Debt Dunk

I have heard people say they do not make enough to write a budget. This is one of the craziest things I have every heard. Everyone needs a budget. Let me repeat that EVERYONE needs a budget! Budgets are not just for people with lots of money, they are for the people making minimum wage all the way to those making billions.

First thing you need to do is figure out all your income. This is every source of money you have each month. If you have a fixed income, this should be easy, if it varies each month, this is a little more challenging. For the basic budget, we will focus on fixed income. Account for everything coming in even the smallest amount. Write it all down.

Now let’s look at your expense side. Start with the basics:

1. House ; rent or mortgage
2. Food : groceries (needs not wants)
3. Electric service and heat
4. Clothing
5. Transportation

These five categories should come before all others. If you can cover these categories, you have covered basic needs and now you can move on down the list. If you get to number five and find yourself short, you are living beyond your paycheck and you have two choices, cut expenses or earn more. Make sure one of the five is not causing a huge problem. Many people live in a nice beautiful house that is eating up most of their paychecks. If that is the case, this may be something you need to address by selling the too expensive house and renting for a while or if renting, you may need smaller place.

Looking at number two, if you are buying all name brands, you may need to change to store brands or start looking for coupons. Coupons are a great way to cut your grocery bill by a lot of money. Another way is to be in bulk when you have extra or if something is deeply discounted. Making stuff from scratch is not only healthier, it is cheaper too. There are always ways to cut down in this category, just make sure your families basic nutritional needs are met ( I said needs right?)

In category three, you can use more energy efficient bulbs, make sure to not leave lights on all the time and turn the thermostat down a couple of degrees at night and even lower when no one is home. There are tons of energy saving tips available online that are easily done with little cost.

I know people love their clothes. However, this is a category where people tend to look at wants over needs. You need to look at the value of clothing before buying it. If you have a professional job and you need to dress nice for work, consider the value of each purchase. Do not buy a pair of pants for twice the cost because they last a year compared to three months if you are only going to wear them three months. I personally have never been an over spender in clothing because I see no value in it. I paid $150 for a nice pair of running shoes (most I ever paid do a pair of shoes) and I was scared to wear them. For six months, I would not wear them if it was rainy or if there was a chance to get them dirty. They had little real value to me. They fit great, looked good but lost all value in the fear of wearing them. Buy for value and need. If you can get name brand clothes for the same as a cheap brand, by all means buy them. Otherwise, always compare value to use to figure out how to save in his category.

The final category is where many so called normal people get into trouble. They want to impress so they drive a new car or SUV every couple of years. Ever meet that person who owns the nicest car around and lives in shack? Paying payments for something that depreciates as fast as a car is stupid. I have been guilty of it. I never owned a new car until I got married, my wife really wanted (not needed one) so I gave in and we bought one. I used my negotiation skills and got a great price but still had payments. Stupid, did I say Stupid? I now drive a 2000 SUV and my wife a 2003 mini van. Both are paid for. The SUV was the last vehicle I ever bought on credit in 2005 and we paid cash for the van last year. If you can’t pay cash, you are buying too much. If your car payment is killing you, sell the car and buy something you can afford. The saying, ” A fool and his money will always part” applies no better place than when buying a new car.

Once you list out you income and the top five expense categories, how does it look? Do you have any money left? If yes, that is good news and we will continue the budget next post. If no and you already did some trimming to the categories, you have only one choice, increase your income with a better job or adding a part time job.

Many are now saying, you just do not understand! I have been there, I understand but reality is, there is no magic to money. You can cover your expenses by borrowing for only so long. At some point you have to come to grips with where you at and either earn more or spend less.

As always, I am here to help and will give you honest advice even if it is not what you want to hear. Leave me a comment or contact me through the contact us page. I will continue the budget process in the next post, subscribe to my feed so you never miss out.

As you send your kids off to school, you hope they will learn everything they need to know to become good adults. They learn math, science, history, reading, and writing. But the problem is, this is not enough.

