Saving Money Grocery Shopping
Most consumers want to save money to live a better a life whether it is to reduce debt or reallocate the resource they have. One key budgetary item that can almost always be reduced is the monthly food bill. Making a few changes to how the average consumer handles shopping for food can make a big difference in how much they spend per month. When it comes to budgeting and cheap home living, food items is the one area where most individuals can realize significant savings.
Saving money at the grocery store doesn’t have to be hard work. It simply requires some small changes in preparation and shopping habits on a regular basis. Some planning is required to make it out of the grocery store without being drawn into buying items we just don’t need. These changes to purchasing grocery items and planning can lead to big savings on the amount you’re spending on groceries.
There are several steps consumers can take to spend smarter, reduce the number of trips to the stores and overall spend less money on household and grocery items. Here are some tips on how to cut down on some of your food and grocery bills. Remember, saving money will require some self discipline.
Create a Food Budget. When it comes to saving money planning and creating a budget is always the first step. To help cut grocery costs we need to create a food budget. It is hard to plan on saving money on without knowing how much we are currently spending. To build the food budget it is necessary to know how much you are spending. Determine how much you have averaged spending per month on groceries over the past three months and use that as a starting point to analyze the average amount spent and use this opportunity to view any potential waste in resources, either financial resources or time resources.
Plan Meals. Planning meals reduces waste and saves time at the store. When planning meals in advance individuals and families will tend to buy fewer things they don’t need, waste less food and free up time shopping and at home. Planning meals also leads to more home cooking, which is the number one food saving practice as well as a process to healthier eating. Planning your meals should involve some standard meals that can always be prepared with frozen goods and pantry items but should also work around what is on sale at the grocery store. If you plan your menus a week or a month in advance, you will be able to take advantage of sales and bulk buying opportunities. You may find that you can cook similar main dishes all on one day, and then freeze the others for later. Planning meals will help you take full advantage of the stores sale prices for future meals.
Organize Your Recipes. Not a common tip for saving at the grocery store, but organizing and building a recipe database prepares you for coupon clipping, reviewing your food needs and cooking at home more. Cooking at home more is a central element in saving on grocery bills and living a healthier lifestyle. Cooking from scratch no matter how simple or complicated, avoids processed foods which are some of the most expensive items in the grocery store. Get out the knives and pans and save on all those over priced chopped and prepared convenience food products. Reducing your food bill can be facilitated tremendously by planning meals and knowing what you can make before going into the grocery store.
Always Use a Grocery List. Using a grocery list will help plan for your needs in advance, so you can take advantage of sale prices and avoid those costly impulse purchases. The key element is to stick to the items on the grocery list. Buy only what’s on your grocery list, don’t buy anything that isn’t on it. And be sure to check to see what you have on hand so you don’t buy an abundance of duplicates or similar products. A grocery list is one of the first lines of planning and will prevent consumers from making impulse purchases as well as avoid the waste of time incurred from return trips to the store because of forgotten items.
Use Grocery Store Coupons. Coupons can save money plain and simple. Clipping coupons doesn’t take more than a few minutes a week and they work. Remember to only use coupons for those items that you need on your grocery list. Grocery coupons can be found in many places, including the Sunday newspaper, magazines, weekly mailers and online. Don’t forget to check the store’s website for printable coupons as well. Not using coupons in a crime and punishable by an extended stay in debtors prison. Don’t waste the opportunity.
Buy Food in Bulk. Buying in bulk almost always saves money on the unit cost of a grocery product. Buying bulk should be done on pantry items and non perishable as well as on items like packs of meat, chicken and fish. These food items can be divided into smaller portions and frozen. Each portion can now be used to help with meal planning and home cooking. Not only can you save money on the unit costs but you can cut down on the number of trips to the grocery store and save time again.
Buy Generic When Possible. Generic food items foods are almost always less expensive. Most generic and brand name products contain the exact same ingredients and generally have the same quality as name-brand products. It may help to try various generic items and keep notes on what’s good and what’s not so good. You can save a lot of money by switching to store brand goods or by buying the brand that is on sale.
