NDSU Extension Service - Ramsey County


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A Financial Make-Over

A Financial Make-Over


          TV reality shows that include major remodeling changes to a home, high-priced shopping trips for a new wardrobe and plastic surgery for a body makeover are currently very popular. Some financial experts are now applying the same concept of extreme changes to money management.  If you would like to have your own home version of a TV show, see how these financial makeovers steps apply to you.

            Find the sources and outlets of your money.  Many of the people who seek help from debt counselors have no concept of how much money is coming in, going out and where it is going.  Start with listing income on one page and expenses on another right down to the penny. This is no time to say “Our phone bill is about ___”, or “I think we spend ___”.  Be accurate and realistic. If your income is based on commission or sales, are you spending for the next big commission check before it has arrived?   If your expenses are larger than your income, you are a prime candidate for a financial makeover.

          Track your spending.  Large bills, such as home mortgages, can be budget breakers, but it is often the accumulation of small spending patterns over the years that has gotten us into a financial quagmire.  As a separate exercise, keep a list of everything you spend during a whole month.  And yes, again, it needs to be every penny, every dollar bill.  Not only will it show you where your money really goes, but it will also help you spot ways of reducing your outgoings.

          Stop spending for one pay period.  Do pay your power and light bill and do make that student loan payment but call a moratorium on any discretionary spending such as no new shoes, no dinners out, etc.  How does your checking account look at the end of that time period?  Better?  How about your credit card balance? Lower?

          Change __________.  Somewhere between tallying your income, tracking your spending and not spending, you will find one or more categories of expenses that are marked by a large, red flag. It might be your housing expenses, it might be car insurance for the five vehicles your family drives, it might be the category of entertainment.  Look at that category; take a deep breath and change.  Family financial experts have recently been included more recommendations of selling vehicles, downsizing to a smaller home or apartment, etc in their advice to families in financial trouble.  These are the type of changes that are definitely life-changing and have major impact on a budget.  They are a far cry from the simple advice of remembering to use coupons when grocery shopping.  This is the type of change that requires gathering the family members and insuring that all are ready to buy into the new change and why it is happening. 

          Make the change doable.  If your needed change is to reduce credit card debt, are you able to cut-up or lock away all existing credit cards, until each account is paid off and then close it?   If the needed change is in entertainment, can you drop club memberships?  What steps do you need to take to be certain the change happens?

          For more info on financial makeovers, check out the eXtension web site at - http://www.extension.org/personal+finance

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