But what happens when income changes occur; due to a disability,layoff, or another issue beyond control?
Is bankruptcy the answer? Is accepting a horrible credit report the rest of your life the solution? What is the responsible solution to take when there is no savings nor support from family and friends to assist with income changes?
Importance of Managing Money teaches one of the biggest steps toward leading an independent life is financial independence. This means taking control of your money - both the money that you earn and the money that you spend. You do need to know how to manage the money you have and make it work for you. This website offers additional tips to help improve finances using a steady income.
Consumer.ftc.gov teaches Credit Repair: How to Help Yourself. There are great tips on this website to managing credit repair and legit resources to help a credit report that takes a hit during an income change.
When primary income decreases below a consistent comfort of living; what can a person really do? What help is available?
Most government organizations do have limitations to assist those who suffer income changes. They base income on the prior year of Federal Adjusted Income.For most who work, it is nearly impossible to get government help.
Nonprofit organizations can assist; but be careful, for the assets of vehicles, value of housing, and income proof of decrease may have to be provided before they assist.
So what can a person do if they have no savings, no 401K, no credit or no means to pay bills.
My methods are not conventional. But with money, it's not conventional information that pays the bills. We can't solve a problem with prevention when the problem already exists. It is about being real and using facts of math to control expenses with the income that pays these expenses that get the job done.
Many would disagree with these methods and examples. But do they pay our bills? No. Do they manage our credit reports? No. Do they have an income decrease to deal with? No. Some of the best advice I ever received was unconventional methods. Applying new skills to decrease problems and increase solutions is the only way to live and survive life. Here are some suggestions.
#1 - Create a primary "bill" list.
- Housing (rent/lease/mortgage) payments
- Electric
- Water/Sewage
- Trash
- Transportation (payments/insurances)
#2 - Create a primary "necessity" list.
Toilet paper
Dish-washing liquid
Washing Powders/Dryer Sheets
Soap/Shampoo/Conditioner
Toothpaste/Deodorant
Basic necessities to survive.
#3. Create a "secondary/expandable" list.
- Credit Cards
- Credit Accounts
- Satellite/Cable
- Internet
- Cell/Landline Phone Plans
- Recreational - restaurants, clubs, etc.
#4 - Create a worst case plan of income loss and methods to get in front of the income change. Contact companies to inquire about budget plans, decreased payment plans, inform of income change, and discuss methods of remedy to restore income. Most companies will work with you favorably, but you must contact them.
Look for "out of the box" ways to decrease electric costs. Example: Remove extra light bulbs from ceiling fixtures and unplug lamps. (One light bulb in a room is better than living in the dark with no electricity and having 10 light bulbs in a room.)
Look for "out of the box" ways to decrease water usage when paying per gallon. Example: Decrease shower times to 10-15 minutes. (Having a decreased shower time is better than having no water to shower with at all.)
Buy only primary necessities. Be realistic. If you were camping or living in the woods; what would you need to "survive?" This is all a person needs to buy to "survive" through a drastic income change too.
Create a plan to make decreased payment arrangements, to keep, to temporarily suspend or let go of items on the "secondary/expandable" list.
Recreational and entertainment luxuries are the least important items to "retain" when suffering an income loss.
- Credit can be rebuilt.
- Credit companies will work with income loss when notified.
- Learn new "free" hobbies when "surviving" an income loss is more important than keeping things that cannot be afforded.
Many Americans put their financial priorities of wants before needs. Many spend money when income times are good and stable. Very few reach out for help until it is too late when income decreases through sudden changes.
Americans should make a 15 minute commitment daily to learn about how to control money and make wise choices and investments. Time investment of learning about money and applying new skills to money will increase money.
When income changes occur drastically; Americans should know what to do. How to downsize. How to put income "survival" before "want".
Bankruptcy is the common word and tool used when drastic income changes occur. But how many bankruptcies could be prevented if Americans knew how to manage steady income and how to survive on basic necessities and primary bills?
Our children learn about money from the choices we make and how we live by example. If we don't appreciate our incomes that suddenly change than we won't appreciate incomes that are steady either.
