Monthly Archives: November 2010

Economic Crisis Spurs the Importance of Budgeting.


It’s a fact, that the economic crisis was brought about by over spending, and very minimal saving. When mortgages worth $ 500,000 were being given to a person delivering pizza (with all due respect), I think both parties in this transaction were not being honest with each other. One way of controlling such overspending, and possibly prevent another financial disaster like the one we are going through, is the use of a budget. But budgeting will not achieve much, if you do not follow it, that is, when you see the latest designer jeans, do not rush and buy it, ask yourself whether you can afford it in the first place, and if not, postpone the purchase to a future date. Jeff Nelson expands further the above point in the following article on how the economic crisis has made people realize the importance of a budget in achieving your goals

Due to the recent economic crisis, people have realized the importance of budgeting. The crisis stemmed from the fact that people where borrowing too much, spending too much, and not saving enough. People took out loans that they could not afford because the interest loans at the beginning were low. However, when the interest rates significantly increased, like they were supposed to, people could no longer afford their monthly payments. Now that the public is realizing the effects of over spending, hopefully we will come to terms with the matter and stop over spending. The importance of budgeting has become a popular topic in mainstream American as we now find that banks are not able to loan out what they once were. Budgeting is one of the most important tools we can use to responsibly allocate our resources in the most effective way possible. The over spending of Americans has brought about this crisis, so we can help to defuse it as well. If people realize that they can live they way they are accustomed to just by budgeting their money correctly, there will be a major impact on the financial markets.

The economic crisis is real, so now we must act responsibly with our money and not make any vast moves. The importance of budgeting stems from knowing how much money you have, how much you can spend, and how much you want to save, it’s as simple as that. You must be aware that the goal is to make and save more than you spend. In determining how to get started with your budget you need to organize all of your accounts including checking and savings accounts, credit cards, loans, and bills. By laying everything out you will be able to clearly see how much money comes in and how much comes out. However, to many this can seem like an overwhelming task that involves far too many documents and number crunching. Relax and take a deep breath, there are many different tools and software you can use online free of charge to help you with your budgeting. These tools can manage all of your account online and alert you to when bills are due and can also track all of your spending.

There are many different factors that encourage you to budget your money, which will end up helping the U.S. economy. Taking advantage of online tools will enable you to stay organized, and on top of your financial game. The importance of budgeting cannot be stressed enough for there are many more benefits that can be achieved than the costs associated. Taking the time to sort out your finances is a must that will help you in the short and long run and for the rest of your financial life. Being smart with your money is a skill can be obtained from gaining financial knowledge that can be obtained just about anywhere. Therefore there is no reason to not be smart with your money, take the time to set up a budget and you will see the results immediately.

Budgeting During Economic Crisis


Since we are discussing budgeting, we might as well see how it can help an individual during this time of economic hardship. It is probably the best tool that will get you through this financial crisis we are in right now, because we need to save as much money as we can by cutting down on expenses that we don’t need. A lot of people and the country as a whole is going through a dark period right now, the economy is still trying to make any meaningful recovery that will assure everyone that the worst is behind, but before that, we have to make some serious adjustment to our finances. Jeff Nelson gives examples of areas that can make your life a living hell in the future, if you do not do something today, regardless of your economic situation.

During this time of economic crisis budgets have become an essential part of almost every American life’s. With so many huge financial companies such as A.I.G and Frannie and Freddie Mac having trouble, it may seem like there is no end in sight. At a time like this, budgets for every aspect of your life may seem like a reasonable idea. Okay, that may seem like jumping to conclusions, but there are a few different aspects of your life where budgets can really help.

The first aspect of your life where budgeting your money may help is when you are establishing a college fund for your child. College is extremely expensive; this is just another reason as to why you should start a college fund right now for your child. During this time it may be very hard to think about setting money aside to save for your child’s future but it is very important. At a time like this the safest place to keep money is in a savings account. Although the interest rates are not very high for a savings account, savings accounts are one of the safest places to save money, due to the instability of the stock market. One of the hardest things to do during a time of economic hardship is to restrain yourself from taking money out of a child’s college fund to pay for other necessities, it is crucial that you do not touch this account having a college education is priceless in today’s world.

Another essential place where budgets are necessary is when you trying to pay off credit card debt. This is a time when you don’t want to fall behind with your credit card payments, falling behind with credit card payments during this economic crisis will only end up severely damaging you for the future as far as your credit score. The best way to deal with credit card spending and payment is simple; don’t spend money that you don’t have. That means that you will always have the money to make payments to your credit company, and won’t end up in bad standing with credit companies.

