Personal Budgeting Blog

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2009-01-12T09:25:00.001-07:00

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Budgeting College Expenses

2007-08-08T14:02:00.000-06:00

Tips and Guides for the Upcoming 2007-08 College Year

College students are getting ready for the upcoming 2007 Fall semester. It is just a few weeks away before millions of student across the country make their trek to their university of choice.

Several tasks are required to prepare for that journey. Your first important task is calculating the exact costs for attending school. Colleges are required to provide estimated costs upon acceptance at the University. Those costs are estimated costs incur by students from previous years, adjusted for inflation. However, you should budget the amount of financial aid you will need for the academic year. You need to have a spending plan by month to avoid running out of money before the school year ends.

The costs that you should estimate include the following:

School Tuition and Fees:
Costs to attend class instruction and the use of facilities, labs, libraries and all other related services for each enrolled student. And don't forget to add access fees to campus facilities. Check your class registration for what you will need.
Books and Supplies:
The estimated cost for books and supplies the student will be required for classroom instruction. Many students fail to estimate the total cost for books and supplies; some classroom instructions may require several books and copied outlines. Make sure you estimate everything that you will need for each classroom.
Computer and Other Electronics:
Not necessarily required for some colleges since they offer computer labs and other shared facilities. However, it will be the student's advantage to have their own personal laptop. Personal laptops can cost you $1,000 or more for a decent model. And then there is the software, printing, scanning, etc. Understand what you will need for each classroom.
Room and Board:
The estimated cost for housing and food if you live in a residence hall; if you live off campus, the cost for monthly rent, utilities, and food. You need to estimate costs for eating in the cafeteria and other related snacks and beverages.
Transportation:
The estimated cost for 2-3 round trips from your home to school (you don't want to spend the winter holidays at school). Additionally, what is going to be your transportation options at school? If you have your personal auto or other motor vehicle, estimate costs for fuel, insurance, parking fees, maintenance, and other related fees. If you are on foot or bicycle, estimate the costs for public transportation.
Personal Living Expenses:
The estimated cost for clothing, grooming supplies, laundry and entertainment. Toothpaste, make-up, shampoo, deodorant, etc., can all add up.
Other Personal Costs:
Personal expenses that are specific to the student such as insurance, disability expenses, dependent care, loan fees, etc.
Miscellaneous:
Any other expenses that you can identify with your school's Financial Aid Office

You can estimate and budget these expenses by month using our FREE college budgeting worksheet. Link to our budgeting module for our guide and worksheet.

Private student loans are a great resource when you need extra money. Sometimes your college and personal aid will not cover the full cost of education after your run your budgeting analysis. That is when you turn to private student loans to make up the difference from the cost of education and the amount of student financial aid that you have. See more information about private student loans

Krayton M Davis is the Executive Principal of nBuy Associates, which owns and operates the SayStudent College Financing Guide. For more information about our services, link to: http://www.SayStudent.com

Small Business Budgeting Tips - Perfecting the Plan That Keeps You On-Track

2007-08-07T14:00:00.000-06:00

At the end of every fiscal year companies tallying up their scores to see how they’ve finished. Unlike the game of golf having the highest score is cause for celebration, being in the black you’ve done well and deserve some congratulations. If there isn’t a soirée going on in your business maybe it’s because you didn’t plan for a year-end party, and that could be the direct result of your failure to budget.

To be successful in business, budget cannot be a taboo word in your company. One of the skill sets you as an owner or manager need to possess is the ability to plan ahead, this includes that ability to budget. If you’re a visionary and lack budgeting skills, then stop reading and go find someone who is. So before we discuss budgeting tips, let’s first discuss what a budget is and isn’t.

What a Budget Is:

A budget is a proposed plan to monitor financial activity over a period of time. A budget is a planning tool an owner and/or manager should be using to measure trends over a fixed interval; this includes inflow, outflow, and asset/ liability growth. Finally a budget is a resource to forecast an assumed outcome.

What a Budget is NOT:

A budget is not the law; it is not to be used as a means of accountability and to ensure financial integrity. A budget is not to be used a ceiling to spending, and a method of absolute control. And finally a budget is not a guarantee so financial and business success.

So now that we have defined what a budget is, let us get to how to properly use and understand how a budget actually benefits a company.

The budget should be put together and approved at least 1-2 months prior to the start of the new fiscal year. This will allow for key employees to look at what the company is trying to accomplish and what is being aimed for. So for this to happen planning will need to take place approximately 3-6 months before the start of the new fiscal year, this of course depends on the complexity and size of the company.

The budget should reflect the direction that the company is headed in; this of course is handed down by the CEO and/or Board of Directors. Everything about the budget should point towards the strategic plan the company has adopted. The budget should also be multifaceted, not only should you include a Profit & Loss operating budget, but also a Balance Sheet budget to help track cash inflows and outflows.

Finally the budget should be realistic. An exponential increase in revenues without any foundational proof or purpose can lead to fiscal year failure. Again remember the budget is for mapping out trends in an attempt to forecast growth or decline. All the pieces must fit, in business there is usually a cause for increased revenues (hint: check for the reason in your expenses section!).

To summarize let’s recap the key points:

1. Budget is not taboo
2. Budget is a proposed plan
3. Budget is not the law
4. Approval should allow for time to disseminate throughout the company
5. Reflects the strategic plan and heading of the company
6. The budget should be realistic, for all growth there should be a reason

Jayson Cardwell is the Founder and CEO of Cardwell Financial Group, Inc. a small and mid-size business services and consultancy. Cardwell Financial Group, Inc. specializes in helping owners, managers, and entrepreneurs realize their dreams of owning prosperous and successful firms. They accomplish this by providing Financial Management, Analysis, Strategic Planning, Business Analysis, Executive Development, and Accounting Services and Consulting. For more information about Cardwell Financial Group, Inc and how they can help you visit them on the web at http://www.CardwellFinancial.com, or e-mail them at Info@CardwellFinancial.com

Tire Discounts

2007-08-04T14:13:00.000-06:00

The booming Tire Discount industry has led to the mushrooming of Discount Tire Stores throughout the United States. While most of these stores sell tires directly to the customer, some are selling them via the Internet. Discount Tire Companies have come to represent an option that is affordable and can cater to various automobile requirements at economical rates.

Tire Discount Stores offer a range of tires to suit the varying needs of customers. In addition, they also offer tips and suggestions about making a good purchase, or tire maintenance. Some of these stores have also launched marketing drives to target potential customers. Some of the promotion initiatives include freebies like free mounting, coupons, or free servicing after a specified number of miles. Most of these Discount Tire Stores are located at advantageous positions, adjacent to highways and major roads, in order to give customers easy access.

Most Tire Discount Companies undertake various forms of research and development activities. This is to ensure safety, traction, reliability , durability, and any number of other factors that make for the perfect discount tire. These companies are aware of the vehicular requirements for tires, such as the speed index of the tires and the rating for load. These should not be lower than your original set of tires that came with your vehicle. The speed index indicates the safe top speed of the tire, and needs to be taken seriously. Generally, a decreased speed rating means that the tire’s ability to contribute the overall performance of the automobile is reduced.

Tire Discounts provides detailed information on discount tires, discount ATV tires, discount motorcycle tires, discount tire company and more. Discount Tires is affiliated with Used Race Car Parts.

Personal Budgeting Tough Love

2007-08-04T13:43:00.000-06:00

Developing and living by a personal budget is by far the best way to get your expenses under control which, in turn, can mean a much less stressful life.

However, many families find it very difficult to stick to a personal budget. It does take hard work and a lot of self-discipline, at least in the beginning. The good news is that most families find the longer they can stick to a budget, the easier it becomes. This is because sticking to a household budget eventually becomes an unconscious habit, just like driving a car. And once it becomes a habit, the budgeting process just sort of goes on cruise control and requires much less thought or effort.

But what do you do during those first three, four or six months, when sticking to a personal budget feels so difficult?

There are several answers to this. The first is to make sure your budget categories are realistic. You may think you can get by with $100 a week for groceries, but is this real? Do you have checks or receipts that verify how much you have been spending at the grocery store? You really need to know. Otherwise, you may household budget too little. In turn, this becomes frustrating because you will always be over budget.

Second, make sure you have all categories covered. There are some categories that are easy -- rent, mortgage payment, utilities, car payments, etc. But think hard about all other categories such as clothing, eating out, prescriptions, pet care, tuition, books, allowances, movies, CDs and DVDs, and computer software and games, to name a few. If you don’t budget for all these kind of expenses, I promise they will bust your personal budgets.

Finally, if you find you just can’t seem to stick to your household budget, here’s a sort of tough love answer.

Go to your nearest office supply store and buy a box of #10 envelopes. Take them out and label one for each of your budgeting categories. Then write on each envelope the amount you have budgeted for that category.

For the purpose of this exercise, it is not necessary to break down general categories into subcategories. For example, you can label one envelope “entertainment” and not worry about envelopes for “movies,” “eating out,” “DVDs,” etc. Just be sure the number you write on the envelope for any general category represents the sum of all its subcategories.

When you next get paid, cash your paycheck and bring it all home in $50, $20 and $10 bills. Then put and amount of cash in each of the envelopes equal to the amount you budgeted for that particular 6category.

Now, as you need to pay bills or buy groceries, etc., use the cash in the corresponding envelopes to pay them. You will know when you have reached the budgeted amount for any category because its envelope will be empty. What do you do when you find an envelope is empty? You do nothing. That category is all finished for this pay period. If the envelope is empty and you still have expenses, either you simply haven’t budgeted correctly or you have overspent. You might be able to fudge and take funds from another category envelope. For example, if you have a week to go and are $40 short for groceries, you might be able to take the $40 out of the entertainment envelope. Just keep in mind this means $40 less for entertainment.

Do this for a few months and I promise you will not only learn to budget accurately, you will learn to stick to your budget personaly.

Here's another good answer. Try Mvelopes Personal. Mvelopes is the modern version of the paper envelope technique. This is what I personally use and it works great. Visit Mvelopes.com

TOP THREE CAUSES OF BUDGET FAILURE

2007-06-22T09:49:00.000-06:00

Many people make an honest attempt to budget, but become discouraged and give up before they are able to accomplish any significant financial gain. The top three causes of budget failure come into play before you even begin to set up your budget. Awareness of these budget busters, is your first line of defense in the Battle of the Budget.

Budget Failure #1 - Negative Attitude It cannot be emphasized enough--a positive attitude about budgeting is essential to your success. If you think of budgeting in negative terms (such as a financial diet, financial handcuffs, restrictive, penny-pinching, a sacrifice, etc.), you are sure to fail, unless you are a martyr or a masochist who finds some strange reward in a punishing experience. For purposes of this article, we will assume that you are neither. A positive attitude means you think of a budget as a means to an end--a way to achieve your dreams and goals--and that postponing the instant gratification of spending all the money you earn is worth the rewards you will earn in the end.

Budget Failure #2 - Lack of Motivation What is your motivation for budgeting? Are you trying to appease a nagging spouse? Following the terms of a debt repayment plan with a consumer credit counseling agency? Complying with an agreement made in bankruptcy court? These are not bad motivations, but they are external pressures and will probably not be easy to maintain over time. The best motivations are internally generated: do you honestly believe that budgeting can help you meet your goals? If you need a little help in the motivation department, see "Twelve Reasons Budgeting Can Improve Your Life". A quick re-read of these will surely inspire and ignite a motivational spark or two!

Budget Failure # 3 - Unrealistic Expectations What do you expect to gain from instituting and following a budget? Do you think that setting up a budget will reveal large caches of hidden cash or that the budget fairy will sprinkle fairy dust over your budget and magically transform your spending habits after a month or two of tracking expenses? The reality is that budgeting is an endurance event--those who stick with it, through thick and thin, will come out ahead financially. Do not expect miracles. What you WILL see if you stick with it is steady, measurable progress towards the goals that really matter to you.

Starting a budget without having a positive attitude, internal motivation, and realistic expectations, will probably set you up for failure. You can greatly increase your chances of success by ruling out the three biggest budget busters before you even begin. Family budgeting – just the thought of it makes most of us cringe. However, mostly, we do attempt to curb our spending and live within our means. Others fall into bad habits, habitual spending patterns or impulse shopping and over-extend themselves, landing knee-deep in debt! Ironically, one of the first remedies for any debt consolidation or repair strategy, is to take a long hard look at the budget and financial patterns within the household! It is almost like running a diagnostic. To take a closer look, you are in effect placing your family dollars under a magnifying glass and microscope. This can prove both challenging and painful for most people. We hope to alleviate some of that initial discomfort and apprehension with this handy step-by-step guide and tips. Most financial advisors will tell you that you have to reward yourself for good fiscal responsibility, discipline and habits, to increase your motivation and success levels.

Budgeting is the first step, sticking with and to it, a close second and the sometimes overlooked but ever-important reward, has to keep the motivation going! To repeat and continue to experience the benefit of the budgeting cycle and discipline could be an uphill battle, but there are calmer seas ahead.

Cash management, savings, planning for retirement, setting financial goals etc. active and hands-on, is becoming increasingly important for the survival and well-being of our families everywhere. Be your own best expert with coming up with new ideas on how to save money, budget better and spend less! Your unique strategies stem from a deep understanding of your own situation, demands, and needs. Discover which tips and ideas work best for you. After all, fiscal management and finances are definitely not a one-size-fits-all solution environment. It is personal, customized and unique.

Why You Should Start a Family Budget

2007-06-22T09:35:00.000-06:00

12 Great Resons Why You Should Start Budgeting Now For Your Family And Yourself

THE RATIONALE AND PROCESS OF FAMILY BUDGETING

Here are twelve good reasons to get you started:

1. Family budgets are used as a baseline, analysis-tool and roadmap. It is a useful tool. It tells you whether you are headed in the direction you want to be headed in financially. It helps you to move from spending to saving and good fiscal balance, management and responsibility. You may have goals and dreams, but if you do not set up guidelines for reaching them and you do not measure your progress, you may end up going so far in the wrong direction you can never make it back.

2. It is often described and justified as an empowering enabler. A budget lets you control your money instead of your money controlling you.