Most teens graduating from high school know very little about money. They may have had a small class on how to get into debt with credit cards but not real advice on how to handle money and finances. This is partly due to the normal thinking in society is to grow up get a credit card then a car loan, then a mortgage and numerous personal loans along the way. Is this how we are suppose to live?

Back 50 years or more ago, grandpa might have sit you down and gave the advice of pay cash for everything you buy. Now days, we are bombarded with easy financing, get now pay later, and much more. Parents seldom teach their kids how to manage money because they do not know how. Is that how you want your kids to grow up?

As parents, you need to first learn about money and build an honest relationship with money. No debt is good debt but house mortgage is an acceptable debt but in the shortest term possible. This means 15 years or less and pay off as quick as possible.

There are many great books and courses on the market to learn about how to manage you money. Look for the ones who focus less on getting credit and more on building wealth. You need to learn in order to pass the knowledge on to your kids.

I will be adding more posts on how to guide your kids to be better money managers. Please be sure to favorite us and subscribe to our feed. As always, if you have money questions please ask.

It is much easier to account for your money when you are single. You do not always make the right choices but it is your money and you are the only one you have to answer to. This is good and bad but it is yours all yours. However as you get into a serious relationship and get married your life chances and so does the money part of your life.

When you are married, the finances are combined and so are both the rights and responsibility. This is where communication is key. If both husband and wife are spending freely with no regards to where the money is going, it will catch up to them and in a very bad very real slap in the face reality way. At all times, I repeat, at all times, both spouses should be able to know where the money is and where it went. If this does not describe your marriage, YOU HAVE A PROBLEM! Excuses like., my wife always handles that or my husband handles all the money is no excuse at all. If you are not a partner in the finances, you need to educate yourself and become one.

This is not to say that one spouse can not do the majority of the financial paperwork and keep the books. Most couples have one who is more equipped or willing to do that job. This is not to a bad thing and in my marriage, I am that person. However, at any given time, you should know where the money is and how much of it there is.

One of the top reason for divorce is money. People go through life sailing along debt to debt and spending freely. One day, the train of credit cards slow down and they realize they have hit their max. How are they going to pay all the debt. That is where the fights begin. First it is anger at the situation, next it is anger at one spouse or both blaming the other. How many couples do you know or have you  heard of who have lost everything because they maxed out? Many times you hear one of them say something like, ” I had no idea, John always handled the money.” Ignorance is no excuse!

If you are reading this, the first step is to ask your spouse, “where is the money honey?” Second is for both of you educate yourself on the matters of money. Take a class, read a book, research online, or ask a financially responsible friend or family member for help. Make sure you know where the advice is coming from! If it is a book written by a credit card company or another debt related company, skip it. Learn from those who have been there and recovered and are no longer a slave to debt. If you want to lose weight, do you go to the biggest person you know? No, you go to the person who has loss weight and kept it off. If you want to succeed in money, you do not go to a person who is broke or in extreme debt.

Finding financial success means opening your eyes and learning from your mistakes. If you are in debt, borrowing more will not fix it. Join hands with your partner for life and form a new partnership, the Financial Us. Working together and knowing all about the money will secure your finances and prevent a bankruptcy of your marriage.

If you have a question or need help, maybe I can help, leave a comment here or got to the contact us section and send me a private message. I will try to address it as quickly as possible.

Vacations can be fun but they can also cause a lot of stress. How am I going to afford a vacation? Where should I stay? Where should I get a plane ticket? This article will address those questions and show you how to have an affordable quality vacation on a frugal budget.

When planning a vacation, first always shop around. If possible, plan as far ahead as possible. There are many good places to look for vacations. Travel agents do a good job of planning your vacation. They can plan your hotel, plane tickets, sight seeing events, and if you need one, a rental car. The downside with using a travel agent is the fact that you pay more for their services than if you done it yourself.

Another way to plan your vacation is to call airlines and hotels directly to book your vacation. This way gives you the most flexibility but also cost the most. The airlines charge more when buying direct and they increase their prices the closer you are to the travel date. Hotels charge more on weekends, holidays, and summers and they do not offer many discounts if you call them directly. Normal common sense would think you would get a better deal by cutting out the middle man but this is not the case when booking a vacation. This method is the least favorite way to use if you are frugal and looking for a bargain.

