Money Rewind: Are You Sticking to a Budget Yet?

Do you have more bills then money at the end of the month?  Having trouble paying down the mortgage, rent or groceries?  You are one of millions of people who have reached the end of their rope and need help.

Due to financial crisis from a job loss, unexpected expenditures or simple over spending, setting a realistic budget can create a sense of calm in what may otherwise be an urgent and out of control situation.

What is a Budget?

The online wikitionary.org describes budget as “an itemized summary of intended expenditure…”  The word is derived from the Old French bougette, literally meaning leather bag or wallet, the nature of its meaning has changed little since its first use in 1432.

The first step in creating your own budget is to track your spending.  To get a handle of your spending, gather all your bills. Be sure to include the big ticket items such as:

• Mortgage
• Electrical bill
• Water
• Groceries
• Insurance
• Credit card.

Do not forget about the smaller incidentals such as entertainment, movies or the early morning coffee.

Record each bill on a separate line in a simple lined school note book.  Fancier accountant books are available but are unnecessary.  For example, on the first line write 1) mortgage, or rent, and record the amount to be paid each month for your mortgage.  On the second line record, 2) electrical bill and continue until all the expenses are recorded.  Tally the amounts and you now have a simple estimate of how much is being spent every month.

The act of simply recording the amounts that are spent highlights where the money is going. 

Record Your Income

After documenting all of your expenses, record the income.  Below the list of expenses, register your income for the month.  Income will include your weekly pay checks and any commissions. 

Having more income than expenses results in a savings and any ‘extra’ money should be applied to the expense with the highest interest rate.

Paying Off the Bills

Finding more bills than income at the end of the month can be a shock.  Having a budget and recording all expenses can identify where you can trim your budget.  If your expenses exceed your income, start pruning with the incidentals.  Stopping for a cappuccino and a muffin can add up throughout the month and if you can apply this money toward an outstanding credit card bill then you will be further ahead in the long run.

Start Your Emergency Fund Today

There are many different views on what is the best way to manage your personal finances. While financial experts may not agree on all points, there is one area where everyone is in agreement. Having an emergency fund is necessary to avoid financial disaster when you face a financial emergency. Emergencies can come in many forms from needing major home repairs or dealing with the loss of a job. Despite the fact that virtually every American knows they should have an emergency fund the sad reality is millions of households across the nation do not have this financial backup should disaster strike. Without an emergency fund it is almost impossible to manage a financial emergency without going into debt. Here we look at how you can get your emergency fund started today.

• Commit to the process- There are many reasons why people don’t have an emergency fund with the main cause being lack of money. It is true that many households are struggling just to get by and have no resources remaining to fund a savings account, however in all but the most extreme hardships there are ways to find extra cash to start socking away for an emergency. Before doing so you must make up your mind to put every effort into building the fund and commit to the process.

• Getting started- Once you have decided you will put forth an honest effort in building your emergency fund you must then decide where to store your money. Experts offer varying advice on this point and the best thing will be what works for you. Many people opt for a savings account where they already bank, while others prefer to separate their money by opening an online account or an account at a separate bank. It is preferable to set up a direct deposit system where money can be automatically transfered from your paycheck or other bank accounts. This makes depositing cash much easier making it more likely you will stick to your plan.

• Determining how much you will need- Again, advice varies but the general consensus is to aim for three months salary in your emergency fund. This will help offset expenses should you find yourself laid off of work or get you through a minor financial emergency. While it is ideal to have an end goal, the key is really getting started and consistently contributing money. How much you can afford to contribute is really determined by your current financial situation. Once you get farther along in the process and close to your goal you can then consider where to place money for long term investments.

• Accessibility- You will want to have access to your cash in the short term, however you might want to limit that accessibility if you feel you lack the discipline to leave the money alone. An emergency fund is there for true emergencies not an impulse purchase or rainy day fund. By limiting immediate access you reduce the chances of tapping into the account for non-emergency reasons while ensuring you can get the cash within a few days if needed.

Starting an emergency fund is especially important for those who have recently paid off debt or are trying to get their personal finances in order. By committing to the process and contributing on a regular basis you may be surprised how quickly your emergency fund will grow. Having a well padded emergency fund will ensure you have the means to take care of yourself and family should you find yourself in need of immediate cash.

