AEM Mortgage Minute with Deanna Daughhetee

Overcoming Loss of Income

Friday, February 12, 2010

In today’s unstable economy, many Americans have to deal with the unfortunate reality of a reduction in income. Whether it is a result of layoffs, salary cutbacks or reduced benefits, you can take steps to make sure you stay afloat until things return to a more comfortable level.

The most important thing to do is sit down and assess your situation honestly. Look at where you are spending your money. Then, budget your income and expenses down to the dollar. Often we spend money in our normal daily routine without thinking about it. You might be surprised to find where you are spending money. Spending just $3 a day on coffee can add up to almost $100 a month. Make decisions on your priorities.

You can also look at reducing options on things like your cell phone plan or cable/satellite packages. Review your insurance coverage to make sure they are appropriate. There may be updates that make sense - perhaps changing your deductible or coverage levels.

Another option is to call your credit card companies to ask for a hardship program. Many companies are more forgiving in tough times and could offer you improved terms or a period of time to be free of payments.

As long as you are still employed, refinancing your home is another option. Refinancing can provide cash to get you through the tough times or reduce your overall bills every month. Credit card and other debt can be consolidated into one payment that reduces your monthly payments in total.

Being proactive about your situation will help you weather the challenges many are facing during the current economic environment. By taking action and making a plan, you’ll have more confidence and a better understanding of how to get through the challenge.