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Tuesday, March 22, 2011

MONEY: Marshaling Your Resources for the Fight.

Once you have lost your job it is time to take inventory of your possibilities for help.  If you are notified you are going to lose your job that is the time to start your fight.  Waiting till it actually happens lessens your chances for a successful outcome.  Some people can turn to friends, relatives and immediate family and that is good.  However some people for whatever reason do not have that possibility.  If you have a house payment, car payment, credit card payments, utilities and groceries you need to prioritize them as to which is the most important. Eating is a fact of life and no matter what happens to everything else that is the most important item.   While we can cut back in the food area, it can not be cut out. Do you have equity in the house or car.  Could you sell either one or downsize to a smaller less expensive one.  The average person does not want to make that kind of decision, but if it is made early,before the creditors are beating on the door and leaving obscene messages on your answering machine it can help.

The most important thing is to map your actual spending.  That has to be done before you can even establish a budget.  That means you must account honestly for every penny that crosses your palms and that you are the one who decides where it is going to be spent.  This was one of the most valuable lessons I ever learned.  Even before you change your habits you have to know what they are.  Do you eat out every day at work.  That is a place for potential saving.   Do you buy magazines and books.  Do not quit reading but be smarter.  Use the library's resources, get magazines and books from friends and family.  How many snacks do you buy.  When I did this the first time I was in the military.  I got paid once a month and usually by the fourth or fifth of the month I was broke till the end of the month.  Why did that happen?  Bad choices for starters.  I went to the snack bar and paid for what I wanted to eat.  My first cut back was to eat in the mess hall.  In the mess hall I ate free.  Instead of using the cleaners to get my clothes done I started using the military laundry for uniforms.  My personal clothes I started doing at the laundromat. These things saved money that I did not "have" to spend.

That is the first thing you must know.  Where does what you do have go?  The second thing is what are your obligations? If your obligations exceed your income you have a problem.  It is not an insurmountable problem, but it is a problem you must be aware of.  Many people are not aware of this being a problem because they have a cash flow but it is not managed properly.  They pay bills each month and it is not a problem as long as nothing interrupts the flow of money.  Being unemployed messes that system up big time.   If you are shuffling payments from one bill to the next that is a sign of a problem.  If you are making only the minimum payments on credit cards that is another sign.  If you are giving up things you use to do like eating steaks or going to the movies that is the sign of a problem.  Once you realize there is a problem the challange is to find a solution.  There are two ways to accomplish this.   Either increase income or cut expenses.  It is not rocket science.  If you have lost your job or source of income you need to generate a source of income.  Selling what assets you have is short term and as far as I am concerned not a real good solution.  Especially if it means getting rid of things you will have to replace later.  If you no longer need the items it can help to buy time to get your ducks in a row.  We will come back to budgeting later, but first we need to stop the bleeding.  The next two posts will deal with finding a job.  Especially in a situation when there are none.  The second is how to find a house when you have no money.  It can be done and I am not talking moving back in with Mom and Dad or relatives. It does take some creativity.

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