|Terry Rigg is the editor of the Budget Stretcher Newsletter. The
Budget Stretcher Newsletter is published monthly and is loaded with
information that will save you time and money everyday. Go to
http://www.homemoneyhelp.com for more information.
I believe that financially, people
fall into one of three categories.
Which category do you fall in?
Family 1 has all the money they
need for necessities and more and manage it very well.
Family 2 has all the money they
need for necessities and more but live payday to payday with ever
Family 3 doesn't have enough money
even for necessities.
The funny thing about the three
families above is that they could have exactly the same income and
family size. This is not to say that special circumstances has
nothing to do with it, but on the average most people live above
Family 1 has established a workable
budget. They don't pay more than they can afford for housing,
transportation, utilities, etc. They also have money set aside for
long and short term savings. This short term savings provides two
things. First, it makes money available when the car breaks down,
you need a new washer, or any number of unexpected expenses that crop
up. Second, it prevents the need to use credit cards for these
items. The savings here could be hundreds of dollars. Family 1
Family 2 is still struggling to
establish a budget. In many cases their house payments or rent is
much more than they can afford. They don't take the time to evaluate
the money that could be saved with little effort. Usually there is
no short term savings, let alone long term. They use credit cards as
if they were cash and pay hundreds of dollars in unnecessary finance
charges and penalties. These people find themselves with financial
problems that often leads to bankruptcy. Family 2 either didn't plan
or may not know how to handle their finances.
Family 3 has given up on a budget. No
matter what they do there isn't enough money to pay for housing and
other necessities. They struggle to put food on the table. Most
don't qualify for credit cards, which is a good thing. In some cases
this situation is self-inflicted and some are due to circumstances.
What is the answer to these problems?
Family 1 - Leave these people alone
unless you plan to ask their advice.
Family 2 - These are the people that
need to seek help and stand a chance of becoming a family-1 family.
The possible solutions include a debt management company like
Consumer Credit Counseling Service. They need to establish a budget
and stick to it. If their housing and other expenses are too high,
then they need to cut back, even if they have to move. They also
need to cut up the credit cards and think about consolidating.
Depending on how far they are in debt, this could take years.
Family 3 - While their struggle seems
useless, there are things that can be done. First, they need to see
to it that everything is being done to keep expenses down. The
electric bill is a good example. There is federally subsidized
housing that only charges a small fee based on your income. Make
sure that they are receiving all federal and state benefits that
they are entitled. If they are able, they should seek job training
or some other means to make their life a little better.
Which family are you? No matter
whether your are family 1, 2 or 3, there is hope. The primary thing
that must be done is to educate everyone that learning to manage
their finances is absolute for their peace of mind. With the huge
amount of information on the internet providing help, this is