Financial First Aid:
How to Shore Up Your Personal Finances

Anyone can handle money when there's plenty coming in and not so much going out. What takes real skill: balancing that checkbook when there's just enough or not quite enough to cover all the expenses.

Unfortunately, it's a situation that's all too familiar for a lot of consumers.

The positive spin: You're in charge of your money. And a few changes here and there can make a big difference in your wallet, without having a drastic effect on your lifestyle.

"The most important thing is that people identify needs versus wants," says Carolyn McClanahan, CFP, president of Life Planning Partners in Jacksonville, Fla. "What's the minimum you can make and still maintain the lifestyle that you need?"

One example, she cites: "You have to have utilities, but you don't have to have premium cable."

Financial First Aid: Keep a record of what you spend

One powerful tool that can help: a record of what you spend.

"Cash-flow analysis is by far the most important tool in your financial arsenal," says Andrew Tignanelli, CPA, CFP, and president of Baltimore-based The Financial Consulate Inc. If you're tech savvy, programs such as Quicken,,, Microsoft Money, or can help.

Or "a lot of the online checking accounts can help you do this," he says.

If you prefer pen and paper, you can purchase ready-made forms (try the ones at, or you can use a cheap notebook.

Financial First Aid: Evaluate where you can slice your spending

Looking at what you spend, "sort of forces you to budget," says Tignanelli. He suggests you go through your monthly bills, one by one, to find items you can cut:

  • Would a cell phone plan with fewer minutes serve you just as well?
  • Is your teen's texting sending you to the poorhouse? Does your cell service provider offer an all-in-one fee that would save you money each month?
  • Can you jettison some of the extra-cost features on your land line, or use a less expensive cable package?
  • Does your bank charge excessive fees? If so, can you switch to a different kind of account or use a credit union instead?
Financial First Aid: Pay down your debt

If you own a home with a substantial amount of equity, and your credit is good, you might want to investigate refinancing into a fixed 15- or 30-year mortgage at a lower rate, says McClanahan.

Your job security is also an important factor. Provided your job is truly secure, you can focus on paying down debt. If not (or if there's any question in your mind), build up an emergency fund that will cover three to six months of living expenses, she says. Keep it "very liquid in a high-yield, money market fund that is FDIC-insured," McClanahan says.

After you've sliced your expenses and built up an emergency fund, paying down debt is "key," says McClanahan.

Regard credit cards as a payment method, not an alternate source of financing.

When Tignanelli uses plastic, he enters the transaction into his checkbook. That way, when the bill arrives, he can write a check to pay off the entire balance.

Don't have the money available? Postpone the purchase.

Financial First Aid: Use the Right Kind of Money

One easy, painless way to ensure your success: Use the right kind of money.

There are four basic payment methods in the modern world: credit cards, debit cards, checks and cash, says Tignanelli. Through upbringing and personal preference, there is usually one method with which you are much more responsible, he says.

The secret to success: Find the payment method with which you are most careful and responsible and use it almost exclusively.

"When I put cash in my pocket, it's going to disappear in an hour or two," says Tignanelli. "So I rarely use cash," he says.

His preference: the checkbook, with its ledger-style accounting method.

Says Tignanelli, "I'm an accountant by nature."

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