Category Archives: Money

Finding A Personal Budget That Can Work For You

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A good way to prevent yourself from digging yourself further and further into debt is to form a personal budget that can work for you. Many people spend their hard earned money frivolously without having much regards to how much money they will have left before their next paycheck comes. They will often find themselves having no money left and ending up having to borrow from a lender just to pay essential bills or provide for their family. The problem with this type of spending is that you tend to incur debts that will begin to cause added problems with your finances that you become unable to pay off your debts when needed.

This is not the correct way of handling your finances. By creating a personal budget you will begin to plan all of your financial aspects and prioritizing items. Eventually you will achieve a successful financial situation you will enjoy. The first thing you need to do is take a careful assessment of your needs on three different basis:

Do You Have Financial Phobia?

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With an ever-increasing level of personal debt being reported, along with record numbers of bankruptcies and insolvencies, it's no surprise to anyone that money is becoming a big problem for thousands if not millions of people.

Most of us would equate 'money problems' with 'debt problems', and indeed servicing high levels of debt is a major cause of worry and stress for those of us who've perhaps borrowed too heavily in the past.

There is another kind of money trouble that doesn't receive quite as much publicity. It's called Financial Phobia, and is a real clinical condition that causes untold problems for its victims.

Recent research has suggested that up to 20% of adults suffer from full-blown financial phobia, with nearly half of the population showing some signs of a milder version of the condition.

Sufferers find it extremely difficult to keep on top of their finances, as the prospect of doing simple things like opening bills causes them feelings of anxiety, nausea, and even - in the worst cases - full panic attacks. They will dislike checking their bank balances, will put off paying bills, and in extreme cases will avoid opening mail altogether and throw it away rather than deal with the contents.

So what causes this condition? One of the main triggers is a sense of finances being out of control, sometimes through debt, but also through having a bad experience with finance such as losing money in a bad investment, or of following bad advice. Victims of mis-selling of inappropriate products can lose trust in banks and by extension the whole realm of finance.

The irony is that by avoiding paying attention to their financial situation, sufferers will tend to make matters worse as they can't pick up on problems early on. Missed payments, for example, can go from being a minor issue to a cause of legal action if they are ignored rather than tackled.

As their financial situation deteriorates, the sense of being out of control increases, leading to a vicious circle where other problems including full depression can arise. So is there a way out?

As with all genuine phobias, counselling may be required if the problem has got out of hand, along with professional financial help from debt advisors which is often available for free from charities.

However, people in the early stages of the condition can help stop the situation deteriorating by starting to get back on top of their finances, fighting their urges to ignore the problem, and starting to tackle any underlying causes such as debt.

Do-It-Yourself Financial Planning.

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The fight for financial freedom isn't fair. No matter what kind of spin you try to put on it, the path to comfortable living seems either impossible or too long to attempt. Many people these days are spending copious amounts of money going to see professional financial planners for advice on how to get their money situation under control. But let's be honest, while a financial planner can show you how to prioritize your spending and how to go about consolidating your debt, surely there must be a way to plan your finances that doesn't cost you visits to a professional? This article has been written to open some people's eyes to the fact that it is possible to properly plan your finances from the comfort of your own home.

The main aim when planning your finances is to make everything as simple as possible. There is nothing worse than sinking so far into depression that you can't see a way out. Whether you are in debt and looking to get out of it of if you are simply looking for a way to keep a little more spending money aside each month, the simpler you make your planning the better the result you will get. From the beginning, you need to be realistic. I'll start with the example of a single income situation, firstly you need to calculate what your net pay is per month. If you're self employed or not on a regular pay, always calculate the worst-case-scenario, what is the lowest you might get paid. Then go through your monthly bills and write down the ones that are a fixed amount. Do the same for all other bills but use the worst-case-scenario again, what is your estimation of the most that those bills might be. Add everything up and subtract it from your net income total.

Next onto the incidental expenses you might run into on a monthly basis. These might include petrol, car upkeep, public transport fares, food etc. make a list of all the little expenses you might need money for in a month. Even things that you're not sure you might need to buy. Don't add general spending money to the list, be specific. Always add more to the totals if you're not sure as you can fine tune it later. Again, subtract your total from the money left over from your bills. Don't worry if you've gone into the negative figures here, we can fix it.