3. A family budget is a realistic estimate and true reflection of current circumstance and means, a type of financial situation-analysis that will tell you if you are living within your means. Before the widespread use of credit cards, you could tell if you were living within your means because you had money left over after paying all your bills.

There are lots of family budgeting tools available on line that make it a fun and enjoyable task and activity, to assess and analyze your family’s financial situation with minimum effort. There is also lots of free financial software and most of it sets up easily and provides you with a detailed family budget online. It manages your finances, hassle-free and almost effortless. Well, almost! It will require input and minimum effort through hands-on involvement in setting it up, populating, maintaining and editing it. Mvelopes.com is a good example of market offerings that are available at no cost to you, just waiting for the motivated family budgeter to embrace and try it out! Some websites offer free financial newsletters by e-mail, with lots of money saving tips, budget advice, and other relevant personal and family-related financial information. The availability, accessibility, virtual marketplace, ease of use and more of credit cards has made the need for family budgets much less obvious. Many people do not even realize they are living far beyond their means until they are knee deep in debt, struggling to make ends meet and sinking fast into murky financial waters. Budgeting for your family can be a life and money saver, a reality check, BUT ALSO a remedy!

4. A family budget can help you meet your savings goals. It includes a mechanism for setting aside money for savings and investments.

5. Following a realistic budget frees up spare cash so you can use your money on the things that really matter to you instead of frittering it away on things you do not even remember buying.

6. A family budget helps your entire family focus on common goals. It is unifying families in mutual purpose and effort, working together towards a successful outcome and reward.

7. A budget for your family helps you prepare for emergencies or large or unanticipated expenses that might otherwise knock you for a loop financially.

8. A personal budget can improve your marriage. A good budget is not just a spending plan; it is a communication tool. Done right, a budget can bring the two of you closer together as you identify and work towards common goals and reduce arguments about money.

9. A budget reveals areas where you are spending too much money, so you can refocus on your most important goals.

10. A budget can keep you out of debt or help you get out of debt.

11. A budget actually creates extra money for you to do use on things that matter to you.

12. A budget helps you sleep better at night because you do not lie awake worrying about how you are going to make ends meet. Nevertheless, despite all these wonderful reasons quoted above, people are still hesitant to commit to family budgeting as standard practice in their households.

About Author For More Great Information, And useful Tips On Creating A Winning Family Budget Or Even Improving Your Existing Budget visit http://www.family-financial-success.com

6 Critical Benefits of Preparing Your Own Personal Budget

2007-06-22T09:16:00.000-06:00

The role of a personal budget is to help you manage your personal finances and eventually become free of debt. This is the dream of us all, isn't it? Most people shy away from doing the personal budget thing, but it is the best, most trusted and proven method for getting your personal finances in order. You can have your own personal budget completed within a couple of hours.

The task of preparing your own personal budget is a liberating experience. You can finally see the true state of your own finances. The benefits listed below will help encourage you in making your decision to start today.

Benefit #1. The personal budget focuses your thinking.

Without a personal budget you are not able to clearly see the extent of your spending compared to your income. This is the most important role of your personal budget. It will show you whether you are living within your means or whether you are living on borrowed funds. It is also the tool that can show you where all your money is being spent. This allows you to answer important questions, such as "Am I wasting money on things I don't really need?", "Is my credit card debt to blame?" and "How much better off would I be if I could manage to be free of debt?".

Benefit #2. A personal budget helps you save money and set goals.

Once you have correctly prepared your personal budget, it will show you how much you need to save from your income to meet your expenses and set aside some funds for emergencies. It allows you to set goals, both for the amount and the timing. For example, you may set a goal of paying $2,000 off your credit cards, within 1 year. Once you make a commitment to yourself to make this work the budget becomes a tool that will help you stay on track.

Benefit #3. Keeps your goals in your mind.

It is easy to slip back into your old spending ways if you do not commit to making your personal budget work. The budget will help you keep the goals you set in your mind when you are tempted to give in. When you are out, it can help you say no to frivolous expenditure, say no to that daily coffee-shop coffee, think twice before you hand over your hard-earned money on things you don't really need and wait until that item you really want goes on sale.

Benefit #4. A budget helps you live within your means.

Every time you make a spending decision, it has a positive or negative impact on your personal financial position. The budget can show you clearly how your spending habits affect your finances in advance. Your personal budget can help you understand that if you spend money on this item you can't use the same money to spend on something else. You only have a finite income. If you spend more than you earn you are living on borrowed money and the cost of that money is interest. The interest on borrowed funds is most probably the cause of your financial worries.

Benefit #5. Puts you in control of your finances.

If you've prepared your personal budget correctly, you will see how much you have available to spend, after taking into account your debt repayments and savings requirements for your future needs. This information can take away the guilt you may have felt when purchasing some item(s) you knew you couldn't really afford. When you know you can afford an item you really want, the purchasing experience will be much more enjoyable and rewarding.

Benefit #6. - Tracks your progress toward your goals.

Once you prepare you budget it should not put into a drawer and forgotten. It should be a live document that you refer to weekly, or at least monthly. This is your guide to your own financial freedom. You need to check your progress towards your goals, thus giving you the incentive to keep going and achieve your financial objectives. If you make the effort and follow your plan, you'll be surprised how easy it really is to reach financial freedom.

About Author
Bruce Hokin has designed a simple budget tool called "5 Steps to Freedom Personal Budget." It based on his extensive background as a qualified, experienced accountant, manager, consultant and financial adviser. You can download this powerful budget assistant today and be on your way to financial freedom within the hour. You can also click here for your FREE Mini-Budget.

Debt and Debtor's Disease - Do You Have It?

2007-01-19T11:04:00.000-07:00

Debtor's disease is a silent killer. Killer of respect, marriages, self control, and families. There isn't a part of your life that it won't touch and destroy with it's deadly power. Some of you won't even know you have it for many, many years. It's a sneaky affliction; creeping into your life and slowly but surely taking control of every part of your existence.

Seems a bit of a dramatic description, doesn't it? But, the sad part is, it's all true. Even though we often hate to admit it, debt will control our lives totally. Even when we first realize it, we won't do anything about it. We will deny it, continue to feed it, and give it all it needs to thrive within our lives. Oh, you'll have help, no doubt about that. There are many ways we fuel the fever. Falling into the credit card trap is just the beginning. Self justification is your worst enemy. Why, the human mind is masterful at justifying just about any action, or purchase, given the right circumstances.

The first step is recognizing the disease. Diagnoses of debtor's disease is much harder than you might expect. Oh, the symptoms are very clear for sure. But, since most of us hate to admit our own vulnerabilities and defeat, they can be nearly invisible to the victim. I experienced nearly all of the symptoms below before I finally excepted the fact that I did indeed have the affliction. It is quite a humiliating experience to realize that so many obvious warning signs were present and you continued down the wrong path.

They say hindsight is 20/20; Meaning that the past is clearer when we look back. And, when things go wrong, we like to hope that we would have done things differently if we knew what we know now. Well, I'm hoping I can prevent you from some of that humiliation and financial disaster. You can stop it from growing to destructive levels if you can identify the warnings early on. Identify problems early and fix them. Make no mistake, if the following scenarios apply to your situation, you are headed for financial trouble.

SYMPTOMS
* Requesting credit increases lately?
Requesting credit increases for no specific major purchase, but because your cards are maxed out, is a sure sign that your spending is out of control. You may be living way beyond your income.

* Do you apply for new credit cards because your current credit balances are maxed out?
This is just another way to get additional credit especially, when you can't seem to get any more credit increases from your existing creditors.

* Are you rescheduling monthly bill payments due to lack of funds. If you find it increasingly difficult to pay bills on time and according to a consistent schedule, you're probably starting to get into trouble. You should not have to put off paying essential bills.

* Are you using credit to meet your living expenses.
Credit is not intended to help you live above your income. You should be able to meet all of your essential living expenses with your income. If you have income left for non-essential expenses, great. If not, don't turn to credit to live above your income. It will most certainly result in financial disaster.

Paying essential monthly bills, such as the electric or phone, with credit cards is a serious symptom. Once you turn to credit to pay your monthly bills, you're in serious trouble. Sooner or later the credit cards will be maxed out, you will be refused additional credit increases, and you won't be able to pay those bills.

* Do your credit card payments equal more than 10 -15% of your monthly income?
Your income to credit ratio is an important part of your credit management picture. The higher your balances, without an increase in income, the lower your credit score. This is true even if you have no derogatory items on your credit history, and are consistently maintaining good payment records.

In most cases, creditors will identify debtor's disease long before the victim realizes his affliction. They will begin to arm themselves against the consequences of the infection when this occurs. Your interest rates and penalties (i.e. late fees, over limit fees) may increase as companies anticipate default. Even they can see you're headed for trouble.

THE CURE

If you answered yes to any or all of the above, you have fallen victim to debtor's disease. Don't let it take control of your life! Fix the problems now. You'll have less stress and be a lot happier. I can say that with confidence. It is such a relief to be able to see an end to the struggle. You will feel as though a great burden has been taken from you when your finances are under control.

And, even though you may experience some difficult periods when you may get discouraged, you'll find those times much less stressful that periods when you worried about how your bills would get paid. Take some serious money management steps to begin your treatment. It's never too late to take control of your finances and make a commitment to debt free living.

* Identify overspending and eliminate it.

Identify where your money goes. Track spending for specified period of time. Eliminate unnecessary expenses. Reduce those you feel you need to keep.

* Develop a plan to become debt free.
Create a plan to get rid of debt. Use a self help plan or a professional. Whether you choose a counselor, debt consolidation or settlement, or a self help plan, lower debt consistently to manage and eliminate debt. A plan that calls for a consistent monthly commitment until debt is paid will be easier to budget.

* Create a Household budget

Creating a household budget will be essential to your success. It is necessary to bring your living expenses within your income. This is the concept of living within your means. You can create this yourself as well or seek professional help in setting up or maintaining your budget. Your situation and your level of self discipline will determine what will be most successful for you. Find a plan that works for your situation and will be the easiest for you to stick to!

* Implement lifestyle changes that will help you free up money to help pay down debt.
Consistently apply these extra funds to debt payments to get out of debt faster. The sooner you are free from debt, the sooner you can start investing that money in yourself. Save money everyday on everything you buy and do.

Once you rid yourself of debt, commit to debt free living. Remember, you now know how you made the mistakes, you know how to identify the symptoms, and you have the knowledge and power to implement the cure. You should now be immune to debtor's disease.

Now, you can vaccinate your children, friends, and family with the knowledge to prevent them from falling prey to this life draining affliction. Give them your hind sight and help them build happy, secure, and independent futures for themselves and their families.

Cheryl Johnson is on a mission to become debt free. As publisher of Simple Debt Free Living at http://www.simpledebtfreeliving.com she hopes to guide and encourage others to become and remain debt free through household budgeting, debt management, and money saving tips.

Planning A Budget for Life

2006-04-18T16:41:00.000-06:00

Budget planning is directly related to planning life. You have hopes, dreams, and goals. The fact is that, most likely, you'll need some money to achieve your life goals. It benefits you to take hold of your future and manage your money for life; Not just for living, but for planning the fulfillment of your dreams and goals. Planning a budget is crucial for your future success in life.

Not only is budgeting a must to reach your life long goals, it's an essential lesson for your children. A life survival lesson you might say. Budgeting is necessary for financial survival. We all want our kids to grow up to be successful adults. Right? Start budgeting habits early on. Teach them how to plan a budget to build wealth and be financially independent. Children model behavior, both good and bad. Teaching good habits by example is always the best lesson. After all, if you practice what you preach, you reinforce the importance of the lesson.

When you start to create your budget plan, get your kids involved. Help them understand your finances, and how you manage money, to prepare them for managing their own. Explain how credit and debt work. Encourage good credit management skills. Giving your children a chance to see how budgeting works will give them a clearer understanding of money. Besides, it can be very helpful when you have to say no to that new bike. Creating a personal finance budget is a crucial step in planning for life. Planning for life means managing your living expenses and planning for the future.

Budgets come in many forms and should meet your individual needs. No matter how you choose to accomplish the task of budgeting, you'll need to know some essential budgeting information. You'll have to know how much you have to spend, how much money you actually do spend, total debts owed, and what your savings or investment goals are. Then, plan your budget for life. Control spending to free up money for funding emergency and investment savings. These will help you achieve goals for you and your family. Personal budget planning will help keep you focused on those life goals. Be a life planner and teach your kids to plan for life. Manage your money and your credit wisely. Don't let it manage you!

Budgeting: A Tough Love Way to Handle Your Household Budget

2006-03-16T10:25:00.000-07:00

Some families find it difficult to stick to a household budget. The good news is that most people find the longer they can stick to a budget, the easier it becomes. But how do you get through those tough first two, three or four months? This article describes things you can do that will help make sticking to a budget easier, including one "tough love" solution ...

Developing and living by a household budget is by far the best way to get your expenses under control which, in turn, can mean a much less stressful life.

However, many families find it very difficult to stick to a budget. It does take hard work and a lot of self-discipline, at least in the beginning. The good news is that most families find the longer they can stick to a budget, the easier it becomes. This is because sticking to a budget eventually becomes an unconscious habit, just like driving a car. And once it becomes a habit, the budgeting process just sort of goes on cruise control and requires much less thought or effort.

But what do you do during those first three, four or six months, when sticking to a budget feels so difficult?

There are several answers to this. The first is to make sure your budget categories are realistic. You may think you can get by with $100 a week for groceries, but is this real? Do you have checks or receipts that verify how much you have been spending at the grocery store? You really need to know. Otherwise, you may budget too little. In turn, this becomes frustrating because you will always be over budget.

Second, make sure you have all categories covered. There are some categories that are easy -- rent, mortgage payment, utilities, car payments, etc. But think hard about all other categories such as clothing, eating out, prescriptions, pet care, tuition, books, allowances, movies, CDs and DVDs, and computer software and games, to name a few. If you don't budget for all these kind of expenses, I promise they will bust your budget.

Finally, if you find you just can't seem to stick to your budget, here's a sort of tough love answer.

Go to your nearest office supply store and buy a box of #10 envelopes. Take them out and label one for each of your budget categories. Then write on each envelope the amount you have budgeted for that category.

