Budgeting Archives - Free Debt Management Tips

5 Pieces of Advice That Could Help You Become Debt Free

June 13, 2017 debtmanagement

You would like to get out of debt, right? Of course, you would. But if you’re struggling with debt it’s probably due to overspending in three categories: 1) too much house, 2) too much car, 3): too much entertainment.

If you truly want to get out of debt, the first thing you need to do is take a hard look at your spending in these three categories. If you’re not sure of your spending in these categories, you need to track your spending for at least a month. A number of free apps are available that make this drop-dead simple. Three of the more popular of these are Mint, Xpenser, and Pennies.

Be prepared to sacrifice

Reducing your spending in the three categories mentioned above won’t be easy. It can be especially hard if your problem is too much house. This means either finding a cheaper place to rent or worse, yet selling your home and buying a less expensive one. It can also be hard to reduce how much you spend on your car or cars. You might have to sell your current vehicle and buy something cheaper. You might feel great driving around in that Lexus SUV but it could feel even greater to drive around in a car where the payment was less than $100 a month. It might feel even better if you could pay cash for that cheaper car.

The easiest area to reduce your spending is on entertainment. The simple answer to this is just don’t go out so much and don’t eat out so often. You also may find you’re spending a lot more than you thought on just the “little” things like that drive-through latte you get every morning.

Have a goal

It’s practically impossible to save money unless you have a good reason to do so. This means having a worthwhile goal. In this case, it will be to get out of debt. Other times it might be to create an emergency fund or to save up enough to make a down payment on a house. Then, whenever you get the urge to go out for dinner or to buy that great sweater, take a minute to remind yourself that if you spend the money, you will be that amount further away from becoming debt free.

Develop self-discipline

This is where a budget can help. Mint is a great budgeting tool as is HomeBudget with Sync and Spendbook. In fact, if you are committed to becoming debt free, you must have a budget. Even more important, you need to stick to it, and this is where the self-discipline comes in. No budget can help you take control of your money if you’re constantly busting it.

If you just can’t stand the idea of making a budget, there’s an easier solution. It’s using the 50/30/20 rule of thumb.

The way this works is that you dedicate 50% of your net pay to your “needs.” This could include your rent or mortgage payment, automobile payment, utilities, groceries, and health insurance. In other words, those things you absolutely need. The 30% is for your “wants” – dinner at that great Italian restaurant, those fabulous shoes, or a weekend in the mountains. Last, is the 20% which is the percentage of your net pay you should save and use to pay down your debts.

Learn to live on one income

Two may not be able to live as cheaply as one, but if there are two of you, and you can live on just one income, you can become debt free in just a matter of months. Banking one of your incomes could also get you that down payment on a house in just a few years or could allow you to pay cash for a decent car. This should also mean money you could stick away in an IRA. If your employer offers a 401(k), you could increase your contribution, which could mean retirement sooner rather than later.

Consider settling your debts

You might also consider settling your debts. This is a process where you contact a lender and offer to pay a lump sum for less than the debt’s balance. Some people have been able to settle their debts for 50% or 40% of their balances. This, in fact, is the only way to pay off debts for less than you owe. However, you need to have the cash available to make those lump-sum payments, and you need to be a very good negotiator. This is wy many people turn to a professional debt settlement company like National Debt Relief. This eliminates the need to have money for lump sum payments, and the company does all the negotiating for you.

In conclusion

Getting out of debt isn’t easy. But if you’re committed to the idea, you can do it. Just follow the advice you’ve read in this article, reduce your spending, use some self-discipline, and you could be debt-free in just a few years.

Free Debt Management Tips: Six Bills You Could Easily Get Cut

March 27, 2017 debtmanagement

If you think your bills are fixed and can’t be cut, you have another think coming. According to the bill negotiating service, BillShark, we consumers could save as much as $50 billion a year just by haggling over certain bills. Cell phones are where you can currently get the best deals, as the cell phone companies are currently engaged in a price war. The founder of BuildFixers, Ben Kurland, has noted that if your cell plan is more than six months old, this might not be the most efficient plan for you.
If you think your bill fixed and can’t because you have another think coming according to the building associating service bills we consumers could save as much as 50 billion a year just by handling over certain bills cell phone bills are where the biggest savings can currently be found as a cell phone companies are engaged in a price war. Billfixers founder, Ben Kurland, has noted that if your cell phone plan is more than six months old, it may not be your most efficient plan.

