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Articles by Lisa Taylor
Huff
Top 10 Ways to Restore Your
Financial Integrity
April 17, 2000
Financial integrity. To
me, this means being honest with yourself (and others, when appropriate) about
the state of your finances, and being willing to face the truth, good or bad.
It means being current on payments to anyone to whom you owe money, whether
that be your mortgage company, credit card company or your brother-in-law. It
means having a plan to get out of credit card debt. It means not living above
your financial means to the point where you get into debt in the first place.
When you are out of integrity financially, you are living with fear,
every minute of your life. You are afraid of being found out. You are afraid of
running into someone because you owe them money. You are afraid that ringing
phone means another creditor seeking payment. Being out of financial integrity
doesn't make you a bad person. It simply means you've made some unwise choices
in the past.
The good news is, the past does not equal the future, and
you CAN change how you deal with your finances. You can begin, right now, to
restore your financial integrity. Some of these steps you can do on your own;
for some you may need additional support from a financial or legal
professional, or from your coach. Please seek professional support where you
feel you most need it.
1. Know what you're worth, financially
speaking.
You can't fix a problem when you don't know where the
problem is. The first step in restoring your financial integrity is being
willing to look honestly at your financial picture. This means taking a deep
breath, opening those unopened credit card and bank statements, and tallying up
what you owe (liabilities) and what you've got (assets). Subtract the
liabilities from the assets, and you've got your Net Worth. If you've got a
mountain of credit card debt, don't be surprised if you have a negative net
worth. Remember though - being in financial difficulties does NOT make you a
bad person. Do not use this information to beat yourself up, it is simply an
exercise in awareness and facing your responsibilities head-on. Congratulations
for taking this first big step!
2. Get out of credit card debt - and
STAY out!
If you are carrying credit card debt, make it a priority
to pay it off as quickly as possible. This means knowing how much you owe and
to whom, and if you completed step 1 you should have this information at your
fingertips. Make a list of each creditor, the total amount you owe, the
interest rate, and monthly minimum payment due. Create a debt repayment plan
where you focus on the credit card with the HIGHEST interest payment first. If
you have any extra money to apply toward erasing your credit card debt, even it
it's only $10, each month put the extra funds on the card with the highest
interest (in addition to that card's minimum payment), and pay the minimum
payments on the others. Once you've paid down the first card, apply all the
money you paid each month on that card towards the balance on the card with the
second highest interest, and so on. This method is considered by many to be the
fastest means of paying down debt. If you're in real trouble and are having
difficulty making even the minimum payments, consider getting a second job or
consulting with your local credit counseling service (they may be able to
negotiate better payment terms with your creditors). You can locate credit
counseling services on the internet - look for accredited companies, such as
Credit Counseling Centers of America (www.cccamerica.org), Consumer Credit
Counseling Service (different web sites based on the state you live in) or Debt
Counselors of America (www.dca.org). And one last thing - stop using your
credit cards while you're trying to pay down the debt. Keep one for
emergencies, put it somewhere other than your wallet, and cut up the rest!
3. Balance in your life starts with a balanced checking account.
It never ceases to amaze me how many people avoid balancing their
checkbook every month. If you aren't balancing your checkbook each month, start
today! Set aside a regular time to tackle this task. It really doesn't take
that long - you're probably using more time and energy avoiding it than it
takes to just do it! If you're not sure how to balance your checkbook, make an
appointment with someone at your bank, and they'll teach you how. If you have a
computer, consider purchasing some computer software such as Quicken to help
make this task even easier.
4. Know what your credit rating looks
like.
Did you know that your credit report can have errors on it?
