Bad Advice: Financial input is only as good as source

Who hasn’t tried to dish out financial advice to you as if they’re Suze Orman? How about friends or family members that tell you when it comes to money, they’ve “been there and done that” and have all the answers?
Then, you have that nosey co worker or overbearing boss that is all too eager to give you as much information about saving money as you can handle, and perhaps they’ll even throw in a little bit of so called knowledge about retiring as well.

What’s a person to do? Who should we be listening to?

For starters, you should be all too willing to weed out the people who are giving you advice about saving money who are worse off than you. If your close friend is barely making it from one paycheck to the next, but he’s going to tell you how to spend money or give you an impromptu seminar on budgeting while you’re in line at the grocery store, you should think more than just twice about taking that bait.

The real informed individuals are those who have been successful spending, saving and budgeting. The best source, however, has to be someone who manages money and finances for a chosen professional, such as a financial planner or retirement specialist. Even searching out someone at your bank would easily trump listening to someone who you’re not quite sure has a clue about money or financial responsibility.

But be careful just which financial advisor you choose, since they’re not all as prominent or experienced as you might assume. You want to be certain to not only research them once you’ve found a particular person but also make sure their training and expertise was formal.

Just because someone says they’re certified, doesn’t make that a true statement. When it comes to your money, a little research goes a long way.

One missteps we often make when it come sot searching out a professional is the propensity to believe in referrals, but in actuality you want to make sure that person fits your financial needs, wants and goals and also comes highly recommended by someone other than who you know.

As much as the advice you receive from others is driven by trying to be helpful, you still have to remember one key piece: it’s still your money.

And what you do with it should be your decision and not overly influenced by those who might not be quite as much of a resource as initial thought.

Limited Engagement: How to save money on small budget

 What’s the first thing that comes to mind when mention “budgeting?”

For most, that word is negative. It reminds the masses that budgeting is directly related to not having what you want, scraping along to just “get by” because you’ve limited yourself to what you can spend, based on a variety of factors led by income and expenses.

The income factor is quite paramount, but what is someone supposed to do when they’re trying to save money when they don’t make a whole lot, and that aforementioned budget doesn’t stretch very far.

In that situation, budgeting does take on quite the negative connotation, but it doesn’t have to be that way. The first and most natural reaction is to cut spending and expenses, being that feeling of depriving yourself is going to stand out more so than anything else. Cutting expenses is the easiest path realistically but it comes at the expense of peace of mind, furthering the thought that you’re only working to pay bills, and you’ll never have the funds to actually have fun.

Granted, if saving money is a priority and you don’t have a huge income, having fun might need to go on the back burner, but there may be other ways save money first.

You might want to take the time and start price matching or shopping around for better rates on anything from electricity to car insurance. That also includes online and print coupons, something maybe you didn’t take the time to do previously because you felt it wouldn’t make much difference. The fact remains is that price matching works, and coupons are all the rage if you actually sit down and dedicate yourself to getting the process down pat.

And if you’re not always trying to find a cheaper car insurance quote or a homeowners policy, then you’re accepting the potential that the status quo is quite expensive versus making the most of businesses that are fighting for yours.

If you’re someone who has a little bit of money saved, you might want to look at your credit and debt specifically. Sometimes if you pay off a credit card completely, you’ll save hundreds per year on interest and yet still have a little money left in your savings account. If you don’t have an emergency fund, that should take precedence over spending and your budgeting prowess should reflect that in terms of making sure you pay yourself, and then pay your bills. The paying yourself part is just another way to save money, but makes some feel as though they’re actually a priority in the process.

No matter how much you make, there’s always room to live within your means and save money, with the focus being on the former: spending what you have based on income, and nothing more.

Hail Monitoring: How your credit score can instantly be improved

If you’re not familiar with your credit score, you should be.

If you’re not familiar with your credit score, that’s part of a bigger problem that centers on you not paying close enough attention to your money and how it is being managed.

Your credit score lets lenders know how much of a risk versus reward proposition you are, if you’re going to pay them back based on your history and if loaning you money is ultimately a good idea.

But as much as you believe your credit score is arbitrary and really doesn’t matter as much as say your income or lack of debt, chances are you’re underestimating just how much more paramount those three digits are when it comes to how you’re perceived and just how easily you’ll be able to finance things like a car or home.

What most don’t realize is that raising or “fixing” your credit score isn’t as difficult as you’d think and can be achieved with very little headache on your part, other than just focusing more on your finances overall.

