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Planning for Periodic Expenses
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Kelly Rote (713) 394-3201 |
Release Date: January 27, 2005 |
HOUSTON (January 27, 2005)— It is estimated that the average American spent more than $1,700 on holiday related expenses in 2004. But just as the holiday credit card bills begin to appear, tax season arrives. Money Management International (MMI), a national non-profit credit counseling organization, reports substantial increases in the number of clients who come to them for help during February and March.
Both holiday and tax debts are periodic, joining the ranks of auto registrations and vacations, meaning they are not part of regular monthly expenditures. We usually know when these events will occur, but still fail to plan for them. Unfortunately, when these expenses arise, many people rely upon credit to extend their monthly incomes. To avoid this, follow these tips when planning for periodic expenses:
· Determine what you spent last year for periodic expenses and assume you will spend the same amount this year.
· Just because you don’t list an expense doesn’t mean you won’t have to spend money on it. Remember things such as back-to-school expenses, auto repairs, and birthday gifts.
· Remember that some items, like auto insurance premiums, may occur more than once a year.
· Try to keep at least 3 months salary in your savings account to handle any “unplanned” expenses that could make the difference between a minor financial setback and a major financial disaster.
· Once you set a budget for periodic expenses, divide the total amount by 12 and plan to save that amount each month. Designating a savings account for this purpose may help to organize this process.
· Accelerate your savings schedule by including all of your "windfall" money. This “free money” includes increased income from a pay increase, birthday gifts, insurance settlements, escrow overages, and inheritances.
“Don’t forget to revisit your overall spending plan several times throughout the year to make sure you are staying on track,” said Cate Williams, vice president of financial literacy for MMI. “Common sense and the ability to remain flexible are important keys to financial success.”
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Money Management International, is a non-profit community service organization that provides confidential financial guidance, counseling and debt management assistance to consumers. MMI helps consumers trim their expenses, develop a workable budget, lower their debt payments and repay debts. Services are available by phone. To visit with an MMI counselor, call toll-free 1-800-762-2271- 24 hours a day, 7 days a week. Spanish speaking counselors are available. Consumers can also learn more by visiting the MMI home page at www.moneymanagement.org.
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