Tag Archives: budgeting

How to Plug the Leaks in your Budget

Do you have days when you feel like your income is like water and now matter how hard you try, you can’t seem to plug up the leaks in your budget? Here are some ways to stop the leaks and make your budget more waterproof.

First, you have to know where the money is leaking from. Yes, this is sometimes painful, but definitely eye-opening. Take out your checkbook or whatever other sources you have for your recent bill paying and other expenditures. Now, print up this expense tracker. Then, sit down and start filling it out.

Next, as part of tracking those expenses, I’d like to ask you this question. Do you start the week with money in your pocket, but have no clue where you spend it? The next step in tracking expenses is to put that cash (yes, CASH-it hurts more to pay cash) into an envelope and keep track of EVERY purchase you make with that cash. (here’s a daily spending worksheet )  Morning coffee, afternoon paper, candy bar out of the vending machine, track it all either with receipts placed in the envelope or by writing on the envelope. How are you spending your miscellaneous funds? Make sure to add it to the expense tracking report.

Once you know where, when and how that your money is leaving the household, you can then sit down and start figuring out how to slow down the exodus. Write down a list of financial goals you have. Do you want to find the money to pay off your credit cards or maybe save for a house, maybe an emergency fund would be nice or a vacation fund?  Look at what you’re buying or paying in bills. I can’t tell you to cut this or that. YOU have to decide what is most important to YOU. Personally, I wouldn’t give up my high-speed internet, but I have no problem working harder at chopping my grocery bill to keep that internet. You might feel that giving up high-speed is fine if you can SPEND more on groceries. These are things you have to decide on for yourself, your family and your situation.

I’ll briefly tell you a few things we noticed when we began a serious cutting of our expenses. I loved treating my hubby to microbrewery beers. Probably once a week, I’d buy him a six-pack of something new. When I did our expenses, I noticed I spent an average of $30.00 per month for these. Granted, that’s not a lot of money, but when my husband mentioned that he didn’t NEED that much beer in a month and I didn’t always buy him stuff he liked, I figured it was my first “found” $30 and quickly eliminated the purchases. The $30 soon rolled over onto the purchase of disposable diapers as our first child came along, but I had the $30 to work with.

Over the years, I’ve continued to sit down and re-evaluate our expenses. Two years ago, I came to the realization that our garbage pick up equated to me paying $5 per pick up when I could easily drive by the transfer station myself and save $20/month! I cut down our newspaper to Sunday only and saved $10 a month. I reworked out cell phone contract at contracts end to get us the more free minutes and eliminated long distance calls from our regular land-line. This created a net savings of about $25/month. So, this gave us $55 more per month to do things we enjoyed, like camping. Maybe you would use your found money for that savings account or that lingering credit card bill.

The bottom line is that nothing should be ruled out for slashing. Just don’t rule anything out and just tackle just one part of your expenses at a time. Each month, focus on one thing-cutting utilities one month, groceries the next, get new insurance quotes before your renewal is due. Remember to stay focused on what you’re spending and make sure you’re spending it on what you REALLY want.

Written by Tammy Paquin, owner and publisher of www.frugal-families.com.  Available for reprint with active link back to Frugal-Families.com

A Fresh Start for Family Finances in the New Year

While 40% to 50% of us make New Year’s resolutions on January 1 – a ritual that has existed since ancient times – approximately 60% to 80% of us have already broken them by the end of February, according to researchers.

It’s still not too late, however, to reset the trajectory on your family’s finances, experts note.

1. Build a Budget

If you haven’t already done so, create a realistic budget.

Approximately 85% of your income should be set aside for necessities like housing, food, health care and clothing, according to the professionals at VISA USA.

This leaves 15% for entertainment – and something many consumers completely neglect: savings.

2. Distinguish “Needs” from “Wants”

Make sure you have a clear understanding of what you need in life versus what you want in life.

You need to pay for the antibiotics when the doctor diagnoses a respiratory infection. You don’t need to buy the latest movie released on DVD to aid in your recovery.

You need to pay the rent or mortgage. You don’t need to buy the lovely accent pillows that beckon to you from the interior design boutique.

Always separate the needs from the wants – particularly if money is tight.

3. Monitor Your Spending

To see what you really spend each month, keep a running log of all purchases – no matter how small – for a full month. This will give you a visual display of where your money goes after you deposit your paycheck.

You may find that the $3 cup of coffee that starts each day adds up to $90 a month – a pocketbook pincher that may prompt you to buy a pound of coffee beans at the local market and grind them yourself. That $90 blossoms into $1,080 in savings at the end of a year.

