To spin a phrase, all personal finance is local. Some families have come through the recession in good shape, while others lived paycheck to paycheck even during the economic boom that preceded the recession.
It really doesn't matter much if the economy is thriving if your personal situation is stressed. Your personal habits, honed over a lifetime, make or break your response to a financial calamity.
It's smart to forestall serious trouble with basic preventive measures, and sometimes a pro can identify those measures before you can. When is it time to talk to a professional financial counselor?
"Some financial danger signs are arguing in your home over money, hiding purchases, charging even the small purchases because you have no cash," says Gail Cunningham, vice president of public relations for the National Foundation for Credit Counseling, Silver Spring, Md. More signals, she adds, include receiving next month's bills before this month's bills are paid, and spending more than 20% of your take-home pay on nonmortgage debt obligations—and this includes your vehicle payment.
David Barnett, partner relations specialist for Accel, a program of GreenPath, Inc., based in Farmington Hills, Mich., agrees and offers a few more markers. "Some obvious signals are using credit cards to supplement income, collection calls from creditors, sending only minimum payments, and feeling stressed and losing sleep."
Before things get to that point, can a credit counselor just give consumers a financial "checkup"? "Absolutely, and we encourage it," Barnett says. "A checkup can reveal problems that need to be corrected, such as lack of emergency savings or committing too much of the budget to unsecured debt repayment."
Much like the mom who tells a child, "I'm chilly; you put on a sweater," family members don't always feel the same need for budget counseling. If you're ready to make the call but your partner is balking, call anyway and attend a session alone.
"You certainly can come alone for credit counseling, but as you might imagine, it is helpful if both parties are pulling in the same direction," Cunningham says. "Someone has to be responsible for finding direction and resolving the financial issue. It may be hard to go home and admit that you reached out for help, but the straight-talk conversation is going to happen at some point, and it might as well be now."
Barnett says it's often possible to persuade the other spouse to participate once the initial assessment takes place.
Cunningham points out, "Delaying only makes matters worse, as the financial problems continue to dig deeper and deeper." Don't let self-consciousness keep you from the help you need. Both Cunningham and Barnett say counselors in their programs are trained to be sensitive to people's financial concerns.
According to Barnett, "The counseling is totally confidential and non-judgmental, and our primary mission is to provide education and assistance when necessary."
Cunningham adds, "Even though they counsel approximately five different families or individuals each day, and there's probably no situation they haven't heard, they nonetheless realize that it's the first time that person has shared their story.
The people at your credit union bring you this Web site and other tools, such as credit counseling, to help you make the most of your financial resources. In 2010, the Financial Fitness Challenge will continue to look at ways you can make better financial habits no matter what condition the economy is in.
And each month we'll randomly select five winners to receive $50 Visa gift cards; we'll choose each month's winners only from that month's entries, so enter often. Remember to register for the Financial Fitness Challenge.
Susan Tiffany, CCUFC
Home & Family Finance® Resource Center
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