Budgeting Tips to Save Real Money

Sticking to a budget can be difficult, but with so many demands on your finances you have to be extra cautious. TV ads are constantly bombarding the airwaves with messages that you need to buy this or you must have that. Usually, if you just wait a week or two, the urge to buy that new gadget will pass. But, what should you do if you have already spent more than you have? The following are several real world ideas that can help you save real dollars.

First of all, consider refinancing high interest-rate loans and credit cards. Obviously you would like to pay as little interest as possible, sometimes by shopping around and transferring a balance to a low-interest rate card, you can save hundreds of dollars. Even better, if you can find a lower rate on your mortgage, you will be savings thousands of dollars. Just make sure to get your debts paid down as quickly as possible.

Secondly, change the deductible on your auto insurance to $500 or $1,000. This change can save you up to 40%. The insurance company will make money no matter what. If you file a claim they are likely to raise your rates to make up the difference so you end up paying no matter what. It makes sense to cover the first $500 or $1,000 yourself and enjoy a lower monthly premium in the meantime.

Another idea is to trim some small expenses. For example, if you get your haircut every 6 weeks, see if you can go 7 or 8 weeks instead. This will save you the cost of 1-2 cuts per year. Check out that book from the library instead of buying it. Try renting a video instead of going out to the movies. Purchase a ready-made meal at the grocery store instead of going out to eat. Be creative and see what little expenses you can trim that will add up to big savings over time.

Other ideas include clipping coupons, taking your lunch to work, carpooling (or walking, biking, or taking the bus), stop smoking, and finally just don’t even open up that catalog. Toss them out immediately. If you peek inside you're bound to find something you like.

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Budgeting Before Buying

With interest rates being at an all-time low, I can understand the urgency for people wanting to purchase a home. But I caution the first-time home buyer to learn how to budget their money before buying a new home.

I happen to live in a state with one of the highest foreclosure rates in the country. I was so shock to learn that many people lose their homes within the first couple of years. I wondered why so soon. Sure the economy is not the best and people are getting laid-off and having hardships, but some people are simply not prepared for the unforeseen problems and expenses that comes with owning their first-home.

When I received a call from a friend telling me about a property less than a mile from my home that was in the process of being foreclosed on, I quickly made arrangements with their agent to view the property. It was a nice single family residence with some minor wear and tear. The family that was losing the home was a basic middle-class family. I had less than three weeks to close the deal since the home was to be sold on the courthouse steps the following month.

Needless to say I bought the home and had instant equity in the property. Before the closing, I sat down with the previous owners and asked why they were losing their home. The wife said to me in a matter of fact way, "Well we started falling behind on some bills, and soon things got out of control." I wanted to ask her if she had a budget, did they keep track of their monthly expense but I didn't want to impose on their privacy. However, I explained to her that I was a Financial Literacy Coach and worked specifically with people to help them customize a budget. She promised to get in touch with me after the transaction but I never heard from her again. I often wonder if things would have worked out differently seeing as if they had utilized a budget before buying their home.

I share with my clients some advice I heard from one of my financial mentors, Suze Orman. Before buying a home, put aside the difference of your rent from what will be your mortgage payment, taxes, and insurance for six months. If you can manage without going into the money or finding it to be a burden on your lifestyle then you just might be ready. One last thing is to update your budget with the category "repairs". Take 1% of your purchase price, divide that by 12. If you can budget this monthly cost into a separate savings account you are ready to become a first-time homeowner.

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The Importance Of A Budget

Budgeting is an integral part of society. In today's hurry up and get it done society; every day we are trying to budget our time, our meals, our kids' time and our money. Unfortunately for many, most of this process is done mentally and never put on paper. Remember, just as families budget time and money, your business must also develop a financial plan. This type of budget is simply a formal written summary of your goals and intentions in terms of dollars.

