Personal Responsibility with Personal Finance: Acknowledge the Pitfalls and Fix Your Mistakes

February 19, 2013 By 5 Comments

Personal Finance - Budget for Your LifestyleThere’s no personal finance without taking personal responsibility.

You can say what you want about external factors but much of your financial situation is one brought on by yourself. Sure, there are those unexpected moments when you have to burn through savings (such as a major car incident) but the point of personal finance is to get you set up with proper money management regardless of how much you bring home.

The main elements of personal finance

PF comes down to just a few small actions to make the biggest difference in money management:

  • Understanding where your money comes and goes
  • Developing a routine for your savings
  • Creating a safety net through an emergency fund
  • Expanding your options and growing your wealth

Many people live outside their means which drives them to pitfalls and financial ruin. The best action one can take is to embrace a frugal lifestyle. No, you’re not being cheap and you’re not eating lentils every night – frugality is a way of life which trains your mind into understanding the smart, logical choices for your money.

Acknowledge what you’re doing wrong

It’s time to “man up” to how you’re spending your income:

  • Do you continually upgrade gadgets that don’t truly need upgrading?
  • Do you splurge on dining out when you could stay in and cook?
  • Are you failing to maintain your housing, transportation, and health?

These are but a few examples that many people let slip which eventually starts a snowball effect on their debt. Being unprepared for life’s curve-balls is what will drive you off the cliff of financial stability.

The only way you can truly fix your money mistakes is by knowing what’s causing them.

Take a cold, hard look at your finances and you’ll quickly realize what needs to be done; it’ll be an uphill battle but clamoring out of debt, setting a workable budget, and living within your means will give you a stress-free lifestyle that has no limits.

Get things in motion

One great way to get things moving is to undertand where you currently stand financially. This can be done by creating a basic budget or by using a resource like MyMoneyCheckup.org; a website and tool created in part by the Social Security Administration’s Financial Literacy Research Consortium (that’s a mouthful), funding from Ohio State University, and the National Foundation for Credit Counseling (which has been active since 1951 offering guidance on credit and debt reduction).

The tool itself is about as simple as you can get but packs a punch when it comes to personal finance education.

The tool will take you through a questionnaire in the main categories of money (budgeting, borrowing, savings, housing, retirement, and more). When you work through this tool and run the report, you’ll see the areas which need improvement; these areas are marked by green (good), yellow (okay), and red (bad).

Action steps:

  1. Come to terms with your ability to manage your money
  2. Understand where your money is going by using the MyMoneyCheckup tool
  3. Use the financial calculator (on the site) to reconfigure your finances
  4. Begin the process of rebuilding your financial education with the included resources

A simple 5 – 10 minute process, using the tool (which is also now available in Spanish) will give you the jump-start on “owning” your mistakes. It’s unfortunate that personal finance isn’t a skill most taught throughout school but one which you discover but there’s no reason to wait any longer – get started right this moment and you’ll never again need to be on the lower end of your finances.

You can find this helpful financial tool and resources over at MyMoneyCheckup.org.

 

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Don’t Know How to Start Saving? Motivate Yourself With These Gift Goals

February 8, 2013 By 1 Comment

Save Money

Although it’s important to be smart with money, it’s also important to treat yourself from time to time. But if you’re cash strapped, saving up for a fun gift may seem out of reach. Maybe you’ve always wanted to go on a fabulous cruise or purchase a large screen television. Because these are high-ticketed items, it can take awhile to save for these purchases. And if unable to reach your goal, you might get discouraged.

Fortunately, there is a better way to save. Rather than think big, think of inexpensive items you can save for today. It’s much easier to save $500 than $1,000 or more. And if you meet a small savings goal, this can encourage you to reach bigger goals in the future.

What are some fun things you can plan for in the future?

1. Plan a weekend getaway: Maybe your budget doesn’t allow an elaborate or fancy trip. This doesn’t mean that you’re stuck at home. Check into local cities or popular tourist spots within driving distance of your home. Perhaps you can plan a weekend in New York City, Niagara Falls, the Grand Canyon or Miami. Compare hotel rates and browse attractions to determine how much you’ll need to save. There’s the cost of your fuel, hotel, food and entertainment – but you can easily complete a trip for $500 or less. To make the trip extra special, consider unique activities. For example, if you’re visiting Washington, DC, you might pickup Washington Wizards tickets.