This is a time where it may pay in the long run to start purchasing products that are store brand. This can save a lot of money when you are shopping on a budget. Many people believe the common misconception that store brand products are not as good as brand name products which is incorrect. This idea of switching from brand name to store brand should encompass your whole life, not just with beauty or grocery products. If you can make the switch over to store brand products it can save you hundreds of dollars a year, and who wouldn’t be happy with a few hundred dollars extra without any serious sacrifice.

How to Budget Your Money When Starting Up a New Business


The last few days we have been talking about how an individual can go about using a budget to bring some sanity into their financial life. There is another group of individuals who will want to use the same technique in their businesses, and frankly speaking we all know what happens to 90% of the businesses in the first five years in operation? A budget is a fundamental tool to any person who wants their business to be among the remaining 10%, as you will have considered all the necessary expenditure that you will need to start-up your company or business, and probably be in a position to incur losses in the first few years of operation as the business tries to penetrate the market. These are some of the few point you will have to take into consideration when budgeting for your business, Jeff Nelson also points out other areas that are worth taking into account when budgeting your money in starting a new business.

Many people have dreams of eventually starting up their own company one day. The idea of being your own boss for a job of your dreams is one of the reasons why many people decide to follow this path, but what may start out as a dream may turn up being a financial disaster if you don’t budget your money. With every story of success, there are five stories of financial disaster of businesses that didn’t work out. Many of the financial hardships that people experience while starting up their own company can be avoided by using a simple budget when planning on money you will need to spend.

One of the most important things to do before starting your own business is to research the market you are interested in getting into. The failure of most new businesses can most commonly be contributed to the owner not doing enough research about the market they are going to enter. You need to carefully analyze the market you are trying to enter and figure out who are the main businesses’ in it and how you will compare. You must use realistic standards when doing this; you can’t expect as a new business owner that you are going to make a profit during your first year. With that you have to take into effect that in reality you may not make a profit your first year, and for most new company’s backup funds are essential to continuing the new business. You also have to ask yourself what you want to get out of your new business, in order to do this you not only have to make short-term goals but also long-term goals. Making a budget for short-term and long-term goals will allow you to see your future spending in a big picture.

Besides having backup funds you have to have enough money to get your new business rolling. Many people underestimate the amount of money a new business needs, they do this by overlooking costs they may need. For example, if you are purchasing items for a retail store you may forget that you need clothes hangers to hang the clothes in the store. Many people focus their budget on immediate needs such as inventory and forget the smaller things that may become costly. It is imperative that new business owners have money stored somewhere as a backup for unexpected costs. New business owners are also known to spend money on things that are unnecessary. Of course you want your new business area to be gorgeous, with new desks for employees and a new building, but you have to ask yourself if it is really necessary. Is it absolutely necessary that I am in a new building with new things? If it isn’t you may want to look into different areas to start-up, sometimes the best place to start-up a new company is in your very own home.

Three Reasons Why Your Budget can Fail, and How To Ensure that it Doesn’t.


Yesterday, we were talking about some of the myths that people have about the budget. Continuing on the same line of discussion, today we are going to look at some of the common problems that turn a very well thought out budget plan, into a total failure. Many individuals have set out to change their financial destiny only for them to fall by the wayside because of very common mistakes that are made during the budget process. Lets look at three examples, according to JG Anderson, coming up with unrealistic figures, not taking into account the views of other family members who will be affected by the budget and (this one is a biggy) not budgeting for fun items, are some of the common problems that make a budget to fail.

Creating a budget is a fantastic first step in getting your financial situation under control, especially if you are currently having money troubles. Unfortunately, just creating a budget is no guarantee that your money situation will turn around – you need to be able to stick to it. There are many reasons why a budget may ultimately fail. Here are the three most common problems, and what you can do to overcome those problems.

1) The budget is unrealistic.

It’s very easy to come up with a budget that looks fantastic. The numbers say that you can save hundreds a month and be debt free within a year or two. That’s great – as long as the numbers are realistic!

The worst thing you can do when creating a budget is put in unrealistic numbers. It’s very easy to do this accidentally (by now realizing how much certain expenses really are, or even leaving out some expenses entirely because they are “uncommon”), but sometimes an element of wishful thinking can creep in as well. Needless to say, if the budget is unrealistic there is no way it can work. Take a few extra minutes to make sure the budget actually represents reality (even if it is an ugly reality), and you will be able to benefit from using the budget.

2) The budget doesn’t have buy-in.

If you live by yourself, setting a budget doesn’t require you to talk to anyone else. But if you have a partner or family, the worst thing you can do is suddenly turn around one day and say “you can only spend $X on this now”. At best you’ll get an argument. At worst your partner and/or family will begin to resent this new budget you’ve forced on them, and may even begin to ignore or sabotage it.

