Colorado Springs Military Newspaper Group

Schriever Sentinel

Reduce debt with focused approach

By Jennifer Thibault

50th Space Wing Public Affairs

Editor’s Note: This is the fourth and final article in a series aimed at helping Schriever personnel succeed with their popular New Year’s resolutions.

This series has taken a look at some of the most popularly made New Year’s resolutions, including improving one’s fitness, quitting smoking and eating healthier. The focus of this final article in the series may be more popular this year with the slumping economy.

Television ads, radio beepers and a variety of paid spokespersons tout the path to financial freedom as something that is easy to achieve, if you use their program. Yet many are making this New Year’s resolution each year.

“Financial stress affects [more than] 75 percent of Americans,” said Christina Ruetz, Community Readiness Consultant with the Schriever Airman & Family Readiness Center.

A common mistake people make when it comes to their finances is failing to plan ahead, specifically for emergencies.

“It is recommended that people have three to six months living expenses in an ‘emergency account’ at all times. If that is too much, people should strive for at least $1,000,” said Ms. Ruetz.

With little to no savings, when an unexpected expense or emergency occurs, the majority turn to credit just to survive. This tactic has led many to be overwhelmed with credit card debt.

Members who develop a strategy can learn to stop this cycle.

“Always focus on paying down high interest rate balances first. Powerpay.org is a free credit management tool Web site where individuals can log on; insert their debts, balances, and interest rates. The tool automatically creates the best way to pay off debt focusing on high interest debt. Once credit cards are paid down then you can focus on other debts such as student or vehicle loans,” said Ms. Ruetz.

This approach will help with debt already incurred, but the key to minimizing debt requires a change in how people look at their finances.

Members need to create a manageable budget, according to Ms. Ruetz. She recommends that members keep a money journal, where they write down every expense. Not only will this hold members accountable for their spending it will show them where they can cut costs.

“Look at ways to save money; consider cutting back on cable or get rid of a land-line phone. Look into refinancing your home or vehicle or other options to save money to pay down debt faster,” she said.

As with many other New Year’s resolutions, setting goals can help members stay focused on reducing their debt.

“Always have ‘SMART’ goals. Your goals should be specific, measurable, attainable, relevant and have a time frame,” said Ms. Ruetz. “A good example is, ‘I will pay off my high interest credit card by this July, paying $210 by allotment every month.’”

Specific goals come with specific actions so members will know exactly what they need to do to make progress.

“Goals are motivators. They provide focus and direction. Financially, goals help us use the resources we have to get the things we want,” according to Ann Henderson, Utah State University Extension Educator.

For many if that action happens automatically, the process works even better.

“Make savings and paying down debt automatic. If you have an allotment or automatic transfer of funds, you don’t even think about it and you won’t be as tempted to spend the money if it’s not in your checking account,” said Ms. Ruetz.

Once a budget is created there is more to do, as expenses can change or fluctuate monthly.

“I recommend that individuals look at their budget every month, not only to reconcile their existing budget to see if they are meeting their goals but also to project for the next month’s expenses,” she said.

Generating a support group is another repeat from previous articles on sticking to New Year’s resolutions.

“Tell someone else what you are doing and ask for their support,” said Ms. Henderson.

Finances require consistent focus as is obvious here but the rewards are worth it.

“If we can take small steps today they will add up to big progress down the road. This in turn will relieve stress and allow members and families to focus on more important priorities in their lives,” said Ms. Ruetz.

For a more personal look at how individuals can reduce their debt and improve their financial health, the A&FRC has a full-time personal finance manager dedicated to working with individuals and families to address their financial needs and concerns. The center also offers monthly financial classes on various topics. For more information on either, contact the A&FRC at 567-3920.

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