Cash Plan: Why curbing spending starts with cash in hand

Saving money often hinges on how you view credit, borrowing money versus using your own money.

Taking that philosophy one step forward centers on the latter, and specifically how you use your money.

Take for instance something as simple as a vacation, trip to a theme park or anything that you know ahead of time is going to cost you money on a day to day basis.

Either one of those examples might be something you budget out, but often overlooked is how you spend your money for the entire time you’re on this trip or that day out riding rollercoasters and eating cotton candy.

The cost of the vacation (flight, rental car, hotel) or the theme park (cost to enter park) might be on your budget but what about cost of food, games and other activities that might not have figured into your line item.

So while you might have money set aside for the bigger picture, it’s the small, somewhat incidental spending that sinks your ability to enjoy yourself without overspending.

That is, unless you start using your money smarter, leave the debit card at home and stop swiping and simply carry cash.

The cash on hand method means that you give yourself a daily allowance, whether it’s a daily allowance the entire time you’re on vacation or if that day at the park is going to mean cost over and above simply getting through the doors.

Think of it as a daily budget you give yourself, which includes having only as much cash you’ll need for food or the things you absolutely need to have. Once your cash is gone, then that means you’ll just have to enjoy the scenery of the beach or walking around the theme park and riding the rides or partaking in whatever is included in your ticket price.

The flip side to this is wheeling and dealing that debit card, swiping at will and racking up a bill that is only going to be more difficult to swallow when you actually sit down and tabulate the total. Sure, the debit card is your own money, and it’s certainly better than swiping a credit card, but you still shouldn’t give yourself free reign to spend.

Swiping is just too easy; you don’t think about what you’re spending until you log on to your online banking and realize that instead of taking $50 out for the day, you’ve just spend three times that much.

Having cash and using it as an “all and then nothing” proposition works, and will keep you from overspending and thus help your efforts to have fun and save in the same breath.

Double Visionary: How to pay off debt quickly

When the topic of debt comes up, more specifically, paying it off in a timely fashion so you’re not inundated with money owed and interest rates through the roof, you ultimately come to one conclusion.

You simply aren’t going to be able to get ahead.

Despite success stories to the contrary and enough “how to get out of debt” banners strung across every internet pop up ad page, you’re still of the opinion that debt is always going to just be part of your financial future, and getting out of it just isn’t possible, other than rare occurrences.

But what if paying off debt didn’t have to be a question of completely stripping down your budget and not spending another time but rather a simple understanding of how to do it effectively and expedite the process.

It’s simple: double up, and watch your debt melt away.

Now that certainly sounds like it’s easy enough, but more specifically you are going to want to make two credit card payments per month, rather than the customary one. The idea behind it is that you take debt and you not only make the required payment but continue to chip away at it with an extra payment (or two) each month.

You might be asking yourself the question how are you going to come up with that extra money? Simple: find it somewhere in your budget.

For example, if you’re currently paying $200 per month on a credit card, but want to up it to $400 to pay it off twice as fast, that extra $200 isn’t going to come out of thin air and unless you get another job and the money magically appears, you have to dig a little deeper in your expenses.

So maybe your $200 per month cable bill goes away, and all you keep is a $50 internet package and a few streaming services that turn that original total into half as much per month ($100). Now that you’ve saved $100, think of a way you can cut the budget back even more, maybe those bi weekly spa visits that are costing you $100 every other week can turn into a $100 per month affair, and there, magically, is your $200 extra dollars to put toward a credit card payment.

The great part about doubling up is you not only pay the debt off faster, but you save money on the interest that would accrue and be your responsibility with every minimum payment you make and nothing more.
Shortening the loan is key, and getting out of debt can happen with ease if you simply show the vision to double down and pay twice as much on debt by peeling back your budget and finding space to make that happen.

Daily Planner: Why small, every day expenses are killing your savings

When you are wondering why you can’t save any money, think about a few expenses that you partake in on a daily basis?
At this point, your mind probably draws a bit of a blank, and then thoughts move into the major line items you’re dealing with on a monthly basis, such as your car payment, mortgage or rent or perhaps a utility bill that has suddenly spiked or is hard to budget for based on inconsistency of usage.

But don’t gloss over and go back to that first question, those incidental expenses that could be accounting for thousands of dollars spent each year, even though at the point of sale they’re only costing a few dollars instead.