Instead of making a budget decree, it is essential that you get buy-in from others in your family when putting together your budget. Get everyone involved in looking at the figures, and working out how much money can be allocated to each area. If people know the entire situation, they will realize that you’re not just trying to ruin their fun or arbitrarily cut their money. Instead everyone can work together to better the financial situation.

3) The budget doesn’t allow fun.

When coming up with a budget, it’s very easy to scrutinize every single cent you spend and strike off every item that is some sort of luxury or “fun” item. While this can make your budgets figures look good, it is ultimately a losing situation. The budget will very quickly change from a benefit to a grindstone. When this happens, it is very easy to start spending extra money on the fun items you miss (“I’ve been good, just one little extra won’t hurt”) but aren’t in the budget. And since they aren’t in the budget, this gets you into the habit of ignoring the budget in other areas.

The solution is to ensure that any budget you create includes some money set aside just for fun. Whether it’s a meal out, money to go to the movies or just an amount you can spend guilt-free on shopping, you need to allocate this money for the fun so the budget you create can be maintained. Of course, this amount of money needs to be set like any other part of your budget, and once you set the amount you must stick to it.

Now that you are aware of the three most common reasons that a budget can fail, you are in the perfect position to ensure it doesn’t happen to you. A budget is the first step in getting control of your financial situation.

Simplify Your Finances, Five Strategies that Work.


Sometimes it’s not that we don’t have the financial knowledge that will have a positive impact on our finances, but rather coming up with the wrong strategies and then implementing them which leads to a financial loss. I believe that in this day and age, almost everyone has access to the same financial information, depending of course on the source of the information and other factors that will affect the quality of the content. Financial freedom is not rocket science, most of it will be in making strategies based on the gathered financial data, that hopefully will lead to a positive return. The following five strategies by Sara Carroll will not only lead to a positive outcome, but they will certainly lead to peace of mind.

When was the last time you saw the Dow Jones Industrials in the 8’s? Last year Americans paid more than 19 million dollars in credit card late fees. The economy is reeling from too much consumer consumption of everything from fossil fuels to super-sized homes, and utility bills. Your peace of mind and solvency are at risk now more than at any time since the 1980’s. The cost of education, health care, food and energy are escalating at soaring rates. It’s time to get organized, control your spending and simplify your finances.

Five Strategies that Simplify

Making a plan that works to decrease the paperwork, while taking more control of your finances, is a great mind-set in this unpredictable economic climate:

  • Stop using numerous credit cards. Pare down to one or two that you use advisedly. Pay on time and always pay more than the required minimum amount. Two cards are better than one, to demonstrate your good money management skills, for a better FICO score.
  • Choose a smaller community bank or credit union for your banking needs. Large banks charge too many undisclosed fees on checking accounts, and have rising ATM surcharges. Credit unions are now easier to join, and offer higher interest rates on saving accounts.
  • Make a budget, based on your income and the amount of debt you carry. Factor in payments that will allow you to pay off debt as quickly as possible. People who do the work to make a budget and follow its guidelines are often 30-40 per cent wealthier that those have no savings and spending plan.
  • Get rid of unwanted credit card offers and junk mail, to pare down on unnecessary paper shuffling, and temptation. Go to sites like Pro Quo and Catalog Choice to get the necessary forms which can be mailed in, to get off these mailing lists.
  • If you need to make a purchase, do the work to make price comparisons online, to get the best deals for your hard-earned dollars. Places like Price Grabber can help you make knowledgeable choices.

Good Results

Although the economy is floundering, you don’t have to let the stress of rising costs and shrinking investment income affect your stress level, health and happiness. The less paperwork, credit card debt and banking fees that have to be paid; the sooner the words “simplified” and “debt-free” will apply to your financial life. Planning, budgeting and strategizing to keep things under control and simple, is the most proactive way to stay in charge of your fiscal well-being. Make the investment of your time and effort to not only limit your purchases, and live within your economic means; but to budget for a future that is solvent and capable of sustaining your lifestyle when you no longer wish to be part of the active work force. Everyone needs to take some responsibility for the enormous debt that they acquire. By increasing your savings, and staying debt free, you help to stabilize the value of every dollar, while living a simplified and stress-reduced life.

Do You Suffer from these Five Budgeting Myths?


Yesterday, we were talking about how one can go about transcending their financial beliefs. This is one of the reasons people don’t achieve their financial goals, for example, having a ‘locked’ mentality about things that were taught by our parents sometimes are taken as the absolute truth no matter what. If you really want to change your mindset, you better ‘open’ up your mind to new ideas. A good example of a financial belief that is proving difficult for people to overcome is their view on budgeting, JG Anderson cracks five myths about budgeting in the following article that prevents a lot of people from coming up with a financial plan.

