2 Ways To Reduce What You Owe

pocket money

The only recession that matters is the one that may be happening now at your house or in the near future. Our blogs and activity in personal finance self-help are targeted to help middle class families help themselves by developing their own plan to overcome the headwinds set against us in this economy.

Unemployment is set to rise to 11 or 12% by 2010. The question in everyone’s mind is: Am I next? The truth is that you can only do so much to control that. You can be more visible and network about your accomplishments at work. You can promote your value to your bosses (and their bosses). You can be helpful to anyone at work to build as many bonds as possible to your current job. However, at the end of the day it will be about revenue Vs expenses and the bean counting that has become the chief operating strategy at most businesses creates fairly consistent job reductions.

Here is what is worse in 2009: If you lose your job, it is less likely that you will replace your job with a new one that allows you to keep or improve your income. The jobs that are being created are lower paying jobs.

These factors mean that middle class families – already under attack for several decades – are facing more serious issues going forward.

So, if you cannot control your ability to keep your job 100% and you cannot control how you may replace your income, what can you control?

BEING LIKE A BUSINESS

You simply must have your own plan to develop savings and invest for your future. How old are you now? That answer will give you a lot to think about. If things go well, how many years can you make a good income? How do you want to live when you retire? How will you reach your short-term goals? These are important questions for your family and your life.

In 2009, you must think like a business. You must pack away a reserve called an Emergency Savings Fund.

While other sites and financial magazines say you should have 3 to 6 months of emergency savings, we urge you to shift your thinking to the 21st Century. You must work to build a proper emergency savings fund for 2009. That is – in our opinion – 15 to 18 months of expenses. The first six (6) months should be in liquid money market savings at an FDIC-insured institution. The balance can be in laddered certificates of deposit.

Put your household on a spending reduction. This is not about killing your lifestyle, but things have changed. Like businesses, you should determine how much you would like to save (may we recommend 20% of your income?). Then, you will want to reduce your bills by 20%. That may sound rough, but you will have help.

1. Lay out each of your hard bills on the kitchen table. Call each business associated with those bills individually. Tell them you have been hit by this hard economy. Ask for a reduction in the bill. Tell them you need between a 10 -15% reduction in the bill. Be open to suggestion. For instance, you may be able to make adjustments in your deductibles with insurance or bundle services to save money. You may have to reduce or eliminate bills altogether. However, the goal is to reduce your overall hard bills by the percentage you are looking to save.

2. Debt is the most serious issue that negatively impacts wealth creation. You must take this on head-on. Start with the credit card companies. Look at your credit cards. Get an understanding of what each card is charging you in interest. Call the credit card companies and tell them you have been hit by the recession and do not want to go bankrupt. Tell them you need their help and ask them to take your interest rate to ZERO while you pay your credit card off. If they won’t do this (and they probably won’t), ask to talk to a supervisor. Be patient even while talking to the supervisor. Stay with it. Call them again and again until you get a result. You are looking to get them to move on interest rates. This is your way to get them to do their part so you can get this debt off of your family. Credit card companies don’t mind putting the screws to you – stay patient and continue asking for reduction or elimination in interest rate while you pay off your credit card debt. Any amount they “give you,” take that as a badge of victory in your quest to eliminate debt.

PUT YOUR CREDIT CARDS IN A SAFE AT YOUR HOME. That’s right. You must stop using credit cards unless you have no credit card debt at all and can pay off your credit cards each and every month. After all, you don’t own credit cards. CREDIT CARDS OWN YOU.

PAYING OFF CREDIT CARD DEBT

Figure out which credit card account (if you have more than one) has the highest interest rate. Pay the minimum on all credit cards EXCEPT the highest interest rate card. Pay as much over the minimum as you can each month on that card until you have paid it off, then rotate to the next card with the highest interest rate and repeat until you have paid it off, then continue until you have ZERO CREDIT CARD DEBT.

FAST FORWARD YOUR WEALTH-BUILDING

The best thing you can do for yourself and your own kids is to learn about saving smart and investing for the future. Too many Americans think that saving is optional. We all need to wake up. Wealth can be yours if you are prepared to build a strategy to get there. Are you ready?

If you want to fast-forward your opportunities, we recommend our own strategy e-book. It’s called “How To Survive Any Financial Crisis” and it is available for $4.95 for a limited time only at http://www.middleclassmoney.com. It is the only thing we sell on any of our blogs or groups and it cost about the same as a cup of coffee at Starbucks.

If you like free, check out our main blog at http://www.stickyasset.com/blog. There you can sign up for our FREE monthly e-saver by signing up in the e-mail window next to the blog. We will never sell or lease your e-mail address or access to it.

You can also join our FREE Facebook group called “Live The Lifestyle Your Family Deserves.” Just search Facebook for the name of our group and click on “become a fan.” That will give you instant access to our blogs and resources for developing your own plans.

There is a lot stacked against the middle class in 2009. The only recession that is important is the one that is happening at your house. Get a plan, move ahead.

Thank you for spending a moment with us.

Loyd Ford
http://www.middleclassmoney.com
http://www.boostmywealth.wordpress.com
http://www.stickyasset.com/blog
http://www.stickyasset.com
http://www.squidoo.com/boostmywealth

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One response to “2 Ways To Reduce What You Owe

  1. I’m finding more ways to live frugal. Some ways better than others. http://www.ysdata.com/financemoney/frugal-dollar-money-saving-tips/17

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