By following the Action Plan in this and following chapters, you will improve your ability to deal with money problems.

Step 1: Prepare a Complete Household Budget Worksheet
A budget helps you see where you spend your money and where you can save. Use the household budget worksheet (PDF) as a guide. Do this together as a family.

Your budget expenses should include:

• Fixed expenses (including mortgage, rent, taxes, insurance, loans, installment payments, credit card payments and any other monthly payments).
• Monthly expenses (such as food, gas, repairs, dues, recreation, prescriptions).
• Future expenses (income/property tax and any other outstanding debts).

Step 4: Make a Complete List of Creditors Worksheet
Using the creditor worksheet as a guide, list the following information for each creditor:

• Total amount owed,
• Payment schedule and amount,
• Account number, and
• Name, address, and phone number of the contact person.

Determine how much you are going to be able to pay on each bill. Call the creditors if you need to negotiate a lower monthly payment. See “Dealing With Creditors.”

IMPORTANT: DON’T IGNORE YOUR MAIL! Sometimes folks get in trouble because they ignore government agency inquiries or creditor requests for information. Ignoring notices and bills only makes things worse. If you do not understand something sent to you, call the company that sent the bill.

Step 5: Stop Credit Purchases
Stop using all your credit cards. Interest on most credit purchases is extremely high. Don’t add to your burden. If you have advance warning that you might be out of work, try to make larger credit card payments to reduce the balance you owe. It will be easier to handle the minimum payment they require.

Step 6: Plan How to Reduce Household Expenses
Plan with your family to reduce your household expenses.

Plan less expensive meal menus—ones that make good use of leftovers.

Lower your phone bills by reducing long-distance calls or by making them during the lower-rate evening and weekend time. Cancel electronic phone features like “call waiting.”

Conserve on energy and fuel costs by:

• Turning off lights, TV and appliances when not in use,
• Cutting back on the use of “power hogs” like hair dryers,
• Lowering the thermostat on your furnace, or turning up your air conditioner, and dressing accordingly indoors,
• Washing and drying only full loads of clothes, and
• Eliminating unnecessary car trips by combining errands, car pooling, taking public transportation or walking to save gas. Biking is fun and good exercise.

Learning to sew and mend can stretch your wardrobe. Tailors and many dry cleaners can do low-cost clothing repairs and alterations that extend the life of your clothes.

Yard and garage sales are a good source for clothes and other items. Because children outgrow clothes so fast, used children’s clothes are often high-quality and low-priced.

Salvation Army, Goodwill Industries, St. Vincent DePaul Society and many churches sponsor clothing lockers where good, often new, clothing is low-priced.

Step 7: Sell and Barter
Consider selling that extra vehicle or the boat and trailer you rarely use. Look at your possessions to see which items could be sold without really changing the way you live.

Where possible, offer to trade out property for items you need. For example, you might suggest to a landlord that you “swap” a TV you don’t need as part of a rent payment.

Step 8: Check Into Other Financial Resources

• Life Insurance—Review your policy or talk to your insurance agent to see whether you can borrow against your life insurance policy.
• Pension Funds—Talk to your union representative or company to see whether you are owed a refund on your contribution to a pension fund or other company funds.

Resources Credit counselors Salvation army Goodwill industries St. Vincent DePaul Society Churches

Resources

Credit Counselors
A credit counselor is a professional trained to help you make and stick to a budget, suggest ways to reduce costs and help you contact creditors. A credit counselor can help you sort out your financial affairs.

Creditors appreciate your willingness to get professional assistance with your affairs and usually will cooperate to get you back on the track.

Many communities have consumer or credit counseling services funded by United Way or other nonprofit agencies. These services usually operate on a sliding fee scale (the charge is according to your income—if your income is really low, there may be no charge).  The Unemployment Lifeline lists many such services. You can also look in the telephone book yellow pages under “credit.”

NOTE: Beware of private, for-profit consumer counselors—often linked with consumer finance companies—who want fees for service up front.