Once you've got your expenses total in front of you, obviously any money that is left over is your profit for the month. In the event that you have nothing left or have gone into the minus figures, the next step is to minimize your expenses. Pretty straight forward, huh? Any incidental expenses that you might not need, remove them. And any expenses you know you will have, like food and petrol for example, really get down to the lowest spend on them. How much do you really need to spend on them? Your aim should be to save at least $50 per month after spending money. All that extra builds up and gives you a nice petty cash at the end of a few months!

If you are in a multiple-income situation, the same process applies. You need to start building up that petty cash tin. There will always be unexpected expenses, everyone knows that. In truth, the basis of comfortable living is really the knowledge that you can afford to pay for something unexpected.

To finish, all of this can be done on a piece of paper if you want to invest a little time, or you can lay it all out on an Excel spreadsheet. The way that saves the most time is to use a Financial Planning software program, you enter the numbers and the program gives you an automatic monthly planner. Whatever way you choose to go, always remember to keep it as simple as possible. When you're following a plan, the pressure on you will decrease. What more could there be to comfortable living?

How To Get Rich Today

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Want to know how to get rich today? You could try the lottery, or try your luck at the roulette wheel. Of course, you know the odds are against you, right? Want a better way?

Start thinking about what it means to BE rich. Consider that you are sitting there with a fantastic machine in front of you - the computer. It can entertain you, educate you, employ you and more. Think back two hundred years ago, when the richest people in the world didn't have access to a computer, or a television, or a car, or a refrigerator, flush toilets or modern medicines.

Think about how many millions of people TODAY would eagerly trade places with you. If you consider yourself poor, there are others who would consider you rich by comparison, right? "Rich" is relative, isn't it? While others imagine how much better their lives would be if they had as much as you, you imagine a life made better by even more wealth.

It's certainly true that life can be improved by money. Those who tell you differently are lying or have a real lack of imagination. However, long before you get rich according to whatever standard or goal you have, you can get rich by living differently. You can learn how to get rich by enjoying the real wealth you already have. If you don't learn how to enjoy life first, you may not enjoy future wealth in any case.

Who is really richer, a person with a lot of money and things who is alternately stressed and bored, or a person who is enjoying all the good things he has, however few they may be? Appreciate what you have, and you WILL be richer. Of course you should plan for the future, to make more money, but get rich today by living in a state of gratitude for what you already have.

How To Get Rich Today - Part Two

Isn't money a blessing, as well as an incredible and fascinating invention? It's the distilled essence of all the worldly things and situations you might want or need. Why not make more of it? The following are some simple reminders of things you already know about how to get rich.

1. Plan to make more money. Choose a way (there are many) and work it. Try another if you fail, but don't stop trying. Fast or slow - you can get rich. However, don't just think about getting rich. Put your goals in writing, and take the steps necessary.

2. Decide what is truly important to you. I have seen more than one person spend what could have been a wealth-building investment on things that really weren't important to them. Self control doesn't have to mean self-denial, but it should mean doing what you REALLY want for the long term.

3. Learn to manage money. If you watch those "Where Are They Now" programs, you'll quickly see that it's easier to lose millions than to make them. How many famous people have blown through all their money in a few shot years? About 1,897. Okay, who knows, but the lesson is clear. You need to understand how to manage money if you want to get rich and stay rich. Why not start educating yourself?

Enjoy what you have, and put a plan in place to get more - this is how to get rich today.

Do You Have These Frugal Living Habits

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Frugal living requires skills and ways of looking at things that help you take advantage of the money-saving opportunities in life. The truly frugal person makes these into habits. Six of these habits are outlined below. These are techniques that can be learned in a matter of a day or two, and made into new habits a few weeks. Then they will save money for you for the rest of your life.

1. Frugal living requires a knowledge of values. How can you get a great deal on a car if you don't know what a great deal is. Get in the habit of educating yourself on prices, especially before you're ready to buy anything that costs a lot. It takes a few hours of looking at listings for sale, for example, to know what homes are selling for in an area, but this is knowledge that can save you thousands.

