In today’s society, the majority of us truly do live paycheck-to-paycheck. Sometimes it is because we are actually overspending and sometimes circumstances get us into a financial pinch. However, one key component of getting out of debt is learning to save. I know what many of you are thinking right now. “How can I save when my paycheck barely covers (or doesn’t cover) the bills.” Believe me, I fully understand!! But saving money needs to become a habit. It doesn’t just happen when you finally have extra money after paying bills. If you wait until then, you will continue to get deeper in debt.
I strongly suggest that you open a savings account that does not have a minimum balance to avoid a service charge. Then take a set amount of each paycheck and put it into that account. We prefer to use an ING Direct account (http://ingdirect.com) for this for a couple of reasons. First of all, ING offers a better interest rate than traditional banks. And secondly, since they are an online bank, you don’t have immediate access to your funds. Transferring money to and from your account is easy, but it does take a couple of days. Be sure to check with your bank about withdrawal or transfer fees. This prevents us from using the money for impulse purchases. However, if you don’t have a traditional bank to use to transfer funds, call around and find a bank that offers an account to suit your needs. By the way, ING Direct is FDIC insured.
So now you’re still wondering how you are supposed to do this if there isn’t any extra money after the bills, right? Would you really miss a buck or two out of each paycheck? Maybe even $5-$20 is manageable. Whatever amount you decide upon is good. The real point is to make it a habit to save. Mark your calendar for about three months after you’ve started saving and see if you can raise the amount you are putting into the account. Hopefully, by doing this, the next time something unexpected happens, you’ll have the money there to pay cash and not get into further debt. And it’s a good way to reduce financial stress by knowing you have a small “cushion.” I know some people who take the money they save by using coupons and put that into their savings accounts. Where there is a will, there is a way!
I grant permission for every reader to reproduce on your website the article you are now reading but copy this article, without any alteration whatsoever. Include the copyright statement, too, please.
"Copyright © Renita R. Perrone All rights reserved. Permission granted to reprint this article on your website without alteration if you include this copyright statement and leave the hyperlinks live and in place." www.wowyousavedhowmuch.com
Showing posts with label debt. Show all posts
Showing posts with label debt. Show all posts
Sunday, July 18, 2010
Friday, July 16, 2010
Budgeting
A few weeks ago I talked about being aware of what you are spending. This is an important first step toward getting on a budget. None of us like having to be on a budget. But, the reality is that we won’t get anywhere, financially, until we learn to live on a budget.
Before my husband and I got married, we sat down to set up a budget for him. At that point he never really knew how much money he had or how much he was spending. And he used a “rounding off” method in his checkbook so it couldn’t even be balanced! For an ex-banker, like myself, that was a nightmare! He was not very happy when he saw that he had less than $20 a month left over (maybe it was even less), but after a few months he started realizing that he was getting things paid off and it was actually easier to know exactly where he was at.
So, how do you set up a budget? It’s really pretty simple. Start with making a list of your routine monthly bills. You should note when each bill is to be paid and approximately how much it usually is. Then take a look at your pay schedule to determine which bills have to be paid out of each paycheck. Obviously, if you get paid once a month this is easier because everything has to be paid out of that one paycheck. However, most people get paid at least twice per month. Once the basic bills are done, think about the expenses you have to pay less often than once a month – things such as haircuts, insurance, car maintenance, etc. Then average out how much to set aside each month. For example, if you car insurance is $300 every six months, then you need to set aside $50 a month so you will have the money when the bill arrives. Be sure to figure in expenses paid in cash as well, such as groceries, gas, etc.
Once this is all done, I strongly suggest using some form of the “envelope” system. If you are not familiar with the envelope system, the basic idea is that you would have an envelope for each budget category and actually put the budgeted amount of cash in the envelope until the bill is paid. However, few of us pay our bills in cash any more, and even fewer probably want to retain larger amounts of cash at home. Therefore there are several ways you can do this. Personally, many years ago we found a computer program called Money Matters, which has worked wonderfully for us. I’m not sure if you can even still purchase this program. Another option is to simply have a savings account and some form of a spreadsheet with the various categories listed out and use that as your savings ledger. Before the age of computers, I used to use accounting ledger paper (yes, I’m showing my age here! LOL). The key is to keep track of how much money you have available in each category at any given moment.
Now, are you ready for the real secret??? STICK TO THE BUDGET! It’s that simple. It’s not easy, but it is a simple process. For an online tool to help you out, try Budget 5000. I have not tried this, but found it while searching for tools to help you out. It’s a free service that looks pretty good. You can find it here. http://www.budget5000.com/budgeting-successfully/
Good luck on your budgeting journey! You can do it!
Before my husband and I got married, we sat down to set up a budget for him. At that point he never really knew how much money he had or how much he was spending. And he used a “rounding off” method in his checkbook so it couldn’t even be balanced! For an ex-banker, like myself, that was a nightmare! He was not very happy when he saw that he had less than $20 a month left over (maybe it was even less), but after a few months he started realizing that he was getting things paid off and it was actually easier to know exactly where he was at.