For the purpose of this exercise, it is not necessary to break down general categories into subcategories. For example, you can label one envelope entertainment and not worry about envelopes for movies, eating out, DVDs, etc. Just be sure the number you write on the envelope for any general category represents the sum of all its subcategories.

Now, as you need to pay bills or buy groceries, etc., use the cash in the corresponding envelopes to pay them. You will know when you have reached the budgeted amount for any category because its envelope will be empty. What do you do when you find an envelope is empty? You do nothing. That category is all finished for this pay period. If the envelope is empty and you still have expenses, either you haven't budgeted correctly or you have overspent. You might be able to fudge and take funds from another category envelope. For example, if you have a week to go and are $40 short for groceries, you might be able to take the $40 out of the entertainment envelope. Just keep in mind this means $40 less for entertainment.

Do this for a few months and I promise you will not only learn to budget accurately, you will learn to stick to your budget.

For FREE help with debt and credit, subscribe today to Douglas Hanna's free email newsletter 8 Simple Steps to Debt Relief at http://www.all-in-one-info.com

19 Ways for Couples to Stop Fighting Over Money

2006-03-10T11:02:00.000-07:00

1. HAVE GUIDELINES. Marriage is a partnership so both partners must participate and mutually agree on financial guidelines and budget making.

2. NEGOTIATE. Nothing is set in stone. Your budget and spending guidelines should change just as your lives do. Both partners can negotiate and renegotiate when necessary.

3. KNOW THE DIFFERENCE. Wants and needs are two very different things. Make sure the family needs are taken care of before entertaining the thought of spending on each others wants.

4. DON’T TURN ON YOUR SPOUSE. Your spouse is your partner. When times get rough you and your partner must band together to develop a plan of attack.

5. MAINTAIN INDEPENDENCE. Yes, a marriage is a partnership, however this does not mean that each person must lose their financial independence. Agree on a spending amount or ‘allowance’ for each person. The allowance is used as personal spending of their choice.

6. DON’T HIDE IT. Don’t hide the money (income or spending) from your spouse. Trust plays a major role in successful relationships. If you have negotiated a budget that you both are abiding by there should be no reason to hide finances.

7. DON’T SPEND IT IF YOU DON’T HAVE IT. If you don’t have the money at the time you are purchasing it…chances are you can’t afford it.

8. TALK ABOUT IT. Talk about buying big-ticket items. These sorts of purchases impede on guidelines so they too should be agreed upon before spending the money.

9. BE REALISTIC. Fully understand your budget. Know how much your family income is and what your expenses are. Create your budget based on real numbers.

10. DON’T RENEG ON YOUR AGREEMENT. Once you have agreed to something follow the agreement. Breaking it will result in lost trust, frustration and feelings being disrespected.

11. BEWARE OF ‘WHEN’ THINKING. Don’t get caught in ‘when’ thinking – “I’ll pay this off when I get my next pay.” Most of us are guilty of doing this at one point and many of us have realized that ‘when’ never arrives. Usually the money you thought could be used to pay for your purchase has already been allocated towards the budget.

12. KEEP TRACK OF SPENDING. Write down each financial transaction your make, groceries, bill payment, gas, entertainment etc. Visually seeing spending habits will help identify areas where money is being wasted. Note: online banking is a great way to keep track of your spending

13. DON’T BE DRIVEN BY EMOTION. Don’t spend for the emotional high of it. Understand what drives you to spend and realize that careless spending can cause bigger emotional stress. Remember, emotional problems will not be solved with money.

14. BE INFORMED. Educating yourself is crucial in helping make the best decisions possible. There are many laws and incentives impacting your finances that many problems can be avoided if both individuals had the knowledge they needed to make better decisions.

15. FIGHT FAIRLY. Do not use money as a weapon to attack your partner.

16. DECIDE ON YOUR ACCOUNTS. Joint or not to joint…that is the question. Couples have come to many different arrangements when it comes to this. Whether you keep separate accounts, a joint account or both separate and joint accounts it doesn’t matter, just as long as both people are happy with the arrangement.

17. REMEMBER YOU AGREED TO IT. Don’t be resentful if things don’t turn out the way you thought they would. Remember, you agreed to it.

18. USE A SYSTEM FOR BILLS. Who should pay household bills should be discussed. Whether it’s one partner who takes on the responsibility or both people choose to pay them, make sure that there is a system in place for bill paying.

19. REFLECT BEFORE REACTING. Many times relationship problems mask themselves as financially motivated issues. Before reacting to problems that seem to be financial, ask yourself what the root of the problem really is.

By Gina Goldenberg BA, Cert. Ed. -Mess Management http://www.messmanagement.com FREE Mess Management Idea-Pak and E-zine, filled with tips and information articles to help you organize your home or office and simplify your life. Gina Goldenberg may be contacted at http://www.messmanagement.com or info@messmanagement.com

Debtor's Disease - Do You Have It?

2006-03-07T11:28:00.000-07:00

Requesting credit increases lately?
Requesting credit increases for no specific major purchase, but because your cards are maxed out, is a sure sign that your spending is out of control. You may be living way beyond your income.

Do you apply for new credit cards because your current credit balances are maxed out?
This is just another way to get additional credit especially, when you can't seem to get any more credit increases from your existing creditors.

Are you rescheduling monthly bill payments due to lack of funds. If you find it increasingly difficult to pay bills on time and according to a consistent schedule, you're probably starting to get into trouble. You should not have to put off paying essential bills.

Are you using credit to meet your living expenses.
Credit is not intended to help you live above your income. You should be able to meet all of your essential living expenses with your income. If you have income left for non-essential expenses, great. If not, don't turn to credit to live above your income. It will most certainly result in financial disaster.

Paying essential monthly bills, such as the electric or phone, with credit cards is a serious symptom. Once you turn to credit to pay your monthly bills, you're in serious trouble. Sooner or later the credit cards will be maxed out, you will be refused additional credit increases, and you won't be able to pay those bills.

Do your credit card payments equal more than 10 -15% of your monthly income?
Your income to credit ratio is an important part of your credit management picture. The higher your balances, without an increase in income, the lower your credit score. This is true even if you have no derogatory items on your credit history, and are consistently maintaining good payment records.

In most cases, creditors will identify debtor's disease long before the victim realizes his affliction. They will begin to arm themselves against the consequences of the infection when this occurs. Your interest rates and penalties (i.e. late fees, over limit fees) may increase as companies anticipate default. Even they can see you're headed for trouble.

THE CURE

If you answered yes to any or all of the above, you have fallen victim to debtor's disease. Don't let it take control of your life! Fix the problems now. You'll have less stress and be a lot happier. I can say that with confidence. It is such a relief to be able to see an end to the struggle. You will feel as though a great burden has been taken from you when your finances are under control.

And, even though you may experience some difficult periods when you may get discouraged, you'll find those times much less stressful that periods when you worried about how your bills would get paid. Take some serious money management steps to begin your treatment. It's never too late to take control of your finances and make a commitment to debt free living.

Identify overspending and eliminate it.

Identify where your money goes. Track spending for specified period of time. Eliminate unnecessary expenses. Reduce those you feel you need to keep.

Develop a plan to become debt free.
Create a plan to get rid of debt. Use a self help plan or a professional. Whether you choose a counselor, debt consolidation or settlement, or a self help plan, lower debt consistently to manage and eliminate debt. A plan that calls for a consistent monthly commitment until debt is paid will be easier to budget.

Create a Household budget

Creating a household budget will be essential to your success. It is necessary to bring your living expenses within your income. This is the concept of living within your means. You can create this yourself as well or seek professional help in setting up or maintaining your budget. Your situation and your level of self discipline will determine what will be most successful for you. Find a plan that works for your situation and will be the easiest for you to stick to!

Implement lifestyle changes that will help you free up money to help pay down debt.
Consistently apply these extra funds to debt payments to get out of debt faster. The sooner you are free from debt, the sooner you can start investing that money in yourself. Save money everyday on everything you buy and do.

Once you rid yourself of debt, commit to debt free living. Remember, you now know how you made the mistakes, you know how to identify the symptoms, and you have the knowledge and power to implement the cure. You should now be immune to debtor's disease.

Now, you can vaccinate your children, friends, and family with the knowledge to prevent them from falling prey to this life draining affliction. Give them your hind sight and help them build happy, secure, and independent futures for themselves and their families.

Author Resource: Cheryl Johnson is on a mission to become debt free. As publisher of SimpleDebtFreeLiving.com she hopes to guide and encourage others to live debt free through household budgeting, debt management, and money savings tips and strategies that save you money everyday and reduce living expenses.

Create and Maintain a Budget for Your Family's Financial Security

2006-02-21T17:05:00.000-07:00

Create and Maintain a Budget

The first step to avoiding the troubles of financial debt is to create and maintain a budget. It’s not as intimidating as it sounds, don’t worry.

First off, create a list of all your monthly income and also a list of your monthly expenses. When determining income, list all sources including alimony, child support, side jobs, etc. In calculating expenses, be sure to include housing, food, transportation, utilities, entertainment, etc. To gain an accurate reflection of actual expenses, sit down each night and write down expenses, just make sure to save receipts. Determine if your income covers all of your expenses. If the answer is no, then some expenses need to be reduced.

Adjust expenses. If it is a small discrepancy, it may mean reducing some minor expenses like entertainment or cell phone plan. If the deficit is larger, you may need to downsize your vehicle or living arrangements. If your income covers all of your expenses, you still may want to trim some of the excess fat off your spending habits. This can free up extra money for things such as vacations or college funds for your children.

Additionally, consider if you need to add new categories. Some areas that are often overlooked are debt reduction, emergency savings funds, and retirement savings. An emergency fund ensures there is an adequate amount available to cover unforeseen events (car emergency, etc), should it arise. This will eliminate the need for using credit which can quickly damage your budget.

There are several advantages to sticking to your budget. Firstly, most people have set financial goals that they would like to reach in the future. Sometimes it may be a trip, a brand new car, or a college education. A budget can help people save money to make these goals a reality. Additionally, many people are crushed under heavy consumer debt. Without a disciplined pattern of spending, it is virtually impossible to make much headway in reducing debt. A personal budget will provide the necessary framework to begin eliminating these inflated account balances.

If executed properly, a budget will allow a person to simultaneously meet their expenses, place money into savings, and pay back outstanding debts. Therefore, it is anyone’s best interest to create and implement a budget.

By Janet Bullard - She may be contacted at http://www.magnoliawalker.com/index.html webmaster@magnoliawalker.com Click here to view more of Janet's articles.
Janet, a homeschooling parent, balances teaching, internet marketing and computer programming. She promotes various products at http://www.magnoliawalker.com/index.html. As part of her service to Christ, she is the webmaster for her church's webpage at http://greenland.magnoliawalker.com. In her spare time she gardens, paints, quilts, and goes trail riding on her Tennessee Walker. Go check out her site and sign up for her weekly newsletter at: http://www.magnoliawalker.com/subscribe.html You may also view her latest newsletter: Christian Pen Pal Newsletter at http://www.penpalezine.com

Your Credit Card Payment Just Doubled!

2006-01-30T10:48:00.000-07:00

Even if you didn’t charge anything last month, your next payment may have just gone up

If you haven’t received your credit card bill yet this month, you may be in for a big surprise, especially if you went a little overboard with your holiday spending. For the estimated 40-million Americans who carry a balance on their credit cards their minimum payment may be increasing anywhere from 40-100 percent. Here’s a look at why, and what to do about it.

Under pressure from federal regulators, credit card issuers are increasing the minimum monthly payment requirement on outstanding balances. The change should help consumers in the long run, but can be painful in the short-term.

Credit card minimum monthly payments have traditionally been set at an average of 2 percent of the outstanding balance. The entire 2 percent would often go towards interest, and cover little or none of the principal. According to Bankrate.com, a balance of $8,000 (the approximate credit card debt carried by the average American) would take almost 54 years, and cost an additional $22,931.52 in interest when paying only the minimum 2 percent each month.

Credit card companies are now required to set a minimum monthly payment that covers interest, plus at least 1 percent of the outstanding principal. Using those guidelines, that same $8,000 would take only 30 years to pay off and cut your interest in half to $11,789.08.

Obviously 30 years is still a long time to pay off credit card debt. Most people will pay off their home loans in less time than that.

All too often, I see people treating their credit cards as an additional source of income. The key is to pay-off your balance each month.

According to a recent study by the American Bankers Association, less than half of cardholders consistently pay-off their balance each month.

The problem usually starts when we have an irregular expense, such as car maintenance, holiday spending, or a vacation. We turn to the credit card to cover the difference, planning to pay it off next month. But when next month rolls around our budget is tight again, and even if we don’t add to the balance, we’re unable to pay it off in full.

The trick is to manage your daily, weekly and monthly spending. Set up a spending plan based on your income and include regular expenses like mortgage, groceries and car payments, but also irregular expenses such as holidays, birthdays, car maintenance and medical expenses. By planning ahead and setting aside a little each month for these irregular expenses, you’ll have enough to cover them when they arise and won’t have to turn to the credit card to cover the difference.

Most people can easily squeeze an additional 10 percent out of their paycheck by simply creating a spending plan and tracking their expenses. Use an online budgeting tool to make setting up your spending plan simple. Mvelopes Personal offers a free 30-day trial. A pen and paper will work, but you have to be disciplined to stick with it long-term.

Credit card spending can throw an extra wrench in a budget. When you make a purchase on a credit card, the money isn’t immediately taken out of your account, as it is with a debit card. By the time the bill comes, you may have already spent the money elsewhere. A program like Mvelopes Personal, which has a credit card tracking feature that automatically sets aside the money from your budget whenever a purchase is made with a credit card, can make credit card spending less abstract.

Even if all you can do is pay the minimum, make sure that you at least do that. Ignoring the problem won’t make it go away. It’s expensive and will take a long time, but by paying at least the minimum each month, you’ll keep the credit scoring folks happy, which can save you thousands of dollars later on.

Steven B. Smith is the author of Money for Life: Budgeting Success and Financial Fitness in Just 12 Weeks! and President and CEO of In2M Corp. www.in2m.com.

