Managing During Tough Times

1. Managing During Tough Times

2. What does this mean for families? • So, are we in a recession? What does this mean? • Rising gas prices and other prices going up too • Home values dropping • Layoffs and limited job opportunities • People are more in debt than ever before • Home equity – being upside down in mortgages • Average credit card balance approaching $9,000

3. Cash management • Income stability • How stable is your job? Your spouse’s job? • What other options would you have right now? • Manage spending • Be as cost efficient as possible • Maximize income • Minimize expenses • Wants vs. Needs • Know when to use existing assets or utilize debt

4. Taking stock • What is your net worth? • Assets minus liabilities • Determine assets • Current • Limited access • Real or personal property • Determine liabilities • Immediate (anything overdue) • Short term • Intermediate or Longer term assets

5. Taking stock • Now think of all of the other assets • Education, certifications • Experience • People skills • Talents • Contacts, connections • Consider using web networking such as LinkedIn

6. Setting Spending Priorities • Family dialogue; maybe weekly meetings for now • Spending plan • Determine monthly income • Determine fixed expenses • Determine flexible expenses • Adjust expenses based on #1

7. What Priorities? • Housing (consider water, electricity, etc.) • Food, some health care expenses • Debt expenses – may need to discuss payment options with lenders • Entertainment • Time to get creative • What other options are there?

8. Cutting Expenses • Take advantage of local public resources: • Spend time together at the park • Go for hikes or bike rides • Go for a family picnic • Go swimming at the local pool, lake, ocean or springs • Take advantage of free programs offered by the library, museums, and community bands or orchestras, etc. • Check out books, music and videos for free from the library

9. Cutting Expenses • Find cheaper entertainment at home: • Have a family game night • Rent or borrow movies, pop some popcorn, and have a family movie night at home • Bake or cook together as a family • Read stories to one another • Go on evening walks together

10. Cutting Expenses • Help your children learn new skills and ideas: • Teach children how to garden • Teach children craft skills you enjoy and spend time doing these together • Teach children about issues that are important to you, such as politics, news, the environment, etc.

11. Saving on gas • Drive more efficiently • Speed limits • Lower weight • Avoid excess idling • Use cruise control (unless there are a lot of hills) • Keep your car in shape • Plan & combine trips • Choose a more efficient vehicle • For more tips check out www.fueleconomy.gov

12. Setting up a spending plan • Track expenses for 1 month • Need for everyone in family to participate • Determine income • From all sources • Determine expenses • Use spending diary • Distinguish between • Fixed • Variable • Optional or discretionary • Income – taxes – withholdings – expenses = Surplus or deficit

13. Need a Buffer • Emergency or Rainy-day fund • Goal is to have 3-6 months of needed or required expenses in a liquid account (savings, checking, money market or short-term CDs) • How much should you have? • What other resources might you have? • Credit? • Family? • Investments?

14. Remember to consider risk management • What is your access to health care? • Disability insurance • Life insurance • Since others are concerned too, it is important to protect what you have • Auto Insurance • Homeowner’s or Renter’s Insurance

15. STRESS Try to find healthy ways to deal with stress if you or others in your family are feeling stressed by all of this Explore various techniques (e.g. breathing, exercise, talking with others) Find support person or persons Remind yourself of all of your positive attributes, things you will have going for you – going forward to the next thing

16. This may be tough on others • Kids may be trying to understand why you are sad, angry, short-tempered (if you are) • Kids want to help; this can be good for them on so many levels • They might want to earn some money for their own expenses (If old enough) • Learn about wants versus needs • Learn how to be savers or be frugal

17. Couple and Family Communication • As critical now as ever • Helping to keep children aware so they understand why things may be changing • Until things even out, it may be good to have regular family discussions • Is there a need for more income? If so, what are the realistic sources of this? • Someone working part-time, going to full-time, second jobs, etc.

18. Couple and Family Communication • Decide on who will carry out day to day money chores. • Each person keep money of their own. • When disagreements occur, give each other VETO power over any decision to borrow. • Learn to manage disagreements. • Use “I” statements.

19. Tips for weekly money meetings Schedule weekly meetings at a quiet, convenient time when you will be alert and undisturbed. Sometimes, people schedule their money meetings just before they get paid Have your meeting in pleasant surroundings. Have on hand the tools and paperwork you need — spending and money management plans, bills, pencil, eraser, calculator, checkbook, phone, and your computer if you use it for your finances. Limit your meetings to an hour or less, to keep them manageable and do-able.

20. Tips for weekly money meetings • During your money meeting, you can do a variety of tasks: • Pay bills. • Balance your checkbook. • Plan and review — Work on your spending plan and debt repayment strategies. • List or review your goals. • Finish money meetings with a treat. Reward yourself with something you enjoy that does not hurt you financially.

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