The Blog Of TL Wall Accounting

Archive for July, 2015

Work Towards Now, Plan For The Future

A couple of years ago we posted an article here titled Setting Financial Goals. The, at the end of 2014, we posted another article asking people if they were going to set financial goals for the new year.

Creative Commons License Sheila Sund via Compfight

Like almost everyone else, we like to stress the reality of knowing how much money you’re making, being able to pay your bills, putting money away for a rainy day and still being able to have a fun life. Yet, we’re not sure that there’s enough emphasis put on the “now”, the more immediate needs of life.

Talking about the ability to pay one’s bills is pretty immediate, but maybe not immediate enough. For most bills, you’ll get them and have at least 21 days before there’s an expectation of payment. If you don’t have enough money and you know the bill is coming, that’s an extreme amount of pressure to deal with. If it’s multiple bills… way more pressure.

An article we wrote 3 years ago talked about whether it was better to pay off bills or save for retirement. Our conclusion was that paying off bills with higher interest rates is the wisest move, which is something one has to address while still working, because carrying debt into retirement will drain your limited income faster. Thus, you should be working towards a “now” mindset instead of thinking only of long term goals.

There was also an article on another blog on financial issues that gave a plan where, if you started young enough, you could have significant savings when you retire by learning how to put money away monthly, increasing it by $10 every year from age 20 to 40, then continuing that same investment amount for the final 25 years.

It’s a good plan but it still means that one has to think more of “now” than later. As a general question, how many of you are ready to start investing $100 a month into a long term savings plan and still pay all your bills and have a regular life? Actually, hopefully most of you do, but it’s something you might not think you’re ready for, which means a mindset change is needed into understanding the “now”.

What if you really don’t have that $100? Scary to think about isn’t it? This is why we talked about finding ways to increase income a couple of years ago, as well as talk about budgeting all the time. It’s also why we often mention working with an accountant if you need help in figuring things out; it never hurts to work with professionals on your financial goals.

Working towards “now” involves these things:

* having a significant enough income now
* paying down your most significant debt now
* budgeting what you have now
* being comfortable now

Think about it, and if you have anything more to add, let us know.

Why The Greece Story Is An Important Lesson For All Of Us

By now you have probably heard about the problems with the country of Greece (stated for our New York readers since there’s a Greece about 90 minutes away from Syracuse). In essence, they’re close to defaulting on debt they can’t pay because of years of spending money they didn’t have and never adopting any austerity principles to help the country take care of itself.

Greece might end up lucky in some way. It’s looking like, after a lot of chest thumping, they’re about to accept a deal they were actually offered months ago. This will include having to set up ways to generate more money (increase taxes) and reduce spending (budget) drastically.

Does this sound familiar? Every day, people spend more money than they make. They don’t know it because they ignore it, the “I’d rather not know” syndrome. That’s understandable because it’s scary. Unfortunately, one can’t hide from the eventual realization that all isn’t rosy.

Accountants can’t help anyone who doesn’t ask for it. Sometimes, if things are critical enough, even an accountant might not be able to get you out of trouble. In those cases you might have to do some things you don’t want to do.

Maybe it’s Consumer Credit Counseling, which many communities around the country have. They’re wonderful at what they do, but they’re not the answer for everyone.

Maybe you can get a consolidation loan of some kind, pulling all your bills together and getting them paid off so you only have to pay the bank. That might work… unless you don’t start controlling your spending, putting together a budget so you can pay down your debt and still live your life comfortably.

Then again, you might not qualify for that either, in which case you might have to do the ultimate sacrifice – bankruptcy. The problems with that are many, including having a negative action on your credit report for 7 years. However, what’s even worse is that there are debts that aren’t excluded just because you filed bankruptcy. If you owe on a college loan or back taxes… you still have to figure out how to deal with those things.

Our position has always been that it’s better to know where you stand so you can address it. If you’re not in deep trouble, we can help. If you’re in minor trouble we might be able to help. If you’re in major trouble, we can offer you guidance.

Addressing potential financial issues might be scary, but the truth is that the sooner you know, the sooner you’ll gain peace and perspective and can be on the road to serenity.