Six other bills you could get cut in without working out much of a sweat are:

Pay television

Of course, when we say pay television, we basically mean cable TV. If you have more than one cable company in your area, you can probably get a better deal simply by changing providers. We have two cable TV companies where we live, and they are currently slugging it out to attract new customers. If you have only one cable TV provider where you live, consider cutting the cable entirely. You should be able to get all your local channels with an indoor HDTV antenna. Then, there’s Netflix, Hulu, and Amazon Prime for catching up on old programs and for movies.

Alarm systems

If you have an alarm system in your home, it’s almost certain you can cut your bill. If you have a long-term contract, try haggling with your provider. If you can’t get a better deal, Vivant Home Alarm is currently offering free installation and says it charges less than two dollars a day. You could do even better with SimpliSafe. It uses a fast cellular connection, so you can monitor your home 24 hours a day no matter where you are. SimpliSafe also includes 24/7 professional monitoring and police dispatch, and costs just $14.99 a month – with no contract.

Storage units

If you have a lot of stuff in a storage unit, you may not want to consider moving it to a new unit just to save money. But if you haven’t yet rented a unit, there’s a website, SelfStorage.com, where you can find the best storage units close to you at the best prices. The site allows you to view and compare storage options nearest to you, and without the hassle of calling around for prices. When you find one, you can then book the unit free in just a few minutes – either online or on the phone.

Gym membership

Want to get in shape on the cheap? Joining a gym can get expensive. In fact, one source says belonging to a gym costs an average of $58 a month. You can beat this by using free passes. Some health clubs offer free one-day passes, while others have week-long passes, or even two week passes. If you work for a large employer, it probably offers some kind of workplace wellness program, which would be like a gym membership except for free. And some cities have discount gyms that cost as little as $10 a month.

Satellite radio

Since there’s only one satellite radio provider, SiriusXM, you can’t comparison shop. However, you can save money with SiriusXM. It doesn’t talk about this much but it actually offers three pricing tiers. The first is titled Mostly Music, and offers 80 channels of great music. It’s priced at just $10.95 a month. While this tier does not include online streaming, you could add it for just $4 a month. The next tier is called the Select Package, which costs $14.99 a month and includes more than 150 channels of sports, music, and comedy – though you cannot add Internet streaming to this plan. Finally, there is the top tier, All Access that provides all of the 160+ channels, as well as online streaming from your tablet, phone or computer.

The Internet

You may be able to get a better deal from your current Internet provider just by threatening to switch to a different company. It’s also possible to save money by reducing your usage. Think about how you use the Internet. If it’s just for general web surfing, email and social media, you only need a speed of 1 Mbps (megabyte per second). But if you’re an online gamer, you’ll need 1-3 Mbps, and if you’re into high-definition video streaming (think HDTV movies), you’ll need 5-8 Mbps.

In summary

Write a list of all your bills. Then, ask yourself how many you might be able to cut. We’re willing to bet you’ll find more than just the six mentioned here. The fact is, it only takes a little time and effort to get a lost of your bills reduced.

How to Stick to Your Holiday Budget Without Looking Like a Cheapskate

November 21, 2016 debtmanagement

The holiday season is upon us and ’tis the time for big spending. In fact, according to the personal website Magnified Money Americans that are already in debt sank an additional $986 in credit card debt over the holidays in 2015.

Why do we end up spending so much? Some of it is probably due to social pressure. After all, this is the season for giving, right? And if you don’t give generously you could look like a cheapskate. And the stress of dealing with holiday debt can be bad. One study done in 2015 found that more and more shoppers admit that the’ve fallen prey to the seasonal pressure to spend beyond their means.

Fortunately, life doesn’t have to be like this. There are ways you could realistically stick to your holiday budget and without looking like Uncle Scrooge.

Suggest a limit

If what’s keeping you in a cycle of debt is buying presents for all the members of your family, then you need to speak up. Contact your relatives and suggest an alternative to the usual gift giving. For example, you could suggest a mystery Santa where everyone draws a name and then buys a really nice gift for that person.

Give the gift of your skills

What’s your skill? Is it photography, wood carving, art, knitting or sewing? Use that skill to create handcrafted gifts for your family members. Gifts you made yourself will be cherished much more than something you bought on Amazon.com. Several years ago, I received paintings from two of my grandchildren that are hanging on my wall to this day and will stay there so long as I own this home. And this is just one example of things you could make for your family members that they would love.

