How to dodge the hand-to-mouth life

RECENT REPORTS from the Bank of Jamaica and the Planning Institute of Jamaica only confirmed what every housewife, business owner and the man on the street already knew – the economy is in bad shape and it is not going to recover overnight. This underscores the importance of managing one’s personal finances.

In today’s instalment of Making Something Out of Nothing, Lance Duhaney, assistant vice-president and regional branch manager for Capital and Credit Merchant Bank in Montego Bay, responds to a reader’s cry for help.

I have been living from pay cheque to pay cheque. As a matter of fact, I have three credit cards
that I use to ensure that I get through each month. Altogether, my credit card
debt is $120,000. I earn just about this amount per month. I feel as if I am in a bind with no way out. Please help me.

Six-step plan

Here is Duhaney’s six-step plan to recovery:

1. The first thing to look at is budgeting. Do a comprehensive budget carefully and stick to it no matter what. You have to decide on needs and wants, and spend on needs only.

2. Stop using those credit cards. If you continue to use the cards, you will only go deeper into a bind. You don’t need three credit cards. Get rid of two and keep one for emergencies only – let me stress, emergencies only. You can get rid of the credit cards by consolidating the credit-card debt into a loan. By doing this you will get a much lower interest rate
(up to half the interest charged on the credit cards) and a more manageable monthly payment which would ultimately result in more disposable income.

3. Reduce your expenses like telephone bills. Talk is not cheap and Jamaicans love to talk. You also need to reduce your entertainment bill if you have one. You, don’t need to go out or drink so much. Again, Jamaicans have a tendency to party too much. Then look at the cable bill. Do you really need to watch cable? Conserve on electricity and water. Too often we take these for granted – we allow the water to run or walk past the room with the light on. You can also do simple things like planning your route before you leave home to conserve on gas and time.

Less is best

4. Buy what you need on a daily or weekly basis to give you more cash flow for savings. Smaller quantities result in less wastage. Do you really need to buy a case? How many times have you had to throw out that can or two left sitting on the shelf?

5. Stop shopping at supermarkets for ground provisions. You need to go to the produce market. The prices there are often much less than in the supermarket.

6. Keep saving no matter how small. Ideally, you should set aside one-five per cent of your monthly income. You need to keep your funds in interest-bearing accounts like the Money Management Account at Capital and Credit Securities Limited. The interest is calculated daily and credited at the end of each month.

From now until the end of the year, Lance Duhaney and the rest of the Capital and Credit team of experts will be at your service. Every month, they will answer your money questions and tell you how you can Make Something Out of Nothing.

Send your money questions to editors@gleanerjm.com and look out for the answers online, in print and on air.

Log on to The Gleaner’s website: www.go-jamaica.com.

Tune in to ‘Real Business’ on Power 106 FM every fourth Tuesday at 9:35 a.m., then read the money advice column in the Tuesday Gleaner the following week.

Real money business, in real time for real people!

Stacy-Ann Smith, Gleaner Writer