Budgeting requires you to look ahead and formalize future goals. By establishing a budget, you can set goals for achieving a certain level of income and monitor your expenses. Many home based and small-business owners have remarked that their increase in profit margins did not occur until they had a written revenue goal and a method with which to monitor expenses. 
Other business owners need to know their sales levels in terms of dollars and how hard they need to work to make the budget work. Sound familiar, goals and budgeting is very much tied together. The closer you come to the goals you have set for yourself, the closer you will come to achieving the budget amount you need. You'll know you are on top of your business when you can tell your accountant that you need to sell 3.25 items per day in order to make your budget work and meet your financial goals. 
Copyright 2003 DeFiore Enterprises

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Budgeting your Savings - Did You Let Your Piggy Bank Get Away?

I think most of us have at some point in our lives. Some how we forget to feed the little piggy. And, like most neglected "pets", your piggy bank will disappear if you don't feed it. A personal budget is important to create financial independence and setting goals for feeding that "piggy bank" should be an important part of your budget!

The most successful financial plans allow you to INVEST IN YOURSELF! It just makes good sense. A plan to build financial security should always be considered essential to any budget.

Even if you're on a plan to reduce debt, you need to include plans to build a foundation for future financial security. A good savings routine and variable expense account are essential to building a strong foundation for financial independence.

A variable expense allowance in the budget is important to save for those expenses that seem to "hit us unexpectedly". Funny thing is, we know these expenses will occur. They are an inevitable fact of finances for most of us. So, why do we call them unexpected? I can't explain why, but there are many of us who make this very BIG mistake in our budgeting.

Some expenses don't occur monthly. Some are paid out every now and then, quarterly, yearly, or bi-monthly, or semi-annually. These are expenses like car insurance and maintenance, home insurance and maintenance, property taxes, income taxes, medical expenses (prescriptions, deductibles, co-pays), pet care, school expenses (supplies, trips, activity fees, books), and clothing. Some of these are huge expenses that can put a ripple in any good budget if not planned for.

Most of us have good intentions, but it's easy to fall prey to the credit card companies without a plan to cover all of these "unexpected" expenses. The term still makes me chuckle. I mean, don't we "expect" to wear clothes? It's even funnier to me knowing that I was guilty of this very thing. Poor Planning! Not expecting what should be expected.

Lesson ..........Don't forget about this expenses in your budget. They will sabotage the best of intentions!

The other essential ingredient to a successful budget is a savings plan. A good savings plan should have a goal to reach at least the minimum amount necessary for you to survive for a three to four month period. It may take time, but this a strategy that provides a fail safe against a financial crisis. Crisis such as serious illness or job loss.

Trying to save money by cutting your savings budget out will eventually backfire on you. It is essential to build financial security, in order to remain debt free, you must not compromise your savings expense.

Only if there is no way to avoid it should you reduce the amount of your monthly savings commitment.

Start with 2-4% of your monthly income if you have to. A little is better than nothing, and then you can build it up from there to at least 10% of income as funds become available.

Some Important Points:

Applying extra funds to your debt first will not help you gain financial security. Emergency savings and variable expense savings goals should be met before debt is reduced in order to remain debt free.
After all, these sources will be the foundation you will fall back on in order to remain debt free. If you can build a reserve for emergencies you won't have to use those nasty credit cards. This is an important defense that builds financial security.
If you use a good debt reduction plan, debt will reduce, and in a reasonable amount of time. As long as you stop creating debt. Just be patient.

Paying more on your debt, instead of saving, is not going to help you pay for that major car repair when the car breaks down. It will most likely do the opposite of your intended plan and send you running for the credit card to bail out.

Of course once you have reached your goals for savings and your variable expense account, then you should start applying extra funds to your debt reduction plan.

Using money saving tips reduces expenses in your budget in an effort to help you build that financial security. Through saving money on everyday expenses and living a frugal lifestyle, you free up monies to apply to your savings and variable expense account. These are the defenses that build a strong foundation for your financial independence.

These "defenses" prepare for the inevitable expenses that will arise. Many of us had just forgotten to plan correctly for these types of expenses. That's how we got in the "big red mess" to begin with. Properly preparing for necessary variable expenses is your defense against feeling the need to use the credit cards.

