Obviously, I feel pretty confident about my financial knowledge as do my happy clients. But life has a way of testing even the most financially savvy of us in the most punishing ways sometimes. The economy, your partners/spouses, emergencies you couldn’t possibly have imagined, the desire to provide the world on a platter for your kids, and sometimes just plain greed get their ugly fingers into our financial actions and wreak havoc.
A few years ago, I had hit a point when my financial decisions went off plan and did NOT end well. A lot of people experience this but just like everyone else, it hit me hard. I had invested in a lot of rental properties around the country that were sitting empty, credit card debt, school tuition, my husband’s work industry had severely contracted and he was experiencing some medical issues at the time, and then….the real estate and banking industry fell apart. I had been walking this tight rope and was now nearly drowning in the mess that was my financial life.
So….what do you do when you find yourself barely treading water wondering how to keep it all together?
What do I mean by that? You assign degrees of urgency to your financial priorities in order to render aid in the most beneficial manner. It’s different for everyone but for my family, we started with deciding what our most important goals were. In our case it was educating our son so we based all of our decisions around that goal. First we set aside 10% of everything we made into our savings to be sure we had six months of cash reserves in case my husband’s health or industry caused him temporary time-off.
Then, we took the remaining 90% and focused on our son’s education first. Then we budgeted to pay our daily needs (mortgage, utilities, etc) and trimmed the fat where possible by renegotiating all the phone bills, ancillary utilities and household services like the gardener and pool guy. We learned how to clean the pool ourselves and had the gardener just mow, cut and blow every other week.
Next, in order to be sure we could sleep at night, we negotiated with the mortgages on our rental properties to get out of excessive loans. It helped that the financial system had collapsed and we had reasonably good real estate so mortgage companies were more than happy to take them off our hands.
Finally we took money we had been spending on those mortgages and began paying off our credit cards. It took two years, but we were able to accomplish all of our goals with a little planning and lots of discipline.
Perform your financial triage, figure out what the goal is then tackle your finances in the order that most urgently addresses that goal. Need help prioritizing your current financial situation? Please feel free to contact us!
We’ll chat again soon!