For starters, you should put some sort of plan or schedule in place so that you don’t miss any payments. Missed payments hurt your score tremendously, and yet are the easiest things to fix. Even if you just pay the minimum, that’s better than not paying at all, even if with interest that minimum payment is going to actually be more of a break even as far as the overall balance is concerned.

Planning, too, plays into your success as far as raising that score. Planning can be defined in both paying on time but also getting a better idea of what exactly your debt looks like and focusing on the highest interest rates or using the opposite mentality: start with the small debt first and pay it off so that you can see real progress. No matter which end of the debt spectrum you start from, make sure you pay down credit cards or debt that is near your debt ceiling, meaning if you have a credit card, for example, with a certain maximum amount you can spend and your balance is flirting with that number, you need to focus on that card first.

What you never want to do is look at at a sub 600 credit score and assume all hope is lost. Instead, you should level set and understand wholeheartedly that getting your score out of the doldrums isn’t quite as daunting as originally thought.

 

Life Aligned: Budgeting starts with asking for help

Not too many people like to admit they’re wrong or don’t know what they’re doing, no matter what the project or endeavor is. Money certainly is no different.

The hardest part for most as far as saving money goes is the ability to budget, understand their credit and score, and to know what kind of debt they have and come up with a plan to get rid of it.

The fact remains is that the average individual has about $20,000 in credit card debt, another $50,000 in school loans, along with the average home purchase at around $170,000 and cars sitting at around $30,000.

If that sounds like a lot to manage, you’re right. The house and car aren’t as much of a concern since that is more about business as usual when it comes to debt, rather than having unsecured money that has nothing to show for it (credit cards).

The education number is high but also understood due to its nature and the fact that most student loans are protected by a very low interest rate.

The focus of this is more about asking for help when it comes to credit card debt and your credit score, specifically the amount of debt you’re carrying and your debt to income ratio. Realistically, the debt to income ratio should be about 60 to 40 in favor of the income, obviously. Some suggest a 70 to 30 split, which is wonderful but hard to achieve.

Asking for help doesn’t always have to a professional endeavor, either. You don’t necessarily have to seek out the help of a financial planner or credit advocate in the form of a lawyer or even a credit consolidation company.

Those avenues certainly are perfectly fine, but they might not be that necessary when it comes to your situation. If it is, so be it. Those individuals or agencies might be more helpful, but if you know what you should be doing and have a decent to above average salary, you might want to consider a spouse, sibling or parent to make you accountable for your plan and how you spend and budget.

Some have gone as far as saying that they give those individuals or ones of that nature money to save for them or ask them to keep an eye on them, for example, when they’re out to eat or shopping at the mall.

You shouldn’t feel defeated for asking for help but rather a sense of relief that you’re on the right path to crushing your debt, raising your credit score and finding that financial stability that has eluded you.

Tiresome Debate: Retirement success rooted in early savings plan

Ask a random 10 people who recently retired, say in the last 10 years, and see what the response is to this very question.

What would you do differently to prepare for retirement?
Chances are, you’d get varying answers, particularly when you consider that some who plan for retirement aren’t always exactly where they want or more importantly need to be when it comes to retiring.

The real issue stems from planning, or a lack of it.

Planning simply means you’ve not only be preparing for retirement by saving in a variety of ways but also talking to financial experts on how your money is going to work for you or setting up goals and the aforementioned plan, rather than just haphazardly putting money aside from a paycheck or buying into a 401K without much knowledge about exactly if it is enough or how it’s going to be invested otherwise.

Planning also should start when you’re young, such as your early to mid 20s if you’re in a position to do so. For those of us starting our retirement plan in our 40s, we’ve got a lot of work and saving left to do, so the majority of people who already are in their formidable golden years will tell you that they should have taken advantage of company match 401Ks or some sort of savings plan their company provided. By not doing so, or opting to do so later in life, has set them back years and tacked on those same years to their working status. Rather than retiring at 62, maybe they’ll find themselves forced to work another three to five.

When you think about your current status as far as retirement planning, you want to think big picture as well when it comes to those larger bills. That includes a large sum of credit card debt or your mortgage, as well as car payments. The goal should be as you approach retirement is to have these items and more paid off as soon as possible. If you have to prioritize, then start with the mortgage, which likely is the highest payment amount you have.

Finally, you want to make sure you don’t save for retirement and go cheap with your purchases. You need to understand that a purchase should be one that has some durability to it, such as that vehicle or instance. Make sure your that purchase is one with a propensity to last well into and during retirement.

Being a “success” in retirement centers on what your original goals are, and you can’t compare yourself or your situation to someone else, but rooted in all smart retirement success stories will always be planning correctly.