How To Ask For and Get Discounts on Anything

Many people never even consider haggling down the price of merchandise they want to purchase. It seems a normal practice in open-air markets while on vacation or when you find something you like at a yard sale but for the most part, people don’t ask for discount for three reasons: they are afraid of the confrontation, they don’t think it will work, or they just never think to ask.

Asking for a discount is not difficult at all but for those who are not comfortable doing so, there are ways to build confidence and at least try out the tactic. The worst-case scenario is that you will be told ‘no’ but the best case scenario is that you will get what you want and save money at the same time.

Here are some tips to get your started on your new haggling techniques:

Present Yourself Well
Be courteous and respectful when meeting with a sales person. Cockiness will likely not merit you any bonus points. While being confident is good, remember that you want the salesperson to treat you in the same manner you want to be treated. Making friends with the bargainer can go a long way to netting you a more than fair deal.

Start Simple
When a sales person relays the price of the item, simply ask ‘Is that the best price you can offer?”. Let them come back to you with an answer. If they decline a better deal, thank them and move along.

Show No Desperation
While you may be dying on the inside to have that leather recliner chair in front of your television, don’t let the salesperson know it. Start the negotiation process but remain casual. If they refuse to work a deal, be ready to walk. Chances might be good they will call you back with a better offer before you reach the door if they truly believe you are going to go somewhere else.

Show Them the Money
If you walk into a store with cash in hand to pay for the merchandise, you may be able to score a better deal than if you were to need financing. A good rule of thumb for buying big items is to always remember if you don’t have the cash to pay for it, you shouldn’t be buying it in the first place.

Bargaining for a better deal should not wound your pride. It is a simple tactic used to enhance your financial situation. There are many deals out there that you just have to ask for. If you are not asking, you are paying much too much for what you want.

What He Said: Inspiring Quotes to Help You Get and Stay out of Debt

Getting into debt is easy-spend more than you make.  Staying out of debt requires more discipline and thought.  If you are in debt and trying to get out, or you are debt free and want to stay that way, perhaps instead of the same facts that you know so well, you could use some fresh insight into finances by some inspired writers who have famous sayings about money.  Seeing things from their perspective might deepen your commitment to your financial journey.

“If One Wants to get out of Debt and Stay of out of Debt He Should Act His Wage”-Unknown Author
The first rule of getting out of and staying out of debt is to live within your means.  Problems come when we act (and spend) like we make more money that we actually do. 

“Interest Works Night and Day, in Fair Weather and in Foul.  It Gnaws at a Man’s Substance with Invisible Teeth”- Henry Ward Beecher
Pay off high interest loans as quickly as possible.  Making only the minimum monthly payment will get you nowhere.

“If You Would be Wealthy, Save as Well as Getting”- Benjamin Franklin
Since we never know when an emergency might happen, it’s important to plan for one.  Have 3 months worth of expenses saved.  Start building your emergency fund and add to it monthly.

“We Didn’t Actually Over Spend our Budget.  The Allocation Simply Fell Short of our Expenditures”-Keith Davis
Whether you use a simple pencil and paper or a complex computer software system, you must set some sort of budget and stick to it. It’s the best way to stay out of debt.

“Beware of Little Expenses-A Small Leak will Sink a Great Ship”-Benjamin Franklin 
Tracking expenses is one of the disciplines needed to get and stay out of debt.  A $5 coffee here, a $4 magazine there can really add up with nothing much to show for it.  Pay attention to where your money is going and stop the leaks. 

“He Looks the Whole World in the Face, For He Owes Not Any Man”- Henry Wadsworth Longfellow
If your goal is to become debt free, or to remain debt free, there is sage wisdom available to help you achieve your dream.  Take the time to make a budget, track your spending and be honest about what you make and can afford.  Before you know it you too will not owe any man (or woman!). 

Everyday Money Savers

Getting into debt is easy, getting out of it is much harder.  Being proactive with your spending habits and living within your budget is always a good game plan. Being in debt is a stressful place to be.  Staying out of debt is a lifestyle choice.  You can begin today working towards a life with less debt by changing some of your small habits that little by little eat away at your money.  

