Cutting Down on Unnecessary Fees

Whenever you are revisiting your budget (and downsizing your expenditures), there are typically a few stages that you go through. The first stage is typically the easiest. You take out as many discretionary items as possible. For example

But what if you find that you need to cut some more expenses? Here are some areas to look at.

Look to car pooling - With the sports season coming up, many parents are just tied up sending kids to various sports training and events during the week. You can potentially save money on gasoline by planning ahead and car pooling.

Use a low grade gasoline - Many people have this perception that you have to fill up your wheels with “premium” gasoline so that they “protect your car engine”, or “enhance performance”. Most of the time, these claims are false. You can actually use the lowest grade gasoline and your car will run just fine.

Don’t buy anymore new clothes - Clothes are a big expense. You can save a lot of money by skipping this year’s new season items and purchasing off season items on clearance. For example, since it’s spring right now, the new spring and fall lines of clothes are priced at a premium.

Instead of buying those clothes, purchase the winter items up to 70% off. If you do this at the end of each season you will have a nice wardrobe at a fraction of the cost.

It does mean that you will have to wait several seasons to wear your new clothes, but at the end of the year you will have a very nice wardrobe that cost far less.

Use more hand me downs - You can purchase some very nice items at thrift stores. Especially thrift stores in wealthy areas. Find out where the wealthiest areas of your city are, and call those thrift stores. Ask if they have days of the month where all items are half price. Most thrift stores do.

You can also ask your family and friends for clothing if they wear the same size. Most people enjoy clearing out their closets, especially if it’s going to help a friend.

Refinance Your Mortgage - With mortgage rates heading lower, now is the time to refinance. Many will face difficulty because appraised home values are down. However, for those who can refinance, now is a great opportunity to knock off a couple of hundred dollars of your mortgage bills.

Use one provider for cable, phone and internet - Your bills will most definitely be lower if you consolidate your phone or cable provider. In most cases, you are choosing between your cable or phone provider. Either way, you will save a lot by doing so.

Use the same insurer for auto and home insurance - You will almost certainly get a lower rate for both your auto and home insurance if you use the same company. Just make sure that if you switch, you are getting an exactly identical or better policy.

Start cutting coupons - If you are not a coupon fanatic, you’d better start now. Coupons are just like money - as long as you use them for items that you would purchase normally.

The quick way to get started using coupons is to buy some current coupons for a few dollars on EBay, and check out sites like The Grocery Game which will help you maximize sales in your area.

Revise your cell phone plans - Every one is probably paying more than we should on our cellphones. Call your provider and ask how many minutes did you use on average last year and what is the best package based on your usage. Cut down or disable things like texting that waste your time and adds to the phone bills.

Be more energy efficient - Electricity rates are lower at night because it is at a non-peak hour. So do your laundry at night and not in the morning or afternoon. Same goes for the dishwasher. Don’t leave it till the morning. Unplug plugs from the wall for appliances that are not frequently used.

Use a cash back credit card for any expense and make sure you pay your bills in full.- I’m still amazed that very few people use an actual cash rewards credit card at the supermarket. The better cards pay more than 1% rebate for supermarket and gasoline purchases.

Easy Method to Quickly Start Budgeting Money

Budgeting your money is one of those things many of us dread to do. If you haven’t experienced it already, living paycheck to paycheck isn’t ideal. So, if you haven’t made a budget for your money yet, today is the day to start one. It isn’t as hard as many people think. Money Tree created a brand new software application that I believe will help beginner budgeters. Here are the benefits of this software as opposed to other methods of budgeting:

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Why America is in the Mess It is In

The Federal Reserve Board does a survey every three years of Consumer Finances. This post is based on the results published from the 2004 survey. The results for 2007 have not been published yet. The 2004 survey is based on 4,522 families that were interviewed.

Average Debt Has Increased

The average debt for families from 1998 to 2001 increased by 5.2%. From 2001 to 2004 the average debt increased 33.9%. The reason for the large increase was home-secured debt, home equity lines of credit and second mortgages were taken out against the increased value of homes. Normally this is seen more in the higher income brackets, but the lowest wealth group in 2004 had the highest rate of borrowing - 86%. Home-secured debt rose 27.3% from 2001 to 2004.

The Tax Reform Act of 1986 created an incentive for homeowners who needed more funds to borrow against their home equity. They could no longer deduct the interest payments on other types of loans from their taxes, but they could on their residence.

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How to Avoid Ugly Money Problems or Recover from Them

Budget Isn’t a Four-Letter Word The word budget makes most people cringe. It used to make me run in the other direction when someone mentioned the word. But after many years, I’ve come to realize that budget is not a four-letter word after all. However, it didn’t happen over night.

When I worked 8 to 5, I was paid every other week. This means you have two months a year that you get three pay checks in one month. That sounds great, but leading up to that third check, I was always short money. The dates that I was paid constantly changed, but the bills were always due at the same time.

I must also admit that I’m not very organized. I forgot to pay the mortgage bill one time and wondered why I had extra money. My mom went and bought me a wooden envelope holder that you can hang on the wall so that I would keep my bills in one place so that they wouldn’t get lost. That solved one problem, but I still had the problem of thinking I had extra money when the money really had to go to a bill that I hadn’t received yet.