Still another way to plan you vacation is through the Internet. This is the total do it yourself method of vacation planning. You can search hotels, airlines, events, and car rentals for the area you are planning to visit. This can be fun and if you are lucky, you can find a real frugal deal. The Internet puts the world at your fingertips However, if you are not careful, you can end up paying more than you would have by just using a travel agent.

The final method I will discuss for planning your vacation is a combination of the travel agent and the Internet. This method is using an online discount vacation broker. There are many of these sites and more are being added each year. One of the oldest and my personal favorite is Priceline. This is the one my families uses for almost all of our vacation needs. Priceline offers frugal living at its finest. Priceline offers discount airplane tickets, discount hotel rooms, discount car rentals, and discount cruises. If you have some flexibility in your time schedule, you can name your own prices on hotel and plane tickets for discount at 50% or more off retail prices. Priceline also offers the convenience of full travel agents by designing vacation packages to meet your needs.

For the frugal minded people like all of us, Priceline is a one stop shopping site for all you vacation needs. If you just want to get away for a weekend drive, name your own price for the hotel room and you can save up to 60% off retail price. Want just the plane ticket? Name your own price and you can save tons of money off other discount sites. If you need a full vacation package, they allow you to pick your hotel, plane tickets, and rental car and you can add on airport pick-up and sightseeing tickets to make a well rounded well planned out complete vacation.

Frugal living is good living so be sure to use your frugal skills when planning your next vacation. Being a cheapskate can get you further when you use Priceline to plan all of your getaway needs. Have fun and enjoy your frugal vacation by taking the stress out of planning your vacation.

How many times have you looked at your wallet and your checkbook just to say I am broke? If this has never happened to you, congratulations! For almost every else, including me, it has happened. It is not a good feeling to have no money. That is the main reason you need to be prepared for everything. Preparing means knowing where the money comes from and where the money goes.

This is the first of a two part post about the in and the outs of money. Money comes from many sources. You can earn money through a job, you can get money through investment returns, government entitlements, you can win money, inherit money, or just be given money as a gift. No matter what way you get money, you have to understand that money is never unlimited; even for Bill Gates. Understanding that mere fact will start you on the road to financial freedom.

Most people are not so lucky to get money handed to them so we work for a living and earn a paycheck. You can either work for yourself by owning your own business or you can be employed by someone else. Either way, you are still working for a paycheck. It does not matter if you earn a million dollars a year or twenty thousand dollars a year, the concept is the same. We have what we earn and that is all we have. When deciding what to spend, we need to look at our earnings and compare that to what we want to see if they match up. If they do not, you can not afford what you wanted. It is so clear but many fail to see the facts.

What to do if you want something you can not afford. You must either borrow the money (bad plan) or save up for it. The other way is to increase the money coming in. This can be done by taking on more work or selling something you already own. Yard sales and Craigslist are two great ways to sell stuff to earn extra money. However, this is limited to what you have on hand. The best way to get extra money is to get a part time job. There are many simple part time jobs that can bring in extra income. Currently, working for the Unites States Census is a flexible good paying job for many people to earn extra cash. Other jobs, include newspaper delivery, Internet business, lawn care, pizza delivery, and many more. Most of these offer flexible hours that can be arranged around your full time job.

The next option is to find a better paying fulltime job. This can be done by better educating yourself, learn new skills, or moving to an area that is better paying.

The main point is that you need to know where your money is coming from and if you want a better lifestyle, you have to increase your money coming in. Credit cards is not another source of income. Because the local car dealer will give you a loan to buy a new car, it does not mean you can afford the car. Even if you can afford the car, you have to understand that the money must come from somewhere. Increasing the money going out means you need to increase the money coming in. Once you build a realization of where money comes from, you will better be able to understand the limits of your money.

Check back soon for part two “Where does the money go?”

