Recently a nightly newscast did a series of stories on the “struggle of the family with unemployment”. I saw it for the first time like many of you as a casual observer in my usual night time routine. One of the women on a video portion said something that really stuck with me. She said: “….we will still be a family….” How very poignant! No can take away your family or your concept of what that word means. In fact it means something different to every person who is a family. That night I kept reliving that statement and the way the crew had shot that piece. The mom was seen with her back to the camera in the dark looking out her window into “her world” saying these things. The next day, I did a little research online and watched the video again and I asked myself; “…if this were my friend, what would I say to her?”
What would you say if this was your neighbor?
So, I thought I would just write some great ideas here and perhaps you can take in my “virtual hug” and “virtual concern” and perhaps put some of these ideas into your life and family right now. My prayer is that you and your family will become closer and that this time of hardship will make all of you stronger than you can possibly imagine.
I will give these to you in small bite size portions so that they are not overwhelming.
Step 1 Take an assessment of every corner of your financial life.
Here’s what you do: Categorize your monthly income. Take a sheet of paper and paid statements and make yourself a financial reality income and expenses sheet.
Gross Income Per Month (This includes your salary (include all salaries), interest earned, dividends or other income that comes in from other sources)
Less: (-) (minus) each of the following:
Taxes (Fed, State, FICA)
Housing (36%) (Which includes your: mortgage (rent), Insurances, Taxes, Electricity, Gas, Water, Sanitation, Telephone, Maintenance etc)
Food(12%)
Automobiles (12%)(which includes:Payments, Gas, Oil, Insurance, Licenses/Taxes, Maintenance, Repair)
Insurance (5%) (which includes: Life, Medical, other)
Debts (5%) (which includes Credit Card(s), Loans, Notes, other items)
Entertainment/Fun/Recreation/Vacation etc. (6%) (which includes: eating out, baby sitter, activities, vacations, after school activities for children, movies, rentals, theme parks, etc)
Clothing (5%)
Savings (5%)
Medical Expenses (4%) (which includes Doctor, Dentist, Eye Doctor, Physical Therapy etc)
School/Child Care (6%) (which includes: Tuition, Materials, Transportation, Supplies, Day Care, Uniforms, Books etc)
Investments (5%)
Miscellaneous (5%) (which might include: Toiletry, cosmetics, beauty salon, barber, nail salon, dry cleaning, laundry services, allowances, lunches eaten out, subscriptions (magazine, telephone plans, cable, internet, TV, cash spending from ATM, gifts, etc)
These percentages are based on a family of 4 making an annual income of $36,000.
OK…total up your expenses. (Now if this is beyond you right now, you will need to step back and go through all your “paper”. Yes, I know it is hard. Yes, I know you do not want to do this. However, your very livelihood is at stake here and this is where you are backed up right on the edge of the “cliff”. You either fall over the edge or you get some backbone and you begin to march boldly forward into the reality of your new future.
Do the math.
Where are you? $________________________
Where is your family? $_____________________
Your family depends on you to navigate the financial white water that we are all in. They depend on you and your spouse to be the calm in the eye of the storm. This is the very first step in learning where you are financially right at this moment in time. Even if it looks bleak and it may, you can recover, with facing the reality of where you are right now, making a plan to bring life into a financial place of calm and learning a new way of living. Yes, it will be hard. Yes, you have ignored things for a long time. Yes, that time is now gone. Your future in NOW.
If you are looking for financial freedom it all begins with this exercise. In order to “Prosper” in the future we need to “Start” some where. This is your “Start”.
Next time: INCOME ALLOCATION
