Tighten It Up
01/19/2016 08:00AM ● Published by Aimee Cormier
By Amanda Jean Harris
You went overboard at the holidays. Now you’re paying the price. It’s time to get on track. It’s time for some self-discipline. Time for some sacrifice. There will be setbacks. You may not like the numbers you see. With enough hard work, you’ll make progress. And in the end, it’s all worth it. This is your financial diet.
While many of us are hitting the gym with renewed vigor after frighteningly high numbers on the scale, there are just as many of us looking at frighteningly high numbers on those credit card statements arriving in the mail. It is estimated that the average American is more than $16,000 in debt.
According to the National Foundation for Credit Counseling, the calls for help from consumers increase by 25 percent in the months of January and February.
“Most people fail to plan,” says financial professional Ron J. Nezat. “If you fail to plan you’re planning to fail.”
It’s an old adage that is applicable for financial success whether it’s starting over after spending too much around the holidays or recovering financially from the loss of a job or other unexpected and costly life event. According to Nezat, who is the president of Global Financial Resources, Inc, there are two simple, but effective steps every single person can take when it comes to stabilizing finances:
1. Write a budget and develop a plan.
2. Pay off the highest interest debt that has the smallest balance first.
Write It Off
Writing a plan for finances is easily compared to a fitness plan. The difference it can make to use a food journal, a professional coach and have accountability is no less than the difference in your financial future when you create a hard copy budget, enlist a trusted professional and then meet regularly and have honest conversations and look at how you’re truly spending money.
“You need a plan. You’ll see your expendable income,” Nezat says.
Looking at the truth of where you spend money can make a difference in how you spend moving forward. Many people don’t realize dining out eats up hundreds of dollars a month. Cutting back to more affordable eating options (if you decide not to banish eating out all together) can save hundreds a month.
Mind Over Money
“Most people don’t want to be on a budget,” Nezat says.
Money is an emotional thing. Where we spend it and why is different for every person. Nezat says getting honest about motivations and spending habits are the foundation of forming a budget and sticking to it.
While it may seem money problems are always a direct link to people who simply need to make more money, the truth is that financial woes have more to do with self-discipline and how we spend money.
“It has almost nothing to do with the money they make. It’s almost the same percentage on cars and houses and eating out whether you’re a millionaire or make $100,000 a year,” Nezat says.
He says the issue is that many people don’t live within their means. They live, instead, as though they are going to get a raise or a pay increase any day now.
“People may run up a credit card thinking they’ll make more money in the future. It’s a mindset you have to erase,” Nezat says. “Today in Acadiana with the way incomes are going down … people are living maxed out and it’s backfiring quickly.”
For The Future
A financial plan is about getting debt down as quickly as possible so you can move on to the fun stuff — the dreams and the goals and the retirement. Sticking with a budget that allows credit cards to be paid off opens the door for the next step of planning for the future.
“You have to get your monthly cash flow down and then set goals for the future,” Nezat says. He suggests using a professional you can be honest with and programs like MS Money or Quicken, which can easily show consumers where they are spending and give a historical analysis. “You can track it and run comparables. And, historicals are great,” Nezat says.
These are all tools that can lead to a better financial future and a set up that means no debt next Christmas. “If you have a plan, you’ll be budgeting for Christmas next year and have money set aside,” Nezat says.
But, getting finances back in order requires that intangible something not found on any spreadsheet — self-control. “You have to be willing to do whatever it takes. You have to be willing to change your lifestyle. There will be set backs and tough times. But you have to be willing to sacrifice and do it.”
He says there is no case too dire. Anyone can dig themselves back out even if it means selling the car for a cheaper one and moving to a smaller home or renting a cheaper apartment.
“You have to be willing to do the work and be accountable. It makes a difference.”