There are essentially three purchases that the masses buy daily (although it won’t pertain to everyone, at least not all three) that can add up quickly and take a huge chunk out of not only your budget but actually keep you from being able to save any money as a result.

They are coffee, cigarettes and water. Now, the last item seems to be a real head scratcher, along with the first one. The real conundrum is as follows: you buy coffee for your coffee maker at the grocery store and the water comes out of the tap or fridge for free, but yet in both instances you make it a point to spend money even though you really don’t have to for either.

Coffee can be made in the morning but how many times do you skip that for a stop at a local cafe or coffee house instead? There’s $4 to $5 dollars spent on just that one cup of coffee and for some that’s the cost of an entire can or bag at the store. One five dollar coffee purchased each day accounts for nearly $2,000 out of your bank account each year. Imagine retiring after 30 years of work and knowing that you spent $60,000 on just a cup of coffee each day.

The average bottle of water is $2 per day, so while the total number isn’t quite as bad per year as coffee, you still can avoid spending any of it, particularly since most studies now have shown that bottled water is just tap water that is cleverly marketed, with little if any difference.

And, not to be outdone, the average smoker (one pack per day) spends about $7 per pack, and that means they’re at right around $2,500 per year on cigarettes.

Ouch, and then ouch again. So a smoker who loves their take out coffee and a bottle of water before the gym is going to have a yearly grand total of nearly $5,000 per year on just those three items.

When you put it that way, those small expense are hardly inconsequential to your budget and prospects of trying to save money.

Pay Stationed: How to properly pay off credit card debt

The thought of paying off credit card debt seems daunting and runs parallel with the total amount of debt you have, and the general thought is to simply pay as much as you can on what you owe, when you can.

But that method is a bit haphazard in that you could potentially be allocating your funds better and taking other factors in mind when paying off debt. While some financial and money experts agree on one way to tackle credit card debt, others differ wholeheartedly and implement a plan of attack that is far removed from their equally savvy counterparts.

So, is there really a proper or right way to pay off debt?

For starters, when considering debt, you have to take into account your budget and how much you are putting toward unsecured credit card debt specifically by factoring in your minimum monthly payments.

The best method to pay off debt is to focus on your smallest debt and begin paying as much as you can toward it to pay it down and ultimately off as quickly as possible, while still maintaining the minimum payments on all your other debt. This method works two fold: not only are you eliminating debt by focusing from small to large credit card balances but you’re also seeing much needed progress in the face of what can be described as difficult, as far as paying off debt or dealing with credit card payments.

The trick is once you pay off that first (and smallest balance) then you take that amount of money you’ve been paying and put it toward the next highest balance you have, plus the minimum payment (because you’ve already been paying that too, and have it budgeted).

For example, if you pay $300 toward your smallest account and the next highest balance you have carries a minimum payment of $150, that means once the first account is done, you’ll have budgeted $450 toward that next credit card debt payment, so that $150 minimum payment goes up to $450 and then you’ll begin to see how this domino affect and increased payments lead to higher balances falling by the wayside as well.

Some would argue that interest rates should play into this equation, but they don’t. That isn’t to suggest that if you have a 30 percent rate on one card and nine on the other, that you can’t rethink the process, but what is important with the smallest to largest theory is you actually see a dent being made what was originally thought to be an insurmountable amount of debt.

You can’t underestimate just how great that feels in the long run of getting debt free for good.

Goal Oriented:  Why saving money has to have reasonable tone

What if someone told you that you had to save $10,000 in six months?

For the majority of people that goal is unreasonable at best and nearly impossible at worst. And a lot of that sort of goal oriented chatter, while seemingly smart and important on the surface, actually can prove to dissuade the masses from being able to save.

Now, why would setting a goal like the aforementioned one be a bad thing?

The truth is, when it comes to money, is we typically and routinely set ourselves up to fail because we set unrealistic expectations and goals and thus begin to slowly fade when that $10,000 goal, for example, looks more like $500 in that same time period.

Think of it in terms of weight loss.

If you have to lose 50 pounds and you put a three month time frame on it, but only lose a couple of pounds instead, what may happen? You’ll probably throw in the towel (literally or figuratively) and assume that because you didn’t hit 50 pounds in 90 days that you feel far too defeated to continue.

