ARLINGTON — The tough economy is requiring people to make hard decisions.
Those who took hits in their 401(k) accounts are mulling over how and when they can retire. Laid-off workers are trying to survive. Families are cutting back on spending.
Joseph Misiuda, owner of JRM Financial Advisors in Arlington, said he received many calls in 2007 and 2008 from people who are struggling to pay their bills or reduce their debts. Misiuda, a financial adviser with about 30 years of experience, said he expects to get similar calls this year as well.
Each person’s financial situation is different, but general tips may help people get started solving their issues.
Here’s some advice from Misiuda on personal finance:
Question: Where and how should people start addressing their financial problems?
Answer: Look at what you make and spend. Analyze how you spend your money. Remember to look at facts — bills, pay stubs and all the other documents — objectively without being emotional. Face the reality as it is.
“The best friend everybody can have is a mirror. It’s pretty difficult to lie to a mirror,” Misiuda said.
If you earn more than you spend, you can think about how to invest or save the leftover. If you spend more than you earn, you have to either cut back or identify steps to make more money.
Q: With the recession costing jobs and reducing salaries, many people are trying to hunker down. What are the challenges that keep people from changing their habits?
A: Financial advising often comes hand in hand with emotional counseling.
“Our challenge as a society here in America is our desire and belief that we have the ultimate right for affluence,” Misiuda said. “We don’t like sacrificing it, and we want our lifestyle to stay the same.”
Look for and trim creature comforts, which could be a second latte or a luxurious cable contract. Don’t let your ego get in your way of making sound fiscal decisions.
Q: How should people evaluate their decisions?
A: Each financial decision people make is based on their need, budget and philosophy.
Take food, for example. You eat because you need to. But where and how you get food affects your budget. Remember that your budget may not always match your philosophy, which defines what you want to get.
Re-evaluate your routines based on your need and budget. Try to be more efficient. Allow yourself to make changes to balance your budget, such as using coupons for groceries.
Q: From your experience as a financial adviser, what kinds of changes are difficult for people to make?
A: When it comes to tightening their belts, many people find it harder to make small cuts than big ones. Cutting back on groceries can be challenging, but can be a great way to start tackling your financial problem.
“Start with something. Build a positive, small routine with spending habits,” Misiuda said.
Q: Does every budget-cutting action need to be emotionally hard?
A: No. Spending less shouldn’t have anything to do with your self-esteem. In tough times, people get creative. An economy goes through ups and downs. So does a household budget.
“The essential thing is that if a person is thinking or discovering that they are going to have a challenge,” Misiuda said. “Be proactive about it.”
Reporter Yoshiaki Nohara: 425-339-3029 or ynohara@heraldnet.com.
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