Buy Nutrition, Not Snacks. Avoid the temptation of spending money on snack foods like potato chips, ice cream and soda. These grocery items are expensive often very expensive and unhealthy. Snacks also tend to be disposable and you are not paying very much for the food but rather the packaging. If you need to have some snacks buy large sizes and re-package in small baggies. Also, consider eliminating soda from your diet and drink more water. Buy concentrated juice containers as a substitute. Make sure to stay away from cartons, extra water adds extra cost. This also means stay away from bottled water. Bottled water is costly for both your budget and the environment. Buy healthy and eat healthy while saving money.
Think Cheap for Cleaning Supplies. Be cautious about adding non-food items to the grocery list. Stay away from the expensive brand name cleaning supplies. Old wash cloths and towels make great cleaning utensils and can be reused. Save money by avoiding all those disposable cleaning supplies not to mention freeing up more space at the land-fill. For many cleaning supplies and toiletries it is generally worth a quick trip into WalMart or other discount store to stock up on these products. Toiletries should only be purchased in bulk and when they are on sale not because they are available at the grocery store.
Be Organized. Use a notebook to make notes on stores, sales, coupons, prices and more. The notebook will make it easier to track the sources and prices of the foods purchased most often. The notebook will also help to identify where to shop for certain items. You may even try shopping at different supermarkets to compare pricing. Be organized and keep notes to help keep informed on what’s on sale and whether it’s a good deal.
When it comes to saving money at the grocery store, every little bit counts and over time the financial savings can be significant. And once you start to use these tips regularly the savings will compound and saving money will become even easier.
Three Big Time Budget Busters
No matter how much money you earn, a little or a lot, you need a budget. One of the most important things you can do with your money is tracking how you spend it. A good budget saves money in the short term and over long periods of times. Money savings that can be used to assist personal financial goals or to allocate resources to more beneficial or desirable endeavors. Budgeting can help you to create a financial plan that includes investments and savings, but you need to recognize and avoid the pitfalls that can bust your budget.
Avoid Impulse Spending
Modern society will try to convince you that you need the most modern and updated toys available, even though yours work just fine. Marketers are paid lots of money to arrange the grocery store so that you’ll be tempted to buy things you don’t need. Why do we find ourselves wandering at the shopping mall, looking for nothing in particular? These extra purchases can bust your budget in a major way, especially if you buy these things on a credit card that you don’t pay off every month.
Before you go to the store, make a list of what you need (plan meals ahead if you have to), and stick to your list. Don’t look for recreation in places that you will be tempted to spend more money than you have. You work hard for you money, stop and think about how hard you want to work to have that gadget you saw on television that does only one thing. Conspicuous consumption of non durable products is probably the biggest single budget busting expense that has little reward.
Reevaluate Your Utility Usage
In many European countries where energy costs are very high, consumers turn off their water heaters during the day to save electricity. A hundred years ago, it was simply unthinkable to leave the light on when you go to work. Can you really watch 400 channels of television? Sometimes it pays to evaluate how much of a utility you actually use, and which ones can go. A large number of people are canceling their home phone lines and using just a cellular phone, while others are bundling phone, Internet, and television into one low fee. Check around for what will work best for you, and you may be surprised at the cuts you can make with little or no change to your lifestyle.
Utility savings not only conserves money but more importantly helps the environment but consuming less fossil fuels and energy that pollute our environment.
It’s the Little Things that Kill
It’s only five bucks, right? That daily trip to the coffee shop before work will cost you $100 per month. If you buy lunch twice a week instead of packing it yourself, that’s another $80. Everybody has a vice- whether it’s online auction sites, music downloads, or weekly celebrity magazines. Start small and eliminate your vices slowly. Give up one trip to the coffee shop per week and put that money in an envelope instead. See how much money you’ve managed to tuck away. If you were to put $20 a week into an interest bearing account, you’d be set for retirement in twenty-five years. Now how much do those cigarettes cost? Conserving money on these expenditures doesn’t mean living like a miser.
Home made products save money are generally safer and once again are less of a drain on our environment. Bottles water is both expensive and generally no better than tap water let alone the production and disposal of water bottles is a clear detriment to our environment.
Saving money often has other positive consequences not just the conservation of money. Saving resources and preventing detrimental environmental damage is certainly one. Freeing up resources to allocate them for more worthwhile endeavors is another. The resources don’t have to be money either. Time is one of our most precious resources. Time with kids, time with family, time on charity or church groups. Watch the budget busters and save – in more than one way.
