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Learn to live on your income

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Impulse buying and consumer debt must be watched

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Your expenditures hold the key to how well you do when dollars are scarce. If your family does not follow a spending plan, this is the time to start. Family input is essential, so is being both realistic and flexible. Here are some suggestions:

Before making purchases above a certain dollar amount, discuss the potential purchase with other family members.

Create an emergency-spending plan by identifying what you absolutely would have to have to survive. Then add what you would need to be comfortable, prioritizing items as you add them to the list. Thinking through the emergency plan will help you prioritize your spending and see where you can cut back.

Control impulse buying. Make a shopping list and weigh the importance of each item. Before buying anything, ask yourself: “Is this purchase absolutely necessary? Can we live without it for now?” Stop buying on credit.

The elderly who as a group live mostly on fixed income and as the figures below show are turning to credit cards more than younger age groups to finance day to day expenses.

Credit card debt is growing most quickly for Americans 65 and older. According to USA Today, July 28, their average credit card debt is  $10,235, up 26 percent from 2005. Average debt for ages 18-34 is $9,111; ages 35-49 is $10,514; and ages 50-64 is $9,342.

Practice effective consumer skills. Comparison shop. Examine the specials. Use coupons. Go to price-competitive stores. Look for cash discounts. Shop at thrift or discount stores. Repair rather than replace. Eliminate waste.

Brainstorm ways to have fun without spending money ... have a pizza and movie night at home, pack a picnic and spend a day at the park, take advantage of free and low-cost community events such as any free movie nights at the Hodgenville Civic Center or check out free movies from the public library, find a walking partner and explore the free walking trails at the parks in the county.

Do not drop insurance coverage. The need for insurance is magnified by the stress you may be experiencing. However, if you have several policies, make sure that you are not paying for duplicate coverage.

Do not cancel essential medical and dental appointments. Canceling such appointments may prove to be more costly long term. Some medical and dental professionals may be willing to negotiate payment schedules if details are worked out in advance.

Bankruptcy is not a good option. Financial institutions are also affected by the economy, and as the funds they have available for loans become more restricted, a good credit report for those wanting to borrow money becomes more essential. A bankruptcy will lower your credit rating for years, making it more difficult for you to buy essentials like a home or a car.

Emergency savings are essential. Those attempting to get out of debt may fail to realize that they should have emergency funds available. These funds may help ensure that a debt repayment plan does not have to be postponed for unexpected household expenses or other emergency expenditures.

Reduce consumer debt. Don’t ignore your monthly payments on outstanding loans. Make a list of all your debts. Include in that list each debt’s annual percentage rate, the specific terms of the contract, and any finance charges.

Analyze your debt payment options by utilizing a program such as the online program PowerPay (powerpay.org). Determine how much you owe to each creditor, then print out a plan for making power payments until you are completely out of debt. Continue making payments to build up your emergency savings to a minimum of three months of expenses.

More info on this topic can be found at a national Extension supported Web site- www.extension.org/pages/When_Prices_Rise:_Living_on_Your_Income. If you have a question on any topics listed on this Extension Web site, you can click on the Ask an Expert link. This will get you non-biased, research based feedback from a national specialist on your question or topic.