Stacy Livingstone-Hoyte, AFC®, is an experienced Financial Counselor who has worked extensively with U.S. Armed Forces members and families. She is a recent volunteer blogger for Navynavstress.com, but contributed previously while serving at the Fleet and Family Support Center, Millington, Tenn. Prior to government service, she worked as a Financial Services Representative for several brokerage and insurance firms. As a military spouse, Ms. Livingstone-Hoyte knows firsthand of the financial challenges and opportunities that face military families across the globe. To that end, she embraces a steadfast belief that financial success can be simple, just not easy.
With the recent passing of tax season and promise of warmer weather underway, now is a great time to revisit your overall finances, develop a plan to use a possible tax return and spring into healthier spending and saving habits. With the countless books and articles available to inform, persuade and advise consumers about best practices for money management, charting a clear course to your financial future can end up being confusing. In this two-part series, we’ll take a broader approach to exploring how personal money habits and attitudes can influence the ways we experience and define financial readiness. Here are the first three steps to help you define success without the stress:
1. Know your current financial position. You simply cannot progress to the next level of success without first knowing and understanding what your current financial position is and what it means. Whether favorable or not, understanding this essential point ensures that you understand the past and are motivated for the future. Start by conducting a comprehensive budget analysis with items such as net worth, income and expenses (current and projected), household debt ratios, interest rates paid, etc. From there, adjusting your spending habits to what you earn (not above) is equally important. There are a number of free resources, particularly in the military community, that will help in this analysis.
2. Communication is key. Always. A financial plan is only as good as the effort given to follow it, so acceptance and trust from both you and your spouse is a must in making money decisions. This is absolutely critical to the success of your financial endeavors, so if you can’t agree on every detail, especially spending habits, consider a compromise to win over your reluctant financial partner.
3. Make a plan to eliminate consumer debt. One of the greatest threats to financial independence is debt in the form of credit cards, personal loans, vehicle loans, student loans and other interest-carrying instruments. Having a realistic plan to systematically erase each line item will truly be the platform for success, and you can start this by limiting blind credit card swipes and using cash only to cover simple transactions. You can also explore tools specifically-designed to help you create a repayment strategy based on available income, interest rates, pay-back period and comfort level. Although some amount of debt is unavoidable for most Americans, such as a mortgage, the general rule of thumb is to ensure that any consumer debt will contribute to your growing net worth. Once you’ve gotten a handle on your current financial situation, talk things out with your financial partner and be sure to establish a plan together, then come back for part two of our series to help you prepare for the future – the unexpected and the inevitable!