So, how do you set up a budget? It’s really pretty simple. Start with making a list of your routine monthly bills. You should note when each bill is to be paid and approximately how much it usually is. Then take a look at your pay schedule to determine which bills have to be paid out of each paycheck. Obviously, if you get paid once a month this is easier because everything has to be paid out of that one paycheck. However, most people get paid at least twice per month. Once the basic bills are done, think about the expenses you have to pay less often than once a month – things such as haircuts, insurance, car maintenance, etc. Then average out how much to set aside each month. For example, if you car insurance is $300 every six months, then you need to set aside $50 a month so you will have the money when the bill arrives. Be sure to figure in expenses paid in cash as well, such as groceries, gas, etc.
Once this is all done, I strongly suggest using some form of the “envelope” system. If you are not familiar with the envelope system, the basic idea is that you would have an envelope for each budget category and actually put the budgeted amount of cash in the envelope until the bill is paid. However, few of us pay our bills in cash any more, and even fewer probably want to retain larger amounts of cash at home. Therefore there are several ways you can do this. Personally, many years ago we found a computer program called Money Matters, which has worked wonderfully for us. I’m not sure if you can even still purchase this program. Another option is to simply have a savings account and some form of a spreadsheet with the various categories listed out and use that as your savings ledger. Before the age of computers, I used to use accounting ledger paper (yes, I’m showing my age here! LOL). The key is to keep track of how much money you have available in each category at any given moment.
Now, are you ready for the real secret??? STICK TO THE BUDGET! It’s that simple. It’s not easy, but it is a simple process. For an online tool to help you out, try Budget 5000. I have not tried this, but found it while searching for tools to help you out. It’s a free service that looks pretty good. You can find it here. http://www.budget5000.com/budgeting-successfully/
Good luck on your budgeting journey! You can do it!
Thursday, July 15, 2010
Barter Your Way to Savings
In tough economies such as we are currently experiencing, a good way to save some money is to barter for services. Many years ago, people bartered for services far more than we do. I remember watching TV shows, like “Little House On the Prairie” where the town doctor was overrun with chickens because that is how people would pay him!
My husband and I have been starting to do more bartering. He is a massage therapist and we’ve traded massage for music lessons, and have some ideas about bartering for dental care and haircuts. There are so many ways to do this. Maybe you don’t have what you consider to be a special skill. But we all have some abilities that others may want. Perhaps it is handyman work, cleaning houses, detailing cars, babysitting, bookkeeping, lawn care, etc. Or maybe you have a green thumb and love to garden. I know many people end up with more veggies than their family can use. Others would be thrilled to have home-grown produce!
Another idea I heard of some years back was group bartering. Instead of trading child care with the same person each time, a group of moms got together and set up “barter bucks.” They each started off with a certain number of “barter bucks” and determined a set value for childcare. When they needed childcare they would find someone else in the group that they could “pay” to watch their kids. But, if you ran out of barter bucks, that meant you weren’t doing your share and now couldn’t ask one of them to do childcare for you until you had earned barter bucks by watching someone else’s child(ren). This type of system could easily be set up among a group of people with varying talents/skills.
There are many options for bartering. It’s all about thinking creatively, and being bold enough to ask someone if they would be willing to trade services. In some cases, you may be able to barter for the labor, but have to pay for materials. But oftentimes, labor is the most expensive part of any bill.
I grant permission for every reader to reproduce on your website the article you are now reading but copy this article, without any alteration whatsoever. Include the copyright statement, too, please.
"Copyright © Renita R. Perrone All rights reserved. Permission granted to reprint this article on your website without alteration if you include this copyright statement and leave the hyperlinks live and in place." www.wowyousavedhowmuch.com
My husband and I have been starting to do more bartering. He is a massage therapist and we’ve traded massage for music lessons, and have some ideas about bartering for dental care and haircuts. There are so many ways to do this. Maybe you don’t have what you consider to be a special skill. But we all have some abilities that others may want. Perhaps it is handyman work, cleaning houses, detailing cars, babysitting, bookkeeping, lawn care, etc. Or maybe you have a green thumb and love to garden. I know many people end up with more veggies than their family can use. Others would be thrilled to have home-grown produce!
Another idea I heard of some years back was group bartering. Instead of trading child care with the same person each time, a group of moms got together and set up “barter bucks.” They each started off with a certain number of “barter bucks” and determined a set value for childcare. When they needed childcare they would find someone else in the group that they could “pay” to watch their kids. But, if you ran out of barter bucks, that meant you weren’t doing your share and now couldn’t ask one of them to do childcare for you until you had earned barter bucks by watching someone else’s child(ren). This type of system could easily be set up among a group of people with varying talents/skills.
There are many options for bartering. It’s all about thinking creatively, and being bold enough to ask someone if they would be willing to trade services. In some cases, you may be able to barter for the labor, but have to pay for materials. But oftentimes, labor is the most expensive part of any bill.
I grant permission for every reader to reproduce on your website the article you are now reading but copy this article, without any alteration whatsoever. Include the copyright statement, too, please.
"Copyright © Renita R. Perrone All rights reserved. Permission granted to reprint this article on your website without alteration if you include this copyright statement and leave the hyperlinks live and in place." www.wowyousavedhowmuch.com
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