9 Financial Resolutions

2006-01-13T14:53:00.000-07:00

Earlier this week I wrote about "Nine New Year’s Resolutions to Get Your Finances in Order". Today I would like to expand on some of those ideas. Have your personal finances been a bit of a challenge this past year? According to In2M Corporation’s financial fitness survey conducted this past fall, you aren’t alone!

Nearly 90 percent of survey respondents are moderately to very concerned about their ability to meet future financial obligations for major items, such as education and retirement.
Seventy-three percent of respondents said their financial situation is about the same as (40 percent) or worse than (23 percent) when compared to last year.
Sixty-six percent stated their approach to financial management is either reactive or simply total avoidance. Only a small 34 percent follow a plan of action.

Here are 9 suggestions that you may want to consider for this next year. Now is the time to get control of your finances, and take that first step down the path to financial fitness. Why not start this next year off on the right financial foot?

1. Spend less than you make.
Just like you can’t loose weight if you take in more calories than you burn… you can’t save money if you spend more than you bring in. Spending less than you make on a consistent basis is the key to reaching financial fitness and financial stability. You can’t increase your savings, make investments, reduce debt or even make wise spending decisions if you’re consistently overspending your income each month. Forty nine percent of respondents, to In2M’s financial fitness survey, said they rarely, if ever, use a budget to manage household spending. No wonder they have so many challenges with overspending, increasing debt and lack of savings.

Put together a spending plan and make it one that works for you and your family!

For a step-by-step process of how to make an effective spending plan, look in the book Money for Life and its companion piece the Money for Life Success Planner. These books walk you through the process and explain the reason behind each step, in a way that anyone can understand. If you’d rather go the paperless route, Mvelopes Personal will help you create an online spending plan.

2. Save more… at least 10% of your income.
Ever hear of the theory of paying yourself first? That’s basically what this is. If you make it a habit to pull out 10% for savings and investments for retirement, before you pay any other bills, you are actively working towards a better financial future for yourself. This 10% can include your 401k account if you have one, but be sure you are maximizing that option! It’s also wise to put an additional amount into savings after your 401k investment is made. Put this money into a money market account, money market fund or CD if possible, so that you get a higher interest rate. According to In2M’s financial fitness survey conducted this past fall, 48 percent of respondents saved nothing in the past 6 months and 31 percent saved less than 10 percent of their income. Don’t be one of the statistics, take action today and start saving!

3. Calculate your net worth.
Do a reality check to ensure you are on the right track. Your net worth should be increasing each year, even if it is just by a small amount. The exercise of calculating your net worth can be very valuable as well… people often discover accounts, investments, etc that they have forgotten about, or need to update.

If your net worth has decreased from the year before, take an honest candid look at where you can make adjustments to improve these numbers. Consider accelerated debt reduction. Consider increased savings. Even consider canceling every credit card you have if it means that you stop overspending and start saving. Be proactive in your efforts to get financially fit!

4. Start an emergency fund.
If you don’t already have an emergency fund, start one today! Your emergency fund should have a minimum of 3 months worth of expenses in it. This is your emergency money for a job loss, emergency repair, medical expense, etc. Keep these funds in a money market account or other high interest, easily accessible account. If ever you have the misfortune of an unexpected job loss, unexpected car repair, unexpected appliance problem… you will be far more prepared to weather the storm if you know you have a little breathing room on your finances, thanks to your emergency fund! That peace of mind makes all the difference.

5. Reduce your debt.
Use the debt roll down principle to quickly reduce your debt. Make a list of all your debts and prioritize them in order of interest (highest to lowest) or in order of the number of payments till payoff (fewest payments at the top). Once your first debt is paid off, roll that payment amount into the next debt on your list. Follow the same procedure when the second debt is paid off. You will not only reduce the number of years you will have payments, but you will also save thousands in interest if you follow this principle until you are completely debt free.

6. Use credit cards for the benefits, not the penalties.
If you use a credit card, only do so when you know that you already have the funds set aside to pay the balance completely when the bill arrives. Do not carry a balance on your card! It wastes money and ends up costing you a fortune in interest and finance charges. Thirty Eight percent of respondents to In2m’s Financial Fitness Survey stated that they never pay off their balance, and 33% only do so part of the time. Are those airline miles really worth it? Not if you aren’t paying the card off every month!

7. Make sure you have adequate insurance.
We’re talking home, life, disability, health, property and even auto. Not too many other things will matter if you have no fire insurance and your house burns down. Thirty Five percent of respondents to In2M’s Financial Fitness Survey stated that they either knew they had too little insurance or that they weren’t sure what their coverage was. Make sure that you, and your family, are covered adequately!

8. Create or update your estate plan and/or your will.
Whether you are single, married, divorced, kids or no kids… you need to have the proper documents to make your wishes known.

Update your beneficiary info on your retirement accounts, insurance, etc.
Specify money that you want to give to charity through a trust or gift exclusion.
When preparing a will reference an addendum in the will where you list who will get your various assets and personal property.
Make sure all language is clear and as specific as possible so that your wishes can be carried out.

9. Manage your portfolio.
If you have any 401k accounts from former employers, be sure you roll them over into an account that you control. Consolidation can also make your retirement accounts easier to manage, however, in doing so make sure you don’t jeopardize the diversification. Tools like Mportfolio, from the makers of Mvelopes Personal, can help you manage all your investment accounts from one spot, quickly and easily.

Take advantage of the New Year and get on the path to financial fitness!

Using the Envelope Budgeting Method in Today’s Cashless Society

2006-01-13T14:20:00.000-07:00

Traditionally the envelope budgeting method used cash and actual paper envelopes; however, in today’s high-tech and often cashless society, that would be a little unrealistic. Some expenses simply cannot be paid in cash and, therefore, we need to find ways to use these tried and true principles of envelope budgeting, in today’s world.

The major problem with many budgeting systems has been that they provide after-the-fact information, meaning you create a plan in advance and determine the amount you will spend in each spending category. At the end of the month, you then run a report, which tells you all the categories in which you have overspent. With this approach, the information is not real time—in other words, you did not have the information you needed at the time you were making a purchase decision. Systems like this do not tell you how much is left to spend. An envelope budgeting system provides this critical information.

Even with the significant advantages of the envelope budgeting system, it is only as good as your determination to use it. Meticulous tracking will only prove successful if you are prepared to guide your spending decisions based on the information the envelope system is providing you.

Success will ultimately come from persistent and consistent execution of the success cycle and the envelope budgeting principles. Let’s quickly review the envelope method of budgeting:
¨ Set money aside in advance of spending requirements
¨ Spend from how much is left
¨ When you run out money, you must make a choice
¨ At the end of the period, what’s left is savings
Of course these steps above pre-suppose that you have made the commitment to spend less than you make. Without that, the envelope principles don’t work.

When you partner envelope budgeting with the success cycle, you will have a system that really works. The success cycle is made up of four steps:
¨ Plan
¨ Track
¨ Compare
¨ Adjust

Your Monthly Spending Plan is the part of the envelope method that coincides with the first step of the Success Cycle – Plan. Your Monthly Spending Plan has defined budget categories, or envelope spending accounts. The next step is to track all of your transactions so that you can compare that information with your plan. You will want to use your plan, along with your tracked transactions, to make informed spending decisions; if you know how much you have spent, how much you have left to spend and how long it has to last, you can make appropriate spending choices that won’t limit your options in the future.

How do you realistically track every transaction? Yes, It does seem daunting at first, but it’s actually not as hard as it sounds with the help of the right tools. The right tools can make this task simple, even automatic.

The most critical component to successful tracking is the proactive decision to actually do it. Once you have made this decision, you can begin reviewing the variety of implementation tools that are available to help you in your task; and then find the one that is right for you.

There are a variety of implementation tools available that you can use with the envelope budgeting method. Among the options are:
¨ Cash-based
¨ Paper-based
¨ Spreadsheet
¨ Software
¨ Online System
¨ Combination of the above

Choosing an envelope budgeting system.
Finding out which tool is right for you is important to ensure your long-term success. The correct implementation tool must assist you in successfully tracking all expenses and maintaining the balance information that is necessary to make informed spending decisions on a daily basis. Above I mentioned several types of tracking tools, lets review them in 4 basic categories:

1. Cash
2. Paper ledger or computer spreadsheet
3. Computer-based envelope system
4. Combination of these

Choosing the correct implementation tool for you and your family is a matter of personal preference and lifestyle.

Cash-based envelopes.
The most basic approach to implementing the envelope principles is using a cash-based system. Income allocation and tracking your spending are both very straightforward with cash. Because of these advantages, many people have opted to use the cash system. However, because it is more difficult and inconvenient to make all payments with cash, many people combine a cash-based envelope system with a system that can handle the management of non-cash transactions as well.

Tracking all of your spending is quite simple with a cash envelope system, as every transaction is automatically subtracted from the balance remaining in a particular spending envelope, or account. For example, when you make a clothing purchase, you take the clothing envelope with you and pay for the purchase from the clothing envelope. Let’s say you have $100 left in your clothing envelope, and you are making a $60 purchase. When you hand the cashier the $60, you will have $40 left in the envelope. Simply write down the transaction on your envelope or place the receipt in the envelope so that you can look back at where your money was spent during the month. When you count up the cash left in the envelope, you will know how much you have left to spend and how long it will need to last.

Paper ledger or computer spreadsheet.
Using a paper ledger or computer spreadsheet system allows you to track all types of spending. This approach works much the same way as the cash-based envelope system, with a few adjustments. Obviously, you will not be allocating actual cash to spending envelopes. However, you will be creating spending accounts that are essentially virtual envelopes. Your cash will stay in your bank account, but you will allocate it to your spending accounts for the purpose of tracking your spending and determining the balance remaining in each spending account on a daily basis.

If we use the same example used in the cash-based method above, with the paper-based system, you will need to record the non-cash spending transaction—that is, check, debit card, or other form of payment that you used to buy the $60.00 in clothes—in your bank account register, as well as in your clothing account register and subtract that amount from the $100 balance in the clothing account. The same would be true if you created an account register spreadsheet on the computer.

Computer-based envelope system.
Perhaps the easiest envelope system for most to use is a computer-based or online system. If you are using a fully automated envelope-based computer system, your transaction will be tracked automatically for you. For the example that was used above, you will simply need to download the non-cash transaction and assign it to your clothing spending account. The system will automatically update the balance remaining in that account for you. You will know exactly how much you have spent, how much you have left to spend and how long it needs to last.

In addition to the above, the right system will help you complete each of the following:
1. Create your monthly spending plan.
2. Set up your spending accounts.
3. Create your funding, or income allocation, plan.
4. Set your initial spending account balances.
5. Ensure your spending accounts and bank accounts are balanced.
6. Allocate your income to spending accounts as defined in your funding plan.
7. Automatically track your transactions.
8. Assign your transactions to the appropriate spending accounts.
9. Split transactions between a number of spending accounts.
10. Set aside money for credit card purchases.
11. Complete a monthly review and make adjustments.

An appropriate computer-based system also will generate a number of important reports, including spending and bank account summary reports. These reports can be printed on a daily basis and carried with you to assist with making sound spending decisions. It also should help facilitate the monthly reconciliation process for your financial institution accounts.

Using a combination of these approaches.
Even if you use a paper ledger system, computer spreadsheet, or computer-based envelope system, there may be certain spending accounts for which you would like to use cash. This is not a problem and can easily be done. Most people who use a combined approach use cash envelopes for many of their monthly discretionary accounts, such as groceries, entertainment, allowances, and clothing. They find they are able to exact a higher level of control over these spending areas when they are using cash. If you would like to use cash for some of your spending accounts, you will need to go to the bank or ATM once each month and take out enough cash to meet the funding, or income allocation, requirements for these envelopes.

It’s about choices, not restrictions.
One of the most often-cited objections to the idea of budgeting is the thought that budgets become restrictive and frustrating. The feeling that they cannot make purchases when they would like to can be very disconcerting for many people. However, in reality, as you spend beyond your income resources, your spending choices become increasingly more restricted. Real, long-lasting choice comes from making the decision to live within your means.

That said, there are many times when making a decision to spend beyond the current resources in a spending account is just fine. Let’s say that a desired clothing purchase was $125. You recall the balance in the clothing envelope is only $100. In this case, you have to decide if you would like to put off the purchase until you have more money in the clothing envelope, purchase a less expensive item, or transfer money from another envelope to cover the added cost.

As you can see, the information provided using the envelope system has truly empowered you to make an informed decision. Making the decision to transfer money from another envelope is not a problem, because by transferring the funds, you have made a decision to spend less in that area.

Now let’s say that you did not have extra money in another envelope to transfer to the clothing envelope. In this case, if you are truly dedicated to living within your means, your only option is to either purchase a less expensive item or wait until you have more money in the clothing envelope. Choosing to spend the extra $25 when the resources are not available will limit your choices in the future, because you have just created debt above and beyond your monthly net income resources. This means you will be paying more interest next month and further reducing available resources to purchase the things you want or, more importantly need.

Most people are very successful at making sound purchase decisions when they know how much is left to spend. But ultimately, your success in making smart decisions will depend on your resolve to live within your means.

Nine New Year’s Resolutions to Get Your Finances in Order

2006-01-11T16:56:00.000-07:00

1. Automate your finances. If it’s not easy, most of us simply won’t do it. Make it easy on yourself by using a secure online budgeting system, like Mvelopes Personal, to track and categorize your expenses. Use online bill pay to save time and money.

2. Create a spending plan. Determine how much you plan on spending, and where you want to spend it. Give yourself some flexibility to allow for some of those impulse buys without ruining your overall plan. Spending management is simply proactively budgeting your money.

3. Save at least ten percent of your income. If you don’t pay yourself first, there won’t be any left over at the end of the month to save. Set up an automatic transfer to a savings account to make it easy.

4. Pay at least the minimum on your credit cards, and pay off all that you can. Making at least the minimum payment on time accounts for 35 percent of your credit score. Paying off the entire balance each month can save you hundreds in interest.

5. Contribute enough to your 401(k) to get the maximum company match. Your kids can get help to pay for college, but no one will help pay for your retirement. If you’re not taking advantage of a company match, you’re turning down a yearly bonus from your employer.

