Tap Into Financial Freedom in Seven Easy Steps

A Full house at Sheppard AFB. Photobombing my fellow speakers Ingrid Bruns from USAA and Bethany Grace our high energy emcee!

A Full house at Sheppard AFB. Photobombing my fellow speakers Ingrid Bruns from #USAA and Bethany Grace our high energy emcee!

Today, many families long for financial freedom and yet they are facing the same issues that Bob and I faced when we were first married—paying bills, stretching paychecks, and still trying to maintain a reasonable quality of life.  In our work with military members during the Heroes at Home Financial Event, we find that their problems are the same as most Americans. But there are answers for those who are willing to do something about it. Here are seven basic tips to help you beware and prepare:
1. Be Diligent: FICOS (Fair Isaac Credit Scores) – Now is the time to improve your FICO as these scores can determine your auto insurance premiums, whether you’ll get the promotion or the job (employers are checking FICOS these days), and whether you pay a security deposit for utilities. If you are a USAA member, you can link through your USAA account and get free credit monitoring service with Experian. If you downsize a home or a vehicle, you’re also going to need to have an excellent FICO to get the best APR rates. Rod Griffin educates our Heroes at Home audiences and among other advice, he gives very specific ways to improve your credit score in three easy steps:
· Pay your bills a day early (rather than a day late) by setting up payments online
· Pay $5 to $10 more than the minimum balance on your credit cards, which means you are paying down debt
· Proportionality: make sure that you don’t have more than 30% of the available credit charged on any one card (for example, $2000 charged on a card with a $6,000 limit).
2. Be Smart: Save Money– I get loads of emails every week from families who are cutting hundreds from their household budget by following simple savings tips such as using RetailMeNot or going to TravelZoo to save on travel and entertainment. From insurance to groceries, there are savvy ways to save at your fingertips. (See the money savings tips on this blog). Start to implement these savings and it will create good discipline that will prepare you for the inevitable highs and lows of the economy. Use the money you save to pay down debt and build short term savings. This prepares you and solidifies your financial picture.
3. Beware: Debt Consolidation Companies: With rumors of economic challenge comes an influx of those who want to “help” prepare you for the worse by consolidating your debt. However, many of the for profit debt counseling companies charge a hefty fee for their services, which is usually tacked onto your debt load. Instead of going through a for profit company, consider going to the nonprofit, National Consumer Credit Counseling Service. 
4. Be Aware: Refinancing to Pay Debt – As things begin to get tight, you might be tempted to get a HELOC (Home Equity Line of Credit) or refinance in order to pay your consumer debt. This isn’t a good idea if you’re using it to pay consumer debt and you haven’t learned the discipline of living on a budget. This kind of borrowing will only deteriorate the equity in your home and chances are really good you’ll be right back in that HUGE boat load of debt by this time next year. The better option is to cut costs, budget, and only use a HELOC for home improvements.
5. Be a “B” Word Person – If you don’t have the “B” word as part of your lifestyle, then yesterday was the day to start budgeting. Set one up with online budgeting tools, or a helpful app found at mint. Make sure your budget has “fun” figured into it and isn’t so restrictive that it is impossible to follow.
6. Be Careful: Recalculate Your GPS (Gross Personal Savings):  In this tip, you are building savings and paying down debt with the previous tips. But you are also recalculating your budget to accommodate the act of actually writing a check or transferring money from your checking to pay debt or to fund your savings account. Otherwise, all the money you save is just flying out the door.
7. Be A Planner With A Purpose – Whenever a “theory” is tested, it must stand up to a “proof” in order to be established as true. You can have all this good stuff on paper, but if you slap down the credit card to pay for a “40% off” killer Marc Jacobs suit, or buy a new boat during summer vacation–and you have consumer debt–then your plan is only a theory. For it to become REAL, you need to make it part of your daily life. This means your family starts to live with the plan and they don’t incur more debt. Your purpose is to live a life with more financial freedom in order to benefit your family and your kids future in the long run.
Ellie Kay
America’s Family Financial Expert (R)
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