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Chapter 2: Improving Your Relationship with Money
Book I
Taking
Charge
of Your
Finances
Some creditors, though, would rather play hardball and force you into bank-
ruptcy before accepting a lower payment each month. If you have difficult
creditors, contact a credit counseling agency. These agencies have experi-
ence communicating directly with creditors and working out solutions to
debt-repayment problems. If you search online, you'll find a large number
of credit counseling agencies, but we strongly recommend beginning your
search with the National Foundation for Credit Counseling at 1-800-388-2227
or www·nfcc·org for help locating a counseling agency near you. This net-
work of credit counseling agencies is nonprofit and doesn't have a vested
interest in making money off the debt-ridden consumer.
Budgeting for the Future
Does the word budget send chills up your spine? We know it did for us for many
years. But we've had a change of heart on this whole topic of budgets. Now we
realize that budgets allow you to be organized and have some control over
what you spend. They help you to decide how to spend your money, plan
for your future, pay off existing debt, and save a few pennies each month by
reducing wasteful and impulsive purchases. Book 1, Chapter 1 introduces
budgets, and Book 1, Chapter 3 talks a lot more about budgeting, but the fol-
lowing is a refresher on what you will be doing when you start budgeting.
Step 1: Categorize your expenses
When you begin setting up a monthly budget, start with big categories before
breaking down your budget into smaller expense categories. A good list of
basic budget categories to begin with includes the following:
Housing: Mortgage/rent, repairs, property taxes, cleaning supplies,
homeowner's/renter's insurance, utilities, furnishings, décor
Food: Groceries, meals out, pizza delivery, snacks and beverages at work
Transportation: Car payments, insurance, gas, oil, parking, repairs/main-
tenance, public transportation fees
Medical: Insurance, out-of-pocket expenses such as deductibles and
noninsurance-covered medical services, pharmacy, eye care, dental
Clothing: New purchases, dry cleaning, repair
Personal: Cosmetics, haircuts, cleansers
Insurance: Life insurance and any other insurance not covered under
home, transportation, or medical expenses
