ICFE eNEWS #16-01 - January 2016
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Did you overspend on Christmas and the Holidays?
Now What?

What a way to have to greet a new year; facing a mountain of credit card statements within weeks of Christmas.

The sad lament of more than a few consumers is: Now what do I do? First things first, rein in the spending by making it harder for you to spend.

There are ten initial steps to take immediately to begin the turn-around.

1. Freeze credit cards and ATM cards in a glass of water in your refrigerator freezer.

2. Get spending on a cash basis and make notes/keep receipts on all purchases to help raise your awareness of where your money is going, day in and day out.

3. Freeze your credit files. This is now available in all 50 states. Freezing credit files will make it more time consuming to open new credit accounts or make large credit-based purchases. In the process you will be sent a copy of your credit files.

4. Take some financial pictures of yourself. The big picture is your net worth, listing the things you own versus the things you owe. But don't stop there, determine how many years you have been working full-time and how much money you have earned during that time. Now, what percentage of your lifetime income (to date) is reflected in your net worth? 10%? 20%? 50%? 150%? The close-up picture is your cash-flow, how money moves in and out of your life on a monthly basis. It is a list of all income received in a month and also a list of all expenses during the same month. The difference in the two amounts equals your cash flow, be it positive (more income than expenses), or be it negative (more expenses than income), or be it zero (monthly income and expenses are equal). The close-up picture will help in prioritizing monthly spending. The cash-flow will also help identify spending that may be hurtful to getting out of debt. Try to get as much extra cash going to debt pay-down as possible.

5. Create a written spending-plan and implement it with the next paycheck or the first of the month, whichever comes first. The cash-flow exercise is the basis for the spending-plan; all the leg-work is done. The monthly spending-plans then become your financial roadmap. The key is to follow it closely, because within that spending plan will be the Christmas debt reduction and, eventually overall debt elimination. Printable one page spending plans are on icfe.info.

6. Look for ways to get a better value for your dollar. It may mean doing things for yourself that you may have paid others to do for you, such as lawn care, car washes, laundry, and so forth. Comparison shopping is another way to save money and get more value. Coupons and rebates add value to your dollar, especially at the grocery store where the average American family spends 30 cents of every take-home dollar.

7. Make it a family affair. Everyone can contribute to energy savings, avoiding food waste, clipping coupons and watching out for sales on things regularly purchased. Everyone can become a comparison shopper and look for better values. An over-spender is not just someone who spends more than they earn, an over-spender is also someone who pays too much for things and the latter group is the majority.

8. Add to your income at the same time you are spending smarter. This can be done by taking part-time employment, selling things on the internet with eBay, for instance, perhaps generating additional income from a hobby, craft, music or language instruction, and tutoring, to mention a few.

9. Get some visual reminders around your home and office about improving spending. If ATM and some credit cards must be unfrozen, then keep those cards protected in an "ICFE Credit Card Sleeve.". View them here on ICFE.info.

10. Take the inter-active spending quiz here on ICFE.info. There are two; one for looking at your spender's profile and the other is an over-spenders quiz. They both will help anyone gain some insight to their spending Practices and habits.

Good luck and Happy 2016.

ICFE eNEWS is available FREE upon request by visiting the ICFE's Web site and filling out the contact form, selecting "Yes" for "Add to Mailing List." Please pass this eNEWS on to your peers and interested others and invite them to subscribe for free. Also, visit the ICFE's new Web site: StudentDebtHelp.org

Sent by:

Paul S. Richard
President - Executive Director
Institute of Consumer Financial Education (ICFE)

ICFE - Institute of Consumer Financial Education - ICFE.info - 619.239.1401