Making repairs, whether to your plumbing or your finances, requires the right tool. Giving up fancy coffee won’t dig you out of a big hole.
When your finances are out of whack, it always seems easier to make adjustments to the little things rather than confront the big expenditures and the big changes that may be required.
You can save the change in your pocket nightly or buy your meat in bulk and save meaningful, but modest amounts of money. Living below your means means you have a cushion and an opportunity for savings.
But some situations require a bigger overhaul. I can’t tell you how many families I meet with in the course of a bankruptcy practice who arrive adamant that keeping the house is the most important thing, or that maintaining a credit score is paramount.
Examine their balance sheet and you see they have house payments that eat up half of their take home pay, or credit card debt that they can’t pay off in this life or the next. Often they haven’t confronted the sum of their debt or the premium they are paying for a house until we discuss it.
When you make a blue print for improving your financial health, it’s important to get a grip on how big the project is and to select the right tool to accomplish it. Getting healthy may require you consider paying less for housing, giving up the gas guzzler, or private school for the kids. Bankruptcy and a fresh start may be the wisest financial decision.
Each of those choices may seem painful, but ask yourself: how comfortable is it to be overextended?
It takes courage and energy to make big changes to get your finances back in balance, but keeping on with the same old, same old is not likely to yield a solution.
Image courtesy of PutnamEco.
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