 

Cut-Backing: How to ensure yourself cutting expenses is best option

 

No one likes the idea of cutting expenses to try to save money.

That is, until they actually do it and realize two very important things: they enjoy the extra money saved, and the services and products they no longer buy aren’t very missed in the long run.

Expenses are part of the budgeting, spending and saving process but that doesn’t mean you can’t say no or so long to certain items even if they’ve been staples that you supposedly would label as necessities.

The true staples sound as those you’re channeling your inner cave man or woman, but they still ring true when you start with a foundation that is your budget. You need a house, a car, to pay your utilities (gas, electric for heat and power), food and nourishment. In today’s modern world, you have to go with insurance for that home and car, along with a few other things that come to mind, as most of us have some sort of credit card debt.

But what about those who end up spending money on things like cell phone plans, cable television, clothing (which is a necessity and belongs on that top list with some discretion).

For starters, the cable can go out the window, and that means all of it. You can stream your way to entertainment at a fraction of the price as the typical, traditional cable is something that is outdated at best. As for the cell phone, you’d be hard pressed for some to take on a lesser network then Verizon or AT&T but Sprint and T Mobile might be far behind the competition but they’re still viable, much less expensive options, not to mention other reputable companies like Cricket and Boost Mobile.

Clothing is something we absolutely need but at what price? A lot of what we buy can be purchased in the off season, when clothing is 50 to 70 percent cheaper, or you can forgo the department stores and instead buy used or at other retail spots that deal directly in not only used clothing but the kind that is imperfect (but only to the keen eye).

Food also should be specific to the grocery store kind, as limiting your eating out at restaurants for breakfast, lunch or dinner should be kept at a minimum. Dinner three times per week alone can cost you a few thousand dollars, money that could be doing much better in a savings account.

While “cutting” sounds bad, it actually can be the most beneficial part of being able to save money.

Budget Breakdown: Why budgeting can go bad quickly

The magic word when it comes to saving money has and always will be “budget.”

You know, your neighborhood, friendly budget that is the means to an end, with that end being able to save money without even thinking about it.

You piece together a list of your expenses and then your income, and start looking for places to cut the former since you don’t have all that much control over the latter. In most instances, your budget and having one that not only exists but you implement is the trick to getting your finances in order but also saving money where you need to the most.

But can a budget be a bad thing?

Truthfully, it certainly has the potential to do so, given that budgeting can’t be taken to the extreme when you set realistic expectations that you simply can’t meet. Not being smart with your budget doesn’t mean simply not to follow it but also can equate to having a budget that makes things way too difficult on yourself moving forward, no matter how bad things might be.

Living without cable television or cutting your cell phone down from one of the major carries to one that is more of a smaller time entity or a pay as you go should be fine, and doesn’t fall under the “extreme” umbrella. What could cause you problems, however, is banishing your food budget to just cans of tuna and beans for the next 6 months, and not allowing yourself to spend dollar one on a meal out at a restaurant.

Granted, eating out and spending breakfast, lunch and dinner on restaurant or fast food dining will take up a lot of your free spending money, but that doesn’t mean an anniversary or birthday dinner needs to be skipped sporadically.

Just because you put pen to paper doesn’t mean the budget works. It has to be realistic and set forth a plan that you actually can follow. No one, as far as dieting goes, can transform from burgers and French fries to carrot sticks and boiled chicken within a week. You have to slowly ween yourself off your diet; the same can be said for your budget.

Start with items that you know you don’t need and work from there; start cutting small and then work your way up to things like refinancing a home or car, if you truly need to go that route.

What won’t matter, if you take that path, is your budget as a whole. It will be nothing more than a dream that won’t ever come to fruition.

Small Wonderful: Why you can live big on small budget

Without getting too cliche, you can live life as you see fit on a budget that works for you, even if you’re not a millionaire or have the kind of lavish spending that others you know do.

Being able to get by on a small budget, meaning that you spend and save like everyone else, but don’t do the former quite the same because your income dictates otherwise.

In most instances, living small doesn’t mean you have to stop spending or all of a sudden implement a spending style that goes against what you truly want.

Shopping and eating out at restaurants is a perfect example of this point. Those who live “small” still spend money on clothes and go out to eat at restaurants, but they do so with extreme patience, virtue and a flair for the finer things.

Now, that might sound as though it makes little sense since the “finer things” and a small budget don’t go hand in hand.

But consider it from a different perspective: if you buy clothes every day or every weekend or with some regularity, then you’re going to not only spend more but you won’t get what you want, instead feeling as though you have to buy cheap and more frequent. Rather than buy a bunch of $5 shirts, why not shop once every six months and buy yourself something a little nicer since you’ve been saving on a whole lot of $50 or $100 trips every weekend.

