A few thoughts on “Financial Recovery”

I’m sharing with a group of women tomorrow about personal finance, particularly on the subject of “Financial Recovery”. And, I want to share a few highlights on this area.  It seems many of us are going through  financial distress because of the bad economy.  It is tougher to recover from a financial setback. I am no financial guru but I recommend we do four things when face with a financial setback.

  1. Assess your current financial situation – Do this for yourself! Answer these questions: How much do you make a month (after tax), of that amount how much do you spend? Track those expenses.  Do you tend to over indulge in a particular area? For me personally, my love for traveling is my number one most expensive categories. This realization helps me to establish goals and reign in my impulses.
  2. Identify ways to increase income
    1. Turn a hobby to a paying job. A friend of mine turned her love of cooking into a catering business
    2. Review and change your tax-deduction status.  You don’t want to withhold too much money.
    3. Consider receiving these tax credits
      1. Advance Earned Income Tax Credit
      2. Child tax credit
      3. credit for child and dependent care expenses
    4. Rent out an extra bedroom
    5. Sell your junk – I cleaned my garage two weeks ago and found one thousand dollars worth of books.  I have already created a seller account on Amazon to sell these books online.
    6. Take on a part time job.  A few years ago while I was a full time accountant just out of college, I applied to work at Ann Taylor Loft to earn extra cash.
  3. Decrease and prioritize expenses
    1. Start small by eliminating one expense every month.  I cut my cable a year ago. I thought I would not last but I am doing just fine.
    2. Eliminate or reduce expenses that are “wants” versus “needs”
    3. Prioritize your expenses in terms of “necessities”.  Mortgage/Rent, food, utilities, and transportation are considered must-haves.  They come before other expenses and creditors.
  4. Develop a financial recovery plan – Write your financial goals down. Assign a due date to each goal. Track your progress. Make sure your goals are specific and measurable.

Here are a few websites that provide financial assistance. I am not affiliated with these organizations and have not used them.

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