6. Review and readjust your portfolio. Make sure that no single stock comprises more than five percent of your portfolio. As your different investments perform differently, your distribution will become skewed. Readjust your holdings to match your desired distribution.

7. Start an emergency fund. You should have three to six months’ worth of expenses set aside in an easily accessible account to cover mortgage, food, car payments and other necessities in an emergency. Keep it separate from other funds to avoid spending it.

8. Check your credit reports. You’re entitled to one free copy of your credit report from each of the three credit-reporting agencies at your request. Stagger the reports, receiving one every four months to keep an up-to-date view of your credit throughout the year.

9. Review your insurance policies and update as needed. Review your life, health, home, auto and disability insurance policies. Make sure you have cost replacement coverage on home and auto insurance, as well as good liability coverage. Make sure your home insurance reflects the current value of your home.

10 Questions to Check your Financial Health for the New Year

2006-01-05T11:34:00.000-07:00

With the New Year quickly approaching, millions of Americans are preparing to make resolutions to improve both their waste line and their bottom line. If you’re looking to improve your financial fitness this year, it’s important to first understand how you’re already doing. The following quiz, taken from my Money for Life Success Planner, will help you understand how you’re doing financially, and where you can improve.

What percentage of your income do you save each month?
a. 10 percent or more
b. Less than 10 percent
c. None

How often do you use a monthly budget to track and plan your spending?
a. Almost always
b. Sometimes
c. Never

When you make a purchase using a credit card, how quickly do you usually pay off the entire balance?
a. Immediately or before the end of the month
b. Between one and three months
c. I usually carry a balance from month to month

How many times during the last six months have you paid a bill late?
a. None
b. One to five
c. Six or more

Most of your major purchases are…
a. planned in advance, with money set aside to cover them
b. planned even though the funds aren’t always there to pay for them
c. unplanned or spontaneous

If you needed to come up with money quickly to pay for a major home repair or an emergency, what source would you use?
a. Funds already on hand
b. Funds from available credit
c. No funds available without establishing credit

If you lost your job or main source of income, how long could you provide for your basic needs and meet your financial obligations?
a. Three or more months
b. One to two months
c. Less than one month

The insurance I have to cover the loss of major assets including real estate, autos and personal property is…
a. enough to cover replacement costs
b. less than enough to cover replacement costs
c. unsure or don’t have coverage

When was the last time you reviewed and adjusted your retirement plan?
a. Within the last year
b. In the last five years
c. I don’t have any savings for retirement

When you think about your ability to meet future financial obligations, you feel…
a. completely at ease
b. moderately concerned
c. very concerned

Give yourself five points for each time you answered “a,” three points for each “b,” and one point for each “c,” then total your score. If you scored between 40 and 50, you’re in great financial shape. If you scored between 20 and 39, you are off to a good start, but could still address some weaker areas. If you scored below 20, you need to rethink your financial plan, and make some big changes.

Regardless of how you scored, now is a great time to sit down and examine your financial situation. Write down your financial goals, and develop a plan of how to accomplish each one.

Three Financial Resolutions You Can’t Afford Not to Make This Year

2005-12-15T12:13:00.000-07:00

And how to actually keep them

Every January, millions of Americans determine to shed a few pounds and to finally get their finances in order. Unfortunately, most estimates indicate that less than 30 percent of those well-intentioned resolutions make it through the year. The reason most resolutions fail is because a plan is never laid out to help achieve the goal. If you are serious about finally getting your finances in order this year, here are the three resolutions you need to make, along with easy steps to help you actually keep them.

1. Automate your finances.

Why it’s important: If it’s not easy, most of us will quit before the New Year is a month old. The key to effectively managing your money is tracking where it’s going, and how much money you have allocated for specific categories. Paper and pen will do the trick, but be honest with yourself, do you plan on keeping that paper and pen with you for the next year, logging each and every purchase no matter how large or small? The Internet allows you to track all your accounts with no manual effort, and will even do all the math for you. If it’s automatic, you won’t get lazy, and you won’t forget to do it either.

Managing your finances online may also help keep your money safe. According to a 2005 study on identity theft by the Better Business Bureau and Javelin Strategy and Research, “electronic monitoring provides greater safety by sharply reducing time to detection, and potentially eliminates the paper records and mail that are possible avenues to many identity theft cases.”

How to keep your resolution: Set up a secure online budgeting system like Mvelopes Personal (www.mvelopes.com). The subscription service will automatically track your expenses from multiple accounts and credit cards as well as provide you with balances of various savings and spending categories. Seeing where you are spending your money will let you know where you can cut back. Seeing your net worth rise in the net worth tracking feature will keep you motivated. With a 30-day free trial, if you do give up by February, you can simply call and cancel.

Set up automatic transfers with your bank to pay your mortgage and other fixed payments to avoid missing a payment or incurring late fees. Use online bill pay to save on envelopes, stamps, and time (Mvelopes Personal includes a free bill pay service, and most banks now offer bill pay for little or no extra). Set up an automatic transfer to a savings or money market account once a month. Find a high interest bearing account to maximize your savings. Many online banks, such as EmigrantDirect, are currently offering three to four percent APY on savings accounts.

2. Stop paying interest and start earning it.

Why it’s important: According to Bankrate.com, if you charge $1,000 on your credit card, and pay only the minimum payment (assuming an interest rate of 15 percent and a 2.5 percent minimum payment), it will take over 10 years to pay off and cost an additional $757.98 in interest. Conversely, if you were to take only the amount you would be paying in interest each month on that loan and invest it in an account earning ten percent, it would grow to $1,594.92 over that 10 years.
Even if you’ve gotten deep into credit card debt and can’t pay it off quickly, you can save a bundle by lowering your rate, and paying more than the minimum. By dropping the interest rate on your credit card in the example above to 11 percent and paying only $30 a month, you could pay off that $1,000 in just over three years with only $198.85 in interest.

How to keep your resolution: Always pay at least the minimum payment on time, and if at all possible, pay your credit card balance in full each month. Mvelopes Personal has a credit card tracking feature that automatically sets aside the exact purchase amount each time a purchase is made on your credit card to help you pay off the balance in full each month.

If you are carrying a balance from month to month, cut your spending to a minimum and allocate all the extra money you can to paying off your debt. Use the debt roll down principle to quickly reduce your debt. Make a list of all your consumer debts and prioritize them in order of interest (highest to lowest). Pay the minimum on all your debts and pay as much as you can on the one with the highest rate. Once your first debt is paid off, roll that payment amount into the next debt on your list.

Call your credit card issuer and try to negotiate a lower rate. If they decline, let them know you plan to roll your balance to another card and cancel the card with the higher rate. If your credit history is clean, you should be able to find a card with a 0 percent introductory APR. Don’t make any purchases on the new card as often the introductory period ends as soon as you make your first purchase. Be careful the interest rate doesn’t skyrocket after the introductory period, and make sure you cancel the card with the higher rate to avoid simply running up a larger debt load. Check www.creditcards.com to compare credit card offers.

Check your credit reports to make sure they’re accurate. The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. You can order your reports online at www.annualcreditreports.com or by calling 1-877-322-8228.

3. Stop procrastinating saving for your retirement.

Why it’s important: Time can be your biggest ally when investing for retirement. For example, if you begin at age 25 and invest $4,000 annually in a portfolio that provides a 10 percent average annual return, then stop contributing after 10 years, your investment will grow to $1,365,818.31 by the time you retire at 65. However, if you procrastinate investing until you are 35, then contribute $4,000 annually in a portfolio with the same 10 percent average annual return, and continue to contribute every year for 30 years until retiring at 65, your investment will only grow to $759,775.11. Even though you contributed $80,000 more over the life of the investment in the second scenario, you still ended up with $600,000 less.

How to keep your resolution: Contribute at least enough to your 401(k) to get the maximum company match. Talk to your HR department to find out the details of your company’s plan. If your employer offers a company match and you are not contributing to your plan, you are essentially turning down a bonus every year. And since your contributions are taken out on a pre-tax basis, as you increase your contribution, your taxable income decreases, meaning you pay less in taxes.

Open a Roth IRA. Your money grows tax-deferred, and just so long as the IRA has been open 5 years or more and you are at least 59 ½ when you start to withdraw, there are no tax penalties for withdrawal. The maximum annual contribution increases to $4,500 this year.

Make sure that no more than five percent of your portfolio for either your 401(k) or your Roth IRA is in a single stock. Diversifying is the best way to ensure maximum growth over time while minimizing the risk and volatility of the market. Select an index fund or target fund for an easy option that requires little oversight. Fidelity, Vanguard and T. Row Price are among the largest purveyors of mutual funds and all offer excellent funds for a variety of investing styles.

From start to finish. Regardless of where you stand financially, the New Year provides an excellent opportunity to review your finances and make improvements. Make sure that this year you don’t just start fresh, but that you also finish strong.

The Real Magic of The Holiday Season

2005-12-07T08:57:00.000-07:00

9 Practical Tips to Stay Debt-Free This Year

There’s something magical about this time of year when everything is trimmed with tinsel and various shades of red and green. But if you don’t have a spending plan for the holidays, you’ll likely end the year with too little green and deep in the red.

Here are nine smart money tips to make sure the magic this year doesn’t result in a disappearing act by your bank account.

1. Create a spending plan now. There’s no better gift you can give your family than financial stability. Determine how much you can reasonably afford to spend this year, then determine how much to spend on each individual, not the other way around. Don’t forget to include amounts for decorations, parties, and some of those ‘unexpected’ expenses.

2. Track your expenses to stick with your plan. If you wait until you get your credit card bill in January to see how you did with your plan, you’re almost sure to overspend. Track your expenses using online budgeting software like Mvelopes Personal, or a paper-based envelope budgeting system or spreadsheet, to keep an up-to-date view of your spending. Compare your actual spending to your plan often to make sure you stay within the limits you’ve set.

3. Set a deadline for paying off all holiday expenses. If you charge $800 this holiday season, and then make only the minimum payment on that debt, it would take almost 11 years to pay off and end up costing more than twice the original price (assuming a minimum payment of 2.5% or $10 and an annual interest rate of 18%). Mvelopes Personal (www.mvelopes.com) has a credit card feature designed to help set aside the money to cover purchases made with a credit card so you can pay the bill in full each month. You don’t want to still be paying for the holidays next August.

4. Trim the list along with the tree. In addition to trimming the tree this year, trim your gift list. Instead of sending knick-knacks to everyone you know, send a thoughtful note expressing your appreciation for their friendship. Spend the money you save instead to buy gifts for your closest friends and family or contribute it to your child’s college savings fund.

5. Send an e-card instead. You’ll save on postage and stationery, and many e-cards include animation and music and even interactive games, making them more fun than their paper counterparts. You can include a personalized message, and won’t have to worry about it getting there on time. Try hallmark.com or 123greatings.com for fun, free e-cards.

6. Get creative with your gifts. The best gifts require more thought than money. Gather up some old photographs and frame them. Create a digital photo calendar. Give coupons for babysitting, a back massage, or a day free of changing diapers. Refinish that old rocking chair. Make a warm batch of your famous chocolate chip cookies, or record yourself reading a favorite story for a niece or nephew far away. People will appreciate the personal touch and thoughtfulness of the gift.

7. Shop online. You’ll save time, gas money and possibly your sanity as you avoid the crowded parking lots and long lines. Many retailers offer free shipping for purchases over a certain dollar amount. Have the item shipped directly to the recipient to avoid an extra trip to the post office. Make sure you shop early to avoid paying expensive overnight shipping costs.

8. Step back to clear your head. It’s easy to get lost in the hustle and bustle of the busiest time of the year. Schedule some time to go ice-skating, see the lights, take a warm bath or enjoy a good book and a cup of hot chocolate in front of the fire. Taking a step back can help you clear your head to avoid getting caught up in a frantic spending frenzy.

9. Give to charity. One of the most common complaints about this time of year is that consumerism has hijacked the season. The remedy? Give to those less fortunate. Giving to charity helps keep needs and wants in perspective during the holiday frenzy. Give gently used clothing and blankets to a local shelter or the Salvation Army, or donate some time wrapping and distributing gifts for Toys for Tots or another organization. It may help your children – and you – discover the real magic of the holiday season.

7 Tips For Holiday Gift Giving

2005-11-29T10:35:00.000-07:00

by La Tunya Sifford
Avoid the hassles of holiday gift giving this year by following a few simple tips.

Make a list of all the people you would like to buy gifts for.
Set a budget for each gift that you give
Write down gift ideas, Consider holiday gift baskets, or gift certificates.
Set a dealine to finsh your holiday shopping.
Look online, catalogs, for great deals.
Set aside a time and day for you to do you holiday shopping, when you find something that interests you, decide who on your list might like it
Gather shipping boxes, tape, etc.... Remember to ship your gifts as early as possile.

These tips will save you a lot of holiday hassles, and you can spend lots more time with you family for the holidays.

La Tunya Sifford has a online holiday gift basket website, you can visit http://www.fullmoongiftbaskets.com/holiday_gift_baskets.html for more info on Holiday Gift Giving.

Cut Holiday Bills in Half

2005-11-22T08:21:00.000-07:00

Most of us have a certain number of holidays that we celebrate each and every year. That means quite a number of extra "gifts" that will need to be purchased for family and friends.

In a bit, you will learn exactly when to get the best bargains on holiday merchandise, and how you can save you quite a bit off your "gift" shopping bills.

HERE'S WHAT HAPPENS
Every single year, about a month and a half prior to any "major" (popular) holiday, most retail and department stores offer holiday related merchandise. For example, you'll probably find

Halloween Costumes - October
Santa related decorations - December
Autumn and turkey decor - November
Hearts/Candy assortments - February

As each holiday approaches, the majority of the general public rush to buy these high priced "holiday" gifts a few weeks or days before the celebration. Stores expect this. They love the holidays. Why?

Simple. Hundreds and thousands of eager shoppers will come through their door and spend, spend, spend.

KEY TO SAVING MONEY
You can use the 'retailers tradition' as an incredible chance to save money. What is the 'retailers tradition'?

Immediately AFTER any given holiday, retailers clear out ALL holiday relatedinventory in order to make room for the next. Think of it this way, how many of you NEED to buy a Halloween costume after October 31st? Not many right?

