Help for Shrinking Paychecks
Consumer Credit Counseling Service of San Francisco
Offers Tips on How to Live on Less

Mat 19, 2003 – Millions of Americans are struggling to make ends meet with dwindling paychecks. Unemployment topped 6 percent in April, and a recent survey by consulting firm Watson Wyatt found that 25 percent of mid to large-sized companies cut bonuses by about half, and delayed or reduced salary increases.

Education, training, and experience do not guarantee perpetual salary growth – or even maintenance. "Many of our clients are experiencing financial difficulty for the first time in their lives" said Joanne Budde, president of Consumer Credit Counseling Service of San Francisco (CCCS-SF), "seeking help in the early stages of a salary reduction is critical." The following tips can help people make the most out of less.

Think long-term
Even people who expect to be earning as normal in the near future would be wise to behave as if the salary depreciation is lasting. Securing a job often takes longer then people think.

Disassociate salary from self-worth
"Many people's self-esteem directly corresponds with their income level," said Erica Sandberg, financial writer for CCCS-SF. She suggests that people, "dispel the attitude that wealth equals worth. It's a flawed method of determining personal value."

Seize the day
For those who are unemployed or working fewer hours, use the "extra" time wisely. Complete delayed projects or take a class to boost future earning potential.

Analyze expenses
When salary shrinks, spending habits should be modified. Prioritize expenses by analyzing the ramifications of missing or not paying each.

Act before problems arise
If bills can't be met, creditors should be contacted immediately. An explanation and timetable for future payments can offset serious collection activity.

Think positively
Embarrassment and anger are normal emotions for people who are making less then they are used to. But after the shock, they should attempt a positive outlook. This is an opportunity to appreciate the things previously taken for granted.

Use credit carefully
"Credit cards are seductive when money is tight," said Sandberg, "but never treat a credit line as supplementary income." If used to maintain a lifestyle that one's current income can't support, debt can snowball. The average credit card interest rate is about 14 percent, and if payments are missed, it can easily double. Late and over limit fees will add to an increasingly daunting balance – worsening an already difficult financial situation.

Develop a plan
To thwart procrastination, develop an action plan. Be task specific with contact names, telephone numbers and proposed accomplishment dates. Update and refer to it regularly.

Get help
Free and low cost professional assistance is available. Consumer Credit Counseling Service of San Francisco, an accredited nonprofit financial counseling and education agency, provides affordable money management services. By taking pragmatic steps, most can adapt to a reduced income – and achieve a financially stable future.

For information about CCCS-SF, contact Jeannine Moore at (415) 788-0288 ext. 124, or log onto www.cccssf.org/(800) 777-7526.