Grocery Shop Regularly

Groceries are a necessity and a large expense in any family budget.  Believe it or not grocery shopping once a week for needed items as opposed to quick stops throughout the week is a money saver.  Making a grocery list and plan fully purchasing items that you need is a good habit. Buying routinely used items in bulk eliminates frequent stops at the store. Less stops at the store typically results in less spending and more saving.

Limit Your Convenience Store Stops

Think about how many times you stop at a convienence store each week. If it’s more than one or two times it may be costing you a small fortune.  The more stops you make the more things you will be tempted to purchase.  Convienence stores offer many impulse purchases at the counter.  Stopping for milk one night, eggs the next and gas the third night probably results in two or three additional items per stop. You go in for milk and come out with milk and cookies and a pack of gum.  Frequent stops at the corner store temp us to spend more than we need to on a regular basis.  $5.00 extra on non-essentials may not seem like much at the time but over a month or a year it adds up.

Beware of Using Your Card

Using your credit or debit card is convenient but can be costly. The price you pay to swipe the card can range from $.50 to $3.00. Swiping at the grocery store gas pumps or at the ATM machine can result in additional charges. Some charges are double imposed. One is charged by your bank and another by the vendor you are using.   Many times the charges at the gas pumps are not posted but surface on your credit card statement.  Add up these charges over a month and you may realize you are spending an extra $20.00 just to use your card. Pay attention to the locations that have charges.  Make an effort to use those locations in your area that don’t impose charges.  To eliminate multiple stops at the ATM (and multiple charges) take out the money that you need in one withdrawal. Make a point to use those machines that belong to your financial institution.  

Reminder Tips for Staying Out of Debt

Staying out of debt is a constant struggle for most Americans.  Our need for immediate gratification, an array of countless choices of products that are so readily available make it hard not to spend money.  There becomes a fine line between what we need and what we want that often gets crossed.  If we are not careful that line, once crossed becomes a mounting debt. 

The terms saving money and staying out of debt are often used interchangeably but they are two very different concepts.  The reality is that to save money you must first stay out of debt.  There are a few small things you can do that are fairly painless to stay out of debt. The little expenses add up over the long run.  Not spending a little at a time can help you to stay out of debt a little at a time. 

 

Don’t temp yourself:  If shopping is your downfall don’t put yourself in harms way.  Shopping has become more than just a means to get things we need.  It has turned into a leisure time activity, a way to spend time with the family or just a way to relax after work.  Browsing online or strolling through the mall leads to the temptation to spend money.  When you put yourself in situations that are risky the outcome is usually not a good one.  Finding other ways to spend your time is a lifestyle change that can result in not only staying out of debt but it will probably save you money.  

Freeze the card: We have all probably heard of the little trick of placing your credit card in a cup of water and putting it in the freezer to avoid using it. Freezing your card prevents you from having it for emergencies or vacations but not using it on impulse.  You have to wait for it to unfreeze before you can use it.  This little trick may not work that well today with online shopping and pay pal accounts it’s easier to charge without the actual card than it was in the past.  The concept however still holds true; waiting a day or two before making a purchase can force you to really think about if it’s a need or a want.  Sometimes delaying an impulse helps you to put things in perspective. If you have to wait until tomorrow to buy it you might decide you don’t really need it. 

  
Don’t carry more money on you than you need for the day:  Carrying multiple credit cards or large amounts of cash is not only dangerous it’s also tempting.  If you have multiple credit cards consider consolidating this to one card.  Sometimes having multiple forms of spending power such as cash or credit cards is a green light to spend.  If you find yourself borrowing the mall on your lunch break having that credit card may just be enough reason to pick up a few things.  Carry on you only what you need for the day, this helps you to avoid impulsive purchases, be this at the grocery store or the mall or even the gas station.  Having to be thoughtful about what you buy can help save you money in the long run.  

Romancing on the Cheap: How to Keep the Love without Busting the Budget

Staying on a budget, monitoring your spending habits, and controlling impulse buying might not sound like the makings of a beautiful love story, especially to a spontaneous and hopeless romantic.  Keeping romance alive, whether married or single, can take the heart right out of your personal finances if you regularly go on expensive excursions.   With some careful planning and creativity, romantic dates can be exciting and economical.