Once you have balanced your expenses with your income, you have created a Budget for Debt Free Living. Congratulations! You are on your way to financial freedom and security. Enjoy! This concept is simply "living within your means." Something that many of us in today's "plastic society" have forgotten to do.

Live Debt Free to Be Free. You Deserve It!

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Creating a Realistic Budget

Budgeting -- ooh, what a scary word! If you want to frighten someone whose finances are out of control, suggest that they tally up their expenses on a piece of paper. We all understand the value of such an exercise, but when it comes to the practicality of putting a budget together, we get cold feet. Budgeting doesn't have to be so painful, when you have a systematic series of steps to follow.

SET YOUR FINANCIAL GOALS

As with any other area of your life, it's pointless to start down a financial path if you don't you have some idea of where you want to end up. What is your REASON for creating a budget? Do you want to pay off your debts? Save for your kids' college education? Put money away for retirement? Make a list of your financial goals for the next 6 months, year, 5 years, 10, 25 -- all the way through to old age. And don't spend a lot of time worrying about feasibility -- if your goal is to be debt free in a year, don't think about all of the reasons why you won't be able to make it by that deadline. Just remember, where there's a will, there's a way!

CREATE THE SHEET

Start with either a sheet of legal paper -- or a spreadsheet program -- and create 12 columns. Label the top of each column with a month of the year, from January to December (duh!) Each row on your sheet will represent a different living expense -- groceries, gasoline, Starbucks coffee in the morning on the way to work. You'll have better luck remembering everything that you spend money on if you think according to categories. "Automobile" would include gas, repairs, insurance, and taxes -- while "grooming" might be divided into clothes, makeup, haircuts, and facials.

TRACK YOUR EXPENSES

How can you know what steps you need to take to reach your goal until you know exactly where you are right now? Most of us don't have a clue where our money goes -- credit cards and ATM's make it easy for money to just slip through our fingers. The first step is to create a list of STATIC EXPENSES -- things that cost the same amount every month, like rent and your car lease and student loan payments. Now these expenses are not completely "static" in the strictest sense of the word. You can reduce your rent or mortgage payment by finding a less expensive house -- and you could increase your loan payments to get rid of the debt faster. But for now, just itemize your regular monthly costs.

Next, you want to evaluate your VARIABLE EXPENSES -- those costs that fluctuate from month to month. Groceries, entertainment, utilities, and clothing all fall into this category. The great thing about variable expenses is that you control (at least to a certain extent) how much of your budget these items eat up. But some of these costs come in large and unexpected chunks -- like car repairs and medical bills. So you might need to go through your last 12 months' credit card and bank statements to get a clear idea of how much daily life costs you. And don't forget about those expenses that are paid only intermittently -- like insurance. Tally each expense and divide the total by 12, to give you a clearer idea of how your costs spread out over a year's time.

ROOT OUT MONEY LEAKS

Now I guarantee that you will not remember every expense, no matter how hard you strain your brain! Think about all of the things that you buy throughout your week without really paying attention -- snacks at work, a magazine when you stop for gas, that cup of coffee on your way in every morning. And don't forget about the expenses you are racking up because of financial disorganization -- interest charges on your credit card debt, late fees because you forgot to return that movie on time, overdraft charges because you didn't balance your checkbook. All of these fall into the category of unconscious spending. You just do it because it's a habit. And although you think that a dollar here or fifty cents there is insignificant, it can really add up.

So for a month, record every penny that leaves your hand, in the form of a check or cash or a credit card transaction. This may sound like a huge challenge, but you can do it! Make it convenient -- my husband stuck a small pencil and piece of paper in his wallet so he would be reminded to make a note every time he made a purchase. You will be stunned when you see where your money is really going! My husband was shocked to find out that he was spending almost a hundred dollars a month on that morning coffee (am I picking on Starbucks too much?!) What's your vice -- eating out when you are feeling lazy? Buying every new CD or magazine that comes out? I'm not suggesting that you completely eliminate these habits -- just that you decide how often you can reasonably afford to indulge and still reach your other financial goals.