2. Update your electronics. Are you behind on technology, but want to join the rest of the world in the 21st century? Cellphones and computer tablets are constantly changing. And if you update your phone every 10 years, you might miss out on useful features. The cost of tablets and cellphones can be a major turnoff, yet a motivating factor to save your cash.

3. Check out designer labels. The average person can’t afford to spend thousands on designer clothes, purses, sunglasses or other accessories. But if you’ve always wanted a particular designer item, why not treat yourself? There are plenty of high-end products priced under $500, and if you start saving your money, you can have your wish list item in a matter of months.

Tips to Save Your Money

Of course, saving money is easier said than done. You might think, “how can I save when I don’t have extra money?” A common concern, but there are tips to help you spend less and put cash away.

  • Brown bag your lunch: Sure, it’s easier and more fun to join coworkers for lunch. But if you spend $7 a day on lunch, that’s $35 a week. Bring your own lunch and you can save $500 in about three and a half months.
  • Reduce grocery bill. Food is a huge expense, but simple tricks can knock several dollars off your grocery trips. Use coupons, take advantage of saving programs offered by the store, inquire about double coupon days and give generic brands a try.
  • Pick up a little extra work. Whether you’re babysitting on the weekends or asking your boss for additional hours, the money earned can help you meet your savings goals. Earn an extra $75 a week and you’ll save $500 in about seven weeks – or less than two months.

Saving doesn’t come natural for some people. Getting into a habit not only increases your personal wealth, but teaches the importance of waiting and then rewarding yourself for hard work. Think of a fun gift that you’ll like to give yourself or someone else in the near future, and make this gift your motivation for saving your cash. 

 

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7 Easy Ways to Save Money on Credit Cards

March 29, 2012 By 14 Comments

Saving Money Requires More Than Coupons and Sales

During financial troubles, many people rely on credit cards to make purchases. However, the interest rate on credit cards is high. Therefore, it could cost you a significant amount of money down the road. Here are the top 7 ways to save money on credit card interest, so that you’re not strapped for cash forever!

1. Obtain Your Credit Report

The higher your credit score, the easier it will be to get better interest rates. Contact a credit bureau and ask for a copy of yours. You should look over your report and correct any inaccuracies. If the report contains a mistake, it could lower your credit score, so you need to do it ASAP before some bank or credit card sees that.

2. Contact Creditors

Contact each of your creditors to ask them what you can do to lower your interest rate. If you have paid your bills on time, you might have some negotiating power. Credit card companies are very competitive, so they want to try to keep your business. If the credit card company is not willing to lower your rate, you might want to consider switching companies – you can likely find a great introductory deal.

3. Compare Companies

If your current credit card company is charging you a high rate of interest, compare offers to see if you can find a lower rate. You might be receiving enticing offers in the mail but have just chucked these aside? It might be worth it to take look at what the company is offering. You could find a great deal!


4. Claim a Hardship

If you are to a point where you are really struggling to pay your bills, you need to call the credit card company and explain your situation. Credit card companies want to be paid, so they might be willing to work with you, so they can get their money in the long run (a few months or even years is nothing to them). If you file for bankruptcy, they will not get any money from you, so it’s in their best interest to negotiate.

5. Pay Off Credit Cards

The main way to save money on credit card interest is to not have a high balance in the first place! Collect all of your credit card bills and compare interest rates. Pay off the high interest rate cards first, and quit charging on those. It might help to create a budget and make a plan too.

6. Transfer Balances

Many credit card companies offer deals to entice you to apply for their cards. One of the deals that might be offered is a 0 percent interest rate for a certain amount of time. If the balance transfer fee is low consider transferring your balances on a high interest card to a new card. However, keep in mind that the introductory period will expire at some point, so you need to try to have the card paid off before the introductory period is complete.

7. Get a Home Equity Loan

If you have several different credit cards with high balances, you might consider getting a home equity loan. After receiving it, you can pay off all of your credit cards. These loans offer much lower interest rates than credit cards, so shop around to find the best one. Then, cut those cards up!!

Have another trick to save money on credit cards? Let us know!

[box_light]This is a guest post written by Jill Ramone. Jill  likes to save her family money with Life Insurance Quotes. [/box_light]

Image courtesy of marsmet543.

