CareOne Offers 5 Tips to Raise Financial Awareness in 2011

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It’s really no surprise that each year millions of Americans make it their New Year’s Resolution to cut back on spending and pay down their debt. In fact, the first six weeks of the year is historically the busiest time for CareOne Services Inc., one of the nation’s largest debt relief companies, as people begin to realistically face their financial situation. “Many people are intimidated by money, but they don’t need to be,” said Jenny Realo, CPA and executive vice president of CareOne Services. “There are simple things everyone can do to get a better understanding of their budget and better plan for the future.”

Jenny Realo

There are simple things everyone can do to get a better understanding of their budget and better plan for the future.

As the year comes to a close – and the bills from the holiday season begin to arrive – many people are re-evaluating their financial situation in preparation for the New Year.

It’s really no surprise that each year millions of Americans make it their New Year’s Resolution to cut back on spending and pay down their debt. In fact, the first six weeks of the year is historically the busiest time for CareOne Services Inc., one of the nation’s largest debt relief companies, as people begin to realistically face their financial situation.

“This time of year we see a surge of people seeking advice on better understanding their finances and controlling their debt as the holiday bills arrive and people re-examine their finances,” said Jenny Realo, a CPA, personal finance expert and executive vice president for CareOne Services.

And while debt management or debt settlement may be the best options for some, Realo says many consumers don’t need a formal program, only a realistic understanding of their financial situation.

“Many people are intimidated by money, but they don’t need to be,” Realo said. “There are simple things everyone can do to get a better understanding of their budget and better plan for the future.”

  •     Organize your finances: One of the reasons many people seek help with their finances is not because they don’t have the money to pay their bills initially - it’s because they get overlooked. If someone misplaces a bill and misses a payment, or pays an incorrect amount, the resulting interest rate increases combined with late fees and other penalties can easily turn a simple mistake into a costly financial error.

Realo advises everyone to develop a system for organizing – and remembering to pay – their bills to help avoid this pricey mistake. One easy solution is to purchase a letter organizer and put it in a visible location. When the mail arrives, immediately sort out the bills and place them in the organizer by order of due date. The little change will both serve as a visual reminder that those bills are waiting to be paid and as an organizational tool to avoid misplacing or accidentally throwing away bills.

  •     Analyze your cash flow: Another easy, but important, step to getting personal finances under control is to figure out where your money is going. Spend a month tracking all expenses – no matter how minor – from your housing costs to the little splurges like a lunch out or a new addition to your wardrobe. Understanding where your money actually goes will help you to create a workable budget. And the practice of writing down every little purchase may cause you to re-evaluate how badly you want that daily gourmet coffee drink.

“So many people look at these little purchases and say ‘It’s just a few dollars, I can afford that,’” Realo says. “But even cutting back on $5 a day – less than the typical lunch out – can add up to $150 in savings each month.”

  •     Don’t forget to plan ahead: While everyone knows they have a mortgage or rent payment, utility bills and other expenses due at the same time every month, one of the biggest challenges people face is failure to plan for occasional expenses, Realo said. For example, many people pay their car insurance only twice a year and can find themselves in a money pinch when those payments are due if they have not budgeted for them.

Many insurance companies will allow you to break up your premiums into monthly installments, and this may be a good option. Additionally, many utility companies offer budgeted billing so you don’t receive an extreme bill in the winter or summer, but rather spread the expense throughout the year.

Another alternative for large annual or semi-annual payments is to set aside a portion of the payment each month, whether that’s in a separate bank account or in an envelope. Then, when the payment is due, it won’t be such a drastic hit to your monthly budget.

  •     Create an emergency fund: Part of planning ahead is expecting the unexpected. At the same time you are setting aside money for bills, factor in money for those truly unexpected costs that can really be a budget buster, such as home or car repairs or medical emergencies. Even if you just set aside $20 a month in an emergency fund, it can make a significant difference if an unexpected financial crisis hits.

“Many of our customers were able to pay for the regular monthly bills, but got in over their heads when they had an unexpected expense come up,” Realo said. “Often, they start moving money around, taking a portion of what they would usually pay for one bill and allocating it to something else. The debt begins to build up and soon they have lost control.”

  •     Examine all of your expenses and look for ways to cut costs: Paying attention to your bills and making sure you are not getting overcharged can also have a significant impact on your financial situation and help build up savings just a few dollars at a time.

“It’s amazing the number of people who pay their bills without really examining the costs or looking to see if there are ways to cut back on expenses,” Realo said.

For example, Realo has worked with one family where more than half of the cable bill was spent on pay-per-view movies without the family realizing how quickly those charges were adding up.

“Little things, like cutting back on your cable package, renting fewer movies or even lowering your home thermostat by a few degrees in the winter can add up to significant cost savings without drastically impacting your lifestyle,” Realo said.

For more money saving tips, visit the CareOne Tip Jar.

While none of these things are hard to do, Realo says they can make a significant difference in a person’s financial understanding and financial well-being.

“For most people, keeping a resolution to have a better understanding of their finances takes a little bit of time and the willingness to commit to it,” Realo said.

About CareOne
CareOne Services Inc. is a debt relief company formed in 2002 to provide consumers with multiple solutions to complex money issues. CareOne takes a holistic approach to assisting customers in debt and reviews each situation to create achievable financial solutions. CareOne’s services include credit counseling, debt management, debt settlement, as well as free referrals to bankruptcy attorneys if that is in the best interest of the consumer.

CareOne also provides the CareOne Community, a free online resource for consumers that includes educational tools, blogs and forums where more than a million people share their experiences and receive support from others in similar situations.

Headquartered in Columbia, Md., CareOne has helped more than 2 million people. In 2009, it provided consumers with the tools and assistance to pay down more than $294 million in debt. CareOne provides services in 41 states. For more information, call 1-800-373-3225 or visit CareOneCredit.com.

For The Media

For more information on CareOne Services Inc. and the debt relief industry, visit CareOneDebtInsights.com or call (336) 505-9312.

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Michelle Rash
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