If you’re already buying generic goods at the grocery store, making your daily coffee at home, and skimping on luxuries what else can you do to protect your savings and your credit?

We all know the standard financial advice: make a budget, cut nonessentials, and don’t rely on credit cards to pay your bills. But what about when you’re faced with truly difficult times? In recent months we have seen high increases in prices, which means many of us are navigating an unfamiliar, overwhelming financial landscape.

Prevention is Key

While it’s not always possible to plan for hard times, there are some things you can do now to prevent the need for filing bankruptcy in Utah. The SLC Chapter 13 attorney team at Rulon T. Burton has the following financial advice for these trying times.

Prioritize Savings

When you’re living paycheck to paycheck, it can seem impossible to prioritize your savings account. We often hear the advice to have at least six months’ worth of income saved, but that’s not a realistic goal for many of us. Here are some options that might be less out of reach.

Pick a Percentage

Have you ever thought about putting a percentage of your income into your savings account each pay period? However modest, those transfers can add up and provide a “rainy day fund” for unexpected expenses. We’re not talking huge numbers here- simply depositing 5-10% of your income into your savings account can help you set aside a significant amount of money by year’s end. You could do the same with your tax return, or any monetary gifts you receive throughout the year.

Weekly Savings Payments

Another way to pay your savings account on a regular basis is via weekly payments. This method allows you to start small and work your way up to larger payments into your savings account.

In this system, each week of the year corresponds with a dollar amount you’ll transfer to savings. 

• Week 1 – $1 transfer to savings
• Week 2 – $2 transfer to savings
• Week 10 – $10 transfer to savings
• Week 20 – $20 transfer to savings

This goes on until you’ve reached week 52 (the last week of the year), at which time you transfer $52 into your savings account. You can also do this on a cash-only basis, putting your weekly “deposit” into a jar or envelope in your home. 

At the end of this weekly savings plan, you should have $1,378 in savings. This could be a little more if your savings account earns higher interest, or if you do this challenge with cash and put spare change into your jar as well. 

Supplemental Income

Investments or “side hustles” can be additional ways to make money that make or break your finances. Do you have unexplored alternatives to making money that can help your regular paycheck stretch a little further? 

If you’re tempted to cash in your retirement fund or other investments, think twice before making that move! Not only will you no longer have anything to live off of in your golden years, but you will most likely face penalty fees for withdrawing money early. Rely on a financial advisor to help you make educated, rational decisions about your investments in times of financial hardship. Seeing your investments as supplemental income becomes a problem because the market fluctuates and your investments can unexpectedly shrink. Also, the sooner you can put money into retirement accounts, the sooner they can start earning interest for you.

Better forms of supplemental income could include:

• Donating plasma
• DoorDash
• Lyft
• Uber

Snowball Your Debt

As daunting as it may seem, paying off debt has to be done in order to get your head above water sometimes. High-interest rates on credit cards, student loans, or a mortgage can make it feel impossible to ever pay down the principal and reach that zero balance.

However, if you can tackle the debt with the highest interest rate first, it can be easier to pay off other debt with the snowball method.

To snowball your debt means to make at least the minimum payment on all your debts. Of course, paying more is better, but it’s not always possible. When the day comes you pay off Debt #1, take the amount you used to pay for Debt #1 and start applying it to Debt #2, on top of the minimum payment you were already making. Then, when Debt #2 is paid in full, take the amount you were paying from Debt #1 plus Debt #2 and apply that to Debt #3. 

Keep employing this method and you’ll see your subsequent debts get smaller faster than if you just stuck to paying the minimum amounts.

If you do find yourself in need of an SLC Chapter 13 attorney, you’ll not only get guidance on how to file but how to manage your debt and work toward financial recovery.

Despite the best intentions, you may need a bankruptcy attorney in Salt Lake City, Utah. If that’s the case, contact Rulon T. Burton and Associates today. Their SLC Chapter 13 attorney team can help with difficult financial times.