I have written before about Dave Ramsey and the fact that I like his program. Though I am not a huge religious person, Dave’s debt plan is solid and helps people to rid themselves of debt. I have always followed the same principles and I just needed a little reminder of being a good money manager. I have been watching Dave for a while now and my wife and I have become hitting our debt with all we can.

Since I love to learn and any new knowledge can help, we signed up for Dave Ramsey’s Financial Peace University at one of the local churches. We had our first of thirteen classes last Thursday. The program cost $100-$129 for the kit and you become a lifetime member. As a member, you can take the course as much as you want for free. It also includes access to a member only website with some of Dave’s budgeting tools and forms. You also get to meet, interact and both encourage and be encouraged by others wanting to get out of debt.

The classes consist of about an hour of watching DVDs featuring Dave Ramsey. The program is centered around his seven baby steps. Once you watch the video, there is a class discussion and homework is assigned which is geared toward getting your money in order so you know where you are and where you are going financially.

Karen and i found this class interesting and it was great to interact with others from various backgrounds. Since we have applied the basic core of Dave Ramsey and starting really budgeting in September 2007, we have paid almost $11,000 towards our debt.

All of Ramsey’s program is good old fashion common sense but it is nice to have some reminders of these things. I highly recommend this course to anyone who wants to get control of their money and become debt free. I do not believe in bull when it comes to getting out of debt. I am dedicated to provided sound information to my readers and not some scheme. There are no short cuts and I believe if you owe it, you should pay it.

I will keep you updated on my course and if you have taken the class, please feel free to share your own opinion here on the blog.

I have heard in the past where if you are prudent with your money, you will attract more money. My wife and I have noticed this since we have started to really stick to a budget. Honestly, we have always had the money coming in but now we have a set budget we can put any extra coming in can go toward debt.

We seem to be getting a lot of extra income coming from new sources that we did not have before. This makes us feel wealthier now because before we would have found things to spend it on. Being on a reasonable budget makes it easier to apply any raises and extras to debt instead of extra spending.

This is a great way to live and if you decide to follow a plan like ours, you too will see life looking better. It will look like money is coming to you instead of you seeking money. You will start to be a money magnet. As you pay off your debt, things will start to look better. You may not fit in with your free spending coworkers and friends but someday, you will be free spending with honest cash. It is no longer about keeping up with the broke people who live paycheck to paycheck. This is a new way of living that will take you to a whole new level in life.

You do not have to live as a debtor your whole life to have the things you want. Yes, you may have to skip a few fancy restaurant dinners and a few extra trips to Starbucks; however, you will have a future of anything you want if you get out and stay out of debt. Can you imagine a life where you pay yourself instead paying creditors? Life would be easier with less stress.

This can be done and as you progress, you will see what we have, money will come to you. Be prudent and smart about your finances now! Sit down now and get a budget written out. Make sure every dollar you make is written down along with all expenses. Be honest with what you need and allow a little fun. If you get on a plan and stick to it, you will stop being one of those people waiting for the paycheck to save you and then run out of money way before your next pay.

Start now no matter where you are at or how old you are. When you get done reading this, sit down by yourself if single, with your wife if married, and your whole family if you have kids and write out your budget. If you have questions or need help, I will be happy to guide you with any help I can.

The economy is tough and for a while I have been trying to find a source of increasing my income. My current job is basically per Diem or when needed. I have not had any work for about a month. The good news is, my job just picked up to the point that I will have a descent salary for at least a few months. This brings me to a good point when paying off debt.

I have talked about the two equations of a budget. One is the income side and the other is is the expense side. If expense out weighs the income, you are in trouble and either have to cut expenses or increase income. In a weak economy it is harder but not impossible to increase your income.

The most simplest form of increasing your income is to get a better job with higher pay. This is easy if you have the skills and are in a an area where the job market is booming. I for one am not in that type of area. The next method is to take on an additional job. You could deliver pizza, wait tables, work fast food, or any other job that will boost your income. This is not always desired but you have to look that it is to get rid of your debt so it should only be short term. It will boost your debt paying and get you out of debt faster.

