Five Tips for Taking Control of Your Finances

The economy in Arizona and nationwide is in a strange place. While unemployment is down, the real estate market in Phoenix is all but stagnant and there is growing concern over the number of exotic mortgage loans issued last year.

Charles E. Davis, a veteran Arizona lawyer and founder of Davis Miles, PLLC, one of Arizona’s fastest growing law firms, offers five tips to help you keep your finances straight in these confusing times:

1.  Never take a payday loan to get you by to your next payday. Payday loans are often used by people who have no credit or bad credit to obtain money quickly, but this money comes with an exuberant interest rate. The Center for Responsible Lending (CRL) states that a payday loan of $325 has a typical APR of more than 400 percent. What that means is that the interest paid on borrowing that $325 to get you by until payday costs you $54 every two weeks or $104 every month! Additionally, the CRL’s research shows 99 percent of payday loan borrowers end up as repeat borrowers, trapped in an endless cycle of debt. Better solution: Check with your local savings and loan to see if they have a salary advance program and more reasonable rates.

2.  Set up an emergency savings fund. With today’s unstable financial market, it should be your goal have at least three months of savings for emergencies, whether you get fired, laid off or encounter a medical emergency. Don’t consider that savings account for the trip to Hawaii. Your emergency savings fund should be a completely separate account that you never touch unless it is an emergency.

3.  Track and budget your expenses. One of the hardest things for most people to determine is where their money goes. You may want to consider purchasing a home accounting software like Quicken, Quickbooks, or Microsoft Money to help track and budget your money. If you regularly use such a program to manage your checking and savings accounts and establish categories for each purchase, these programs can help design a monthly budget based upon your spending.

4.  Pay yourself first. Paying yourself first doesn’t mean taking your money and using it to pay your payments and other bills. What it really means is that you should use every opportunity to put money aside for just you, not your bills. Force yourself to contribute to your employer’s 401K plan, and learn to live with less money. Take advantage of employer matching programs and contribute as much as your employer will match. Never borrow against your retirement or 401K.

5.  Develop a payment plan and stick to it. If you have a lot of unsecured debt, like credit cards, medical bills or personal loans, develop a plan to pay off that debt. Paying the minimum payment each month will never get you out of debt. Work out a payment plan that keeps your bills current while slowly chipping away at your debt. While paying the loan that you owe the least on may seem like a good way to start, in the long run you will save more money by paying off the debts with the highest interest rates first. Once the debt with the highest interest rate is paid, pay off the debt with the next highest interest rate.

Finally, if you feel overwhelmed about your financial situation, don’t be afraid to seek professional help and ask questions about bankruptcy and debt negotiation.

Davis Miles has extensive experience in estate matters, bankruptcy law and real estate work. Because Davis has been successful in building several successful businesses of his own, his East Valley law firm is able to bring solid perspective on the needs of both small and large businesses and their owners. 

Davis Miles, located at 560 W. Brown Road in Mesa, may be contacted by calling (480) 733-6800. Free consultations are offered in some areas. More information is available at www.davismiles.com.