Transcript Document 7401464

Dealing with a Drop in
Income
Bev Doll
Family Living Agent
UW-Extension
May 15, 2009
When your income drops…
Job Layoff
 Illness
 Death
 Divorce
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Natural Reactions…
Shock
 Panic
 Stress
 Denial
 Burden
 Fear
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5 Steps To Financial Independence
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Set Goals
Analyze Information
Create a Plan
Implement the Plan
Monitor and Modify the Plan
Financial Roadmap
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Where Do You Want To Go?
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Where Are You Now?
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How Are You Going To Get
There?
Where Do You Want To Go?
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Setting Goals
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Specific
Measurable
Attainable
Realistic
Time bound
Goals in writing are dreams with deadlines. –
Brian Tracy
Where Are You Now?
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Where Do You Currently
Stand Financially?
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Income Coming In
Expenses Going Out
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Who Do You Owe?
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Track Your Expenses-Why?
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To get an accurate
picture of where your
money is going
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Allows you to make
educated spending
choices
Track Your Expenses-How?
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Notebook method
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Receipt method
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Checkbook register
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Pre-printed tracking
form
“Small leaks can sink big ships.”
-- Ben Franklin
The little,
everyday
expenses
can make a
big difference!
How Are You Going To Get There?
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Compare what’s coming in to
what’s going out…If expenses
are exceeding income, look for
alternatives:
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Increase income
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Part-time job
Adjust with-holding on paycheck
How Are You Going To Get There?
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Decrease Expenses
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Compare needs to
wants
Find your spending
leaks
Starting The Journey
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Don’t think of your spending
plan as a chore or something
you have to give up….Think of
it as a means to an end.
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If you take a wrong turn, get
back on track as soon as you
can.
Communicating About Money
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Many families face money problems due to lack
of communication:
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Financial stresses
Value conflicts
Emotional uses of money
Unrealistic goals
Lack of planning
Communicating Tips
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Define the problem
Write down all possible solutions
Evaluate solutions
Select one solution
Identify things that might stand in the way of
your success
What are you willing to sacrifice to solve this
problem?
Money Meetings
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One hour or less, once a month
Schedule at a realistic time
Hold in pleasant surroundings
Have all the necessary tools available
Have your task list ready
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Pay bills
Plan and review spending plan and goals
Balance checkbook
Make needed phone calls
Draft letter to creditors
What If You Can’t Pay The Bills?
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Don’t panic!
Size up your current situation
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How much income can you count on?
List your expenses
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Look at consequences of not paying each one
Prioritize
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Pay basic necessities first
What If You Can’t Pay Your Bills
cont..
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Look for options
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Can you sell something?
Can you downsize your housing?
Does your decrease in income qualify you for assistance
such as Food Share, Badger Care, etc?
No matter how bad your situation is, don’t ignore
your bills.
Explain your situation to your creditors.
Where do you start?
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Take action right away…reduce your chances
of being harassed by working out solutions early.
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Contact Creditors BEFORE you miss a payment
Prioritize Bills
Don’t Take on New Debt
Don’t Ignore Bills
What can happen when you don’t
pay bills?
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Utilities shut off
Interest
Late Fees
Turned over to collection
agency
Foreclosure
Repossession
Wages Garnished
Legal Action
Which Debts Do I Pay First?
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General rules on setting priorities:
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First, pay housing-related bills
Pay basic living expenses next
Pay the minimum required to keep
essential utility service
Pay car loans or leases next… if you
need to keep your car
High, Medium, & Low Priority?
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Make tax debts a high priority
Make student loans a medium priority
Make loans without collateral a low priority
Treat cosigned debts like any others
Don’t move up a debt’s priority based on threats
Do move up court judgments in priority if the creditor
has already sued
Be cautious about consolidating
debts or refinancing your home
Tips Negotiating with Creditors
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More likely to work with you if:
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been a good customer
contact them before they contact you
Options you could request from your creditor:
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Reduce monthly payment
Reduce or drop fees for late payments
Lower interest rate
Pay interest only on the loan until you can resume making
monthly payments
Request permission to sell the item
Getting Your Report
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Free Report available
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www.annualcreditreport.com
1-877-322-8228
You can also contact the credit
bureaus directly
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TransUnion
Experian
Equifax
Good Luck On Your
Financial Journey!
 Unless
commitment is
made, there are only
promises and hopes . . .
but NO plans.