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.

Budget Breakdown: Why your budget is only as good as how it adapts

Having a budget isn’t a full proof way of assuring you’ll be able to save money, pay bills on time or have a general, strong understanding of your finances.

The misconception is that just because you put pen to paper and thus have accounted for your car payment, house or apartment or your utilities that you’re on the right track to becoming more successful when it comes to money.

Truthfully, that’s just a small part of the budgeting process as other elements play into all of things you want to do with your money beyond just knowing that it exists and where you hope it is being allotted.

Experts argue and with good reason that your budget has to be adaptable; it has to be able to change with how your lifestyle, job or other elements can shift in one direction or another.

Would you believe that someone can get take a pay cut at work and leave their budget absolutely untouched? You’d think that those with any sort of financial acumen would be trying to look for easy places to start cutting expenses as well, such as cable television, cell phone perks or spending money on clothing less frequently then previously.

The status quo when it comes to your budget, simply doesn’t work.

In addition to any pay changes, you also have to consider your retirement as it pertains to your income and how you save money.

If you’re thinking about retirement or have decided to invest a portion for the first time, you have to consider that as you get yearly raises, bonuses or cost of living expense increases, you might want to alter your contribution to your retirement account and increase it with each year, so you can build your wealth or take into consideration how the market might fluctuate. If your company has a match program, you’ll want to take that into your thought as well.

No one is going to argue that a budget is the way to start saving and to beat debt into the ground, while keeping track of everything and anything that is money related. But budgeting isn’t a one and done proposal. It’s about a constant changing effort to manage your money, with a key on the word “manage.”

If you are a manager at work, manage a team or are in charge in some form or fashion in any realm of your life, why shouldn’t money be the same? You don’t all of a sudden start managing and then stop looking to get better, and money should carry with it that same mentality.

Money Mattering: Why common budget mistakes can be avoided

Do you often update your budget?

Do you even have a budget?

Perhaps when it comes to spending, you don’t have a plan and you simply “wing it” and assume that you’re making more than you spend, whether that comes in the form of simply paying bills or buying what you want rather than need.

Let’s start with that over or under estimating your spending. If you aren’t sure what you’re spending on or, even worse, how much you’re spending, then you need to adjust that immediately and that starts with a budget.

That budget also should consist of a plan to save money for the future or for expenses that might be the unexpected, such as taxes that need paid, home repairs or something else of that ilk.

The real issue that most face and one of the more common mistakes is not really looking at money in the purest sense or buying as though you have all the money in the world. Think about the car you own; did you buy it based on the money you have or the car you want? If it’s the latter, you’ve likely overspent on a car that is much loved, but the monthly payment hardly is the same.

Overspending isn’t just about not budgeting but also not looking in more unique places to get what you want, more specifically buying used when that is perfectly acceptable and must less expensive.

The first thought in that school of thought is car, but what about your home?

Far too many who struggle with money buy too much home, and that isn’t to suggest they don’t need the three bedrooms or extra living space in the basement, but more about the monthly mortgage payment and the overall cost of the house.

The common phrase “house poor” is all too familiar in that your mortgage takes up more than half of your monthly income, a sure fire no-no in the world of budgeting and saving money.

Finally, money isn’t just the root of all evil but it also is something you like to pretend you have even if you don’t. Not having money just means your budget looks different than that of your friends, so trying to buy the same wardrobe, the same car or the same vacation plans is only going to put you further behind in your plans for financial success and freedom.

Making mistakes with your budget is nothing new. The trick is figuring out what you’re doing wrong and adjusting it before mistakes start to feel like commonplace.

Personal Problem: Is a personal loan the answer to paying off debt?

Credit card debt is a topic that is tough for most people to indulge in discussing, mostly because everyone has debt and paying it off can be difficult if not feeling nearly impossible.

So when it comes to tackling debt in the form of credit cards, you might be willing to entertain just about any option that you can think of, even if it means adding to the pile.

Consolidation is paramount for some, simply for convenience purposes of making one payment and calling it a day. The consolidation road can center on two avenues: debt consolidation companies that overtake your debt and help you manage it or quite simply a personal loan that can use its Superman like qualities and knock out your debt in a single swipe.

The debt consolidation plan through a company works, but that renders your credit cards cancelled and obsolete and will ding your credit score as a result. It doesn’t mean you’ll not be able to have credit or get more important loans, but that is a deterrent for the masses.

A personal loan allows you to have a fixed interest rate (which is a breath of fresh air versus doing balance transfers on credit cards that change drastically once the promotional rate that is introduced goes away after 12 or 18 months).

Before going into a personal loan, you have to make sure you’re able to carry something like that, first by checking your credit score but also making sure you’re not going to get saddled with a high interest rate based on your debt to income ratio or income in general.

If you don’t have the income to carry personal loan, what ends up happening is you borrow less than you need to consolidate and still have a stray card or two to pay on in addition to paying back that personal loan.

The real selling point of the personal loan is that one stop shopping (or paying back) mentality. The personal loan can take multiple lines of credit and allow them to be paid off and that one lump sum monthly is important for the purposes of convenience. That is hard to understate for the people who have a lot of debt and a lot of cards they’re trying to manage.

Having credit card debt is troubling and disheartening but it doesn’t have to be a mountain that you can’t climb. Taking a personal loan should mean that, credit wise, you can carry it with an interest rate that only alleviates the problem, not adding to it.

Frugality Gone Wild