Priority list includes talking about finances, building a budget
FARMINGTON HILLS, Mich., Dec. 3, 2013 /PRNewswire-USNewswire/ -- As U.S. Bankruptcy Judge Steven Rhodes announced today that pensions can be cut for City of Detroit retirees, as part of the Chapter 9 bankruptcy, GreenPath Debt Solutions, a Michigan-based, non-profit credit counseling and education organization, reminds pension holders that they need to have a plan in place, in case their monthly income is reduced.
"Many of the City of Detroit retirees rely on their pensions as steady monthly income," said Jane McNamara, GreenPath president and CEO. "It is crucial that retirees start to look at their monthly budget now and talk about possible scenarios where income could be reduced in the future."
McNamara emphasized that anyone who is in a difficult financial situation, not just Detroit pension holders, will benefit from looking at their income and expenses. Some steps to consider:
Have the Talk – Communication is essential, when it comes to personal finance. McNamara said that individuals should sit down today with their spouse and family and have an honest discussion about money. "People have misconceptions about how they should use money in a household," she said. "Some view money as something they should spend freely each month, while others look at money as something that needs to be saved." Retirees need to talk now about what steps they will take today, in case their income is drastically reduced in the future.
Set Up a Budget - Many people think if they have money in their account at the end of the month, they are doing okay. "While this may work in some cases, individuals who may see a drastic cut in their monthly income will need to prepare ahead to make sure their expenses are covered," McNamara said.
A simple way to build a budget is to list all income (pension, part-time work, etc.). Then, list all your major expenses (mortgage, car payment, insurance premiums and utilities, etc.) and subtract from your net income. From there, track other expenses, like groceries, gasoline and credit cards.
Maintain Your Budget – "Years ago, we taught our clients to allot cash each month in an envelope system, where you would put cash in an envelope for a specific expense," said McNamara. "Nowadays, we emphasize that you only spend what has been allotted, and once it's gone, you stop spending." Try to maintain each monthly allotment without borrowing from other "envelopes."
Track your Expenses - Tracking expenses is a key aspect of maintaining the budget that you have created. If you do not track your expenses, there is no way of knowing whether you are staying within the budget you have established. "The most basic tracking method involves writing down all of your expenses in a notebook every day," said McNamara. "Another tracking technique involves saving receipts for purchases and documenting that information in a notebook or on your computer."
Ask for Help – GreenPath Debt Solutions offers free debt counseling and coaching sessions, in-person or over the phone, with no obligation. "We work with hundreds of thousands of people each year in helping them build a budget and action plan to prepare for the future," said McNamara. "We provide impartial advice from an experienced, degreed professional."
For more information, or to schedule a free counseling session, call (800) 747-2898 or log on to www.greenpath.org. GreenPath has 10 office locations in metro Detroit.
About GreenPath Debt Solutions
GreenPath Debt Solutions is a nationwide, non-profit financial organization that assists consumers with credit card debt, housing debt and bankruptcy concerns. Our customized services and attainable solutions have been helping people achieve their financial goals since 1961. Headquartered in Farmington Hills, Michigan, GreenPath operates more than 50 branch offices in 12 states and also delivers licensed services throughout the United States over the Internet and telephone. Log on to www.greenpath.org for more information.
SOURCE GreenPath Debt Solutions