In addition, stores do not have the time, space, or manpower to pack leftover holiday merchandise and store it in a warehouse until next year. There is little or no profit in it for them.

Instead, stores advertise HUGE post-holiday sales with discounts generally ranging from 30%-80% off normal retail prices. They need to get rid of the merchandise, and depending on an items popularity, are willing to sell at a very low price.

Here is your chance to stock up on gifts that you KNOW you can give to someone the following year. Remember, nothing perishable of course.

If at all possible, designate a large plastic container as a "Gift Box" where you store all the gifts that you buy throughout the year. To take this idea one step further, keep a list of all the people you exchange gifts with. When you come across a gift for someone in particular, you can then cross them off your list.

TO SAVE EVEN MORE MONEY
When you go to a 'post' holiday sale, check the prices and quantities of the items you want. Ask the store manager if the merchandise isn't sold within a week, will the price be lowered even more.

Generally, stores do not have much time to clear out inventory and if the merchandise isn't selling, they will lower it to a price that will sell.

If you have the time, check every other day to see if there are any more price reductions. Better yet, ask the manager to call you if the prices get lowered. You might find the manager offering you an additional 20% off just for inquiring for future price reductions.

CONCLUSION
When purchasing gifts throughout the year, you get to put more thought into what you are buying for someone. Your shopping will be done with ample time to spare, and you'll avoid those over crowded mall excursions. At the same time, you'll get holiday related merchandise at 30%-80% off regular retail prices when bought immediately after the celebration.

By the time Christmas or Valentines Day comes around again, you won't find yourself spending $900+ on presents that most likely will be forgotten in a month or two. Try this shopping strategy after the next major holiday. You'll be surprised at how much $40 can buy you.

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The Art of Good Money Management

2005-11-14T10:39:00.000-07:00

Good money management needn't be difficult although it can often feel that way.

In fact, there a number of easy steps recommended by most financial professionals to help manage your finances better.

Pay your bills on time to avoid late fees. Don't wait until the red bill turns up!

Make notes of due dates in your diary and remember to allow extra time for postal payments to reach the recipient.

Pay more than the minimum on your credit cards. If you are paid weekly then pay a little each week rather than waiting until the monthly statement arrives.

Read your bank statement regularly. Keep an eye on all your incomings and outgoings.These days identity theft is very common so you need to make sure you are not paying someone else's charges.

Keep your receipts and check them off. This will give you a better idea of what you are spending.

Look around for and switch to credit cards with lower rates. Many credit card companies offer low interest rates for transferring balances from another card.

Follow a monthly budget.This may be easier said than done but if you are sensible about your outgoings then you will find managing your money much easier.

Try to spread big expenditures like Christmas shopping out by making a list and starting early.

At the beginning of each month try to have an idea of any birthday present you want to buy so you can spread the cost of buying them.

Many of the Good Money Management ideas are really just common sense but they do work. Try them for a couple of months and see if they can work for you. Open a savings account and put what you are saving each week or month into it and watch it grow. This can be all the incentive you need to carry on with Good Money Management!

Lorna Mclaren has an information and resources website at http://www.123-debt-consolidation-loans.com where you can find out about all types of Debt Consolidation.

A Debt-free Holiday

2005-11-14T10:31:00.000-07:00

For many people, the holidays present a monumental challenge for sound financial decisions. We want to give our friends and family generous gifts so they know our love for them. This admirable desire leads to our overspending, forcing us to face the new-year burdened by additional financial stress. Financially Savvy has a few suggestions to help you start the New Year without the holiday debt.

Recapture the True Spirit of the Holiday
Take a journey back to your childhood and your memories of the holiday season. What made it so special? Not the gifts; the magic of anticipation made this time of year so happy and exciting. What can you do rather than buy to help your loved ones recapture their childhood experiences of this season? For some, the smell of sugar cookies will invoke the fondest memories. For others, their favorite holiday song can bring a smile to their face. Rather than spend a fortune on a gift, call your best friend’s mom to find out what cookies to bake or songs to include on the CD or cassette you create for your buddy.

Set a Dollar Limit
Anyone can spend $150 on a gift that thrills a loved one. Try spending $25 to get the same effect. You have to get really creative and focus on what makes the recipient tick. For many years my father claimed he enjoyed most the gifts that I made or that didn’t cost much but showed I really understood what makes him happy. Parents are supposed to say these things so I never put much credence in his words. I always swore that when I have money of my own, I’d spoil my family. Then I gave one of my friends an inexpensive money clip I found that would allow him to get through airport security without emptying his pockets. He gushed gratitude. I spent all of $10! Set a reasonable dollar amount per person ($25 has served me well but only you know what you can afford) and get creative.

Make a List and Check it Twice
Most of us include on our gift giving list people who would feel embarrassed by our generosity because they didn’t include us on their list. Review your list with an eye towards identifying those individuals that would appreciate a card. Then write a really special message beyond the “Happy Holidays”. Think about the person, what they mean to you, and all that they contribute to your happiness. Looking for ideas on what to say? - check out “The Art of the Letter” by Alexandra Stoddard. People who fall into this category of sentiment include your boss, fellow colleagues, neighbors (acquaintances, not friends you spend much of your time with on a regular basis).

Shop Early and Often
You can’t implement this tip for this holiday season but keep it in mind for next year. In January, I usually pick a theme that drives my gift giving for the winter season. Inspiration comes from a variety of sources. Some themes I’ve done in the past include clean spirit/clean mind, and travel. Equipped with the theme and a list of gift recipients, I keep an eye out for sale items throughout the year that would appeal to my loved ones. By July/August, I usually have the bulk of my shopping completed and just have little finishing touches to add.

For instance, Last year I chose the theme correspondence and communication. Over the year, I purchased note cards, special pens, and such to create correspondence kits for my sisters and girlfriends. I put all the goodies (including postage stamps) in plastic envelopes from the local office supply store so they have one place to go when they need to write a “thank you” or other letter. I clipped from a magazine some guidelines and suggestions about writing “thank you” notes. In all, I’ve spent $25-$30 per person and have very individualized gifts that reflect the recipient’s personality and/or interests.

Use a Check Register for Your Credit Card
Once you set your per-person dollar limit, you can calculate your total holiday shopping budget. Put that amount in a blank check register as your starting balance. Then, every time you make a purchase enter the details in your register just like you would a check. When you subtract your purchase from the available “balance”, you reduce the amount available for future gift purchases. Seeing how much you have available to spend will do wonders for preventing you from going crazy and overspending. When the “available balance” hits zero, you have to stop shopping! Pay off the full balance when you receive your next credit card bill.

Most importantly, remember that most of the people on your list (even the children) just want to spend quality time with you. Somehow, this season became very commercial and focused on the value instead of the sentiment. Together we can change this perception. Let’s bring quality, not quantity, back into the lives of those we cherish the most.

About the Author:
Catie Fitzgerald is a 10+ years veteran of the money management profession and the founder of Financially Savvy. Financially Savvy provides investors with the education and resources necessary to gain confidence in making their own financial decisions. We offer a variety of educational venues including classroom sessions, one-on-one coaching, and online resources. If you have a personal finance question you would like answered, contact Catie at cfitz@financiallysavvy.com.

Holiday Gift Giving Ideas

2005-11-02T16:38:00.000-07:00

It's that time of year again, time for traveling, decorating, holiday parties, family, friends, relatives and of course. . . . shopping.

How many of you simply whip out the credit card and start charging every gift you can find, only to dread the day when your statement arrives in the mail? Or are you one of the few that save a little every month just to cover the holiday expenses when they come around?

Before you spend your hard earned money on the latest over priced, trendy gadgets, why not take the time and really think about a gift with special meaning. Something that will remind that person just how much they mean to you.

YOUR HOLIDAY LETTER
Sending a yearly "wrap-up" letter to your family, friends and relatives is a great way to save time and money. Instead of buying expensive store holiday cards and writing individual letters to everyone on your list, design your own holiday letter.

When writing a "wrap-up" letter, remember this is the perfect time to inform friends and relatives what's been happening in your family's life over the past year. Even if something important happened in your life back in February or March, some of your acquaintances might not have heard about it, so let them know.

After writing a rough draft, use your computer (or a friends) to help produce an attractive letter. You'll find that programs such as Microsoft Publisher walk you through step by step so you will have a beautifully designed letter in an hour or two complete with colored graphics.

SIMPLE GIFT IDEAS
Sit down and take the time to think about what each person on your list would like to receive. Of course everyone would love to get tickets for a seven day Caribbean cruise, but very few of us can afford to spend that kind of money on a present.

Here are a few ideas to get you thinking of all the possible gifts that can be aasily put together without the need to spend much money.

Know of anyone entering college? Put together a "care package". Fill it with all the basic necessities a college student might need (or want). Cookies, snacks, toiletries, wool socks, a new college student "manual", etc... Anything you think a young 18-21 year old student could use while away at school.

Do one of your relatives work in an office?- Put together an "office pack". The key is in the presentation. Find a suitable container and pack it with office supplies, personalized pens, coffee mugs, magazines, Far Side calendar, crossword puzzle book, etc.

CREATE A BASKET
Have you seen the decorative basket assortments that are sold around the holidays? Why pay $30-$50 for a basket of "goodies" that probably only costs about $5-$10 to put together? Put the basket together yourself, save a fortune, and even add a bit more creativity!

You can find baskets (straw usually works best) at any discount store or yard/garage sales. Then, simply line the bottom with a decorative cloth (ie: colored bandana, checked cloth, etc...), organize the appropriate items and trim/wrap with holiday decorations.

You can find all types of holiday arts & crafts ideas in books at your local library or on the Internet. Just do a search at Google and you're sure to come up with tons of ideas. The possibilities are endless. Here are a few basket ideas to get you started:

Coffee Lovers Basket
Assortment of coffees, mugs, stirrers, creme assortments, Sunday comics

Cookie Basket
Homemade cookie variety, chocolate/fudge toppings, funny napkins, cocoa mixes

Traditional Jelly Basket
Small jars of homemade jelly, muffin/cornbread mix, spatula, butter & knife

Sweet Tooth Basket
Brownies, cookies, small jars of candy, cocoa mix, peanut brittle, chocolates

Pasta Lovers Basket
Jars of various pastas and sauces, parmesan cheese, pasta ladle, strainer

Fire Starter Basket
Pinecones, long stick matches, starter blocks, candle scents/oils, ash shovel

Brownie/Candy Jars
An attractive gift, perfect for friends, co-workers, and neighbors. A nice large sized jar filled with either brownies or candies. Attach ribbons or bows to the lid and decorate with puffy paint or simply glue colored pasta shells around the jar. Again, be creative.

Homemade Decorative Cookies
Great teacher or babysitter gifts. Buy a cookie cut out pattern, add some colorful icing and a few ribbons with a nice card is a special holiday gift.

Framed Collage
Perfect for any occasion, great for friends or loved ones. Gather pictures of the person you're making the collage for. Look for pictures of various places you've both been and fun times you've shared. Once you have your pictures, cut and organize them to make an attractive display. Glue them in place, decorate the frame and you have a gift that's a lasting memory. How can you put a price on that?

Homemade Ornaments
Get a recipe for a hardening clay from any holiday crafts book. A childs' foot or hand imprint creatively decorated make excellent gifts for grandparents or relatives. This is something special that you can only give once. Your kids will quickly grow up.

Family/Children Portraits
An 8X10 of the family/kids is a perfect gift for grandparents or distant relatives you might not get to see very often. You can even make a holiday frame for it. Look for low prices at JC Pennys or Sears.

Magazine Subscription
Who doesn't like to read magazines? Reasonably priced, magazine subscriptions make excellent gifts. Find out what magazines or interests they have and then every time your friend receives another issue, they'll think of you.

TIS THE SEASON . . . . KEEP THIS IN MIND

All too often, the holidays seem to come and go in a flicker of an eye leaving us wondering if we even had a celebration at all. Take the time to visit with others whom you do not get to see very often. Spend time with the elderly in your family.

Start a 'tradition' within your family that everyone, including the kids, can participate in. These will all be your cherished memories of the loved ones in your life that no gift can replace.

Change Jars: Your Ticket to Getting Rid of Your Debt

2005-10-28T17:30:00.000-06:00

Many people have trouble budgeting - they get into debt, and they just can't find a place that they can cut out the spending. If you're having trouble doing this yourself, consider a "change jar." Get a jar or container of some kind and stick it on the table next to the bed or the door. Every day, contribute something to the jar.

It could be as little as whatever change you have in your pocket. If you think you can stick with it, shoot for something higher. Put in a dollar or two every day, and just don't touch it. At the end of the month, you'll have racked up quite a bit. Take your change down to the bank or to a converter machine and turn it into cash - then, no matter what, use that money to pay down your credit cards. Taking it to the bank probably makes the most sense - you'll already be there, and you can resist the temptation to go spend the money on something else. You can get coin rolls, or see if you can find a bank that has their own machine. If you are willing to roll the coins, do it - it'll save you the ten percent fees machines charge.

What if you feel like spending the money earlier? Don't. It's extremely important to maintain discipline - getting out of debt is just like a chore. You have to do it, and you have to do it every day. If you start to slip, you need to buck yourself up, or you'll be in credit card debt up to your eyeballs forever.

About the Author
Teve Torbes is an expert owner of an air mattress camping site, who knows a whole lot about air mattress woods. He has also created a valuable directory.

Budget Friendly Halloween Costumes

2005-10-13T14:06:00.000-06:00

...by observing you, children learn how to create and they learn craft. These powerful memories imprint a more important message. They come to understand the superiority of the creative tightwad method. - Amy Dacyczyn, a.k.a. The Frugal Zealot

Halloween costumes are so different today. Super heroes, wizards, and cartoon characters rule the trick or treat. It was not too long ago.....ok it was maybe a while ago......when I was a small trick or treater that costumes were much more original.

You were not likely to bump into three or four other characters that looked exactly like you. Oh, you might run into a costume of the same theme, but it would be totally unique by comparison. Of course my mom created our Halloween costumes. You can create unique Halloween costumes and save money by recycling items.

