Written by Suzanne Gellman, M.S., J.D.

Are you concerned about your income dropping in this challenging environment?  Whether it is already happening or may be in the near future, now is the time to review your spending and resources and make changes.  If you continue spending at the same rate, with less income, you may find yourself going deep into debt and/or emptying your savings account.  

It helps to remember that, for the most part, the financial changes you may need to make during this time are only temporary.  Evaluate your expenses and consider ways to do things differently.  For each expense category ask yourself – can I do them less expensively, less often, or can I stop doing them – at least temporarily? 

Make a Plan:  Determine how you will spend less, find a way to bring in more income, or potentially try to do both.  Decide where cuts can be made, control spending, set priorities on expenses, and defer non-essential spending.  If your income is still coming in as usual for the time being, maximize your emergency savings.  Hold onto any cash and make only minimum payments until you know what your situation will look like.

1. Start tracking your spending sooner rather than later – this includes daily out of pocket spending and spending on debit and credit cards.  You can track your spending using free phone apps, the notes app on your phone, or paper and pencil.  Finalize your expense picture by pulling together your monthly expenses like rent/mortgage, auto expenses, utilities, and other items.  Include expenses like insurance, taxes, and fees that don’t happen every month.
2. Compare your income and expenses.   Make reductions in spending as quickly as possible.  Don’t forget to look at monthly automatic withdrawals or charges that you may be able to stop or put on hold if they are not necessities.  Consider putting together a list of your assets and liabilities so you have a big picture of what you owe and to whom, but also what you own that is available to you should you need to make tough decisions about finding cash (i.e. bank accounts, equity in a home or car). 
3. Determine your priorities.  You will need to make some hard choices.  This may mean that everyone in the household has to give a little – including children.  For example:  you may need to temporarily reduce or eliminate buying clothes, eating out, hobbies or entertainment.  Talk to your family and include them in decisions about lifestyle changes that may be needed.  Communication around money is always important, but especially in challenging times.
4. Review your resources:  Consider how you can spend time rather than money – doing things for yourself that you might have previously paid someone else to do for you.  What assistance can family members provide to help you reduce spending (i.e. pitching in to do tasks or services you need)?  What non-money resources do you have on hand that can be used to meet household needs?  Are there community resources you can access through local institutions such as the United Way, local churches/temples and non-profits.
5. Reduce expenses:  Ask to lower interest rates on debt, use parks and free entertainment, use the libraries (electronic resources) for books, videos, music, etc., evaluate the need for cable or telephone extras, reduce cell phone plans, reduce what is spent on gifts, eat at home, barter, make it yourself, recycle, find a new use for old items around your house, go longer between haircuts, etc. 
6. Increase income: Get creative about things you could do to generate more income (legally of course).  Is there a skill or hobby you could use to earn income?  Do you have a skill you can barter with to get family needs met by spending time instead of money?   Do you have old or extra items around the house that you can sell to raise extra money?  See University of Illinois Extension website for bartering or income generating ideas. 
7. Contact Creditors:  Reach out to credit card companies, utilities, lenders, and student loan companies before missing a payment.  Ask about payment arrangements, deferments, or other options to minimize current obligations without hurting your credit.
8. Only consider cashing out retirement accounts or insurance policies as a last resort.

A delay in making difficult decisions may result in greater financial setbacks and a longer timeline required to recover.  If you are feeling overwhelmed, consider breaking your efforts down into bite-sized tasks you can accomplish at various points in your day – so you can see forward movement with each small step you take. 

For more in-depth information and detail about surviving an income drop as well as worksheets to help with financial decisions, visit University of Illinois Extension’s “Getting Through Tough Times” series.    

For more information about community resources, visit the United Way’s resource page.

By Paul Woodruff, Prosperity Connection

Everyone in St. Louis seems to have an opinion on payday lending. Politicians decry the industry as usurious. Consumer advocates demand that ‘predatory lenders’ be shut down. Middle and higher-income people don’t understand why the loans cost so much, or why anyone would take one out. Meanwhile, the consumers who use these services just want access to a short-term loan so they can pay rent, repair their car, keep the lights on, and more. Presently, payday lenders fill that need and are accessible.

