Money Talk Daily

Archive for March, 2010

It will save you money

Making a budget is essential for your financial well-being. Once you have a sound plan in place, the worst recession won’t be able to topple you. But beware, purveyors of payday loans – if you aren’t careful, you can fall prey to one of the top 10 budget mistakes.

Having two household incomes – because you need them

If there is a second income in your household, it’s nice to be able to use that one for savings. That said, too many people have a second income to overextend their credit, especially when buying more home than they need. What if one income dries up? Live within the means of only one income and you will be more economical, and safer.

Not putting money away

Savings accounts, college funds or even rainy day funds. Whatever you choose to use it for, you need to set small portion of each paycheck aside. It pays to be prepared!

Overspending

Will that hole in your soul really be filled with a new television? If your old one works just fine, seriously consider whether you need a replacement. Impulse buys can be lethal, so make sure your budget is about what you really need every month. Sure, there should be some money earmarked for entertainment, but you must be disciplined enough to stay within the boundaries. When you do shop, try to look for sales and special deals.

Not recording expenses

When your budget is young, this is essential. Record purchases in the register of your checkbook, Smartphone, or a notebook, and create visual proof you’re following your budget. Eventually you will get the hang of it and won’t need to record things right away, but if you start to notice trouble, don’t be afraid to go back to recording it all.

Going credit crazy

This is very symptomatic of overspending. If you don’t have the money for something, don’t buy it. Using credit makes it too easy to overspend, and long-term revolving interest is very expensive. If you have to use credit, try to pay it off as quickly as possible and not carry a balance.

Being too charitable

This one might sound odd, but it’s obvious, isn’t it? There’s nothing wrong with generosity, but your own bottom line comes first.

Going overboard with birthday parties

Parents of young children may know about this one. I’m not talking about how much to spend on junior’s gift, but on the party guests. Giving goodie bags is a common practice for kids, but is it really necessary? Cake, ice cream and games should be enough.

Too many bills

This is why it’s useful not to go crazy with credit cards. Sure, housing and utility bills are generally unavoidable, but do you need eight or nine credit cards, too? A too many bills can lead to errors and omissions, not to mention more money you’re paying out.

Being afraid to ask for a raise

If you are valuable to your employer, make sure they know. If you don’t feel your pay level is consistent with others in your field, talk to your boss about it. If you are indeed valuable, a reasonable employer will at least consider it. If your employer won’t, consider improving your skill set and education to get a better job.

Not creating a budget

A person without a plan is a person who will soon be parted from their money. Payday loans can help, but budgeting is the best way to handle your finances over time.

A Word about Personal Finance Education

Poor Debt Management Can Affect Generations

A lot of people that struggle with their personal finances, like debt and credit issues, run into trouble because they’ve never learned about good budgeting. They likely have relatives that have the same issues. They likely don’t discriminate between needs and wants, and altered expenditures accordingly. Left unchecked, such behavior has caused individuals to fall deeply into debt. Just as in situations of physical abuse and substance abuse, the dysfunctional handling of debt and credit is often passed down to future generations. Poor financial decision making, however, is much easier to rectify than the aforementioned dysfunctions.

You Have Control of Your Own Financial Future

In looking at personal finance, debt and credit, it is important to understand that an individual has ultimate control over their destiny in any of these arenas. While many feel as though their spending is out of control, the exact opposite is true. You can regain control over your spending, and you may need help to do so. Simply, a person must recognize that they have a problem, that this problem is a threat to their future and that correcting the problem is fully within their control.

Debt Education is the Answer

Once a problem is realized, a person can then begin to take steps to repair their personal finance debt by becoming educated on financial topics. We live in an information age, and there is unprecedented access to information on how to fix your finances. From budget tools and software, classes in your area, even books and articles written by experts, plenty of resources are available, many for free. Keeping this in mind, a great place to start one’s financial education is with the basics of understanding how to create a personal finance debt budget and to understand how credit works. This can be learned by combing the Internet and reading various articles written on the subject or books can be checked out from the library to gain a basic understanding.

Low-Cost Debt Counseling is Also Available

Also, several non-profit organizations offer low-cost debt counseling services. Contacting one’s local Chamber of Commerce or related public agency can help locate such services. In doing so, a debt counselor can help with creating a budget, consolidating outstanding bills and offer further resources helpful to one who is determined to regain control over their personal finance debt.

No More Excuses

No matter how things went wrong with your finances, credit or debt, there’s no excuse for keeping it up. Nor is there any reason for such economic woes to be passed on to future generations. A person really looking to get in the driver’s seat with their personal finance, correct bad habits, and start reducing stress as a result, there are plenty of resources that can help them get started.