At least not at the moment or right away.

The tiered approach to saving money often is the best way to get from point A to point B, while setting goals that are small and then building from there. If you want to save a $1,000 over the course of 12 months, then so be it. But the most advisable way to look at saving money on a smaller scale that turns into smart money habits would be more of a short term time frame with a money number in mind.

So take that $1,000 and make it four or five months, rather than stretching it out. The longer goal time frame could lead to procrastination on some level. Once you hit that target, then reset it and do it again or simply make a loftier goal. Any setback is just an opportunity to try again, like the cliched but accurate falling off the bike and getting back up and trying to ride one more time, over and over if necessary.

None of this is going to happen without a budget and also paying attention to your spending and adjusting it accordingly in order to make sure you even have an opportunity to save. The bottom line is if your expenses or spending outweigh your income, then nothing is going to change, especially setting, achieving and maintaining any goal.

Questionable Behavior: Why do we continually misuse credit cards?

Saving money isn’t just about calculating expenses versus income but rather can focus on any number of financial decisions you’ve made and how you manage money overall beyond just simple subtraction.

What about how you use credit cards, specifically misuse them?

Everyone has succumbed to using a credit card for something at one time or another, but the manner in which you use it could be costing you thousands. If you have $5,000 in debt and pay upward of 20 percent interest and only make the minimum payment, you might end up paying back in the neighborhood of four or five times as much as the original balance shows, thanks to interest.

So how did you get into that position to begin with?

Chances are you used a credit card for all the wrong reasons, and decided to carry a balance even after a low introductory rate seduced you into securing a card or perhaps buying something that you can’t afford but convinced yourself that you needed anyway.

Being smart with credit cards is, however, hard and easier said than done. Credit cards have always been about convenience and a simple, blind way to fulfill wants.

If you have buy gifts, and you don’t have the money, the credit card solution fits the bill. If you have a major emergency at home, and don’t have enough money to help the cause, you can turn toward credit cards at a moment’s notice. Or what about that vacation you have booked or honeymoon, and you’re just a little short on cash? How about using a credit card?

Sadly, only one of those situations would warrant even a thought about a credit card and that’s the emergency scenario. Otherwise, you should think twice about using credit and thus paying interest.

And that really is what destroys our financial prowess is our inability to not use credit cards for the wrong, mindless reasons. A credit card is not cash on hand, and should not be used unless it is a last resort. And if you have an emergency and can’t pay for it, don’t rely on credit cards. That should be a huge wake up call to rework your budget and start cutting expenses, rather than living at or beyond your means and using credit cards to help fill in those very expensive gaps.

This isn’t to say credit cards don’t have their perks, such as points, travel miles and other discounts when you use them. You actually can save thousands, for example, when you buy clothing at a department store at use your credit card over the course of a calendar year. But if you’re not prepared to get the discount and pay it off the next month, you’re spinning your wheels with debt and won’t be able to get out of park and help your financial standing any time soon.

Fund Times: How to save smart without waste

The two words most people fear in terms of money is “emergency fund,” perhaps even more so than “savings account,” since the former is more fearful given that not many have one.

An emergency fund is quite simply money set aside in the event something unexpected happens. Given that the average saving account for about half the population is around $1,000 or less, the idea of an emergency fund is quite laughable.

But why don’t we have money saved? Why is our emergency fund more prepared for a few months worth of grocery bills rather than a new roof, transmission for the car or braces for the kids?

The fact remains there are two main reasons we can’t save: we don’t spend correctly, and we live far beyond our means. In both instances, you need a budget, you have to track your spending, and by doing so you’ll flush out the bad spending and keep the good (i.e. necessities).

Living beyond your means is more about borrowing money and trying to have what you want or keeping up with certain trends even though your income won’t support it. Having a budget keeps you accountable, and if you’re overspending and you write it all out on a piece of paper and can actually see you’re in the negative that could sharply change your spending habits.

Spending correctly isn’t just about paying your bills and paying them on time, but also our innate ability as a society to waste money on anything from lottery tickets to cigarettes. While some might not consider those purchases a waste of money, consider what not buying those could mean in the long run. if you spend just $3 per day on the lottery over the course of 10 years, you’ll have spent $10,000 and have nothing to show for it. And if the average lottery player spends $5 per day, that number is going to be nearly double.