You can look at food in the same breath.

Spending $10 for lunch and another $20 for dinner three days a week adds up quickly (more than $1800 in six months of food shopping). Imagine if you packed a lunch, cooked dinner at home and went out to a fancy dinner with your significant other once per month for $100 a pop. That’s $600 spent versus $1800 for what only could be described as a lunch time sandwich or salad or a dinner meal at a chain restaurant.
And as long as you’re being smart with food, think about eating out for lunch and skip dinner. Lunch could be a $10 meal and if that same person mentioned earlier cuts out a $20 three days per week, that $1200 in their pocket or more in six months and more than $2,000 saved each year.

Living small doesn’t mean you’re never going to be able to enjoy the good life. That life just gets better when you can splurge and still save at the same time.

 

How you’re losing money every month

Sometimes a budget is only as good as the person who created it or just how diligently it is followed.

Simply put, the budget, specifically having one, isn’t a full proof method to be able to save money if a few things aren’t lining up properly.

Does the budget make sense? Does it account for everything? More importantly, are you accounting for everything?
The problem centers on you having a budget that on paper looks pristine but the execution of it leaves you in the red every month. So, how do you have a budget and yet you can’t manage to save any money as one month rolls into the next?

Chances are, you’re losing money in places that you might overlook or are a given and, secondly, you aren’t treating your budget like a business, one that you can always adjust to save money and eliminate expenses for a better bottom line.

For starters, do you track how much you spend on eating out at restaurants or grabbing a quick lunch on the road? Those dollar figures aren’t just incidental in the way of expenses that you can forget about, but rather need to be accounted for each time you spend. The average lunch bill, eating out three times per week for an entire year, can cost you nearly $2,000 per year. While that number doesn’t sound like much when you’re only dropping 8 to 10 dollars on every meal, it certainly adds up quickly. The same could be said for not paying attention to bottled water, coffee, cigarettes or even the consumer who buys themselves a $50 shirt every time they get paid. If you don’t believe those purchases aren’t important, then you’re not accurately falling under the “budgeting” umbrella.

As far as expenses and treating your budget like a business, you should constantly be combing over your numbers to see where you can save money. Maybe ditching $200 per month on cable versus a $12 streaming subscription is a means to save extra cash. Perhaps it’s been a while since you shopped for insurance rates for your vehicle, and since you’re such a wonderful driver, you’re actually overpaying at the moment. Maybe a home refinance would be in order to get a better interest rate and a lower payment. That cell phone plan, too, might be creeping a little too high for you, and your office just gave you a company phone you can use as your own. The smart money is cutting your ties with your personal line.

Those little tweaks can take what is an average, run of the mill budget that is underachieving and underperforming and turn it into a money-making powerhouse.

Retired Thinking: Why can’t you save for retirement while young?

So, you’re 30 something years old and you still haven’t saved for retirement.

What now?

Well, maybe you assume you still have 20 or 30 years to save, and that should be adequate amount of time to get to 60 or 65 years of age and not have to worry about going back to work at 70 since you really didn’t save as much as you thought.

Your 30s are the ideal time to not just start saving for retirement but to revisit what you are doing and make necessary changes in order to make sure you’re retiring in style, rather than scraping together at the 11th hour in the hopes that you’ll have what you need.

Saving for retirement is twofold: it’s about saving money when you should be at an age when you’re settled and also looking at retirement as more than just socking money away on your own.

You have to ask yourself tough questions, like if you have adequate retirement funds set up, such as an IRA to go with your 401K at work. You also have to resist the temptation to take from the 401K, not only do you face early withdrawal penalties but also that little voice in your head that says you need to borrow $5,000 for a home repair and can easily get that back in your 401K in the next few years. That mentality might work for an emergency medical issue or bill that needs paid, but you can’t keep going back to that well every time you are in a pinch.

And pinching is what you should be doing with those pennies as far as being able to save money in your 30s. You’d like to think that you have a home, a car and are relatively secure with your possessions, so you might want to consider revising your budget and scaling back in the most appropriate and easiest of places: cable television, clothing allowances, cell phone up charges, bank fees and eating out at restaurants for breakfast, lunch and dinner or any combination of those three.

As much as your 30s can be viewed as a time to think about making as much money as possible and enjoying your youth, you can’t overlook retirement, particularly if your company is offering you a head start or if you’re simply forgoing the planning part for the sake of spending versus saving.

Frugality Gone Wild