4. Create an Emergency Fund

Life is full of surprises – both positive and negative. If you happen to lose your job or suffer an illness that temporarily sidelines you, you will need cash reserves to support you during the rough months.

“In most cases, consumers who find themselves dealing with a financial hardship are unprepared and have not saved for unexpected situations,” says Diane Giarratano, director of education for Novadebt, a U.S. financial management service agency, with multiple locations, that provides credit counseling, budgeting and financial education.

5. Educate Yourself

When you attended high school or college, you studied history, mathematics, language and science, but there was probably no course in basic money management.

If you need help in meeting a financial goal – whether it’s buying a home or reducing your debt – take advantage of community resources.

“Consumers should feel free to contact a good credit-counseling agency to obtain free advice with regard to establishing a budget or to learn how to handle unexpected hardships,” Giarratano says.

6. Don’t Become a Victim

Identity theft has become an international epidemic, so be extremely cautious when giving out  your credit card or personal identifying information. Monitor your credit card bills carefully
for unauthorized charges, and immediately report suspicious activity to the issuing company.

“Identity theft is often an inside job,” warns Robert L. Siciliano, a personal security expert with Boston, Massachusetts-based SafetyMinute Seminars and author of “The Safety Minute.”

“Lower-level help desk workers and frontline call center employees often have access to all our personal information in their databases,” he says. “What are you doing to protect yourself? If you’re not paying attention, you could be a victim, too.”

And when a disaster strikes, such as the recent killer tsunamis in South Asia and East Africa, be wary of scammers from fake charities before reaching for your checkbook. Unfortunately, there will always be unscrupulous individuals who seize such opportunities to profit from others’ misfortune.

“Avoid using your credit card to make contributions,” advises James Walsh, author of “You Can’t Cheat An Honest Man: How Ponzi Schemes and Pyramid Frauds Work…and Why They’re More Common Than Ever.”

“Even though this can be a convenient way to proceed, many crooks are looking for credit card numbers,” Walsh says. “They will press strongly for ‘immediate support.’ Don’t rush.”

Instead, initiate the call yourself, and select a reputable charity.

“Go with recognized names,” Walsh says. “No organization is perfect; even the best-meaning groups occasionally misallocate money or fall victim to abusive employees. But larger charitable
groups – like the Red Cross, the United Way and Catholic Charities – have the mechanisms in place to audit their people and performance.”

Charitable contributions are tax-deductible, so keep good records of all donations – including small cash gifts.

ABOUT THE AUTHOR: Fox Symes assists all Australians discover the truth about their debts and how they can rapidly reduce them. There are methods available to the Australian public and you can discover how to use these to assist you in reducing your debt with a free phone consultation from Fox Symes. Visit http://www.foxsymes.com.au

Living on What’s Left

Are you one of those people that pay your bills no matter what? That is an admirable trait to have when managing your money. You made the bill and you feel you are responsible for paying it. Good for you.

Now let’s talk about how much money you have to cover your household expenses after you pay all of those bills. Your household expenses would include your groceries, car gas, school lunches, and all of the other stuff that it takes to run a household. Do you have enough to pay this bill?

All to often, people tend to pay their bills and try to live on what’s left. This never works unless you have enough money left to cover these at home expenses. The grocery bill will always run about the same, you will always need about the same money for gas, etc. In other words, you need enough to live on.

I have seen this time and time again. Another bill is made and the money comes out of the household budget because there is no money available in any other category. Then what happens?

Many people resort to using their credit cards to cover their regular expenses. Since there is no other money available to pay their increased credit card payments, that also has to come out of their household expenses. This is how many people find themselves in over their heads.

There is only one way to change this cycle. You have to allow enough money in your budget to cover the things you need. You must do this even at the expense of your other bills. That could put you in a position that you can’t make some of your payments, but at least  you won’t be increasing your debt, except for possibly late fees. If this is your situation you need to seek help to reduce the payments on your other bills.

Naturally, there are many ways to cut your household expenses that will allow you to pay more toward your other bills. You can save a lot of money on groceries by using coupons, buying generic, not using processed foods, etc. The internet is full of ideas and tips to help you save. I would start by visiting The Frugal Shopper at http://www.thefrugalshopper.com.

When you develop or revise your budget, always put the emphasis on your household needs. Once you have determined how much you need to get by, then you can see what is left for other bills.

Terry Rigg is the author of Living Within Your Means – The Easy Way and editor of The FREE Budget Stretcher Newsletter and Budget Stretcher web site . He has 25 years of experience counseling individuals and families concerning their personal finances