Tracking Bills and General Spending

Since I like using Microsoft Excel, I finally started logging all of my projected expenses and then recording the exact amount and date that I paid them. This really helped me see how much extra spending money I really had. It also helps me keep track of when I pay my bills and what hasn’t been paid yet.

I never called it a budget, but now I realize that’s what it is. I was lacking one thing though. I didn’t have a handle on my credit card usage. Although I had the amount logged in my spreadsheet of the amount I had been paying, if I ended up spending too much money on Christmas, birthdays, or an emergency, then I would have an increase in the credit card payment that I hadn’t taken into account.

I ultimately want to get to the place where I can pay cash for anything I need or want. Credit card debt is way overused by Americans. Credit and credit cards are great to have when needed for special occassions, but our want for instant gratification means that we use them for impulse spending and things that we shouldn’t.

Credit Card Debt

If you can pay off your credit card every month, then it is not a bad thing to have one. I read the Federal Reserve Board Survey of Consumer Finances and according to their survey from 2004 (the most recent one published), only 46.2% of families carry a balance on their credit cards. I was shocked. I thought the figure would be more like 75% or higher. I guess once you get in that rut, you think everyone is in it with you.

I’ve had good credit and I’ve had bad credit. When you have good credit you get all the zero percent offers and can transfer balances from one card to another when the introductory period expires. I did it several times. The bad side to having good credit and using it, is the companies keep giving you more. It is easy to increase your credit debt. They let you do yourself in if you don’t use it wisely. At one point, if I had maxed out all my credit cards, I would have had over $100,000 in credit card debt. That is very scary.

I can understand why credit card companies don’t send zero percent interest rate offers to people with bad credit. But what I want to know is, how does it benefit the company if they jack up the interest rate to 24.99% for someone who has bad credit that is already struggling to pay their bills? If they make it harder for the person to pay their bills, aren’t they pushing them towards filing bankruptcy?

Paying Off Credit Cards

I read on one website that each $1,000 in credit card debt takes over nine years to pay off if only minimum payments are made. I’m not good at math, but I found another example. If you have a balance of $2,000 at 18% and you pay a minimum payment of $41 per month it will take over 7 years. So you definitely want to pay more than the minimum.

The best way to decrease your credit card debt is to choose one that you want to pay off first, whether it is because of a higher interest rate, or a higher balance, then pay extra towards that card every month. Focus on paying extra just on that one. When it is paid off, then you can pay even more towards the next one that you focus on paying off.

If you don’t have extra money to pay towards the balance, consider getting a second job and putting the total paycheck towards paying extra on the bill. You do not want to get another job and end up becoming use to having extra money, otherwise you will have to work two jobs for a very long time. Also look for ways to reduce your current spending. For more ideas on how to save money to put towards your credit card bills, read our article 10 Little Ways to Save Big.

The most important thing is to be self-disciplined. Don’t buy those impulse purchases. When you see something you want, do not buy it right then, even if it is on sale! Walk away and think it through. Is that item really going to move you closer to your life-long goals?

Looking to the Future

I’m excited that the owners of thecreditbeacon.com (I’m just a writer) will be releasing their first edition of the Money Tree Personal Budgeting Software soon. Maybe they should call it something other than “budgeting” since most people don’t like that word. But that’s what it really is.

If you want to be wise in handling your money, then you need to budget. Wouldn’t you like to have money when you retire that will allow you to enjoy retirement and do the things that you never had time to do while you were working? How about sleeping better at night right now, and having less arguments about money with your significant other?

Not only is the software going to be easy to use, it will include calculators that will help you know what you can afford and how long it will take to pay it off. Whether it is figuring out how long it will take to pay off those credit card bills, or how much you can afford to pay for a car, the budget software and calculators will help you make better choices.

Article featured in the The Carnival of Personal Finance Budget Category.

Teenagers Money Management

Teenagers need to be taught money management so that when they move out on their own they will be able to handle their money wisely. You don’t want them to fail and have to move back home just so that they can pay off their debt.

How to Get Started

If your child does not already have a savings account, help your child open one. A teenager should also be able to open a checking account. Anyone under the age of 18 will have to have a co-signer since minors cannot be held responsible for contracts.

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7 Ways That Budgeting Can Improve Your Life

1. A budget shows whether you are living within your means. Since most people have and use credit cards, it is easy to rack up more debt than you can afford. A budget will help you see your limits before you are deep in debt.

2. A budget will help you meet your savings goals, including saving for emergencies. It used to be recommended that you have 3 months worth of living expenses in a savings account. Now days it is recommended that you have up to 6 months worth of living expenses in your savings account.

3. A budget can help your family focus on common goals. If you work on the budget together, and you both follow it, it will reduce arguments over money. One spouse won’t be spending money on something that the other spouse thinks is frivolous. Less arguments plus common goals leads to a happier marriage.

4. A budget reveals areas where you’re spending too much money so you can refocus on your more important goals.

5. A budget can help get you out of debt, or prevent you from getting too far in debt.

6. A budget shows you how to have the money for the things that mean the most to you.

7. A budget helps you sleep better at night because you know what you need to do to make ends meet and pay the bills.

Saving and Budgeting for College

Whether you have a newborn baby or a teenager, you might be wondering, how am I going to pay for college? We have had several questions asked about how to save and budget for college expenses. So I will cover several of the alternatives.

There are many ways to save for college including a prepaid plan, a 529, Coverdell, bonds, or a regular savings account.

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