Pay with your points

If you have racked up a lot of points with one or more of your credit cards, then now’s the time to cash them in and use the money to buy gifts. If you’re lucky some of your credit card issuers will have special relationships with retailers that will give you more spending power per point. You could also use your points to buy retail gift cards, which make really great gifts.

Don’t believe you absolutely have to reciprocate

Did a coworker or friend you’re not really that close to surprise you with a gift? We know you’ll feel pressure to reciprocate but it’s not necessary. Don’t run off to the mall to buy something to match the gift you received, which would only add to the balance on your credit card. What you could do instead is give the person a hearty thanks and then follow this up with a hand-written card or you could maybe treat her or him to a drink after work.

Consider re-gifting

This is certainly not something you want to do very often but it does have a time and place. While re-gifting certainly shouldn’t be looked at as a way to clean out a closet it can be done. However, if you choose to do a personal item – especially if it’s been opened – this should be based on whether or not the recipient would really love to get it. A good example of this is a first edition book that’s just been collecting dust on your bookshelf. This would definitely be an appropriate re-gift. Another thing that’s acceptable to re-gift is a family heirloom that you could pass on to another member of your family.

Gift those people that made your life better or easier or both

Reserve some money in your budget to gift those people that have worked hard to make your year better or to bring some joy into your life. This would include people like coaches, babysitters and teachers. There’s no need to go overboard here but this is a way to show your appreciation in the form of a thoughtful gift. In fact, here’s another area where something homemade would be spot on.

Learn to resist the pressures

You may feel pressured to gift people just because they do something for you. As an example of this, you could feel pressure to gift the guy that picks up your trash once a week or the person that delivers your newspaper. Resist these pressures unless you feel that the person did something for you above and beyond the call. Did the newspaper carrier slog through a foot of snow to deliver your Sunday paper? Then he or she might be worth a gift. But if a neighbor girl babysat for you just a couple of times throughout the year then you don’t absolutely need to gift her. We all feel a lot of pressures during the holiday season but if you want to stay on budget you need to learn to resist some of them.

Budgeting Mistakes and How to Fix Them

October 25, 2016 debtmanagement

You have a budget? Congratulations. Having a budget is the first and most important step towards smart money management. In fact, it’s virtually impossible to do a good job of managing your money without a budget. However, creating a good budget is not an easy task. And even after you have one it’s easy to make mistakes. Here are eight of the biggest blunders people make in budgeting and how they can be fixed.

Neglecting to have a system

What system do you use for tracking your spending? If you don’t have one, it’s important to get one. You could use a budgeting app such as Mint or an old school system like Mvelopes. The fact is that if you don’t have a system for tracking your spending you won’t know where your money’s going and won’t be able to make adjustments to your budget as prove necessary. It really doesn’t matter which system you use. The critical thing is to pick one and then stick with it.

Creating too rigid a budget

Despite what you might think you won’t spend the identical amount of money in the same categories every month. You need to have enough space in your budget to accommodate seasonal fluctuations such as Christmas holiday shopping and summer vacations. If you create a budget that’s too rigid you may find it hard to stick to it, which would derail all of your best planning.

Impulse purchasing

Even the best of budgets will prove useless if you refuse to stick with it. You will need to cut down considerably – or even totally eliminate – impulse shopping and the habits that lead you to it. For example, if your Achilles’ heel is jewelry, stay away from jewelry stores. If you just can’t pass up the latest and most fashionable shoes, then don’t go to shoe stores or the mall.

Not accounting for quarterly and semiannual bills

One of the biggest blunders made by even the smartest of budgeters is forgetting their quarterly and semiannual bills. You need to leave room in your budget to cover them so that they don’t jump up and poke a hole in your budget when they’re due. Bills in this category include things such as annual tax bills, insurance payments and vehicle maintenance payments. Next time you have a few minutes, sit down, go over your old checking account records and make a list of your semiannual and quarterly payments. Then adjust your budget to make sure the money will be there when those payments come due.

Forgetting to save

A good budget needs to include money for saving as well as monthly expenses. The sad fact is that if you’re not saving regularly for retirement you’ll probably never be able to retire. You also need to make room in your budget for an emergency fund. The “experts” say an emergency fund should be the equivalent of six months’ living expenses but that’s a pretty lofty goal. A good start would be to save $1000, which would be enough to at least cover an emergency auto repair or medical bill.