Many people are struggling to get by. According to the 2018 Prosperity Now Scorecard, despite nationwide low unemployment rates, nearly a quarter of all jobs in America are low-wage. Add to that the fact that 45.8% of white renters and 53.9% of renters of color are cost-burdened (meaning they spend more than 30% of their income on housing). For those living on a fixed income, primarily seniors and the disabled, the picture is increasingly bleak as their benefits remain flat and the underpinnings of state and federal safety nets continue to fray.

Community Development Financial Institutions (CDFIs) and nonprofit loan funds operate in our area to offer consumers small-dollar loans ($100 – $1,000) at more affordable rates and the opportunity to engage with financial experts who can provide free guidance on how to build credit, eliminate debt, and manage household finances. CDFIs like Justine PETERSEN and St. Louis Community Credit Union (SLCCU) give consumers a pathway to financial wellbeing through a host of affordable opportunities. Prosperity Connection, a nonprofit, established RedDough Money Center in 2016 to compete directly against payday lenders by offering lower cost small-dollar loans, check cashing services, and more.

A growing number of financial institutions, both banks and credit unions, offer small-dollar loans which are more affordable than traditional payday and title lenders. If you are facing a difficult financial situation and are in need of a small loan, here are some things to keep in mind:
• Ask your financial institution what small-dollar loan options they offer (if they don’t have any, they may have partners to refer you to)
• Before taking out any loan, know what you’re getting into by asking questions.
o What is the interest rate?
o How long do I have to pay the loan back and how much will it cost?
o Are there any fees for paying the loan off early?
• Consider meeting with a financial coach to establish financial goals, build a strategy to meet goals, and navigate difficult financial situations when they arise.

Payday lenders don’t have to be your only option when a financial emergency arises. Ask questions, use the resources available to you, and take control of your finances.

By Sierra Dean, Justine PETERSEN Community Investment and Outreach VISTA

You’ve still got time before taxes are due on April 17, 2018, but why not complete your taxes early? If you’re surprised by a tax bill, don’t fret; set up payment options that suit your needs. If you’re getting a refund, completing your taxes early will ensure you receive your refund much sooner.

If you are receiving a refund it’s important that you manage the funds appropriately. What better way than to get things organized early? Here are a few options to get you started:

• Save for an emergency – The unexpected could happen to any of us and we need to be prepared for it. This could include a job loss, vehicle repair, or an illness. Without an emergency fund, you could end borrowing money from friends, family or even taking out a personal loan. Before you receive your refund, it’s a good idea to shop around for a high interest savings account or CD’s with minimal or no fees. Reputable online banks offer savings account that are not linked with your everyday checking account and not as easily accessible as brick and mortar banks. It’s recommended by financial experts to save for at least 3-6 months of living expenses. To avoid being intimidated by the recommended time frame, start by saving for 30 days of living expenses then 60, then 90 and so on.
• Figure out why you’re saving, so that you know you’re working towards a goal. Your goal can be either short or long term. Short term goals could include emergency fund, vacation, or down payments for a car or home. Long term goals could include retirement, child’s education, or a remodeling project. Picking the appropriate tools for your goals is essential because they’re so many products out there in the market today. If you know that your savings consist of short term goals then you may need to consider obtaining a Savings or Money Market account. For long term goals you may want to look into an IRA, Investment Products, Stocks, Mutual Funds, or 529 Plan.

• Paying off debt could be another option for you. Paying off those credit cards with the high interest rates could save you a ton of money. On average Americans created $1,000 more debt due to holiday spending, so pay it off as soon as you’re able to. Also, if you’ve shopped online lately, certain online retailers will automatically save your credit card information. Clear the cookies from your computer to remove your information from those sites. This could help you cut down on buying items that you don’t need because now you need to go searching for your credit card to make the purchase. Instead of paying off your car at one time, deposit the funds into an account and setup auto payments to pay the remaining car payments. This way you will continue to maintain or build good credit along the way.