Create your own unique costumes. Remember that Halloween costumes exaggerate to be most effective. So the more accessories, the better. Some easy to make costumes using items around the house, borrowed from friends and/or relatives, or purchased for next to nothing at your local thrift store include:

The little old lady or man - dress accordingly in an older man's (a suit is great) or woman's clothing. A hat is a nice touch. If you don't have a real walking cane you can substitute an appropriate size stick. Add some creative face painting with lots of wrinkles of course. Be sure to add the cracking voice and a prominent limp.

The Hobo - Recycle some unwanted clothing. Paint on or put on patches, rip some areas (especially around the bottoms of pants, ends of sleeves, elbows and knees, since these areas show wear first). Use black or brown makeup to smudge the face a little to look un-kept. Blush the nose to look a little reddish. (hobos get cold outside) Sport the oldest pair of worn looking shoes you can find (or even better, two different shoes) and a tattered hat and you're good to go!

Princess - This is a timeless costume. I think every little girl wants to be a princess at least once. But don't rush out and buy the frilliest costume you see. The princess is merely an expression of elegance. As long as your little girl feels elegant she is a princess. If you don't already have a full length fancy party dress, check the thrift store for a low cost floor length party dress. Just pick one that looks "princessy." Even better, borrow one if possible.

A princess wand can be easily made with a dowel or stick and a cardboard star covered with foil. Add frills with duster feathers or ribbons if desired. Make a crown. You can easily make one using a headband and craft materials. Here's a great tip: Recycle a Burger King Crown. You know the crowns they give out to all the little kiddies at Burger King. You can cover with foil or paint and add beads or gemstones to decorate. They also make a great pattern for a crown if you want to create it out of some other material you have.

Animals: For toddlers: Use one piece pajamas as a starting point. An extra bonus: the pajamas are warm clothing for what is typically a cool weather night in many areas. For example.. a fuzzy white, brown, black, or even pink footed pajama can easily become a kitten, rabbit, or dog. Add a home made tail using scrap fabrics (attach with safety pin), a headband with the appropriate ears attached, or if you use a hooded outfit attach ears directly to hood), some creative face painting using home made face paint (below), and you've got a cute little costume that can be used as a comfy outfit after trick or treat!

For older children use tights or stretch pants, and turtleneck shirts, sweaters, hooded sweatshirts all in the desired color instead of the pajamas. Use desired color of mittens or gloves for paws. Bats, lions, tigers, even a skunk can be created in much the same way as the above animals!

Halloween Costume Recycling Tip: Remove the stuffing from an unwanted large stuffed animal (through a cut slit down back), launder, and use sections of fabic for costume. Or, cut a hole for the face and your toddler may be small enough to fit right in and use for hooded costume.

The Big Baby: This is an amusing costume for an older child. Return to the diaper zone! A bottle or pacifier, a bib, a homemade cloth diaper (over tights or pants of course), and a rattle. Add some rosy cheeks and your youngster will be ready to laugh (or cry) his/her way through trick or treat.

The Graduate - Have an old graduation cap and gown? If it doesn't hold too much sentimental value, you can use it to create a very simple, easy, costume. Create a fake diploma and drape it from the waist tied by a string or yarn of same color or wear like a necklace. You don't want the trick or treater to have to carry it. I've discovered these types of accessories usually end up in Mom's or Dad's hands to carry after a short time.

Halloween Costume Recycling Tip: Any discarded or unwanted work uniform (nursing, military, fireman, policeman) can be used as a Halloween costume.

The Witch - A long black dress or all over black pants with black top can be combined with a witch hat and black cape(make your own if you're crafty). Add black boots and make up face to suit.

Scarecrow - cut up some old jeans and a flannel shirt in scarecrow fashion. Cut sleeve ends and pants leg ends in strips to look tattered. Use straw or an old straw broom's bristles and glue or tape along inside edges of sleeves, pants legs, along bottom of shirt to appear as if bursting out of the scarecrow. Add a straw hat.

These are all good halloween costume ideas and I'm sure you get the picture by now. The idea is to use as many items as you have on hand to create these timeless Halloween costumes. The possibilities are limited only by your imagination.

Don't let that little girl cry because you can't find her the purrrrrrrrrrr-fect cat costume. You can create a much nicer one from everyday items and a few craft materials. Chances are it will look more realistic than that store bought costume. As a bonus, many of the costume pieces (i.e. shirts, pants, tights, gloves/mittens) are reusable after Halloween!

A few other Halloween tips:

1. Use spray paints or craft paints. fabric dye, fabric paints and/or pens, to color recycled items to desired color. One year I used silver spray paint to color and entire outfit for my son's tin man costume. We recycled aluminum foil to use in making the hat and the axe. Some silver body glitter on the hands and face put the finishing touches on this costume!

2. Use regular clothing to create an all-over color effect as with the animal costumes.

3. Consider mittens or gloves when you need hand color

4. A gallon ice cream bucket w/handle makes a perfect trick or treat bucket. I save these throughout the year and recycle for hundreds of other uses. Use neon paint or stickers to add bright decorations. This is a good safety technique to make kids more visible while trick or treating

5. Make your own face paint: You will need Corn starch, Water, Cold cream, and Food coloring.

Use several different cups (custard cups, recycled single serve yogurt or Jell-O containers, a foam egg carton) Prepare 1 tsp cornstarch, 1/2 teaspoon each of cold cream and water. Mix different color food coloring in each cup for desired colors

Make your own cream make up:

2 tsp white shortening

5 tsp corn starch

1 tsp white all purpose flour

glycerin (get at drug store)

Food coloring as desired

To make enough for one child's face - Use a rubber spatula, blend the first three ingredients until a smooth paste forms. Add 3/4 drops glycerin for a creamier consistency. Add coloring if desired one drop at a time blending after each drop until you have the desired shade. For easy removal use shortening, cold cream or baby oil.

Remember your Halloween safety. Here are a few, but certainly not all inclusive, reminders of safe trick or treat rules.

1. Small children should always be accompanied by an adult.

2. Use flashlights, bright costumes or decorations to make trick or treaters more visible.

3. Try to frequent the same limited area each year or limit visits to friends and families.

4. Remind children not to eat candy until they get home and have moms and dads check and approve.

5. A safe costume should not block or restrict a child's vision or interfere with mobility. Make sure costumes are of a safe length so as not to trip the child.

Have a safe and Happy Halloween!

Author Bio:
Cheryl Johnson is a mother of four helping herself and others beome and remain debt free. Publisher of Simple Debt Free Living - a self-help plan, ideas, and resources for frugal and debt free living. Low cost gift ideas and a wide variety of other money saving tips.

If a Disaster Strikes, Could Your Finances Weather The Storm?

2005-10-11T15:29:00.000-06:00

By Preparing Your Finances Now, You Can Minimize Damage Later

By Steven B. Smith

As the process of healing and rebuilding continues ever so slowly in areas ravaged by Hurricane Katrina and Hurricane Rita, many of us are taking a closer look at our own lives. While most of us don’t live in hurricane-prone areas, we are all reminded of the possibility of disaster knocking at our door. Mother Nature may provide the most striking examples with hurricanes, earthquakes and tsunamis, but a house fire, car accident, serious illness, or a lost job could prove just as devastating.

We all hope it never does, but if disaster should strike, money is the last thing you’ll want to worry about. You can make it easier on yourself, and your loved ones, if your finances are in order. Here are a few suggestions to help “disaster-proof” your finances.

Create a monthly spending plan. The US Bureau of Economic Analysis estimates that personal savings as a percentage of disposable personal income was negative 0.7 percent in August. That means the average person spent more money than he or she made in August. If you’re on par for average here, you probably won’t need to wait for Mother Nature to create a disaster, you’re creating your own.

Create a budget, and stick to it. Since budgets are in that same category as diets – most of us begin one every January and are done by February – you need to find one that works for you in order to stick with it. For most of us, that means finding a software program that is automatic and able to easily track transactions from multiple checking accounts, debit cards and credit cards. But even if you use cash and the paper envelope method of budgeting, create a spending plan, and stick to it. Make sure you set aside some money for personal spending for those impulse buys. This will give you some freedom without negatively affecting your overall plan.

Back up your financial records, or use a web-based system. If you are not taking advantage of the Internet to track and control your finances, you may be taking an unnecessary gamble. PC-based systems, as well as paper, can be destroyed in a disaster. In his September 8th column for the Baltimore Sun, titled “Flood might destroy your PC, but not off-site backup files,” Mike Himowitz described how even a broken water pipe or a small house fire could destroy your computer, and the records held on it.

“More importantly, with online banking, you can access your account and pay bills from any PC that has an Internet connection,” stated Himowitz. “One of the main concerns voiced by those who fled their homes to escape Hurricane Katrina is that they have no access to their money and no physical way to pay their bills. With online transactions, your physical location - and the location of the PC you're using - no longer matter.”

Himowitz suggests that using a storage company to provide online backup, although pricey, can be a wise investment. However, for far less money, you can also use a secure online spending management program, like Mvelopes Personal (www.mvelopes.com). It will help track and control your finances, and pay your bills from any computer with an Internet connection – and you don’t have to worry about expensive backup storage.

Set aside the equivalent of three to six months’ living expenses in an emergency fund. An easily accessible emergency fund is one of the single most important things you can do for your financial wellbeing. In the event that disaster strikes, if you don’t have enough set aside to cover basic living expenses, including mortgage, food, and car payments, things could quickly go from bad to worse.

If setting aside this much money seems unattainable, start small. Cut out those daily trips to the vending machine. You’ll be amazed how quickly the money adds up. Use cash gifts, tax refunds and annual bonuses to build your fund. When you set up your monthly spending plan, include a contribution to your emergency fund, and make it automatic.

Your emergency fund needs to be easily accessible. That means in a savings or money market account, not real estate investments or stocks. Select an account with no service fees, which can be as high as $100 a year. Also, make sure you are getting a good interest rate – many online banks, like NetBank, EverBank or EmigrantDirect, currently have savings accounts paying three to four percent – that uses an average daily balance instead of minimum daily balance.

This account should only be used for real emergencies, not holiday spending sprees or other indulgences. If you do draw from the account, make repaying it a top priority.

Give to those less fortunate. Don’t overlook the importance of this one. Overspending all too often comes from our desire – not our need – for more stuff. Giving to charity helps keep those needs and wants in perspective, and in the right category. And if disaster strikes your door, won’t you be hoping others are doing the same? If you are unable to give any money, donate some of your time. Call your local government, or check www.unitedway.org for opportunities in your area.

Create a trust and/or a will. This is one that most people avoid, but by doing it now, you will be taking care of your loved ones. Most people should have both a trust and a will, but you should talk with an estate planner to see which is right for your situation.

Most people believe that a will is all they need. For some that may be true, but it can also force your loved ones to go through a costly and difficult court proceeding, called probate, to get your wishes carried out. A trust usually avoids much of the expensive legal mess, and makes the transfer of assets relatively simple.

To save money, you can purchase software to help walk you through creating a valid trust document, and then simply have a lawyer review it. It will still cost around $200 in lawyers fees, but that’s merely one tenth of what it could cost for a lawyer to draft the document.

Review the documents often, and update them whenever any major changes take place. Make sure your loved ones are aware of the documents, and where they can be found. Always keep copies of all important documents in a separate, secure location such as a safe deposit box.

Preparing now will allow you to take care of what matters most. As we look at the pictures of the damage wrought by Hurricane Katrina and Hurricane Rita, and hear the tragic stories of the individuals whose lives have been affected, we are all reminded that what is truly important in our lives doesn’t have dollar signs attached. But by getting our finances in order now, if disaster does come our way, we can focus our attention on taking care of the things that matter most.

Steven B. Smith is president and CEO of In2M Corporation and author of Money for Life: Budgeting Success and Financial Fitness in Just 12 Weeks! www.in2m.com jeff.stevens@in2m.com

Personal Budgeting Software is Money Magic

2005-10-04T16:05:00.000-06:00

Personal Budgeting Software is Money Magic

Does your money seem to pull a disappearing act each month? Does your credit card statement continually leave you wondering when and how you could have spent that much? What about that cash you took out from the ATM the other day - could you possibly have spent it already?

Let's face it. Managing your personal finances (even with personal budgeting software) can be a difficult task - especially when on a tight budget. Every time you turn around, there's another bill to pay, and before you know it, your entire paycheck has been spent - and then some! Soon, you find yourself drowning in the financial demands of everyday life, and the vicious cycle of living paycheck to paycheck - or worse yet, living on credit - has begun. You ask yourself, 'How did this happen to me?'.

If you are finding it increasingly difficult to juggle the many different financial aspects of your life, you are not alone. The fact is, in today's modern society, the average consumer is forced to allocate the money from one stream of income to more than 30 different sources! From mortgage payments and health insurance to childcare services and credit cards, it's no wonder money appears to continually vanish before our eyes. But what if there was a way of reducing the invisibility of your spending? Away of budgeting your money in a simple, pain-free manner while still achieving that so-called state of 'financial freedom' once and for all? Thankfully, now there is. There is a great new online personal budgeting software system that solves these problems and makes it easy.

I found a great online personal budgeting software system called Mvelopes Personal. Mvelopes Personal is the new affordable and easy-to use online personal budgeting software system sweeping the world of personal finance. It is the answer to all your budgeting woes. Mvelopes' unique budgeting concept offers a straightforward method to manage your finances. It enables you to spend your money more efficiently and still enjoy what matters most to you in life. The secret is to know where your money is going and eliminate spending on things you don't really care about.

Here is what Reporter, Jane Bennett Clark of Kiplinger's Personal Finance, said:
'If you don't like keeping lots of cash round the house, you could set up an online system with Mvelopes, a service that links up with your bank and uses envelope icons to apportion your paycheck and keep track of spending. Mvelopes avoids much of the data entry of other personal finance programs and gives you a visual cue of how much money you have left in each category. When you're over budget, the line item turns red.'

Isn't it about time YOU take control of your finances and embark upon the path towards financial freedom?

To learn more about how Mvelopes can help you to start making better spending decisions, or to sign on right away for your one month free trial offer, visit the Mvelopes homepage at www.mvelopes.com

Simply the best way to manage your spending!