2. Learn from other people. Most of us know someone who always gets the best deal on cars, boats, homes, or even groceries. Why not ask him or her how they do it! One person will tell you that the cheapest coffee in town is $3 per cup, while another will say 50 cents. Ask the latter about coffee shops. People near you are living a good life on half of what you make. Investigate that. See how others do things, and you'll know your options.

3. Frugal living means always looking for alternatives. You might have just as much fun taking a discount trip to Mexico as you would going to Jamaica. Maybe you happen to enjoy pizza more than fine French dining. If so, why not skip the expensive restaurant and call Dominoes. This isn't about sacrificing, but about getting even more of what you really enjoy by paying less for cheaper alternatives that work just as well.

4. Pay cash. What happens when everything you buy costs an additional 20% because of the interest you pay over the years? You can't buy as much! Everything is cheaper when paid for in cash instead of credit. If you want that new patio set, divide the price by the number of weeks you can wait to get it. Set aside that much each week, and buy it for cash when you have the money. Not only do you save on interest, but you'll often get a better price when you pay cash.

5. Learn to do the math. Did you really save $400 on that car if it costs you $500 more in gas each year? Did you know that some stores are cashing in on shopper's assumptions that larger is cheaper? It's true. That gallon of pickles might actually cost more than four quart jars. Make it a habit to do the math if you want to save money.

6. Tell people what you need. Mention it in conversations. Many people get free or cheap things, just because they talk. For example, a neighbor wanted to upgrade her living room debt, and was thrilled that I would take her three-month-old couch off her hands for $30. I sure am glad that I mentioned I was looking for one. You need to make this little trick a part of your frugal living habits.

If You Want To Make Money: Avoid Debt!

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:
Everybody starting in life should avoid running into debt.

There is scarcely anything that drags a person down like debt. It is a slavish position to get ill, yet we find many a young man, hardly out of his "teens," running in debt.

He meets a chum and says, "Look at this: I have got trusted for a new suit of clothes."

He seems to look upon the clothes as so much given to him; well, it frequently is so, but, if he succeeds in paying and then gets trusted again, he is adopting a habit which will keep him in poverty through life.

Debt robs a man of his self-respect, and makes him almost despise himself.

Grunting and groaning and working for what he has eaten up or worn out, and now when he is called upon to pay up, he has nothing to show for his money; this is properly termed "working for a dead horse."

I do not speak of merchants buying and selling on credit, or of those who buy on credit in order to turn the purchase to a profit. The old Quaker said to his farmer son, "John, never get trusted; but if thee gets trusted for anything, let it be for 'manure,' because that will help thee pay it back again."

Mr. Beecher advised young men to get in debt if they could to a small amount in the purchase of land, in the country districts. "If a young man," he says, "will only get in debt for some land and then get married, these two things will keep him straight, or nothing will".

This may be safe to a limited extent, but getting in debt for what you eat and drink and wear is to be avoided. Some families have a foolish habit of getting credit at "the stores," and thus frequently purchase many things which might have been dispensed with.

It is all very well to say; "I have got trusted for sixty days, and if I don't have the money the creditor will think nothing about it." There is no class of people in the world, who have such good memories as creditors. When the sixty days run out, you will have to pay.

If you do not pay, you will break your promise, and probably resort to a falsehood. You may make some excuse or get in debt elsewhere to pay it, but that only involves you the deeper.

A good-looking, lazy young fellow, was the apprentice boy, Horatio. His employer said, "Horatio, did you ever see a snail?" "I - think - I - have," he drawled out. "You must have met him then, for I am sure you never overtook one," said the "boss." Your creditor will meet you or overtake you and say, "Now, my young friend, you agreed to pay me; you have not done it, you must give me your note."

You give the note on interest and it commences working against you; "it is a dead horse." The creditor goes to bed at night and wakes up in the morning better off than when he retired to bed, because his interest has increased during the night, but you grow poorer while you are sleeping, for the interest is accumulating against you.

