By Cindy Bennett Jarboe, William and Mary, Former Fraternity Treasurer
“My family’s financial situation is dire.” “My summer job may not turn out.” “I have to work a lot of hours to pay my college costs so I can’t devote as much time to Kappa.” “I can’t afford to be in a sorority.” These are all comments heard recently from active members.
Alumnae also are feeling the impact as many facing the loss of jobs and health care benefits. The Kappa Kappa Gamma Foundation has seen a significant increase in scholarship and Rose McGill Aid requests while seeing a decline in contributions to meet these needs.
So how can we all survive? First, understand that our economy has survived these situations before, and we will again. Worrying does not help the situation and just makes matters worse by increasing health problems (and therefore healthcare costs).
It’s all about cash flow and budgeting. Yes, it takes discipline to stick to a budget—but it’s worth it.
Prepare a schedule with each month across the top and your income and expenses listed under each month. First, list sources of income and evaluate how you can increase cash flow. For example, your take-home pay—can you increase hours or work overtime? Is your tax withholding correct? If you are getting a large refund this year, it indicates the U.S. Treasury held your money for you and you had too much withheld that you could have used to pay expenses. Consider increasing your exemptions on your W-4 form you filed with your employer to reduce the taxes withheld from your pay.
If your receive funds from another source, such as your parents, make sure you allocate that income over the period it is supposed to cover.
If you have savings, use discipline to only withdraw a minimum amount each month. You need to keep as much of your savings intact for unforeseen emergencies. While interest rates are low, make sure you have your account with a financial institution that pays the highest rate.
On the expense side, look at what you spent last month and list expenses individually. Look at what you are putting on credit cards. If possible, remove all your credit cards, except one that is accepted everywhere, from your wallet. Credit card debt is the most expensive debt. Look on your statement and see what your credit limit is. Going over by just one dollar or being late in the payment by one day costs $35 or more. By only using one credit card, you can better manage your spending. Since it is easy to spend more by using a credit card, use cash whenever possible.
Next, list expenses in priority order. For example, rent or mortgage, insurance, car loan, utilities, other financial commitments such as dues, room and board, and essential food should be listed ahead of restaurants, travel, iTunes and other discretionary spending.
Focus on the essentials and eliminate or reduce discretionary spending. If your cash flow does not even cover your essential payments, contact your bank or insurance broker and explain you would like to work out an extended payment arrangement. Make sure you understand the fees and other costs involved in any refinancing.
Students should work out a payment plan for tuition, dues, room and board. Visit the financial aid office for help.
If you have accumulated credit card debt, make sure you pay at least the minimum payment. Look at utility bills. Are you doing everything you can to keep them as low as possible by turning off lights and monitoring the thermostat? Do you really need a land phone line if you use your cell phone? Are you at the lowest cable and Internet service level of billing? Carpool whenever possible or take mass transportation. Buy the least expensive items in the grocery store such as generics and buy all your groceries for the week at one time so you can see the total amount. Avoid convenience stores with their higher costs and impulse-buy items.
By putting everything in writing, you can see where your money is going. Now for future months, list your budgeted amounts and you will be surprised how much further your money will go if you only spend what you budget. If you stick to your monthly budget and have a few dollars left over, reward yourself with a treat!