DON'T FORGET YOUR DEBTS

It's also important that you have some idea of your liabilities -- debts that still have to be repaid. Did you figure these payments in with your monthly expenses? If you are only counting the minimum monthly payment, you will never pay your debts off. You may not be able to do it right now -- but after we get your budget in order, the goal is to pay at least double the minimum amount on at least one of your liabilities each month. You should start with the credit card or loan that has the highest interest rate -- then tackle the next highest after the first debt is paid off. And if you can afford to pay more than double, go for it. You aren't really free to start working on other financial goals until you know you are debt free.

TALLY UP YOUR INCOME

Do you really know how much you make? The tendency is to quote whatever is printed on your employment contract -- to say, "I make _____ a year." But after taxes and Social Security and any other items that are deducted from your check, what are you actually bringing home? Take a minute to really examine all of your sources of income and calculate an honest total -- you can't have a realistic budget without it!

WHAT'S THE VERDICT?

So, comparing income to expenses, how does it look? If you came out in the black, congratulations! How much do you have left over? Regardless of how small or large the amount is, start stashing it away into savings and investments! Your choice of how to proceed will depend on your financial goals -- investing for retirement will involve less liquidity and more risk than just saving for next year's vacation. The main thing to remember is that you should build your savings and investments into your budget just like a bill -- and take care of these long-term responsibilities FIRST, before other costs. That's the secret to good financial management.

Now, if you ended up in the red, we need to talk. The first step is to look at spending which can be reduced or even eliminated. Start by examining those "spending leaks" -- if they give you pleasure and satisfaction, dandy. Certainly late fees and interest charges don't fall into this category! But you can still overdo a good thing.

Ask yourself if eating out 4 times a week gives you 4 times more pleasure than doing it just once. And could you get as much pleasure if you cooked a good homemade meal? Is the ridiculous mortgage on that 10,000 square foot house worth it? Or could you be just as happy (or even happier with less financial stress) in a place half the size? Also look for convenience expenses -- things that we spend money on because we are overwhelmed, too busy, or just worn out.

Perhaps by re-evaluating how you use your time, you might discover that many of these expenses are just symptoms of misplaced priorities. When you arrive at a place where all of your spending decisions are DELIBERATE ones, you will find yourself several steps and quite a few dollars closer to a balanced budget that allows you to reach all of your financial goals.

Ramona Creel is Professional Organizer, NAPO Golden Circle Member, and the founder of OnlineOrganizing.com. A former Social Worker, she has always enjoyed helping people find the resources and solutions they need to improve their lives.

Ramona now travels the country as a full-time RVer, sharing her story of simplicity with everyone she meets. She leads by example -- having worked for more than 10 years as a Professional Organizer, and having radically downsized and simplified her own life as a full-time RVer. Ramona now considers herself a "Renaissance Woman" -- bringing all of her passions together into one satisfying career.

As "The Traveling Organizer", she can create a customized organizing plan for your home or office, or teach your group the "Ten Steps To Organizing Any Area Of Your Life" in a workshop. As a "Simplicity Coach", Ramona provides a proven program for making every area of your life a little bit easier -- perfect for those who want to make the time and space to focus on their true priorities. As a "Frugality Coach," she can teach you how to quickly reduce your household expenses, in good economic times or bad.

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Budget Leftovers

It is extremely difficult to setup a budget, especially when you are behind on some of your bills. Even if you
can make your regular bills and expenses fit neatly into your budget, what can you do if you don't have the money
to catch up?

I have listed several methods and circumstances below that may help manage setting up your budget and begin to
pay those overdue bills. Since there are as many different budgets as there are people that try to set
them up, this list may not be all inclusive. It may, however, give you some ideas that will fit your
individual problem.

Unless you don't have any income at all, there are a couple of things that should never be late. Your rent
or house payment and utilities should be paid first, even at the expense of other bills. This is simply a
matter of survival.

The first thing you need to do when setting up a budget is to determine how much actual take home income you
have. Then determine the amount of your normal bills and expenses. The Complete Budget and Bill Organizer
http://www.homemoneyhelp.com/BBOonline.html explains this in greater detail and provides forms to put it on paper.