Stay Home, Save Money
You don’t have to go out to have a romantic evening.  Hone your cooking skills and make a special dinner for your sweetheart.  It will cost far less than a fancy restaurant and the effort made will really impress.  Check out www.romancestruck.com for easy, budget and gender friendly menus for two.

Festivals, Fairs, and Festivities
There is a festival, fair, or festivity for any interest you and your date may have.  These events are inexpensive and give you a chance to walk around together, sample local fare, and enjoy the sights and sounds.  Search www.festivals.com for latest happenings in your area.

Get Outside and Play
If you two are the outdoorsy type, investigate local hiking and biking trails.  It’s a great cheap way to spend time together and get some fresh air and exercise.  The site www.trails.com has a full list of trails for just about every region in the country.   It will be good for your heart in more ways than one.

Pack a Picnic Lunch
Gather your checkered table cloth, napkins, and a basket and head out to a park for a romantic picnic for two.  Bring food that is easy and keeps well.  Explore the site www.the-picnic-site.com.  It has loads of ideas on how to plan the perfect picnic that will keep the beef in your budget.

High School Events
If you live near a high school, there is no limit to the amount of low cost/high quality entertainment it offers. Most schools have a drama and music department that performs plays, and concerts throughout the year. High school sporting events are an inexpensive way to check out local talent.  You never know, you might spot the next Tom Brady or Derek Jeter.  Check the school web site for event information. 

Desert Night
Instead of splurging on an expensive restaurant, spend less than half of that on a nice desert at the local ice cream parlor or pie shop.  Not only is this easy on your wallet, but it can help you get to know local small business owners who are more apt to cut a deal for regular customers. 

Keep the Romance, Lose the Debt
There are simple ways to stay on budget and mange your personal finances while still having a vibrant dating and marriage life.  Look for ways to have fun, but mange the budget and your love story will always have a happy ending. 

7 Steps to Take Now for Future Financial Payoff

With so much financial advice swirling around these days, it can get overwhelming, leading you to be unsure about just want you need to be doing now to be ahead in the future.

Instead of suffering through information overload, take a moment to consider the following 7 must-do’s to finding financial independent in your future:

Tuck a Couple of Bucks Away
When living paycheck to paycheck, it can be difficult to reach large savings goals you want to set for emergency funds, vacations and even college. Unfortunately, many people end up shrugging off the notion of saving anything when they figure they can’t possible save ‘enough’. However, if you save just a little bit at a time, you are still doing something. $5, $10. $20 a week in the bank account earning interest will add up.

Automate For Goals
Literally taking a $10 or $20 bill from your wallet and depositing it in the bank may seem easy enough but many people find that once the cash is in the hand, it is just too easy to spend. To commit to a savings plan, sign up for automatic deposits into an account with each paycheck. In addition to that savings, you also need to contribute to your 401k retirement account. Whatever amount you can afford within your budget constraints should be set up to transfer automatically, making it more likely the account will keep being funded. After some time, you’ll never even miss what’s being taken.

Get the Max From Your Company Match
If you are not contributing enough to your 401k to collect on the matching contribution from your employer, you are essentially throwing away good retirement money. If your company doesn’t provide a match program, you might qualify for a Roth IRA.

Roth IRA’s Are Good Investments
A Roth IRA brings tax-free income into your retirement years. This is a good deal as income tax rates are expected to rise to cover the federal deficits, You can invest a minimum of $600 with some companies.

Make an Extra Mortgage Payment Annually
Instead of paying the obligatory12 payments each year on your mortgage, make an extra one to cut 5 years off your loan time. Your payment can be split up over the year period to make it even more affordable. For instance, a $1200 mortgage payment divided by 12 months comes to an extra $100. Start making $1300 payments each month and save thousands on interest charges through the life of the loan.

Get Documented
While it is no one’s favorite subject, it is really important that your ducks are in a row in the event something should happen to you. See an attorney or find a DIY method to create a revocable living trust, a power of attorney for finances, a power of attorney for your health care, and a will.