And wasting money isn’t just about lottery tickets or addictive habits, but also can be something as simple as take out food on a weekly basis consistently. If you spend $10 per day on lunch, and another $10 on coffee and drinks that are just part of your day to day routine, you’re spending about $7,000 per year on one meal and a quenching your thirst daily.

What about your need to refill more than just a cup at lunchtime?

Your focus should be on tracking spending, increasing income (if possible) and budgeting what you have not what you don’t. Being wasteful is just an added negative to this entire process, one that can easily be fixed but by your hand only.

Sign Language: How to admit to signs you have money woes

As much as you stare at your bank account, your expenses and income, and realize that money is a problem, you simply cannot admit it.

For whatever reason, the majority of people who struggle with money have a hard time coming to grips with the fact that they aren’t very good at managing it, saving it or anything else that would be considered positive.

The irony of that is that if you’re having money woes and you can admit it and tackle the problem head on, you’re very much likely to fix the issue and have better money managing habits moving forward.

Getting to that admission phase, however, can be a difficult path for most.

For most of us, you can see the signs quite clearly that money is an issue, most notably if you’re missing payments left and right or simply not paying debt or loans back.

Perhaps even more discouraging are those individuals who believe they’re planning perfectly how they spend their money and yet check their bank accounts or statements and can’t understand where exactly there money goes. Chances are in that instance, you have a leaky budget, holes throughout meaning that you simply have forgotten about expenses as part of your budgeting process.

You’d be surprised how overlooking a propensity to each lunch out at a restaurant every day with throw off how much you believe you’ll have left over at the end of each month when it comes to budgeting and knowing what you have to not only spend but more importantly save.

Budgeting is supposed to be an all encompassing task that should include all expenses when possible that you’re making on a regular basis, whether it’s a bottle of water every day out of your pocket or pack of cigarettes. Money adds up and no incidental expenses should be overlooked.

Also what can’t be overlooked is arguably the worst money habit you can have in your spending arsenal and that is the penchant to spend money on what you don’t need and keep bills that need to be paid on the back burner. If you’re trying to save money for holiday gifts, for example, and you want to pay your mortgage late as a result, you’re exhibiting a money habit that has no place in your financial playbook.

Admitting that you’re not good with money is a difficult comment, but being able to assess your weakness and know how to pinpoint where you’re losing money and ultimately fix it can send you on a path to financial freedom rather than repeating the same money saving mistakes over and over again.


Bumpy Rogue: How to get off the path of wasting money

No one is going to argue that saving money isn’t hard. But does it really have to be perceived as next to impossible?

The fact remains is that debt is a real issue, one that isn’t going away any time soon, and you can look at the cruel, crude numbers of the average amount of debt (unsecured) at around $25,000 and also pay close attention to the average amount of money a person keeps in their savings account, around a paltry $1,000.

That is a huge disconnect and distance between those two figures, and with that, you can see why people assume that saving money is a dream, and nothing more.

But the fact remains is that you can break away from that mentality if you avoid some simple ways that you’re wasting money. Even more, you might not even realize that you’re doing it.

The most obvious is two fold: you don’t have a budget and you’re living beyond your means. Those two go hand in hand with one another, good or bad. If you’re having trouble saving money, chances are both of these things are working against you. And, for example, if you have a budget and it’s iron clad (more on that in a minute), you still can overspend or live well beyond your means, which essentially renders your budget useless.

As for the budgeting process, you can’t just focus on the obvious. You have to take into consideration little elements of spending, such as a gym membership or a simple bottle of water every day for 365 days of the year. The small, so called inconsequential things add up quickly and can’t be overlooked.

Another huge missteps when it comes to why you can’t save money is a propensity to ignore your income and only add expenses as you go through life. Successful people who pay attention to money know that they’ll always continue to look for ways to earn more, even if you’re going to be a part time driver or work from home as a typist. They’ll always try to sell things they aren’t using or look for ways to save any way they can, whether that is their cable television bill or cell phone plan. Those individuals don’t add expenses; they find a way to minimize them and work that total number spent down.

Being successful at saving money does take work, but you can argue just how hard it is. The word “hard” should be replaced with attention to detail as the driving force behind financial prosperity.

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.

Frugality Gone Wild