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Chapter 3

Smart Money Management

Juggling income, expenses and bill payments is a dangerous but easy trap to fall into. You can, however, avoid overdrawing your account:

  • Never write a check and count on the "float" time. With the electronic nature of banking, a check can clear the financial institution the same day you write it.

  • Know how much your monthly net income is, and when you get paid.

  • Develop an accurate spending plan by tracking your expenses.

  • Regularly review your financial situation.


Create a Spending and Savings Plan
Creating a spending and savings plan that works for you will help with checking account maintenance. You will be more organized and aware of where your money is going each month, ensuring you have what you need to cover your checks.

The first step in examining your spending plan is to look at your income. (Download and complete the Income Form*)

It can be challenging to analyze your expenses. You probably already know what you spend on regular monthly expenses like your rent or mortgage payments, or your car payment. Tracking your everyday expenses, however, can give you a clearer perspective on where your money is really going. (Download and complete the Monthly Expense Form*)

Debt repayment is frequently the biggest challenge we have when it comes to reaching our financial goals. After all, how do you save money for your dream vacation or new house when you have credit cards bills, possibly with very high interest, to pay? By knowing what you owe, you'll be better prepared to commit the funds necessary to tackle your debt. (Download and complete the Creditor Form*)

Establishing Savings
A key part of sound financial management is saving for expenses and goals – helping you avoid the "need" or temptation to write a check for more money than is in your account. Even the smallest investment in your future, made every month, can result in a small fortune saved over time.
Use an automatic savings plan. Talk to your employer about having a set amount deducted from your paycheck and deposited into an account before you even see it. Or, your financial institution can move money from your checking account to a savings account on a designated day each month.

Delete Your Debt
If debt is busting your budget, commitment is the key to success. First, make a pact with yourself to live a cash-only lifestyle. Before you can reduce your balances, you need to stop increasing them. Close the accounts if you have to. If you keep an emergency credit card, don't carry it with you. Keep it in a secure place in your home.

  • Increase your payments to reduce the length of time and the cost of paying your creditors.
  • Reduce interest rates to save repayment time and money.
  • If you have equity in your home, consider converting high-interest credit card debt to low-interest secured debt – and it is often tax deductible. (Be sure you can handle the payments first!)
  • Commit the bulk of your available debt repayment funds to the account that is most expensive and pay the minimum payments on other accounts. As the more expensive accounts pay off, commit the funds to the next most expensive one.

Continue to Chapter 4

* Please note you will need to have Adobe Acrobat Reader installed on your computer to view these forms. To download the free software, please visit the Adobe website.
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