Stay in Control
It can be too easy to say that there just isn’t any extra but chances are good you are still spending cash on things that are not necessities. Continue to go over your budget and track your spending so you know where you can make changes to find extra money to save and start setting bigger financial goals.

Frugality and Thanksgiving Meals

Sometimes focusing on saving money can go out the window when guests are expected for a holiday dinner. This year’s holiday meal gatherings can still hold the same sentimental value and continue family traditions but without hurting your bank account. Just because guests are coming to celebrate doesn’t mean you have to go all out in order to have fun.

Here are some ideas for a fantastic yet frugal Thanksgiving celebration:

Plan Ahead
Don’t wait until the few days before a holiday to start purchasing your supplies. Selections will be lessened, prices will be higher, and in your mad rush to get it over with, you will likely not consider prices as much as you do time. Start making a list and purchase your items little by little over the weeks leading up to the celebration.

Take A Head Count
If you already know how many people will be attending the festivities, use that number to gauge how much food you will actually need. It may be tempting to please everyone with all of their favorites but try to stick with the basics that will easily feed a lot of people for less money. Leftovers are good to have but if you end up with too many leftovers, you can expect to waste food and money.

Skip The Extras
There is no need to purchase new tableclothes, fabric napkins, or other festive decorations. Use what you have or ask the children in your family to craft some great decorations while dinner is being cooked. The meal is about good food and good family, not about the flowers or other money-wasters.

Consider the Costs Before/After the Meal
In addition to spending money for the food, consider what it takes to prepare the meal. This includes the water you use for doing dishes, the electricity you use for cooking food, and what happens to the heat you lose when the kitchen gets too hot and windows are opened. It may be hard to pay attention to lights left on and other energy-wasters with everything going on but do the best you can. Use paper plates and cups instead of having to run the dishwasher.

Start New Traditions
Holidays this year are likely hard on many people in the family so don’t be afraid to venture outside the norm. Suggest alternative ideas such as a potluck dinner where everyone brings something. You might also consider having your dinner in the days following the holiday when ingredients are on clearance.

 

Money Management Tips For 2010

People who have wrestled with long standing debt often find themselves facing an unsure future once that debt has been paid off. The reason for this dilemma is the fact that most people who have been dealing with debt for months or even years have no idea what to do with that “extra” cash that is now available in their budget. If you are recently debt-free and not sure how to proceed in the future, the following tips can help you manage your money in the recovering economy.

• Debt- Anyone who has successfully paid off high interest debt (or those currently in the process) understands how long and frustrating the journey can be to debt-free living. With that being said, it is imperative you remember that journey as you move forward in the future. It is true that many people end up in debt for reasons beyond their control, however the rest of the population can usually blame only themselves and poor money management. Avoid future debt whenever possible and tread carefully with credit cards in the coming months. New regulation that will be in place in 2010 should provide some protection to consumers, but those who have historically had trouble managing credit should avoid incurring debt regardless of new rules.

• Savings- Debt is the four letter word that often stands between financial independence and living paycheck-to-paycheck. Once debt has been eliminated, consumers have to deal with an infusion of cash in their daily budget. Do not waste this opportunity to build your savings. The current economy is not offering high yields for savings right now, however this should not discourage you from shopping around for the best interest rate offered for traditional savings accounts. After building an emergency fund, you may consider short term CDs or other savings vehicles that do not tie you into long term commitments. Opportunities for better interest rates are likely right around the corner as the economy improves in upcoming months.

• Rebuild your credit- As consumers and lenders alike gain confidence in the recovering economy, a good credit score will be necessary should you need to borrow money to buy a home or automobile. Take steps today to begin the long process of rebuilding or improving your credit history and credit score. This will help set you apart from the rest of the pack in qualifying for more lucrative terms and conditions for future loans.

Everyone is struggling to find level ground in the wake of the recession. Fortunately all signs indicate the recession is in fact over, however that does not mean things will immediately go back to “normal”. It will likely take many months or years in some cases for consumers and businesses alike to feel confident in the economy. By following these tips you can feel comfortable that you are on the right path the long term financial security.

 

 

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