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Simple Living for a Better Life

September 3, 2011 By 3 Comments

It only takes one episode of Hoarders to make me want to get rid of all the stuff in our house. Individuals on that show are obviously extreme examples of people with too many possessions, and perhaps throwing out all our stuff would be an extreme reaction. Nonetheless, I’m someone who believes in living simply. Don’t get me wrong – I don’t live in a commune or a convent. I live in a modest house with typical belongings, but I do try to keep our possessions to a minimum.

If you think about it, things we bring into our home cost more than just the amount on the price tag. They also cost time and energy to use and keep organized, as well as space to store. Not to mention the distress we put on ourselves by living a cluttered life and trying to “keep up with the Jones’.”

Obviously, buying fewer things will save us money, but living simply goes beyond frugality. It’s about using only the resources we need and being grateful for what we’ve been given. It’s about thoughtfulness, awareness and putting our family resources into what’s truly important to us.

My favorite singer/songwriter is a lovely woman named Sara Groves. She wrote a song called, “All I Need,” which nicely sums up how easily we can go from having everything we need to feeling like we need more and more.

“All I Need” by Sara Groves

Newly married, new apartment
All our furniture was saved from the dump
Yes dear maybe we can afford a trashcan next month

All I need is my love for you and a seat for two

New baby new life
We will teach him to speak French
We’ve got no money so we’ll make it all ourselves
I’ll make the curtains and you make the shelves

All I need is a power saw and a new sewing machine

Honey, this house needs a little something
That bare mantle doesn’t look so good
Someone told me of a man
Who makes animals from driftwood

All I need is your monthly bonus for a wooden walrus

Honey, the Colbaughs are coming over
This house needs some renovations
Just a wall or two, just a little room
And a few new decorations

All I need is a sectional and a satellite TV
and dark-wood cabinets that were custom built for me
and a painting by that guy that paints with his feet…

That’s all I need
For now

 

Photo courtesy of Nana B. Agyei.
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Budgeting with Envelopes

August 13, 2011 By Leave a Comment

My husband grew up in a home where all the money budgeted for the month was withdrawn from the bank at the beginning of the month and then divided into envelopes that represented budgeted categories. My in-laws are some of the thriftiest folks around; I really look up to them. My grandparents use a similar system. A few years ago, it became necessary for my family to tighten up the purse strings, and operating mostly with cash from envelopes really appealed to us. We have budgeted in this way ever since.

This is a system that we have really liked. It gives us a sense of control over our money; we can visualize what we have left to spend for the rest of the month at any given time. It reigns in our unnecessary spending and provides checks and balances where there used to be none.

My in-laws use their cash budget envelopes for almost every category: car expenses, clothing, gas, gifts, groceries, house insurance, household items, license plates, medical bills, taxes, vacation, individual spending money, child sponsorship, and even one for the dog. They keep a binder with sturdy envelopes attached to the rings. At the beginning of the year, they figure up what the yearly expense will be in each category, divide each one by the twelve months, and then put that amount of money in the individual envelope each month.

We are not quite so sophisticated yet at my house! We still use our debit card for gas and for unexpected expenses — although we still have individual budget areas, even for non-cash categories. When we began, we had a grocery envelope, an entertainment envelope, an eating out envelope, and individual spending money. I used to keep a little cash from each category in my wallet; I paper-clipped a label to each amount and kept track of it that way. That system worked well for us. We noticed a huge difference in the areas of grocery shopping and eating out. When we ran out of eating out money, we just had to stop eating out for the rest of the month!


More recently our income has gone down significantly, and we have adjusted our budget accordingly. We now have two envelopes: groceries and miscellaneous. Groceries work like they had been working — we grocery shop within our allotted budget and we don’t go back to the store in a given month if we run out of cash. Our miscellaneous money is around at the beginning of the month in order to cover unexpected expenses that may arise. If, by the end of the month, we still have some cash left then we can use it on entertainment or eating out. Most months that is the case, and it is a real treat!

Moving to a cash budget was a big step for us, but we have found it to be a good discipline. It keeps us on track. Someday it will also be a good, concrete tool to help us teach our kids about being frugal and living simply — two of our deeply held values.
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Using Credit Cards Wisely

August 8, 2011 By 1 Comment

Credit cards can provide you with several benefits, including emergency funds, purchase protection, program rewards and a credit history to improve your credit score. However, without being careful, it can be easy to misuse credit cards.