Not budgeting for long-term financial goals

You really need to have some long-term goals and be saving toward them. This could be as little as just $10 a month to fund a new bedroom set or summer vacation. Having a goal and seeing that you’re making progress towards realizing it can be a real motivator to help you stay on your budget.

Refusing to be flexible on your fixed expenses

You may think that your fixed expenses such as rent or your mortgage payment, cable bills, utilities and insurance premiums can’t be altered but they can be. If you’re having a problem sticking to your budget think about downsizing to a smaller house or apartment, cutting your cable or trading in your car for an older one. Getting an older car should even lower your insurance premiums. In this era of Netflix, Hulu and Amazon Prime there’s just no reason to stay with a cable company. Most of today’s TVs have built-in tuners to receive local channels so that all you need to do to enjoy network broadcasts is buy a small antenna. Couple this with a subscription to Netflix or Hulu and you will be able to get just about all the programming you could want and for a fraction of what you’re paying for cable.

Failing to review your budget

If you’re not reviewing your budget every month you’re making a big mistake. This is especially important when you begin budgeting so you will be able to catch any expenses you forgot or any miscalculations you made on your regular bills. And if you do find inaccuracies you will need to tweak your budget to fix them.

4 Tips About Debt You Should Know by Now but Probably Don’t

October 18, 2016 debtmanagement

How many clichés have you heard about money like “money is the root of all evil”, “a fool and his money are soon parted” and “he who pays the piper calls the tune?” There must be several hundred of them and they’re all true. Money has always played a large part in every society all the way back to the Mesopotamian era.

While you may think you know about debt and money there are four tips you should know by now but probably don’t.

All college degrees are not created equal

If you’re typical you graduated from college owing money and maybe a lot of money. In fact, this past year’s graduates have an average of more than $36,000 in debt. The ideal is that you’d now be able to earn enough to pay for your basic expenses without getting any further into debt. But this all depends on whether you chose the right degree. If your degree was in healthcare or computer engineering you’re going to earn considerably more over the course of your career than if you majored in, say, art history or music theory. This is just the way the world works. Of course, if you’ve already graduated and have a degree in some low-paying area, there’s not much you can do to change that. One thing you could do is look into getting a master’s degree in a discipline that would pay better. While this would, of course, increase your student debt it would also raise your income significantly.

Don’t buy a house

Your parents may have told you that it’s a smart investment to buy a house and it makes more sense to pay on a mortgage then to keep paying a landlord. This advice is based on the idea that buying a house will help you build a lifestyle and give you excess cash flow. However, the cold, hard truth is that buying a home is really a horrible investment that produces lower returns than just about anything else you could invest in.

So, instead of buying a home, look for areas to live with a cheaper cost of living than where you now live. Remote and virtual teams have become very commonplace these days so that you no longer necessarily have to live in an expensive city to have a great career. If you could move to a smaller city but still earn a big-city wage this alone could be enough to get your finances on the right track.

Pay yourself first

Do you have you $1000 in a savings account? A recent study revealed that the majority of Millennials don’t. Were you taught to think of saving as your earnings less debt, taxes and your discretionary spending. The problem is that for too many people this equates to zero dollars or worse due to the scarcity of jobs that pay well while the cost of living continues to rise. Another cliché about money, “pay yourself first”, has endured for so many years because it’s true wisdom. If you reprioritize your finances, it’s likely that you could save 10% to 15% of your income while still enjoying a decent lifestyle.

Buy only stuff you can afford to pay for up front

It’s important to only buy things you can afford to pay for up front regardless of how much you’re earning and saving. This is true even if you do decide to make a major purchase such as a car or house. Don’t fall for one of those $0 or low down payment plans. The more you pay up front, the less the purchase will cost you. This means you’ll not only save money on interest but you’ll also spend less time later paying it off.

In addition, when you pay for purchases upfront this simplifies your financial life. If you put a major purchase on a credit card or get a loan to pay for it, then you’re creating a debt that will hang over you for years or even decades. You and another person with identical salaries could be in very different financial situations just because of how you paid for major purchases.

It’s the old way of doing things

If your parents drilled into your head that it’s critical to get a college degree and buy a house, just keep in mind that’s the old way to do things. If this really was the answer, the average US household debt would not be $132,158.