Quick Tips to Save Money on Heating
Saving money on winter heating bills can often be done with very low expenditures or hard work. Management of your existing resources is the biggest factor in reducing the heating expenses. A pleasant side effect is the less energy consumed the less emissions there will be polluting our environment. Save money and do a little to help to stop the damage to the environment caused by burning fossil fuels in your furnace.
1. Replace your old thermostat with a programmable model. Low-cost programmable thermostat models sell for around $25 and can easily pay back their cost within a couple of months. Better yet, they can save you more than $100.00 each year. The simple value of programmable thermostats is the device will automatically change the trigger on the thermostat for the home temperature so the heating and cooling of the house is operating more efficiently at the right time of day. For example, keeping the heat high at night while a family sleeps is clearly an inefficient use of heat and money. The programmable thermostat can be set to automatically drop the temperature at night time and then automatically turn it up at preset time in the morning. The thermostat can be preset to also turn the heat down during the day to let sunshine warm a home or keep the heat off when the family is not home. A programmable thermostat is pretty much a must have device based on costs and savings.
2. The follow up to the programmable thermostat is general rules on setting the temperature in the home. Be sure to set your thermostat as low as possible in the winter while still being comfortable. The closer your indoor temperature is to the outdoor temperatures, the lower your overall heating bill will be. If you still don’t use a programmable thermostat, shame on you, and make sure not to set the thermostat at a warmer setting than normal when you first get up. This will not warm your home any faster and it usually results in excessive heating which costs you money.
3. Check for window air cracks and spaces where the cool air can coem in. Repairing even some leaks can save a fair amount of money. Loss of heat from drafts along windows is a big drain on the heating system. Repairing these cracks and leaks can be performed by caulking along the frame and making sure the window as well as the storm window shut tight and snug.
4. Seal the leaks along door openings as well. Check to see if you feel a breeze at the bottom and sides of your door frames and doorways. Purchasing door blocks and sweeps to help block the flow of cool air will keep your rooms warmer and use less energy.
5. Close the heating vents in rooms that are rarely used. There is no use heating a room that nobody is using. The one issue you need to take care about is determining where your thermostat sensors are located. If they are located in a room that you close off, you may actually make your furnace work harder as it tries to warm a room that you have effectively shut off. Follow up by closing the doors to rooms that are not often used. This will keep the furnace from heating more space than necessary. Keep all your closet doors closed. There is no need to heat your closets during the winter.
6. Use the power of sun for heating and protect against fast cooling. Close the curtains on north facing windows to add an insulating barrier. This will help shield them and make it easier to keep the house warmer. Opening any curtains on the south side of the home along the windows will let in more sunshine. Be sure to close them after the sun has gone down. Using the sun and the warm and cool air outside of your home properly can help maintain room temperature and help avoid unnecessary use of the furnace.
7. Have your furnace checked periodically by a professional to make sure it is operating efficiently. Not only will this save you money now by having it work at top performance, it will also save you money in the long run by extending the life of this equipment. Dirty filters and dirty valves reduce the furnaces efficiency measurably. Maintenance isn’t necessary every year and you can inspect the furnace yourself as well as change the filters by yourself, the filters are cheap and should be changed every two months. Change your furnace filter once a month. Dirty filters reduce airflow, making your furnace work harder and lowering the performance and efficiency of the entire heating system which ultimately costs you more money
Remember, saving on the heating bill can come from very quick and easy patches in the system. Ignoring these drains on heat use may only cost a few to several dollars a month but these numbers add up quick. And saving on heating costs not only helps the family budget but helps reduce emissions and helps the environment. Cuddle up under that blanket at night with a movie at home and save money while you save the environment.
How to Make a Budget
Suggest making a budget and most people would rather visit the dentist. But a budget is just a method to keep track of your money and let you use it as you want. It lets you manage your money instead of letting your financial obligations manage you. Having a budget helps save money and allocates your resources in the most favorable way. The other important point to remember is that you will adjust your budget over and over in life as circumstances change. No matter your income level, everyone owes it to his or her financial future to have a budget.
