Readers do you have a financial problem that is overwhelming you? Our columnist has a sincere passion for helping people. The following was submitted by a 27 year old female.
I am in almost 18,000 dollars in debt at the moment and I am just starting a new job tomorrow. I don't have any money saved and I have tons of bill collectors calling. I wanted to save at least 1 or 2 months worth of cash before I started paying the debt since they are already on my credit report and delinquent then allocate 1,000 dollars a month to the outstanding debt to be able to pay it off in 18 months...Is this a wise decision?
This list contains several problems. Note the following:
1. Don't have any money saved.
2. Starting a new job tomorrow.
3. Ton of bill collectors calling.
4. Almost $18,000 in debt at the moment.
5. They are already on my credit report and delinquent.
6. I want to save 1 or 2 months of cash.
7. Allocate $1,000 a month to the outstanding debt.
8. Pay the debt off in 18 months.
Saving money has to become a habit. What type of debt does this $18,000 represent? We will assume credit card debt because there is no mention of auto repo’s or evictions. You cannot put all of your money on one bill, especially if you owe more than one company.
She has to receive her first paycheck, before she assumes she has a $1,000 to save. People are sometimes surprised when they discover how much is removed for taxes and health insurance. She needs to determine her take home pay before she can set up a realistic budget. Her budget must include fixed expenditures such as:
· Rent/house payment
· Car note
· Insurance (auto and home)
· Gas/Car and home
Miscellaneous bills such as credit cards, furniture, and appliances have to be maintained separately. Tracking the monthly payments for each bill, will create a constant reminder of how much more money you would have available to spend if these bills did not exist.
Now that the necessities are taken care of, items such as Cell Phones and Direct TV may be a luxury. These items can be put off, especially if you do not have a savings.
Managing money is an acquired skill. First, you must have money to manage. It requires planning and implementation. If this person can save 1 or 2 months of cash, chances are good that she will not allocate $1,000 a month to the outstanding debt because of her attitude about poor credit “they are already delinquent and on my credit report”. She must first change her attitude towards bills before she can change her habits.
Go to http://www.jab401k.com/ to submit your question. Leave your age and sex information. Or, email me – firstname.lastname@example.org – I will gladly respond.