Money is in some respects like fire; it is a very excellent servant but a terrible master. When you have it mastering you; when interest is constantly piling up against you, it will keep you down in the worst kind of slavery.

But let money work for you, and you have the most devoted servant in the world. It is no "eye-servant."There is nothing animate or inanimate that will work so faithfully as money when placed at interest, well secured. It works night and day, and in wet or dry weather.

In the former "blue-law State of Connecticut", where the old Puritans had laws so rigid that it was said, "they fined a man for kissing his wife on Sunday". Yet these rich old Puritans would have thousands of dollars at interest, and on Saturday night would be worth a certain amount; on Sunday they would go to church and perform all the duties of a Christian.

On waking up on Monday morning, they would find themselves considerably richer than the Saturday night previous, simply because their money placed at interest had worked faithfully for them all day Sunday, according to law!

Do not let it work against you; if you do there is no chance for success in life so far as money is concerned. John Randolph, the eccentric Virginian, once exclaimed in Congress, "Mr. Speaker, I have discovered the philosopher's stone: pay as you go."This is, indeed, nearer to the philosopher's stone than any alchemist has ever yet arrived.

How You Trap Into Credit Card Debt

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These days credit card or plastic money is very popular and used extensively. It is indeed of great utility if used in a calculative manner, but it is also the main cause that leads many people trap into credit card debt. Let see how it happen to most of people.

Many of retailers are implementing easy payment scheme for their products or services, with some fraction amount of money for monthly installed, you can buy thousand of dollars of items or go for a luxury vacation which you can't afford to buy if one lump sum of money is needed, these monthly installment are automatically charge to your credit card. Every month, you just pay the minimum amount of your credit card balance and you continue spend on your credit card. Let use a case study to review on how a person credit card debt can grow and how it will take to get rid of it.

Case Study

Scott earn $2,500 a month, he is holding a credit card with interest rates of 12%. All his credit cards allow him to pay a minimum of 3% or $10 which ever is higher. His credit card limit is $15,000.

Scott's credit card balance at current month is $4,550 ($3000 in principle and $1550 interest). He tends to pay the minimum of his credit card balance and each month he will averagely swipe about $500 on petrol and other utilities.

Let see how's Scott's credit card balance grow:

Month 1

Credit card balance = $4,550.00

Minimum Payment = $136.50

New Credit Card Spending = $500.00

New Balance = ($4,550 - $136.50 + $500.00) = $4913.50

Month 10

Credit card balance = $7976.02

Minimum Payment = $239.28

New Credit Card Spending = $500.00

New Balance = ($7976.02 - $239.28 + $500.00) = $8236.74

Month 20

Credit card balance = $11109.85

Minimum Payment = $333.29

New Credit Card Spending = $500.00

New Balance = $11109.85 - $333.29 + $500.00) = $11276.55

Month 30

Credit card balance = $13662.60

Minimum Payment = $409.88

New Credit Card Spending = $500.00

New Balance = $13662.60 - $409.88 + $500.00) = $13752.72

Month 36

Credit card balance = $14961.02

Minimum Payment = $448.83

New Credit Card Spending = $500.00

New Balance = $14961.02 - $448.83 + $500.00) = $15012.19

If Scott continues his practice, his will hit his credit card limit after 36 month compare to current month.

Let say Scott stop using his card with the balance at month 36 of $15012.19 and continue paying the monthly minimum. It will take him 228 months which equal to 19 years to just to pay off his $15012.19 debt.

The above example is just a simple case study to show you how your credit card debt may piles up so quickly without you even aware of it. You need a lot of time and spend a lot of money on interest in order to get rid of this debt. In real life, many people have more than one card and other loans to support; hence situation may even worse.

How to get rid of credit card faster & affordable?

If you are already at this situation, the first thing you need to do is to change your behavior of paying the minimum only. Paying more each month will definitely pay off your debt faster but the question is you may say that you can't afford to pay more than the minimum. In actually fact, the easiest, faster and affordable way to get rid of your credit card debt is maintain your current minimum monthly payment.