One significant facet of a good budget is using it to work towards common goals such as saving money, allocating more resources to pending big purchase or simply leading a better lifestyle. A budget should shows you exactly where your money goes and provides a spending plan that lets you save for the things that are important to you: a new house, a new car, a comfortable retirement, a college education, travel, or whatever your particular goals and dreams happen to be.
The key to developing a budget and living within it is not complicated, but requires an investment of time. Here are the basic rules to make it work:
You have a good understanding of how you spend your money. If you tried keeping a money diary, you are a step ahead.
You have a system to organize and pay your bills and balance your accounts on a regular basis.
You have an emergency fund equal to 6 months of salary in the bank.
Step One – List your fixed expenses.
These are the expenses that do not change from month to month. Examples are rent or mortgage, car payments, auto insurance, electric bill, your cell phone or money you set aside for school tuition. You could also include the cost to park your car at work, a baseline amount for gas each month or bus fare. Some of these may vary slightly, but the more that you can establish as a typical fixed cost the easier it may be to manage your money. Remember to include bills that you may pay once a year or quarterly as a monthly expense. These may be your property tax bill, quarterly insurance bills, club memberships or private school payments for your kids.
Step Two – Your Variable Expenses
These are the expenses that vary each month and while you can control them, if you are like most folks, some of them seem to get out of hand at times. Items in this category include meals out, groceries, going to the movies and other entertainment, and buying clothes. Include debts on credit cards in this category.
If you have kept a money diary, refer to it to determine how much you spent the past few months in each category. Or look back at your bank statements for a couple months. This way you can determine an average amount spent at the grocery or for meals out. Debit card receipts will help find all expenses – even the small ones. The more detail you can assemble the better. If you use cash for a lot of transactions, you should try to figure out where the cash went. This will help get accurate totals for the areas of expense that are not necessities but add up quickly.
Add up all the expenses and compare to your income. This is where your money goes.
Are you spending more that you earn each month? Is there money that you cannot track at all?
Try to cut spending in your largest variable expense by 5-10%. For most of us this is usually for food – at the grocery or eating meals out. Try packing lunch instead of eating out every day or reducing the amount of prepared meals you buy at the grocery store deli. Little changes can add up.
Do you have money left over?
Congratulations!
Are you saving enough?
Increase you contribution to your retirement account, set up an automatic transfer to your saving with each paycheck. Do it now and let the power of compound interest and time, work for you and your money.
Finally, be realistic. After setting up your budget, don’t obsess if your spending doesn’t match your budget every month. Remember a huge part of your budget is made up of variable expenses. Be flexible and willing to adjust the numbers now and then. For example, when the price of gasoline spikes again, you will know what to expect.
The Trial Budget – To Help Get Ready for Change
Once you have developed a budget and have some experience in adjusting it to fit life’s changes, you will realize the value of a trial budget. At various times in life you will find yourself contemplating a change. It could be a move, a new job or time off to care for a new baby. You can use a trial budget to see what living with a change in income or expenses would be like.
Thinking of buying that first house, or contemplating buying a larger one?
Use a trial budget to calculate mortgage payments, changes to insurance costs and even an increase in expenses to commute to work after you move. Before you make the change, try setting up the new budget and live with it for a month or two while you look for your dream home. Assuming your expenses would increase, calculate the increase and put it in savings so you have to live with the new spending constraints. This will give you the confidence to make the change for you and your family – and increase your savings at the same time.
Short Term Savings: How Much to Save
Budgeting should always include a savings component. When savings are low it becomes even more important to find ways to cut back on expenses, live more frugally and start a savings plan or ramp up what you already have. We are all guilty of spending too much which leads to waste of physical resources and financial resources. This waste ultimately impacts our ability to save more money. Money that we need for long term savings goal and short term savings needs.
There is no question that you need short term savings. The next logical question is exactly how much you need to have in your short term savings accounts. The answer varies by the individual.
Your Age and Family Situation
Your age and family is a large factor in your savings plan. Young, single individuals need considerably less than families of four sending children off to college. Short term savings should cover three to six months worth of living expenses as well as any planned major expenses in the next three to seven years.
