31 Dec Resolution For The New Year – Get Organized
The biggest problem that every bankruptcy client has is organization. Financial problems have a way of causing chaos. Which bill do you pay first? Which collection agency do you satisfy next? How in the world do you collect all those documents necessary to file bankruptcy?
In fact, the issue of disorganization is one that typically has deep roots. The weed grows slowly, quietly, insidiously hidden by the masks of steady and productive income and rising real estate prices. Now with the crutches of employment and refinances gone, the nasty secret is exposed and the weed is now a vine chocking the life out of you and your family.
It starts small. A small charge here and another charge there with the vow that the balance will be paid off when the bill comes in. Then there’s a small problem like a flat tire or a dentist bill and instead, the check is for less than payment in full. From there, it’s minimum payments when the biggest bills seem impossible. When the real emergency comes or the job loss occurs, the mortgage or the car payment doesn’t get paid resulting in foreclosure and repossession. If you act quickly, maybe by filing bankruptcy, you can salvage the house or the car.
Where does organization fits into this equation?
First – write everything down. The act of writing things down reinforces and memorializes what has happened. You can look at it, you can add it up, you can use the information to predict what will happen next month. Write down everything you spend. Write down the mortgage payment and the pack of gum (or cigarettes) you bought today. Add it up. Be surprised.
Second – plan your income. Know what you are going to earn and write it down. If you write down your income and compare it to your spending, you will have the beginnings of a budget. Now start cutting the unnecessary items from the spending to bring the money going out in line with the money coming in.
Third – Make a budget. What makes a budget? Goals. You reach goals by planning. Take your income, compare your spending, and decide what you want to accomplish. Set a long term goal – something you want to accomplish in five years and then some short term goals – the steps you need to take to accomplish the long term goal.
Once you have written everything down and set goals, can keeping copies of bills, statements and banking records be far behind? Now you are a giant step to being organized. If you still end up needing to file bankruptcy, you will have all of the makings for an easy case. But if you start planning now, you might not be my next client.
For more help in getting organized, follow my 11 part series “Top Ten Personal Finance Mistakes”.