For example, we use back Scott's case. If he affords to pay the minimum payment of his $15012.19 debt, which is $448.83, this is his affordable payment. If he continues to pay $448.83 every month instead of the minimum of his credit card balance, he will need only 43 months to pay off his debt as compare to 228 months. This mean, Scott will have his debt free life in less than 4 years instead of 19 years.

In Summary

Credit card will remain important in many people life, use it intelligently for your convenient, but you much carefully manage your credit card balance, don't let this plastic money drag you into financial crisis; the ideal way is pay the balance in full each month.

How To Create Your Own Emergency Fund?

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Do unexpected car repairs, quarterly insurance payments or unexpected medical bills find you hard pressed to squeeze even one more dollar out of an already stretched monthly budget? These are inevitable expenses and sometimes can put you under a stress condition when you need the cash to pay for these emergencies and unexpected expenses. But if you learn to budget for these emergencies events and save in advance, you will be at a better position to handle them.

Like most of Americans, you may stretch your income to cover the regular monthly expenses, and always choose to ignore or not to think about the brakes that are getting spongy or the plumbing that's beginning to make strange noises. And you end up a surge on your monthly expenses when the brakes wear off and the plumbing break out.

Planning and saving for those events can help prevent an ordinary life from turning into a crisis and can also cut down dependence on credit cards. Not having savings is a major reason people get into debt.

Here are some steps to help you get started to plan for your emergency fund, the "Saving" fund which will help you prevent financial disaster.

1. Identify your irregular expenses

Analyze your pass credit card statement and checking account registers to identify your irregular expenses occur throughout the year. Examples of these irregular expenses are property taxes, insurance premiums, vacations, car tune-ups, holidays and birthdays. List down in a piece of paper all the expenses which are not spent in monthly basis.

2. Write the anticipated amount on the calendar

In most of cases such as insurance premium and property taxes, you will know when the expenses are due to occur. And for those unknown cases such as car repair and plumping repair cost, try to anticipate their expenses and list them somewhat earlier than you actually expect them to come up. Be sure to update your calendar as you discover more expenses.

3. Plan-in the non-monthly expenses into your monthly spending

Based on the foreseen amount and anticipated amount that are captured on your calendar, plan ahead your non-monthly expenses into your monthly spending. For example, you know that your car insurance is going to due on May, set aside small amount of your money for this purpose starting on February. And when May rolls around you can transfer the expense to your spending plan and have money available to pay it. Setting aside even a few dollars each month for foreseeable expenses can prevent larger money woes ahead.

Sometimes, you may find it hard to set aside some extra money from your monthly income; but remember, repairing your car or paying your insurance is not optional expenses and you need to spend it soon or later. So you need to find a way to reduce your monthly expenses so that some money can set aside for emergency fund. You may need to track your spending; then, reduce or cut the optional expenses such as entertainment, dinner at restaurant and other impulse purchase, the money save from those optional expense can be put into your emergency fund.

In Summary

One of the mistakes people make when trying to get their finances under control is not having an emergency fund on their savings account. The problem is that if you don't have money set aside for those unavoidable bills, you inevitably end up adding to your credit card balance to cover the difference.

The bottom line is to start today. It may be discouraging at first if you find that you don't have enough money to fully fund your emergency fund, but you'll begin to succeed the minute you start the process.

How to budget your money for debt relief

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Creating a budget can help you to achieve debt elimination and get you out of debt. In fact it is not a difficult process. You need a piece of paper, a pen, copies of your bills and expenses, and a little time and determination. And to do it successfully requires you to set up a budget which you can live with, adjusting it as needed and follow it.

Create Your Budgeting Plan

Use simple household budgeting tips to get out of debt and get your finances under control. Estimate your housing costs, utilities, food, clothing, transportation and vehicle costs, medical and/or family expenses, entertainment and online services, credit card payments and debt priorities, and lastly, other expenses. In your budgeting plan, allocate a portion of your money under safety net account. The money in your safety net account can only be used on emergencies, to recover for unforeseen expenses, for income lost protection and for myriad of other financial busters.