A young, single individual with bills of $1200 a month who just graduated from school with a new car gifted to her by her parents can save $3600 and be fine – at least until she gets married, decides to buy a condo, plans a month long vacation to Europe or any number of other planned expenses. As situations change, your savings plan changes as well, so always be reassessing your needs.
By contrast, a married couple about to send their child away to college and looking at a career in a declining industry after decades of hard work need a full six months of living expenses in short term savings as well as the cost of college tuition. There is a greater likelihood of losing a job, and despite years of experience, it may take longer to find a new one. If the couple lives in an aging house, they must also be saving for major improvements such as a new roof or foundation work.
Risk Tolerance
Your age also determines the best way to invest your entire portfolio. The older you are, the more you should have in liquid assets. The stock market is inherently more risky than bank CDs or money market accounts. Money invested in stocks can grow at a much faster rate than money in liquid assets, but that same growth can spiral down in a moment and take years to recover.
The older you are, the more money you need invested in your short-term savings accounts to protect yourself from the fluctuating stock market. Young people need less in liquid assets for short term savings as they can afford to take a long view of the stock market. It may be that a young person or couple has only three months worth of expenses in short-term savings with the remainder of their savings in stocks. An individual approaching retirement needs six or seven months of living expenses and planned expenditures in short term savings for adequate protection.
Basic Needs
At the most basic level, the amount you need in short term savings is tied directly to how much you spend every month. Your short term savings account should contain three to six months worth of living expenses. If your living expenses are $2000 a month, your short-term savings needs to contain $6,000-$12,000 at the minimum.
These savings are designed to cover your household expenses should you lose your job or encounter a situation where you are unable to work for a short-time. Your account must also include funds to protect you from other, smaller emergencies such as car repairs, emergency home maintenance and medical emergencies. Remember that the more dependents you have, the more likely you’ll encounter an expensive emergency.
Planned Expenses
Finally, your short-term savings needs to include any planned expenses you foresee in the next three to seven years. New cars, new homes, travel, and college tuition all can fall under planned expenses. And with the continual addition of new trips, procedures and large ticket items to a household, the need for planned expenses is ever changing. Be sure to review your savings plans periodically to ensure you are saving adequately for the future.
Short term savings can be used for emergency funds or for projects that you wanted to do but either didn’t have the time or the financial resources to start. Projects that can be for you or your family or charity work to help others not as well off. Saving money by cutting back on unnecessary expenses can help improve your lifestyle or be used to help others. Either way, cheap home living is a good way of life. Start savings now.
Budget Your Way to a Better Tomorrow
You may cringe when you hear the word budget, but a budget doesn’t have to be a bad thing. Most often you hear a budget in regards to tightening down your spending and you envision this as giving up the things you enjoy and perhaps feel entitled to after a time of doing without.
The real purpose of budgeting is not to punish you or try to make you the kind of person you don’t want to be. Rather, a budget is an accounting of your spending habits so that you can anticipate your monthly expenses and start sending money to the bank. And the money in the bank is the ultimate reward. It offers peace of mind and real perks such as early retirement and major investments such as a new home. For those who are having trouble paying bills and keeping up, a budget will help manage the debt and improve your credit profile. Surely that’s worth giving up a few lattes…
Find Your Savings
If you’re already saving, you are well ahead of the majority of people today. But it could very well be that you’re not saving as much as you could (or should.) Creating first an outline of current spending and then a budget to help eliminate waste can help you find more money to throw into savings to buy you that early retirement.
Begin the Budget
If you are technologically savvy, you may enjoy using software such as Quicken to work through your budget. But you can track spending and create a budget on the back of a napkin if it’s large enough. Your first step is to keep track of all your spending for the month. Be sure to include everything in detail. Just how many cups of premium coffee are you drinking and what about those trips to the vending machines? Of course your bills are included, but it’s often the small items that add up and are overlooked when putting a budget together.
Once you have your list of expenses begin sorting them into categories. This is where financial software may have terrific advantages. That’s not to mention the software can also connect directly to your bank letting you skip a time consuming step or two.
Your categories should include fixed necessities such as mortgages, car loans and insurance. Then consider your other necessities such as groceries, utilities and phone service. Finally, dump the rest of your spending into unnecessary spending. If you’re enjoying your software you can sort it into categories such as entertainment and clothing, but that isn’t necessary for creating a basic budget.
