Defaulted home loans and foreclosures in the United States
are making international news. You cannot open up a
newspaper or turn on a television without hearing about the
housing market. It's my opinion that mortgages will
continue to be in the news for quite a while.
So what's happening and how does that affect you? Simply
put, people are falling behind on their mortgage payments
because of unexpected changes to their finances. As a
result, they have lost their homes or are in danger of
losing their homes. We would like to think that these
people couldn't afford a home to begin with, but it's not
always true: job loss, disability, divorce, and other
changes that we don't even like to think about can
completely change our financial outlook. Rising interest
rates or balloon payments, events we thought we'd be ready
for, can suddenly become dangerous obstacles to our
security. Unfortunately, no one knows what will happen next
month, let alone next year. So you need to take steps to be
prepared.
What can you do to be prepared? The standard answer is to
have an emergency savings account that can meet six months
of expenses, but how do you set aside money when you're
having trouble meeting your current monthly expenses?
1. Find the leaks. You need to find the leaks that are
preventing you from setting money aside. Some leaks may be
obvious and can be addressed immediately with very few
changes, but others may need some research and
investigation. How do you find the less obvious leaks? You
start by dividing your expenses into two categories: needs
and wants. A need is something you must have, such as your
mortgage payment, the utility bills, insurance,
transportation, or food. A want is something you can do
without, like expensive clothing or entertainment.
Sometimes a want is disguised as a need. An example of that
can be eating out instead of preparing your own food. Yes,
you do need to eat, but you can eat for much less if you
bring food to work instead of eating out every day. Your
mortgage, utilities, insurance and transportation can also
be closely examined to see if you're making the best
choices.
2. Reduce your entertainment expenses without giving up
entertainment. Once you've found your leaks, then you can
start addressing them. One of my personal leaks was books,
because I love to read. These days, I typically go to the
library and borrow a book if I think I really must have it.
After I've read the book and know I will read it again,
then I'll let myself make the purchase. Did you know that
you can ask the library to purchase books if they don't
already have them? Most libraries have a fund especially
for requested books, knowing that if one person asks for
the book, many others are probably wanting to read it as
well. This works for movies, too. Most libraries also have
a free movie night - great entertainment at no cost. By my
example, I'm trying to show you that saving money doesn't
always mean going without, it can mean making better use of
the resources available to you.
3. Lower your utility costs the smart way. Not every need
or want can be replaced by free community resources, but it
is possible to lower your expenses while still holding on
to the basic services you're used to enjoying. You can have
fewer televisions connected to your cable / satellite
service, switch to a less expensive package, or maybe give
it up all together and strictly watch movies and TV shows
on DVDs that you've rented or borrowed from the library. If
utilities are your biggest expense you can lower your costs
there as well. When we power washed our home this summer,
we found a few windows that needed to be caulked. We were
glad to take care of it, because caulk is much cheaper than
the heat we would have lost during the cold winter months.
Other ways to lower utility bills are to take shorter
showers, turn out lights when you leave a room, and dress
according to the weather instead of forcing the heating and
cooling to make you comfortable no matter how you're
dressed.
4. Don't be afraid of change. I know from experience that
the biggest obstacle to saving money is the desire for
convenience and the need to fit in. What will you talk
about if can't watch the latest TV shows? Who will eat
lunch with you if you have to eat in the break room? What
if you've never used caulk and aren't even sure what to do
with it? Fear of the unknown can make it hard to get
excited about change. A great way to get excited is to
learn what other people are doing and how it has benefited
their lives. If you are interested in learning more, a few
really great books to read are: "Not Buying It: My Year
Without Shopping" by Judith Levine; David Bach's "The
Automatic Millionaire" Suze Orman's "The 9 Steps to
Financial Freedom" and Amy Dacyczyn's "The Complete
Tightwad Gazette". Remember to check your local library for
titles. After you've sampled the book and know you want to
keep it for future reference, then feel free to buy it.
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Jill Russo Foster provides practical tips for everyday
finances. Learn more about protecting your credit and
living within your means with Jill's popular free report,
bi-monthly ezine, and credit report reminder program,
available here ==>
http://www.themortgagearrangers.com/resources.asp
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