Your creditors and the credit bureaus do make mistakes, and they can be costly
mistakes if you are applying for a loan or mortgage. In addition, according to
recent news reports, there is now something called "identity theft" where
people get some of your personal information, "steal" your identity, and start
living the high life on your credit. It's a good practice to routinely review
your credit rating to protect yourself. There are several major nationwide
credit bureaus, and there may be local ones in your area as well. As of the
date of this writing, the 3 major companies are Experian, Equifax and
Trans-Union, but you can do a search on the Internet for "credit report
services" and get a current list. Start with the national companies. Contact
each of them and order your credit report (the information in your report will
differ with each company. Some companies allow you to get one free report a
year, others charge a nominal fee. If you have recently been turned down for
credit, by law you should be able to get a free report from the credit bureau.
5. Make sure you are current on payments to, or have paid off loans
from, anyone to whom you owe money.
Part of being in financial
integrity is honoring your financial commitments to others. That includes not
only any businesses (credit card companies, banks, loan companies) to whom you
owe money, but also family and friends. Debt is debt, period. It is your
responsibility to make good on any outstanding debts - your family and friends
do not "owe" it to you to forgive any loans. Make it a priority to make your
payments on time.
6. Develop relationships with money experts who
can support you when you need it.
Get to know the "pros" - an
accountant, a tax expert, investment broker, financial planner and/or attorney.
At some point in your life, you will need their services. If you don't know who
to call, ask for referrals from friends and colleagues. Interview the
professional and ask for several references from other clients. Make sure you
feel comfortable with the person's style and experience. And keep in mind,
working with a financial professional does not absolve you of your
responsibility to keep an eye on your money. The pros are there to help make
your job easier, but it's YOUR money, so don't rely solely on others to manage
it for you. Which brings us to the next step…
7. Educate
yourself about money matters.
If you feel uncomfortable with making
decisions about investments, taxes, estate planning and the like, you can
increase your comfort level and have more fun with your money if you take some
time to educate yourself. This doesn't mean you have to get a degree in high
finance. Read magazines such as "Money". Read books about different types of
investments. Check out the financial reports on TV. You want to become an
informed consumer. Educating yourself also helps you protect your money when
dealing with financial experts, you will have a greater sense of control over
your money if you can talk intelligently with your financial pros.
8. Keep your taxes up to date.
We may not like it, but
taxes are a reality of our lives. Being in financial integrity also means not
living in fear of the IRS. The way NOT to live in fear is to make sure your tax
returns are filed on time, and that you have paid any outstanding tax payments
you may owe to federal, state and local authorities. If you are self-employed,
it also means being current on any quarterly estimated tax payments. If you
need help with your taxes, consult an accountant or other licensed tax
preparer.
9. Protect yourself and your family against the
unimaginable.
Another way of ensuring your financial integrity is
INsuring yourself adequately. If you have a mortgage, you already have some
sort of homeowners insurance to satisfy the mortgage company. But many renters
never bother to insure the contents of their apartments, and both homeowners
and renters frequently learn they are underinsured ONLY after disaster strikes.
If you are running a home-based business, your current policy may not cover
your business adequately. You may also need professional liability insurance,
health insurance, and disability insurance. Life insurance protects your loved
ones in the event of your death. Flood insurance is not included in most
homeowners policies, so depending on where you live you may need special
coverage. The premiums you pay are a pittance compared to what could happen if
you aren't adequately insured. And if you don't have one, get a will made up
and do some basic estate planning. You owe it to yourself and your loved ones
to plan ahead. Ask yourself: if the worst happened tomorrow, would I/my family
be OK?
10. Reap the rewards.
Once you have paid down
your debt, and you're living comfortably within your means, you're ready to
focus seriously on creating a plan for financial independence. This means being
willing to save and invest your money, so it can be fruitful and multiply. The
savings and investment choices you make will depend on many factors - how
comfortable you are with risk, how old you are, whether you are single or
married, whether or not you have children. If you've followed all of the
previous steps, you are in great financial shape, in full financial integrity,
and will be able to reap the rewards of all of your hard work by building your
financial independence. You are now out of fear and scarcity, and have removed
all those obstacles to wealth. So - enjoy it!
Copyright © 2000 Lisa
Taylor Huff. May be forwarded or reprinted in its entirety, without
alterations, including this copyright statement, with written permission from
the author.
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