Create the Budget
Create your budget based on two things – your income and your expenses. Your income should be the first item on the list. Include your salary and any other money you make during the month whether it is from investment or alimony. Then, start deducting expenses. Obviously fixed necessities will go first followed by other necessities. Unnecessary items will bring up the rear.
If you find you should have money left over on paper each month, but don’t in actuality, you likely left off some of your spending or just spent less this month, which can easily happen if you’re suddenly recording every dollar you spend. But that’s actually a good thing. Money left over after a month without a budget can go immediately to savings. Obviously you don’t need it, so save it.
Then, examine the rest of the budget. Are there obvious areas you can cut such as premium cable channels you don’t watch or five trips to the vending machines a day? What if you ate out less frequently or chose less expensive restaurants? How much could you save by giving up your home phone and just using a cell phone?
Trim as much excess as you can without making your budget uncomfortably tight and then commit those savings to a separate bank account. Over time, that account will grow nicely. As you get raises and windfalls, save at least a large portion of that money to increase your savings as you should be living comfortably within your budget. If you find your budget is too tight, look for extra items that you can do without to give yourself more money for the things you need. Try to avoid taking money out of savings as it is doing much more for you earning interest for the future.
Pay Off Debt or Save? Do Both!
If you’re living from one paycheck to the next, you’re likely just biding time until an emergency forces you into debt. If you manage to pay the bills but have nothing left for savings, or worse, you have to borrow from one source to pay bills to another, you have a budgeting and possibly a debt problem to solve.
But if you’re taking care of your debt, should you be concerned about savings, too? The short answer is yes. If you’re struggling to find money to save every month, it is likely the lack of savings got you so tied up in debt initially. If you’d had some money in savings over the holidays, you wouldn’t still be paying off Christmas presents in July. There are ways to save while you pay off debt, and you should really be doing as much of both as possible. With your hard work and dedication, you should have your finances turned around completely within the year.
Understand Your Position
If you’re going to save and pay off debt at the same time, you need to first understand your total financial picture. Take some time to pull together your records. How much do you have in savings currently? Where is it located – retirement funds or liquid assets?
Then work through your monthly expenses. How much are you spending and where? Find all of the small expenses you make throughout the month to gain a good overall representation for where your money goes. Subtract your total expenses from your total income. If there is money left over, you automatically have funds to start paying down debt and build savings. If you’re currently spending more than you’re making you can see where that debt is coming from and can start working to reduce it. Of course you’ll have to cut expenses in the meantime.
Using Savings to Pay Debt
If you find that you have money in savings accounts other than retirement, but also have credit card debt, you may be able to take care of your debt problem in one fell swoop. Don’t use all of your savings to pay debt. Subtract the amount you expect to spend over the next year or two from what you currently have in savings (plus a little cushion for emergencies) and then use the rest to pay off the credit cards with the highest interest rate.
If you can pay off all of your debt, do so as long as you’re not compromising your security or retirement. Then take the minimum payments you’ve been using to keep your debt alive and immediately return the money to savings over the course of the next few months. You should also budget to find more money to save as minimum payments aren’t likely to add up very quickly. Unfortunately, most people in trouble with debt don’t have any savings to speak of. This means they must save for emergencies while trying to rid themselves of the credit card debt the last emergency left behind.
Build Savings
To build savings, begin by working with your budget to see what areas can be trimmed. Then allocate a portion of the money that is not being used for bills to savings and save the rest for debt. The money going toward savings should be deposited directly into a bank savings account or money market account if possible. Arrange to have the savings pulled from your paycheck and deposited into a separate savings account before you even see the money. If you don’t see it, it’s unlikely that you’ll miss it. Initially your savings will be small, but as you pay off your debt, rather than using that money for new items, roll over the money usually reserved for debt payments into your savings accounts. When all debt is cleared and you’re saving all that money you used to be spending, your accounts will grow very quickly indeed.
Paying Debt
You’ve allocated a certain portion, probably no more than half, of your variable cash to savings. The rest goes to pay off your debt. The more money you have to allocate to credit card payments, the more quickly they will be paid off. Of course, if you neglect to save, you’ll just run your credit card back up when you need to pay for something unexpectedly. To maximize both savings and pay offs, tighten your budget as much as possible, at least for awhile. Eat in and give up some luxuries until your finances are back under control.