If either changing jobs or getting a better job is not an option, it is time to look at alternative ways to make extra money. With the Internet, it is easier than ever. Many people have found a lot of stuff in their basement, attic, or garage and have made a few thousand dollars selling them on eBay. You could also have a yard sale or find a resale shop that will buy the stuff or sell it on consignment. This is short term income but it could be a quick reduction in your debt.

Once you have done the above, you can look at the various at home ways of earning money. If you have good typing skills, there are doctor offices and medical companies that pay you to do medical related transcripts and billing. If you are a good writer, you could find freelance jobs on the Internet to earn extra income. Some companies people to do customer service work from home. These are just a few suggestions to up your income at home, there are many more. Just be careful not to fall for scams and never pay someone to work for them.

One way my wife and I use to earn extra money was to do mystery shops. Many of these companies reimburse you to eat at nice restaurants and also throw in a few dollars to cover your expenses. Though this is not big cash, it does give you free meals, and products with just a little bit of time. When we lived in a bigger area, we were going out once a week to steak houses and having $40 meals and we got reimbursed for filling out a survey about how the place looked and how the staff performed. It sure did help with the budget. As I advised for the home work stuff, never pay to do these types of shops. If you have pay a fee, it is scam and all you are buying is a list of sites you can find on your own.

The final way I will mention is bartering for things you need. Even though this is not cash, you will get something of value which you would buy otherwise with your income. If someone else has something you need, find something that you can do to get it for free. I have exchanged many things before to get things I need. These could be skill work or physical products. Anything you can get for free that is moral and not against any law is a good thing.

The ways I mention here are just suggestions to get your mind working. Increasing your income is a great way to speed up your debt payoff. However, be aware that it will not help if you continue to use credit cards and just increase your expenses to meet your new income. The main key is to spend less than you make and pay off your debt as soon as you can.

Have a great way that you have increased your income? Please share by leasing a comment to help or inspire others.

I think all of us know by now that the Stock market in drastically down. I personally am down 40% in my Roth IRA. I have been watching many so called financial gurus starting to advice a pull out of the market and spilt your money throughout safer investments like bonds and Cd’s.

As hard as it is to watch your investment shrinks, it is not the time to panic. Over the course of the Stock Market there has never been a loss over any ten year period. Investing in the market should be for five years or more so this should not be an issue. If you pull out now when it is down, you will fail to regain your losses and any potential profit.

Investing in the Stock Market should be for long term and should be done in Aggressive Mutual funds not individual stocks. Day trading is STUPID! If you have invested properly, you should do nothing but continue to do what you have been doing. Do you really thing all these companies are now worth 60% or less of what they once were? No, they are not. The market may sink a little further but it will recover and when it does, the profits and returns that are historic of the Market will return.

True financial wizards should not panic during times like these. If your financial person is suggesting pulling your money out of the Stock Market, I would find another financial adviser. If you are doing regular investing for long term goals, most of your losses will be flatten from cost averaging alone. Be smart and stick with your long term goals and do not panic.

This is advice free of charge! Others who are trying to convince you to pull out of the Market are trying to make a buck off your fear. Feel free to ask a question or leave a comment about this post!

Many so called finance experts recommend that you should carry a mortgage because you will have a write off for your taxes. This is bad advice! I am not saying you should never have a mortgage. Most people at some point or another have a mortgage. What I am saying is that if you can afford to pay off the home with cash, you should not continue to carry a mortgage.

If you itemize, mortgages could lower your taxes. However, that amount will be a small part of what you end up paying for interest. So you are paying $10 to save $3. This so called logic is not smart or even financially responsible. If you have to carry a mortgage, by all means take the tax write-off. However, if you can pay it off, do so as soon as possible.

The amount of people in the world who are waiting to buy a home until they can pay cash is growing. If you can do so, you will be a step ahead of the so called normal family. If you can’t save to pay cash, make sure you are otherwise debt free and that you have saved at least twenty to twenty-five percent to place a down payment and do not take a mortgage for longer than 15 years. .

Being a smart home owner will fit into the rest of your plan as being the CEO of your own personal finances. Though mortgages are acceptable debt when required, they should also be paid off as soon as possible.