Once you file your taxes and you notice that you owe, pay whatever you can on the bill. The convenient and easiest way to pay your tax bill is to setup an Installment Agreement. Also, talk to a Tax Accountant for more information.

By Sierra Dean, Justine PETERSEN Community Investment and Outreach VISTA

Did you make a New Year’s resolution to be financially fit? Getting it done and staying on task could be a challenge. We all tend to become easily sidetracked, find ways to make excuses, or just procrastinate.

At the University of Scranton research suggests that just 8% of people achieve their New Year goals. Considering that 45% of Americans make a New Year’s resolution and of those 25% of resolutions fail within the first week. It would be great if we could get that achieving number higher.

New Year, new beginnings, and new life, as some would say. Let’s grasp on how to keep our promises to ourselves when we make resolutions. Here’s some a few ways:

• Be specific about what your goals are. Don’t just say that you need to save money or that you need to lose weight. Write down exactly how much money you want to save and how much you would need to save monthly. So, if you want to have $2,000 in your savings account after 12 months, then you need to automatically deposit $167 into your savings account monthly.

• Make a list of things that you will accomplish each day to get you towards your goals. Start off small, don’t overwhelm yourself with too much on your to do list. If you’re working towards saving, then your list may consist of different banks or credit unions to reach out to in order to find the best interest rate.

• You could possibly write down different ways to make more money by doing the things love like, writing, drawing, sewing, knitting, etc. Turn your interests into cash flow and deposit the extra money into your savings account.

• Surround yourself with wealth minded individuals and start to attend reputable seminars or workshops that pertain to the process of wealth building. Remember, building wealth does not happen overnight, consistent savings is the foundation that wealth and prosperity are built on.

• Write down your goals, then hang it on your wall, post it on your desktop, or even save it as your screensaver on your phone. Have fun with it!

Keep going after the prize and you will get there eventually. Make sure you celebrate every small win!

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By Angie Henderson, AFC

Did you know that there’s a new financial guidance resource for St. Louis’ veteran population? The Consumer Financial Protection Bureau (CFPB) has launched a new, nationwide initiative to assist our nation’s veterans in the area of personal finance and the best part is – it’s FREE!

There are roughly 250,000 service members who leave active duty every year. Veterans face unique financial challenges compared to their peers without military experience. They often deal with major career changes when they leave the military, which can affect their income. They also grapple with moving often, which can make it difficult for spouses to earn money, further challenging the household budget. So it is easy to see how personal finances often top the list of concerns of newly separated veterans. To help with those struggles, the CFPB recently launched a Financial Coaching Program to help veterans take control of their finances.

The goal,” says Holly Petraeus, CFPB’s Assistant Director and head of the Office of Service Member Affairs, is to assist military personnel and their families in getting the financial education they need to make better consumer decisions. “The idea is to help them proactively take control of their finances at crucial moments and end up becoming financially stable and achieving the financial goals they’ve set forth,” she says.

So what is financial coaching? Financial coaching is a tool that empowers the client to take charge of their personal finances. Through a series of one-on-one meetings, a client can expect to receive support and guidance to pinpoint their financial goals, identify barriers that may be keeping them from attaining their goals, recognize what they can do to achieve them and come up with a plan of action to help them accomplish their objectives. Financial coaches can help access financial education, find resources and seek the right financial interactive tools that will work best for the client to make well thought out and confident decisions while working toward their financial goals.

The coaching services are provided free of charge, funded by CFPB’s Civil Penalty Fund. “(The coaches) give one-on-one advice and encouragement, driven by the client,” Petraeus says. “When we can set up our veterans for success, it benefits all of us,” she adds.

Interested? Contact your St. Louis metropolitan area coach today to set up a confidential one-on-one appointment at (314) 201-0308 or ahenderson@afsc.com.