Daily Archives: May 9, 2010

How to Budget Money and Save- Seven Simple Steps to Wealth Building

Hello,

First of all, let’s stop using the word “budget”. “Money Plan” tells us that we’re going somewhere, that we have a goal of total excellence! Now, why should you have a “money plan”?

1. Knowledge is Power

Your money plan will show you exactly where your money is going to end up when it’s spent. You’ll be able to see your plan for every dollar you earn, and how close you are to reaching your goals. How many of your friends and co-workers can say that about their finances?

2. Decision-making influence

Remember the last time you tried to make a “financial decision”? It was probably deciding which bill collector wasn’t getting paid that month. With your money plan, you will be making decisions that are in YOUR best interest, not the interest of XYZ Collection Agency. Real decision-making power will be in your hands. You’ll be the CEO of You Inc!

3. Simplicity

Think about all of the loose papers you’ve got filled with random money calculations and notes. With the time you spend trying to sort it all out, you could be planning your next financial move or be out earning even more money! Even the most basic money plan will automatically sort your records into categories before you make a move. You’ll find time you never thought you had! On top of that, you won’t have to scramble to produce financial records – you’ll already have them.

4. Relationships

Are you married? Have children? The Number 1 cause of marriage and relationship disaster is lack of communication and planning with money. Your money plan will provide a visible agreement between you and your partner. You could sit down, if only for 10 minutes, at the beginning of each month to agree on your plan. The key here is to work together during this session. It will do wonders for the remainder of the month. Everyone involved gets a say, because everyone involved will benefit from the system.

5. “We can afford that”

After you have your money plan working for you, you will FINALLY be able to say with confidence, “We can/can’t afford that” and you’ll have the documentation to back it up. No more, “we can probably afford that” (if we eat ramen noodles for the next 3 months!).

6. “We have HOW much?!”

Again, after you have your budget working for you, you WILL find money you didn’t know you had. It is uncanny how this works. When I started my first budget 2 years ago, I was extremely skeptical. After 2 months (making the same amount I made when I started), I literally said to myself, “I have a lot more money than I thought!” ATM fees are no longer an issue. That automatic internet subscription renewal is no longer a surprise. You’ll learn exactly where you’ve been wasting money, and you’ll know where the best deal for your buck is.

7. Wealth Building

Money in your bank account will start to increase as your money becomes your employee, not your master.


How to Get Out of Debt and Stay Out of Debt

Hello,

In this article, we are going to help you take the first step to solving your debt problems. The first step, is that you need to know what you are up against. How much debt are you actually in? How much do you spend each month? And what is your income?

This is going to take you some time, very few of us are organised enough to put our hands to every single bank statement and bill, so you need to set some time aside to do this next task.

Task 1: Your Current Debts

You need to search your home for the latest bank statements, credit card bills and any other letters from people who you owe money to. Next, make a list of each of your debts and the amount of money that you owe, also make a note of any interest rates that you are being charged, this is so that you can see at a glance which debts are the most expensive.

You have now taken the hardest, and first step towards clearing your debts. Now that you can see your full debts in black-and-white this may be a little scary, but there are definitely solutions available for your debt problems.

Task 2: Your Finances

Now that you understand the extent of your debts, it’s now time to work out your actual monthly finances. This task is also going to take some time as well, but this is the most important step to begin clearing your debts.

Income

First of all, you need to make a note of every single source of income that you have, so this is your salary, benefits, interest on savings, rental income etc. Refer to your bank statements to remind you of the various sources of your income.

Expenditure

This is the hard bit, you need to itemize everything that you spend your money on. It will be useful to check your bank statements to see what you have spent, make sure you include all your direct debits, standing orders, bills, mortgage / rent, council tax, utilities etc. You will also need to write down the everyday spending such as coffee, sandwiches, magazines, clothes, etc. If you regularly withdraw money out of the cash machine, and don’t know where it goes this should be an eye-opening experience.

Task 3: Moment of Truth

Now you can view at a glance your entire financial situation, and compare what’s coming in and what’s going out. Don’t panic! It is now time to find some extra cash and cut back on your spending. This is where you really need to be ruthless, first of all see where you can cut back on your spending; do you really need the morning coffee every day on the way to work? £2 per day adds up to over £500 a year on coffee! Do you have a gym membership that you never use? Can television and Internet packages be cut back? Check that you have good deals for your gas and electricity suppliers, as well as your insurances, it’s easy nowadays to shop around on the Internet and compare prices.

You need to keep finding areas to cut back your spending until you have some spare cash each month, once you have done that you may also need to look at ways of generating extra income, for instance working overtime or renting a room in your house, selling unwanted possessions, and also check to see if you are eligible for any benefits.

You are now well on your way to clearing your debts, the next step is to work out which debts to pay first, which we covered in a separate article.


4 Quick Ways to Eliminate YOUR Credit Card Debt

Hello,

Credit card debt can be a major financial problem for many people. People with large amounts of credit card debt can sometimes barely make the minimum payments. So how can you get out of serious credit card debt? The best way is to completely stop using your cards and focus on making more than your minimum payment each month. Sound simple? Well it is really not. If it really was this easy to get out of credit debt, then there wouldn’t be so many people with credit debt problems. There is a lot of advice out there for how to eliminate your credit card debt but what advice should you follow? Here is a simple and easy to follow solution to reduce your credit debt.

First off, by only paying minimum payments it would take most people years to pay off their cards. The big problem…interest charges. Many times most of your payment goes toward interest charges and little goes to your balance. The easiest way to solve this problem is with balance transfers. Many cards allow you to transfer your balance to their card and you pay 0% interest for a certain amount of time, like 6-12 months. By decreasing your interest rate you stop your debt from increasing so rapidly. With a 0% interest rate all of your monthly payment will go towards decreasing your balance. Once that 0% interest rate period is coming to an end, you can then transfer the balance to another card with 0% interest rate.

Important note – When you transfer your balance to a new card you should never use that new card for any new purchases. This will only dig you a deeper hole and new purchases will incur interest charges, thus putting your right back in the situation of rising debt due to interest charges.

This leads into the second step. Stop using your cards. If you can’t pay cash for a purchase, then you probably do not need it. You will never get out of your debt if you continue to charge more onto your cards. Use cash instead of your card. Many people are less reluctant to buy something if they are using cash, where as if you are using your card it seems like no big deal.

The next step is to look at your spending. Chart what you spend your money on for an entire month. Then review your spending and see what areas you are spending the most money on and try to reduce them. Also, look at what you are spending money on that are luxury purchases or purchases that are non-essential. For example; eating out instead of eating in, your cable package, or that expensive coffee every morning. These types of purchase can be eliminated and save you hundreds of dollars a month.

Lastly, the money you save by monitoring your spending each month should be put towards your credit card bills. Paying an extra $100 or $200 every month on your credit card balance can reduce your debt quickly, and put you on your way to freedom from credit card debt.


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