Get Organized by Guy Williams
Another New Year and another chance to start over. The most common New Year’s resolutions are hearty perennials, lose weight, get in shape, quit smoking, and get organized. The get organized resolution can mean many things, but often means get financially organized.
When we talk to our customers about financial planning, the first step is to understand where you are. This is the crucial, but often difficult first step. Because of the perceived complexity, many people fail to take the beginning step, and just as “a trip of one thousand miles begins with the first step” a trip to nowhere begins with no steps.
First step: how much do you make each month? Start here. When are you paid? How much are you paid?
This number can look either big or small, depending upon who is looking at it and where you stand. A first job paycheck with no student debt can really look big. The same check with big student loan balances, credit card debt and a looming deposit and first month’s rent can look small.
Regardless of perspective, the next step is to look at mandatory monthly expenditures. These are lodging, utilities, taxes, transportation to work and food. Everything else is optional and can be scheduled. Debt repayment, whether credit card, student loan or anything else needs to come next.
Unfortunately, we have some folks who reach this point and realize that the mandatory expenses are larger than monthly income. If this is the case, debt restructuring, moving to a cheaper location and increasing income are all viable options. The only sure road to disaster is ignoring this step and rolling over payday loans and increasing credit card balances. If you are someone you know is in this position, there is hope, but it is important to get good advice and to be willing to make the tough choices to remedy the situation. We have many success stories of people who reached a financial crisis, but with hard work and good planning, corrected the situation, and went on to successfully repay their debts, and live well.
For those whose income exceeds mandatory expenses, the situation is easier, but still requires discipline. Their important next step is to define what is important. For many people supporting their church is next, and for many of us, this would be in the mandatory category.
Everything else should be planned to align your expenses with your goals. Retirement, vacations, and buying a home are all worthy goals. Achieving these usually means reducing expenditures on things like entertainment, food, and clothing. We don’t suggest living like a monk, although we admire their spiritual dedication and self-sacrifice. What we mean is spending less than your friends on temporary pleasure in order to achieve long term goals.
There were two brothers who both had the same income. Both brothers seemed happy during their working lives. One retired debt free and traveled with his family. The other couldn’t afford to retire and later died leaving only debts to his family. This is an extreme example, but over the years that I knew them their spending choices determined their financial outcome.
The process of financial organization is important. You can do it with pencil and paper, an excel spread sheet, or a personal financial management program. The tools are all readily available and all can work, it just begins with that first step.
Guy Williams is president and chief executive officer of Gulf Coast Bank and Trust Company. Their Kenner branch office is located at 3410 Williams Boulevard. Marcel Gonzalez, vice-president and branch manager can be contacted at 565-3656. Brian Behlar, vice president and commercial lender, can be contacted at 565-3661. Visit Gulf Coast Bank and Trust’s website at www.gulfbank.com.
Article Posted On: January 23, 2018 - By: Allie Munster