Budgeting has a bad reputation with many people. They envision a budget means calculating hundreds of difficult sums and spending hours each week tracking every single cent they spend, all the while being forced to stay at home and never have any fun. The truth is nothing like this at all. Below are five common budgeting myths, and the reality of the situation.

1) Setting a budget is hard.

Many people feel that the process of setting a budget is hard, requiring hours of complex maths or large periods of time slaving away over large piles of paper or an Excel spreadsheet. The truth is there are many ways to go about setting a budget. If you are someone who likes a lot of detail or working with numbers, there are budgeting methods that can involve lots of figures and time working them out. But there are equally other budgeting methods that are very simple and straight forward to set up. It’s all a matter of finding a budgeting method that’s right for you. If you’re not comfortable with the budgeting method you’ve chosen, you’re unlikely to stick at it.

2) It takes a lot of time and paperwork to maintain a budget.

Maintaining a budget does mean you have to keep an eye on how your spending, and budget match up over time (making tweaks to your budget if necessary), but very few budgeting methods require a lot of work and time to maintain them. Usually you will have a quick look at your budget when you get paid to ensure you’re on track, then get back to enjoying your money.

3) You have to be in financial trouble to use a budget.

A budget can certainly help someone who is having financial difficulties find their way out of trouble, but budgets aren’t limited to such situations. Anyone can use a budget. In fact, a budget is the best way to ensure you never get into financial trouble! Better yet, a budget is the perfect way to save up for an expensive item (like a holiday or the latest electronic gadget) that you know you will want in the future.

4) Having a budget means you have to suffer.

Budgets have a bad reputation because many people envision eating cheap noodles at home in a dark room lit only by a single candle, with absolutely no luxuries or fun allowed. But just because you have a budget doesn’t mean you have to suffer. Coming up with a budget is all about working out how to do the fun things you enjoy doing, while at the same time ensuring you have enough money left to pay the bills as they come in. Sure, in some cases you may find you have to cut back in some areas. But the only reason you would ever suffer after putting a budget in place is if you purposely set the budget up to make yourself suffer.

5) Budgeting means not spending any money.

Ironically, budgeting is really the exact opposite of not spending money – it’s working out the best way to spend your money! Sure, if possible there should be an amount in your budget set aside for savings. But even savings are simply putting aside money to spend in the future. All budgeting does is help you save money on little things you don’t really need now so you can spend the money on big items that you really want in the future.

Now that you know the truth behind these five budgeting myths, what are you waiting for? Get started today in setting up your own budget, and reap the rewards they bring!

Transcend Your Financial Beliefs!


We have been talking about the things someone needs to do in order to break this chain of financial misfortune, but I think we have been doing it the wrong way. It is easier to change inside out, rather than the other way round. W e should have started by changing our perceptions first, before starting to dwell on the measures one can take to improve their financial situation. So, how do we go about changing our mindset, Sharon Fredrickson explains how we can go about changing our beliefs which will ultimately lead to financial freedom.

Everything our mind does, it does from memory. If I say relationships, there is a little video technician in your head that grabs a highlight reel of everything you’ve seen, heard and/or experienced with relationships. The same of course will happen when I say “finances”. Again the little video technician in your head grabs the highlight reel and plays for you everything you’ve seen, heard and/or experienced in relationship to finances.

Remember, all the “stuff” in the past has helped and served you. It’s time to expand your recollection to allow for other possibilities. Education is the key and the most powerful tool we have. Educate everyone about finances. We need to eliminate financial illiteracy. Once you realize how to eliminate the past “self”, you will have a better understanding on how to create the new financial self you yearn to become. It’s time to bring to consciousness that which has been kept outside for so long. It’s time to expand your knowledge and belief in financial freedom.

Many people tell me that they and others are just not willing to let go of the “old” and embrace the “new”, and so let me make something clear. I am not asking for anyone to adapt a “new” belief, but rather to have a new experience of the old beliefs.  As I said before, your old beliefs in finances and financial freedom have served you, but it is time to transcend and grow those beliefs into a vehicle that can support you in the future. The greatest motivator out there is our beliefs. We do everything in our day-to-day world based on our beliefs. The current knowledge of our past financial beliefs no longer works and so it is time to open your mind to the possibility of expanded beliefs.

If you are not currently walking a clear-cut path which is leading you in a direction of achieving true financial freedom, then clearly your old beliefs and therefore, actions are no longer serving you and the only thing that can come from these old beliefs and actions are the exact same results. Albert Einstein’s definition of insanity is, “doing the same thing over and over again and expecting different results.”

Aren’t you tired of your same results? Aren’t you ready to move forward and create the financial life you not only desire, but deep down you know you deserve? If you even thought about answering yes to either of those questions, then I say to you once again, it is time to transcend yourself into a higher consciousness of what it takes to be financially free.

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