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Fiscal Fitness 101

classThe holiday season has come to an end, the time for presents and overindulgence has passed, but all is not lost! The New Year is here, and with it comes the chance for reevaluating and re-energizing your life…and that includes your financial situation. While it may not be your favorite way to spend a few hours, nothing is more important than getting your finances in order, according to financial experts. So, New Year, new you and new (and improved!) financial situation.“My first piece of advice for a person is to turn off the TV and the media and don’t listen to all that noise about the global economy,” says Bennett Whitlock, managing director, Whitlock & Associates at Ameriprise Financial Services, Inc. “It is important to look at your own personal finances.” Located in Lake Ridge, Whitlock and his team of advisors work with both businesses and individuals to develop their financial plans. For too many of us these days, it seems that money management is something to be considered when we get around to it, if at all. After we finish running around doing everything we have scheduled for ourselves and our families, we may just find the time to look at the family budget. But the truth is, unless we manage our finances properly, we have very little chance of reaching our goals and  having the happy future we want for ourselves. “My number-one piece of advice for people today is the need to plan, set goals and set out a budget for themselves,” says Ceda Putiyon, owner of CAP Accounting, LLC, in Dale City. “Look at the budget on a quarterly as well as monthly basis…because once you lose control, it’s very hard to get it back under control again.” This is the advice that Steven Thomas and his wife needed to hear a number of years ago. “Instead of budgeting and saving for things we wanted, we’d put it on a credit card,” says Thomas. “We had a written budget, but weren’t that diligent about sticking to it. The economy was doing well, and our incomes were steadily increasing, so things like having an ‘emergency fund’ or a strict budget weren’t our first priority. We were making our minimum payments, and trying to pay down ‘whenever we have some extra money.’ The funny thing is, there rarely seemed to be any extra money, and the balances kept going up. It happened over time, a little bit at a time, and we had a much different attitude regarding debt then.” Everyday Finances for Everyday People Of course, every financial situation is different. For those people living from paycheck to paycheck Whitlock recommends “setting up a savings plan. While carving out that $25 to $50 may be difficult, without it a person is one step away from disaster. The flip side is that without some sort of emergency fund, it is difficult to take advantage of any opportunity that may come along.” For those who have unfortunately lost their jobs, Whitlock says that while he is “not an advocate of using 401(k) plans, there are ways to use these funds without paying the 10 percent Internal Revenue Service penalty on top of the normal income tax payment that has to be made.” Talk to a financial expert to ensure this is done legally. For the rest of the people out there, living within your means is extremely important. Just knowing that your cash inflow is greater than your cash outflow can make for a stress-free life. But how can we get our finances under control in a world where instant gratification is the norm? There are numerous ways to do this, and one of the key components is to pay cash for your purchases as you make them. It is important to save for what you want rather than buying it now and paying for it later, with interest added on. Try to keep your credit card spending to a minimum by using cash whenever possible. According to the website www.creditcards.com, the average credit card debt per household in the U.S. is $15,799. Paying the minimum balance off your credit card every month can mean thousands of dollars in interest payments being paid over time. Many credit card companies now have an online comparison showing how long and how much a person would pay when simply paying the minimum payment each month, in contrast to paying a little bit more. Take heed and try to exceed the minimum required payment each month. It is estimated that nearly one-third of Americans say rising food and gas prices are making it difficult to save money. In fact, according to the U.S. Department of Agriculture, the cost of groceries is expected to increase by two to three percent in 2012, and this follows a four to five percent increase last year. Some ways to help the family budget stay in the green are to use store coupons and buy store brands when you do your shopping. Coupon cutting has grown in popularity these days as people are becoming more financially aware. Remember, using a store coupon means just that little bit extra in your pocket, and many grocery chains double coupons up to a certain amount. Look for websites such as www.thegrocerygame.com  and  www.couponsherpa.com  where you can find printable coupons. Some banks offer rewards for using your check card to pay for groceries as well as other purchases. is can be a great way to build up points and eventually receive a gift card, or even a gift of your choice. Some credit card companies offer this benefit as well, but make sure the amount is paid off monthly so you don’t end up paying interest on your groceries! Waiting for department store sales is another way to help keep spending down. Tips include buying winter or summer clothes at the very end of the season, when stores are eager to unload merchandise. Children outgrow clothes quickly, so perhaps trading clothes with families in your neighborhood will help keep the costs down too. While most people agree that food made from scratch tastes the best, it can be a nice treat for the entire family to dine at a local restaurant once in a while. One piece of advice for eating out while maintaining a budget includes—you guessed it!—using restaurant coupons. Looking through coupons received in the mail or via email can help guide your decision of where you want to eat.