The below methods assume that you have enough money to cover your normal bills and expenses but have some
bills that have an amount that is overdue:

When you are setting up your budget and have overdue bills you need to cut your expenses to the bare bones.
This doesn't mean going without food. However, there are many ways to cut back on expenses. You can find
hundreds of them by visiting my Budget Stretcher Partner sites listed at http://www.homemoneyhelp.com.

You should always make the initial contact to the company any time you aren't able to pay a bill on
time. Once you have your budget setup, see if there is any money left over to start paying the amount that
is behind. If you do have some money left over, when you contact the company, find out if they will accept
paying a little extra each month, without penalty, until the overdue amount is paid in full.

Contact a your local Consumer Credit Counseling Service. You can find them in your phone book. They can assist
you by contacting your creditors and establishing a payment schedule that will fit your budget.

If your overdue bills are credit cards, consider transferring your balances to either a credit card you
already have or can obtain. This will do a couple of things. It will normally lower your monthly payment
and it will eliminate your overdue status. Be extremely careful doing this. The credit card companies you paid
off will be using every means they have to get you to use their credit cards again. Cut them up and notify
the company to close the account.

Look for ways to get extra money just for the purpose of paying your overdue bills. This can be either a
temporary part time job or selling something that you can do without.

If you own your home and have equity in your property, you may want to consider a bill consolidation loan.
While this seems like an easy out, many people start obtaining more debt after they receive the loan since
they have some disposable income. There are pros and cons to bill consolidation loans and you would be wise
to investigate it thoroughly.

If you have exhausted all of the above options, you may have to consider one of the below options. You must
remember that filing bankruptcy can stay on your credit history for up to 10 years and can have a devastating
effect on your future financial plans.

In extreme circumstances, and always as a last resort, consider filing Chapter 13 bankruptcy protection. This
allows an individual to setup a repayment plan of between 3 to 5 years to pay off all or part of their
debts. You must have sufficient income to permit a portion of it to be used toward your repayment schedule.

Another option is Chapter 7 bankruptcy which is the most commonly filed chapter since it can completely eliminate
all of your debt except the ones you choose to continue paying. There are exceptions to debts that can be
discharged and to what property is exempt from being taken by your creditors. You should discuss any bankruptcy
actions with a competent bankruptcy attorney. Only individual's may file for chapter 7 or chapter 13 bankruptcy.

Article Source: http://EzineArticles.com/18534

Budget Tips

To budget, to have a budget and to be on a budget is not a bad thing; in fact, it's just about the best financial situation you can find yourself in. A budget is a valuable financial management tool which will enable you to pay your monthly expenses, save a certain percentage of your income and control your expenditures.

How can you stay within in your monthly budget? There are several steps to making a budget.

1. The first step to making a budget is to gather information about your take home income and other sources if you have these (e.g. stock dividends). This allows you to determine what your true financial standing is. Be systematic; write down exact amount of your income and the other sources if you have them (e.g. stocks, dividends. Note the schedule you expect to receive these sources.

2. You need to understand what each and every bill or expense is intended for, in order to make an effective budget. List of your fixed and recurring expenses and the due dates for these expenses. Examples of these, weekly groceries, utilities, gasoline and mortgage or rental expenses.

3. Track all expenses, as these are not static. It will make your budget more efficient, when track these expenses on a regular basis, rather than once or twice a month. You can then see the variables and make the necessary changes in your budget to reflect this. Or address the reasons why.

4. Monitor the discretionary portion of your income. Where have you gone over budget? Too many cappuccinos at Starbucks? Or is it an unexpected medical or house repair bill? You could start a contingency fund in your budget to take care of unexpected bills.

5. Lastly, motivate yourself to save and to spend wisely. Set up short and long term goals. A short-term goal will enable to buy the latest plasma TV, or digital camera. Long term goals are ones that enable to increase your retirement funds or to buy real estate properties.

You can record the details of your budget, the expenses and sources of income in a 6-column ledger, or buy personal budgeting software, and encode these details herein.

Remember though, that in order for your budget to work you definitely need to spend less and save more.

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