Track Your Spending

After you have allocated your money, apply all extra funds to pay ahead on your debts. In using your money toward debt reduction instead of treating yourself to another fancy dinner or extra pair of shoes, you can watch your debt dissolve quicker than you might imagine.

Once you have set up your budget plan, track you spending to know where your money is actual going and whether it is within your budget. Keep a record of all money spent, whether it is by cash, check, credit card, etc. Once you know where your extra money is going, and oftentimes, realize how you can save hundreds of dollars that can apply directly to your debts and make huge strides to reducing your debt away.

Monitor & Review Your Budget Plan

Budgeting is a process of create a living plan and managing your money to meet your short and long-term goals. Your budget plan should be flexible and being review from time to time and make the necessary change in line with your current needs and circumstances. A static plan that never changes could doom you to failure right at the beginning.

Online Resources

There are tons of budgeting tips and tools which you can find from internet. From budget calculators and worksheets, to detailed software programs, research your options online for the one that best suits your needs. Use these extra information and help on your budgeting process.

Happy Budgeting!

Creating a budget doesn't have to be a painful restricting process, what you need to do it to make it a habit to know whether your money is going; and by knowing the flow of your money, you have a better control on your money and eliminate unnecessary expenses and the saved money can by dump debt accounts to reduce your debts and get rid of it one day. You may not create a perfect budget plan at your starting stage, continue to review and make necessary changes to in line with your needs and financial capability and the most important is follow your budget plan to make it successfully relief you from debts.

Developing a Successful Home Budget

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This is probably the most requested topic that I receive, normally after someone gets a large unexpected expense, or they start thinking about retirement and realize that they have saved a woefully inadequate amount of money.

I recommend using a monthly time-frame to look at your cash inflows and outflows, because most bills are monthly and four weeks is a short planning period that most people can manage. The first thing to do is determine your monthly after-tax income. Usually, this is the amount of money from your paycheck that gets deposited into your checking account. If your income is variable, then use an average of the last three months. (Any savings account interest income would be a bonus.) Next, list out your fixed monthly expenses, such as rent, mortgage, car payment, phone, electric bill, etc. All of these numbers can be changed in the long-term, but first you need to determine a baseline budget of where you are right now.

Make sure you include all of your utilities; some are only paid quarterly or annually, like car insurance, the water bill, or an association fee. Take these expenses and calculate what they would be on a monthly basis. For example, if your water bill comes quarterly, divide it by 3. If you have semi-annual car insurance, then divide it by 6.

So now you have your fixed monthly income and your fixed monthly expenses. Deduct one from the other, and you have the variable amount of money that you are free to spend any way you want for the remainder of the month. From this remaining amount of money, start listing out your main categories of variable spending: groceries, entertainment, medical expenses, clothing, dry cleaning, personal care (haircut, nails, etc.), and gifts. Take each of these variable expenses and put an amount next to them that you think represents your average monthly spending for that category.

Make as many subcategories as you need to make an accurate estimate. The more precise it is for your spending habits, the more effective it will be for you. For example, food can be broken down by grocery store/fast food/dining out/work lunch/etc. Then go through the last few months of your checkbook and credit card statement looking for any spending that hasn't been covered so far that you need to include for your situation.

Now you should have a total number for your monthly income, total monthly fixed expenses, and total monthly variable expenses. The moment of truth is when you deduct the two expenses from your income to see if there is anything left over. Don't panic if it is a negative number -- it is far better to discover this out now, rather than building up credit card debt later. Most people comment somewhere along this process, "Oh, so that is where my money is going. I had no idea I spent so much on that!"

Seeing all the numbers in black & white can help you prioritize (and negotiate with all the other spenders in the family). From this beginning budget, you can start to set monthly targets for spending categories, you can focus on reducing the largest expenses, and find areas where you should start doing some price-comparison shopping. And did I mention that saving a 5-15% of your income should be an additional fixed expense? Yes, you need to pay yourself first!

Having a budget is the critical first tool in managing your money. Wielding this tool allows you to finally start making financial decisions based on the facts instead of fiction. You can plan for expenses instead of being caught by surprise. And most importantly, figure out how to move forward with goals like a big vacation, a new car, or investing.