Improper credit card use can affect you financially, emotionally and physically. Among the financial dangers are overspending, too much debt and bankruptcy. Financial stress can lead to depression, insomnia and heart problems. You can avoid these problems by using your credit cards wisely and responsibly; here are few tips how:

  • Pay off your credit card balance every month and on time. Doing so will help you avoid finance charges and late fees.
  • Only charge what you can afford to pay now. It’s easy to think to yourself, “Well, I don’t have the money for this now, but I will soon.” That’s a dangerous way of thinking that will get you in over your head quickly.
  • Call your credit card company and ask for a lower interest rate. They might lower it, especially if you have a good credit score and excellent payment history. They definitely won’t do it if you don’t ask.
  • You know those “blank checks” your credit card company is always sending you in the mail? Shred them. They’re not actually checks; they’re actually cash advance loans with ridiculously high interest rates. They also don’t provide the same purchase protection as your credit card.
  • Limit the number of credit cards you have. Experts say you should have between two and six cards. Applying for too many cards can negatively affect your credit score, as can closing credit card accounts.
  • Pay more than the minimum monthly payment. It could take you 30 years or more to pay off your balance if you pay only the required minimum. Look on your credit card statement for exactly how long it will take you to pay off with the minimum payments.
  • Keep a keen eye on your account. Keep track of your charged purchases with receipts. This way, you can dispute any questionable charges that might show up on your statement at the end of the month.
  • Don’t ever lend your credit card to anyone. Sign the back of the card, and if your card has a PIN number associated with it, don’t ever share the PIN with anyone.
  • Read the fine print. Many cards offer a low interest rate at first, only to raise it later. Be aware of the grace period, annual fees and any other fees.

Photo courtesy of Andres Rueda.
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How to Make a Family Budget

July 25, 2011 By Leave a Comment

Like it or not, budgeting is something every family should do. Creating a budget is necessary if you want to make sure your money goes where you want it to go. A budget doesn’t have to be painful; it’s simply a plan.

The first step in home budgeting is to look at how you are actually spending your money. This can be a real eye-opener for some people. Frankly, some people don’t want to see how they are spending their money because they know it probably isn’t going to be pretty. It’s better to figure it out now, though, before your current spending habits get you into trouble down the line.

Next, evaluate your spending and set goals for how you want to allocate your income. This is where you plug a certain amount of your income into each expense category to meet your family’s needs. Important: Give every single dollar a job for that month. Whether it’ll be spent or put into savings, it must have a place to go. This is how you’ll control your money, rather than having it control you!

The final – and ongoing – step in creating a family budget is to track your spending and make sure you’re meeting your goals. Your budget plan won’t necessarily stay the same every single month. You might need to alter your guidelines according to your changing needs, and that’s OK.

Resources

You might be wondering how you’re going to make up this budget. Fortunately, there are tons of resources available to help you write and stick to your family budget. Some people prefer a more detailed approach (me!), while others may want just a basic outline. What’s important is that you make your budget in a way that will work for you and that you’ll stick with.

My favorite budgeting program is called You Need a Budget. You pay once to download it, but then it’s yours and free to use.  YNAB helps you give every dollar a job and makes it easy to create sinking funds for occasional expenses, like property taxes, Christmas gifts and car maintenance. Several other software programs are available – some for free or preinstalled on your computer – including Quicken and Microsoft Money. Mint.com is free, but I find it more useful for tracking your spending than actually making a plan for the future.

*Here’s a simple budget worksheet from Dave Ramsey to get you started. Here’s another from the frugal living guide at About.com: Budget Worksheet

*This is a handy budget calculator to help you decide how much money to allocate to different categories.

Good luck making your family budget! Do you have any budgeting tips to share?
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Putting Yourself in Debt, Just to Get Your Child Gifts?

July 17, 2011 By Leave a Comment

Have you ever caught yourself spending more cash than you can really afford, just to make your child happy? This spending can put you in a financial bind that can take months or longer to pull out of. [Read more...]
Filed Under: Education, Frugal Gifts, Home & Family, Keeping Control Tagged With: , , , , , , ,
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