To pay off your debt as quickly as possible, start by arranging all of your loans and credit cards by interest rate. Revolving credit lines, such as credit cards come before installment debt. Arrange them by interest rate rather than balance. Credit cards with higher interest rates cost considerably more while you maintain a balance.
Stop spending on all of your credit cards and pay the minimum on all but one. The credit card with the highest interest rate goes first. Pay it down with the money you’ve found for credit resolution. When that card is done, close the account and start on the next one. This time, you’ll be able to use the money you found in the budget plus the minimum payment you’re no longer spending on the other card. By the time you get to the last loan on your list, you should be able to pay it off in record time thanks to the large sum of old minimum payments that get sent to it every month. When that last loan is paid off, send all of the now free money over to savings to help supplement that account as much as possible.
Plan for the Future
Paying down debt and saving adequately are both long term investments of time and money. But they are both extremely worthwhile which is why you should arrange a debt payment plan and savings arrangement that works for you and helps you meet your goals – even if it takes years.
Think You Can’t Save? Try Keeping a Money Diary
The first step to budgeting your money is to fully understand how you spend your money today. The best method to get a handle on your expenses is to write down every purchase you make for two weeks or a month if you can. This may sound annoying to do, but you will come away from this exercise having learned something about your spending habits. Chances are you will also realize that there is a considerable amount of cash that just disappears out of your wallet each month. Just like a dieter writing down everything he or she eats each day in order to eat less, when you become more aware of what you are really doing, you will tend to be more careful with your money.
If you have a high school-age child, who is beginning to manage his or her own earnings and/or allowance you may want to make this a family activity. If your teenager is constantly looking to you for a handout since they tend to blow through whatever money they have, start the lesson today. After all, there will come a day you hope to stop being their private automatic teller.
The trick to this is to make the process work for you. If you tend to use a lot of cash, you will need to save receipts. If you use a debit card for pretty much all you do, this may be easier. Keep this record in a notebook or an excel document to make the math easier. It is up to you.
At the start of a pay period, enter in your take home pay on one page. Next list all of the following expenses that you will have before the next paycheck.
Saving – Pay yourself first. What amount will you place n savings? If you do not know this role be sure to read Savings 101.
Fixed Expenses – Things like rent (could be half of the total if you get paid twice a month, car payment, insurance, utilities, your cell phone, gas or bus fare – whatever monthly obligations you have.
Variable Expenses – Here we get to the real point of this exercise. These are the expenses that you choose to make. Each day write everything down, no matter how small. Lunch with a co-worker, drinks with friends after volleyball, coffee on the way to work, or those new shoes you could not resist. Enter each expense with some kind of description like meals out, clothes, groceries, cash at an ATM, etc.
Just before your next paycheck, total things up and see how you are doing. Compare your expenses with your income. Be honest with yourself. Did something surprise you? You may never have added up that those trips for bottled water at the fitness club or work, amounts to over $10 a week. Add that to $40 on fast food for lunch each week and you may see why some of you co-workers pack a lunch most days. Convenience is great but it comes at a price. If you spent more than you had, you can try to tighten your belt for the rest of the month.
If you have a considerable gap with cash that was spent and not recorded, you can see that you may need to change a few habits. It is so very easy to go back to an ATM to get cash when you find yourself short. You may need to budget your cash for each pay period and watch that you do not overspend.
Creating a budget and sticking to it is a fundamental tool for making sure that our money is used properly. This means, we use the money is the most judicious manner. When consumers make a budget for the first time and stick with the details, one of the biggest problems turns out to be frivolous expenses. Fast foods, shopping for items as a past time, buying items that are cheaper somewhere else or purchases that are easy to do without are all common, recurring problems in household budgets. The budget is a starting process to see where this waste goes to and with the budget you can develop a plan to seal the holes and enjoy financial freedom.
