Pay Down Debt, Plan for Success

Financial adviser offers tips to build wealth, pursue dreams

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Hinson

Grappling with excessive debt or poor money management skills is no easy task. As the economy continues to contract, credit card companies lowering credit limits, and job security tenuous, keeping track of your money and wealth is paramount.

Here, David Hinson, founder of Wealth Management Network, a wealth management consulting firm, offers tips on how to get into financial shape. A financial adviser for nearly 20 years, Hinson’s areas of expertise include financial planning and asset protection. If you’re looking to learn more about handling personal finance matters, submit any questions in the comments section below. Hinson will be answering them directly.

Also, be sure to check out our Financial Fitness Checklist for a step-by-step guide on what you can do to boost your credit, savings, and investments.

BlackEnterprise.com: What’s the best strategy for developing a realistic budget that someone can actually follow?

David Hinson: The best way to start developing a budget is to write down — preferably in an [Microsoft] Excel spreadsheet — all your daily and monthly expenses. This will provide a clear picture of where you are today. Then, set a savings/lifestyle goal. For example, I want to buy my own home by age 35, and I will have to save $15,000 for the next three years to get it. Implant that saving goal into your monthly budget as the amount that you agree with yourself to save. Make it easy on yourself by opening a brokerage account (online, at your bank, or with your adviser) and have money automatically moved to that account every month or pay period.

What financial goals should people be making amid the current economic downturn?

Financial goals are not based upon where you are but where you want to go. Dream a big dream and let that be your guide. Often people will say “be realistic.” Every goal is realistic in time!

I recommend:

Saving six to eight months of expenses

Keeping at least $3,000 in cash in a secured place in your home in case of extreme emergency

Pay off 50% of outstanding credit card balances in the next six months

Reduce spending by 25%

Delay big-ticket purchases until you can pay for them with cash. That includes cars, electronics, appliances, clothes, etc.

Why is it important that financial goals be intertwined with life goals?

Because our ability to achieve our life goals are in whole or in part a reflection of our ability to achieve our financial goals. In the absence of considering the power of financial goals, we will not be able to achieve our life goals. In other words, every life goal has by definition a financial component.
With the stock market in flux, retirement savings have taken huge hits. What are some ways people can protect their investments?

The best way to protect your investment is not to panic and make unwise decisions. Be clear on your time horizon and how much you need to achieve your goals. Take a long-term view and continue to save

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  • Carl E. Carey

    I found this post very helpful. It gave me a place to start, something to think about. I’m a little older (42) and should have my things in order but the truth of the matter is, I’m just not organized enough. I make decent money but still have nothing to show for it. It come in and goes out. I even went as far as dating women I thought were good with money but found they were good with there money but not with mine. At anyrate, I’m going to subcribe to your magazine with hopes of getting more information to get me on track.
    Thanks, Carl

  • Diane

    I’m in the same situation as Carl. Do you think that Debt Settlement would help if you are overwhelmed with Credit Card payments and doctor bills?

  • Joanna

    How do you start to reduce debt when your net income in less than you monthly expenses?

  • markeith mitchell

    I’am running a small Trucking company.With the way the economy going its hard to save and pay the bills. What are some way to stay above water,I cannot make money to pay other and myself. I need some help.

  • Lamar M

    I’m a 37 y/o male with pretty much the same issues. My income to debit dosen’t allow me much leway in regards to being able to save. I have 2 car notes and a mortgage to flip every month. Any advice, please I’m all ears,,,

  • Alexis M

    I kind of have not much debt compare to must people/ but i want to start now i,m still young and i have time to get back in track financially. my total debts are no more than $3800 dollars and i have a $4500 net income but its just hard for me to save money , i just started putting away 10% of my income , and plan to get 401k . anybody has a good sugestion?

    by the way i,m 33 !

  • Pamela Cartwright

    About 2-3 years ago I was debt free.
    I am single parent, divorcee, 12 yr old and 23 yr old graduate from college past May.
    I have 2 credit cards I want to get rid off, pay off. There are other debts. I read your info and resolutions, some of which I have incorporated in my plan to pay down debt but extremely difficult. I am now 53. Trying to restablish good credit and would like to buy a home. Because of my age, is it legal that any banking institution or mortgage lender could deny me credit?

    Please advise.

    Thank you,

    Pamela

  • Tiarra Jackson

    I am a 24 year old college graduate who’s goal is to become financially savy in 2009! I have many medical bills, my student loans, and some credit cards, however those accounts have been closed but is counted as negative accounts on my report. As of now, I have a low credit score, but I want to buy my first home soon. What are the first steps that I should take to achieve financial stability?

  • Lynn

    Hello
    I had a lot of debt, now I’m down to two credit cards (CC). As it stated in the steps above. I paid myself first and not even as much as 5% while still paying min.on CC. I’d tuck away $20. which is not much, but I was able to save $1,000. That started my emergency fund. I added more money to that amount until (1,500) I felt comfortable to tansfer $1,000 to my CC. Leaving w/$500 to continue to add on. Just take small steps. You will get there. I hope this helps.
    Lynn

  • clayton

    Years ago I opened a store credit card to establish a credit history. Being new to me I maxed it out. Holiday time, girlfriend, and family you know. It took a number of months but I paid it off. Being acquired by Chase I updated my mailing preferences. No solicitation, no third party, etc. With a zero balance I recieved no mailings. I inquired by phone Jan 09 and to my surprise zero balance and a closed account. Apr 07 was the last activity. Are credit card issuers responsible for a mailed notice of cancelation? I had no payment due,no solicitations, no activity, and now no card. I was told by the supervisor they could not re open the account. “i could always re-apply” and “the way the account was closed will not affect my credit.” No thanks I’m considering closing my Washington Mutual Chase accounts and going to a credit union.

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    I learned a lot good points from this piece and will definitely save it in my favoritse. Thanks for the effort you took to explain this subject so deeply. I look forward to future posts.