SeminoleChronicle.com
January 17, 2013


Beef up your finances with advice from local experts on how to stay in control
By Jessica J. Saggio

Just like a giant, heaping, pile of laundry on the bedroom floor, managing finances is something we know we have to do, but eh - maybe later.

Sure, the rent is due and the bills have to be paid, but do we organize much more than that? The idea of numbers, spreadsheets and budgets can be overwhelming, but with a little direction from local finance experts, it's one lasso worth throwing out and reeling in.

Rounding up the finances and getting them straightened out is an easy thing to let go, but as the new year offers a fresh start, it may be time to whip out the old spreadsheets and budget - or for some, scrounge up the pennies in the couch and open a bank account for the first time.

But where does one begin?

Kevin Boyle, branch manager of the Oviedo Fairwinds Credit Union, said it all starts with setting small goals. Perhaps just coming up with a budget for a week or for a month is enough. Whatever it is, start small and let yourself feel the success of controlling your finances, no matter how small in nature.

"Set very small goals ... [such as] I want to make sure in the month of January, we're successful. I don't want to budget for the rest of the year because a lot of times you throw a budget out to people and it doesn't work, but if you throw out little opportunities for success, then you feel like people want to budget more," he said.

A way to start small, he said, is to simply begin writing down your transactions. Grab a piece of paper and a pen, and just start keeping track. While it may sound old school, it's the best route to getting your finances on the right track and aligning yourself for something he calls "financial freedom."

"Nothing replaces a pen and a paper and knowing what you've spent. Nothing," he said.

Just by writing these things down, you'll not only start to pay attention to how you're spending your money, but also what you're spending it on. Knowing where your money is going is the first step in identifying where you can make change, said Terri Walsh, Seminole State College accounting program manager and CPA.

"You should look at what you spent. However you get your ins and outs of your checking account, you should probably look at what you spend your money on," she said. "People tend to know their revenue; they know exactly how much they make, they know their raises, they know that. They don't tend to know or exactly see where the cash is going out for. If they can see they're spending more on a particular category, they need to know why."

While online banking may offer some an out for the old-fashioned method of reconciling a checkbook, she said, banks still make mistakes and it's important to keep track.

"People don't reconcile their bank statements anymore, and that's a problem ... now because of online banking, it makes us think we don't have to do that," Walsh said. "You have to review your statements because there are mistakes that banks make and we make."

Walsh said that after keeping track of your spending habits, you can begin the process of making a budget. First, take note of your revenue. Then, group your expenses into two categories: fixed and variable. Fixed expenses are those that are the same month to month (rent, car payments, etc.), variable expenses are those that vary month to month (groceries, gas, etc.). You can also group discretionary expenses like gym memberships or a Netflix account into a category. Discretionary items are things you spend your money on, and may be fixed, but that you can discontinue because they aren't committed. Once you've done this, you can determine what you must keep the same (fixed) and what you have some control over.

"Somebody should categorize first by description, what it actually is. The coffee binges at Starbucks versus a mortgage payment. And then they should label what those costs are. Are they variable or are they fixed?" she said. "If your costs are going too high and you don't have the revenue to sustain it, you have to look into those known fixed costs that aren't committed, aren't required. They're discretionary."

Group these together on a spreadsheet and set goals for each category. Fixed costs are already set, but changes can be made to variable items like grocery bills, restaurant tabs and leisure activities.

Walsh and Boyle agreed that budgets do not have to be long term. Whether you choose to do things weekly or monthly, just setting aside time for it is what will make an impact.

"I'll meet people who have a system of physical fitness and exercising and they are religious about it ... your finances are the same way," Walsh said. "Just set aside a time to basically make a date with your finances. Just like you do with your health."

Once you're on track with a budget, Boyle said, you should look into what kind of fees you're paying. Whether it's a high interest rate on a car loan or ridiculous requirements on a checking account, start to ask questions.

"Make sure you're not paying more than you need to in certain areas. There are a lot of people that when they're trying to set their budget, they're paying way more for their car loan than they should, they're paying way more for their mortgage than they should, they're paying way more fees than they should," he said. "So it's very free to come into a credit union and ask questions. Say, 'This is my situation, can you help me save money?'"

Bankers are trained to help you apply for lower interest rates and potentially tweak your accounts so that they cost you less in the long run, he said, and a lot of the time, all you have to do is ask.

As for being physically organized, Walsh said that it's important you create a filing system. Make sure you save all your filed taxes for as long as you can.

Bonnie Miller, a professional organizer and owner of Utterly Organized, said that she tells her clients to keep tax records for seven years.

"To get someone organized ... is to have files for your financial life. For instance, sometimes people don't even know what they have. Like their checking account, their savings account, a retirement account, an investment account, a credit card account. So there should be a file for each of those items," Walsh said. "If you already have one, then you need to clean it up. You need to throw out your bills and receipts that you don't need anymore."

Having a filing system will make it easier to reference what you need and keep budgets, bills and banking information in one place. Walsh said she keeps all of her records together along with a calculator and pen, so when it's time to go over her budgets, everything is in one place.

Getting organized financially may be tricky for some, but it all just starts with a little motivation, asking a few questions and diving right into it, Boyle said. Start small, make a budget and with each passing success, you'll be a step closer to "financial freedom."