Rather than think of this as a punishment, think of this as freedom of choice. Perhaps in hindsight, you would have skipped picking up a burger or sub sandwich for lunch three times this week so you could have enjoyed a nice meal with a friend on Friday night – without feeling guilty. Or you would rather spend all that money on bottled water (and the packaging you toss out) on a hobby. If you followed directions and put money in savings at the start of each pay period, at the very least, your long-term financial savings goals are not completely derailed.
After you have managed to keep a money diary, you are ready to build a budget – and make it one you can live with. Check out How to Make a Budget.
Five Ways Save Money and Avoid Credit Card Debt
Too much debt is problems for far too many people. Credit card debt is generally the largest reason why so many of people into debt and have difficulty paying their bills. You don’t have to be a pawn of the credit card companies or fall victim to the credit card advertisements that reenforce this attitude of easy credit.
It’s easy credit for the credit card companies to seduce consumers with easy credit and walk away with a pile of cash. They make money from the merchant and by charging the card holder interest charges, late fees, annual fees, increased default rates and I am sure there is a thieving banker right now trying to invent yet another charge to throw on to the credit card bill. These interest rates and charges make you wonder where they stash all the cash they are reeling in. Just look at the standard bank savings account and money market account and compare that to the double digit credit card interest rates.
You don’t have to make the bankers rich and you can have control over your financial health without depending on a credit card. While reviewing techniques to avoid credit card debt and increase your savings, keeping track of your finances and a budget before you break out a credit card is the number one rule to avoiding credit card debt. Budget, budget, budget and don’t feed the thieving bankers.
1. Understand Your Credit Card
You should always know the deadlines and limits on your credit cards. Be aware of when your payments are due, and don’t mess around. Credit card companies love being able to charge late payment fees, which typically range from $25 to $39 regardless of whether you’re one day late or ten.
Many credit cards will also raise your interest rate the first chance they get. Low introductory interest rates only stay in place as long as you make your payments on time. The companies also report late payments to credit bureaus, which will lower your credit score.
Know what the spending limits are for your credit cards, and don’t get to close to it. If a late fee puts you over your spending limit or you forget and charge too much, an additional over-the-limit fee will be added to your bill.
2. Pay the Balance off Each Month
Paying off your credit card balances in full each month is ideal. If you can’t do this, you are overspending and living beyond your means. By paying the balance in full, you will save a lot of money in the long run by not paying interest on your purchases. Also, if you roll over your credit card balances from month to month, most companies make you pay interest on purchases immediately. Since most consumers can’t pay the full balance every month, at least try to save more money by paying more than the minimum amount due.
3. Limit the Number of Credit Cards You Have
Opening a new store credit card to save 20% on a purchase isn’t a great deal if it entices you spend until you max out the card. If you know that you can’t handle the temptation of having credit cards without using them, this tip is very important. A lot of people keep their card balances at the spending limit. Opening new accounts will only leave you deeper in debt. Don’t carry more credit cards than you can afford. Most people only need one or two.
Having a number of credit cards also means there is more information to keep track of. With various payments and due dates, it’s a lot easier to make a mistake and send in a late payment. One late payment could raise the interest rates on all of your credit cards. Multiple late payments will damage your credit score.
4. Stay Away From Cash Advances
The only time a cash advance is acceptable is in an emergency situation where you must have cash, and you have no other options. Don’t make a habit of taking out cash advances for convenience. Using your credit card this way is very expensive.
To start with, a fee of around three percent is usually charged on all cash advances right away. The also carry higher interest rates than you are normally charged for purchases, and this interest is charged immediately when you borrow the money.
5. Use Cash
Hardly anyone uses cash for purchases these days, but it might be a good idea. Carrying cash is a great way to control your spending. After all, you can’t spend more cash than you have in your hand. Compared to plastic, most people pay more attention to prices when they see the actual money going. Managing your budget is far easier with cash. And anyone who has tried knows that setting up a budget is not always easy. When you stick with cash you know how much money you have available and you don’t easily fall into a trap of buying something that does not fit your budget.
Always remember that goods and services beyond your needs do not bring happiness. A granite counter top does what? Cleans up spills by itself? An Escalade or Ford Focus? One is better for the environment, costs less, loses less value per year and is cheaper to operate. What does the Escalade do? Maybe it goes in a direction the Focus can’t. Happiness and true rewards are what is inside not physical possessions.