The Thomas family eventually took a class at their church called “Dave Ramsey’s Financial Peace University.”

“Dave Ramsey teaches a common debt reduction strategy, called the ‘Debt Snowball,’ but this is part of his ‘Seven Baby-Steps to Financial Peace,’” explains Thomas. “‘Baby Step 1’ is to quickly save a $1,000 emergency fund. This is to cover those little emergencies, like car repairs, that we used to put on a credit card, without a second thought. Baby Step 2 is to pay off all debt, except your mortgage, using the ‘debt snowball.’

 Id love to say its easy to getout of debt.

Its not.”

“First thing we did was to get rid of our credit cards, and did a detailed written budget. Then we started paying off our debts, starting with the smallest balance, while making minimum payments on the rest. As we paid off a debt, we’d apply that payment to the next, until they were essentially gone. Credit cards should be paid off first, as they typically have the highest interest rates. While we were doing this, we were ‘all cash’ for things like food, clothing, and entertainment. If we needed or wanted something, it went into the budget and we saved for it. We became very disciplined regarding our budget, which made us very mindful of spending,” says Thomas. Thomas and his wife are now almost debt free and are working hard towards being completely out of debt. “I’d love to say it’s easy to get out of debt. It’s not. It is simple, however. Have a written budget. Spend less than your income, and use the extra to pay off debt. Avoid new debt. It takes time, but if you keep at it and keep your goal in mind, you will get there. The hardest part is learning to say no to yourself.” Personal Financial Planning Services From banks to financial planners to accounting firms, there are many sources throughout Prince William County that can assist individuals, families and businesses to develop and manage their budgets and long-term financial plans. To provide the best, most tailored financial advice for customers, Whitlock and Putiyon both stress the first steps of setting goals and setting a budget. For families, the importance may be placed on retirement funding as well as college planning. For businesses, it may be cash flow. Whatever it is, the current situation will be assessed and a roadmap developed to get there. If your needs have more to do with investments and long-term investment planning, financial advisors can determine if a plan needs to be more aggressive or more conservative. “Timeframe comes into play when you are looking at setting money aside (for investing),” says Whitlock. Being able to offer advice on a broad range of financial products and services including mutual funds, certificates of deposit, as well as brokerage services can help people find a path to a secure future. Banks and credit unions offer products to the public that not only help people to save for a rainy day, but also encourage financial education. Henry Funn, manager of Wells Fargo in Woodbridge, says the bank “offers a unique savings product called “Way2Save” that puts $1 in a savings account every time a person uses their check card for a purchase. It helps people save without feeling the pressure of having to consciously save. “A lot of the branches,” he adds, “have licensed personal bankers who have investment qualifications and can have a conversation with you about saving for a rainy day or for retirement. There is the potential to map out a strategy, depending on each client.” Like Whitlock and Putiyon, Funn reiterates the need to gather a complete image of an individual’s or business’s current financial situation before any recommendation can be made. Having the services of both a bank and a credit union available to you can be beneficial simply because many credit unions are not- for-profit and can offer services and products at lower costs. Of course, credit unions are not as open to the public as banks are; rather, you must have some sort of connection to become a member. To encourage saving from a young age, many institutions have accounts that can be opened in a child’s name with a parent acting as a custodian. All that is needed is a Social Security number, the child’s name and date of birth. These types of accounts allow children to come into the bank, deposit their money and watch it grow over time. “This allows relatives to make checks payable to the child come the holidays or birthdays,” says Funn. Your Finances There are numerous financial businesses within the county that can assist you regardless of your fiscal circumstances or goals. “Whether it be a new grad looking for a savings plan, to a family looking to save for college, we can work with them,” notes Whitlock. Knowing yourself and your financial situation is the cornerstone for starting a budget or financial plan. Once you know where you are currently financially and where you want to be in the future, things will become easier to manage. Says Putiyon, “I cannot stress enough the importance of setting goals and setting a budget.” To contact the businesses mentioned in the article, please visit Bennett Whitlock at www.ameripriseadvisors.com/bennett.c.whitlock or CAP Accounting, LLC at www.capva.com. A graduate of American University’s School of Communication, Olivia Overman has written articles for a number of online and print publications. She lives with her husband and son in Woodbridge. Overman can be reached by email at    [email protected]   princewilliamliving.com.

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