2005-09-23T09:56:00.000-06:00

Mvelopes Personal Offers New Approach to Spending Management

Hello everyone. Thanks for all the great responces I have been receiving to this blog. Today I just wanted to post some information on the budgeting system I use as the foundation to my personal finances. If you have followed this blog for long you know that I tell everyone I can to use Mvelopes because it has made such a big difference in my own finances. So today I am doing a full-on write-up on Mvelopes.

In2M Corporation recently announced the launch of Mvelopes^® Personal Web-Client 2.8. The web-based application offers the anytime, anywhere convenience of online banking in a one-stop financial management center that users can access from home, work, or on the go. The program allows users to plan for, track, and control spending, eliminate and avoid debt, pay bills, and monitor net worth.

Mvelopes Personal is the latest player in the personal financial management (PFM) space that Quicken^® and Microsoft^® Money have dominated for so long. But Mvelopes doesn’t necessarily consider itself a competitor to Quicken or Money – at least not directly. “Mvelopes really approaches spending management from a different paradigm than traditional software programs,” said David Neddo, senior product manager for Mvelopes. “Other programs simply track spending to let you know if you’ve reached your goals. Mvelopes helps you reach your goals by giving you up-to-date and accurate information, when you need it most – when making spending decisions. Mvelopes does more than simply allow you to view spending patterns, it helps you create them.”

Breaking the Mold

Unlike other PFM programs that simply track your transactions in an account register and show your ending balance, Mvelopes divides the money in your accounts among separate virtual spending “envelopes” such as groceries, mortgage, entertainment and savings – each with its own register and balance. So when a user looks at her money to make a spending decision, she doesn’t just see a checking account total, she sees exactly how much is remaining in each specific spending envelope. The idea is that by viewing the envelope balance instead of a checking account balance, you can see that although a specific purchase may not adversely affect your account, it can adversely affect your ability to cover other expenses, such as a car payment, groceries, or your daughter’s birthday.

The service links directly to your bank account(s) and automatically receives your transactions in real time. The transactions can then be assigned to the various spending envelopes to give you a visual snapshot of exactly how much you have left in any given category and how long it has to last. If you overspend, the budget category turns red alerting you that you need to adjust either your spending plan, or your spending.

Because the service is web-based, users can log on to view and update their spending plan from any computer with an Internet connection. Couples can simultaneously log on at different locations and go over their finances together over the phone. Unlike traditional software programs, users aren’t tied to a single computer. “I recently received a letter from a retired couple touring the country in their RV who use a computer at any local library to keep track of their finances and pay their bills while on the road. They love the freedom and control it offers them. We even have users in the military, serving in Iraq, who have been able to access Mvelopes through local Internet connections to coordinate with their spouse back home,” said Neddo. “Mvelopes really does allow for anytime, anywhere access.”

Mvelopes Personal also boasts a credit card feature that allows users to properly manage their credit card spending, avoiding costly service fees and high interest rates. When a user makes a purchase using a credit card, upon assigning the transaction to a specific spending envelope, the program automatically reallocates the transaction amount from that spending envelope to a credit card repayment envelope so the user isn’t tempted to spend the money elsewhere. When the bill comes, the exact amount due is sitting in the credit card repayment envelope to be paid in full. You can even pay the credit card bill using the included online bill pay service.

The prepaid subscription service, which is supported by over 8,000 financial institutions, is available starting at $7.90 a month*. According to In2M, that places the cost of Mvelopes Personal at roughly a third the price of either Quicken or Money once you pay for the additional features that Mvelopes includes standard. Important features include:

Electronic envelope approach to budgeting
Automatic transaction retrieval
Anytime, anywhere access
Credit card management
Full-featured bill pay service
Net Worth tracking
Live customer support, and unlimited personal budget coaching

“Every so often a product comes along that changes the paradigm in a given industry,” said Neddo. “Mvelopes Personal is bringing spending management into the twenty-first century.”

Product Pricing and Availability

Mvelopes Personal is a prepaid subscription service available at www.mvelopes.com or by calling 1-866-367-4686. Plan prices are as follows:

2 Year Plan: $189.60 billed every other year (equivalent to just $7.90 per month)
1 Year Plan: $129.60 billed every year (equivalent to just $10.80 per month)
Quarterly Plan: $39.60 billed every 3 months (equivalent to only $13.20 per month)

10 Tips To Stay Debt Free This Christmas

2005-09-13T09:00:00.000-06:00

Christmas can be a financially stressful time for many people and that takes the fun out of the festive season. The funny thing about Christmas is it occurs every year and at the same time every year! So with a little bit of planning you can take the stress out and stay debt free.

Here are my Top 10 tips to get you on you way:

PLAN
Write a list of the friends and family members you wish to give a present to. Next decide on your total budget for Christmas presents. Next to each name add a maximum dollar value for the gift and ensure the total does not exceed you budget! If you have ideas for gifts start listing them now - it will help your shopping trips be more focused.

STICK TO THE PLAN
When you do your gift shopping stick to the plan - avoid impulse buying. That stereo might be a great "bargain" but if it is over your budget you need to keep walking.

I am sure you have great taste in gifts - do you ever buy a gift for someone and buy it for yourself as well? You will get plenty of gifts for Christmas - no need to buy for yourself as well.

START NOW
Rather than waiting until 2 weeks before Christmas and spending all your money in a short period of time start buying now. It is much easier to afford one gift each payday than 10 all at once. Find a good hiding place in your cupboard!

USE LAY-Away
Credit Cards are easy and convenient but if you struggle with debt over Christmas leave them at home! Interest rates on unpaid monthly balances are an unnecessary cost. If you have started shopping early you can pay a small amount each payday off your lay-by without going into debt. Keep your spending manageable.

HAVE A SAVING PLAN
Have a separate bank account for Christmas savings. Many banks have accounts that earn "bonus" interest if you make a deposit and no withdrawals in a month. Many of these accounts have no bank fees. You can arrange for set amounts to be automatically transferred to that account each payday. If you don't see it you can't spend it! If you are comfortable banking online there are also good "virtual" accounts with Credit Unions that pay around 5%pa and allow you to transfer money out of account with no penalty.

THINK OUTSIDE THE BOX
It really is the thought that counts so think outside the box. People love gifts that have a personal touch to them. - make Christmas chocolates, cookies, jam etc to give to friends - give a gift voucher for 10 hours of babysitting - make a donation to charity in their name - give a voucher for 5 lawn mowing afternoons (to be provided by you)

INVOLVE YOUR FAMILY
Discuss your plan to stay debt free with your family and discuss ways that the whole family can be involved. There are no rules - find something that works for your family and keeps Christmas fun. One popular idea is to not buy gifts for all the adults in the family - just the kids. The adults each select a name and buy a gift for that adult on behalf of the whole family. Christmas is about love and sharing not about how many presents you receive. You will probably find other family members feel relieved to be able to reduce their Christmas spending too.

ANOTHER COFFEE?
Start becoming aware of what you spend on "little extras" each week - coffee is my favourite place to start. Buying just 1 coffee a day can cost you $10 - $15 per week … buying lunch each day at work can cost you at least $25 per week. I think you get the point. If you are serious about keeping out of debt this Christmas start taking your lunch to work or having instant coffee …. put the money you save into your Christmas account. You will love how quickly this adds up!

LEAVE THE PLASTIC AT HOME
That's right - leave the Credit Card at home! If it is not in your wallet you cannot charge Christmas shopping to it. It is so easy to accumulate debt without even being aware of it - once you do it snowballs into something much greater than you can handle and becomes a weight to begin the New Year. Use cash or you debit card - you can't spend money you don't have.

BE COMMITTED
You have a choice. If you are 100% committed to being debt free for Christmas then you will make it happen. It takes focus, desire and discipline not to take the easy, convenient and expensive way out of Christmas shopping. 'Those who want to succeed will surely find a way, and those who don't will find an excuse' "a thousand paths to tranquility" David Baird

**********************
Linda Anderson is a Certified Professional Coach working with Small Business Owners and Professionals in Australia, New Zealand and the USA. Linda helps her clients succeed in business and in life by creating strategies to overcome their obstacles to success. Linda brings this passion for challenge, new experiences and adventure to her coaching. You can visit Linda at her website - www.a2acoaching.com

Getting Past the Idea of Budgeting and Saving Money

2005-09-06T10:12:00.000-06:00

I'm sure you'll agree that budgeting, saving money, and eliminating debt are very appealing ideas. If effectively tackled, these goals can secure your financial status for the future, and allow you to live a comfortable, debt-free life.

However for some unfortunate reason, these important financial goals hardly ever get accomplished, and most will continue to go through life consistently worried about their financial security, unprepared for what the future may hold.

I have been writing money saving articles and newsletters for http://www.SavingSecrets.com for over 5 years now. After being in contact with a number of readers over the years, I found that many who were interested in learning how to effectively save money simply lacked the foundation to accomplish this.

I am a firm believer that the ability to save and budget is dependant on the plan and approach one takes. Sure many proclaim they want to conserve and save more, but how many actually accomplish this? Saying one thing and actually doing are completely different from one another. Why do you think so many New Year's Resolutions are forgotten and never heard from again?

For example, think of the times you yourself started a new hobby or goal. Were you successful? If not, how long did you stay with this new undertaking? What was your reason for quitting or not following through with the intended plan?

From this short self reflection, you can probably guess the reality most would-be budgeteers are faced with. Even though these individuals have the desire to conquer their finances, for some reason the task never gets accomplished.

What is needed to help guarantee success is inspiration and a solid approach, or what I like to refer to as a "game plan".

Think about it.

If someone wants to learn how to play the piano, realistically, they are not going to just sit down and start banging away on the keys. They'll never learn to play the piano effectively that way!

In order to tackle the process of learning the piano, an eager student will take lessons, purchase "How To Play Piano" books, tapes, cd-roms, interactive software, browse the Internet for tips and related online forums, check local college for classes and instructors, etc..

Who do you think will have more success learning to play the piano? More than likely it will be the energetic individual with the planned agenda and goals, than the dreamer without a "game plan".

Designing Your Game Plan

Once you fully commit to accomplish a particular task, to help improve your chances for success it is imperative that you design and follow a regiment, a well thought out "game plan".

Every task, whether it's for work or pleasure, has some type of goal or objective. If your underlying task is to clean the house, then a specific goal may be to clean the kitchen or organize the cupboards by the end of the day. If your task is to learn how to play the piano, then a goal may be to learn how to play your favorite song within a month or two.

Take notice that the goals provided are very realistic and practical. You want to establish goals that are attainable in a reasonable amount of time.

Before you start planning how YOU are going to tackle the task of budgeting and saving money, take a moment to determine what goal(s) you want to accomplish and a specific time frame for each particular goal. This will give you something tangible to strive for and help keep you focused on task, thus increasing your chances for success.

Here's an example of a practical task along with the respective goals:

TASK: Spring Clean The Whole House

GOALS:
week 1 - kitchen; refrigerator, cupboards, monthly menu, coupons organized
week 2 - garage; organize boxes, Xmas decor, scrub/polish floor
week 3 - family room & bathrooms: cleaned, scrubbed, carpet & drapes
etc...

Putting Your Plan Into Action

Remember the piano playing example mentioned earlier? No matter how many books or tapes you buy to help teach you how to play, unless you devote serious time to practice, you will not improve and you will not accomplish your goal(s).

Your game plan MUST be put into ACTION! Don't let your wonderfully designed agenda get lost under a heap of papers or collect dust on some obscure counter top.

Put your plan into action!

Just like the piano player, you will need to devote focused time specifically to your task in hopes of accomplishing the predetermined goals. Keep in mind that only after serious time and effort is devoted to your cause will any real changes occur.

Best wishes accomplishing your tasks and goals to effectively save and eliminate that ever-present debt! Hopefully this has inspired and motivated you to accomplish your tasks and goals regardless of what they may be.

© 1998-2003 http://www.SavingSecrets.com. Get access to 60+ money saving articles, newsletters and creative ebooks you can download, stop by and explore our money saving resource at: http://www.SavingSecrets.com

The Secret of Envelope Budgeting

2005-09-01T10:24:00.000-06:00

Isn't it amazing how often we learn about simple principles that, when applied, have the ability to impact our lives in profound ways? Such is the case with the traditional envelope budgeting method of personal financial management. Many have heard of or are familiar with someone who has used this simple system for spending management. The envelope budgeting system has worked exceptionally well for many people in the past. These people understood the basics of the system and how to use it, but many could not articulate the principles behind the system that allowed them to be successful.

The envelope budgeting system as it was used with cash is very simple. In the days before the proliferation of credit cards, debit cards, and other forms of cashless spending, many couples were very dedicated to this system and used it effectively for years. Initially, a couple would sit down together and determine how much cash they would receive each month. This available cash represented the net amount of all of their paychecks for the month. Then, they determined where they would be spending money. Their areas of spending included things that they would purchase and pay for each and every month, and things that they would spend money on only periodically. After completing their list, they took out a stack of envelopes and labeled one for each area of spending. Their next task was to determine the amount of money required for each area every month. For the areas of periodic spending, they calculated the amount they would spend each year, and then they divided this amount by 12. This represented their monthly spending plan.

When they received a paycheck, they would go to the bank and cash the check. Then they would sit together at the kitchen table and divide the cash into different envelopes based on their defined spending plan. When they paid for goods or services, they would simply spend from the specified envelope. Couples always knew how much money they had left to spend and how long it needed to last.

The envelope budgeting system automatically encapsulates four principles that are keys to financial success. They reveal the secrets of how you can achieve financial fitness utilizing the envelope budgeting system.

FIRST: Set money aside in advance

When you commit yourself to use a budgeting system, you become dedicated to living within your means. One of the primary reasons for this is that the envelope budgeting system requires you to set aside money in advance for each of the spending requirements you have, including monthly required and discretionary and periodic required and discretionary expenses. As discussed earlier, many people in America live paycheck to paycheck. This system helps eliminate this problem, because the funding for spending comes from available cash resources that are allocated to spending before the spending takes place. After following this system for just a few months, you can quickly get to the point where you have enough money set aside at the beginning of the month to meet all of that month's spending requirements.

One of the significant problems people face today is not understanding how future spending requirements will impact their monthly cash flow. Have you ever had an annual insurance payment surprise you? Other periodic spending requirements include vacations, property tax payments, holiday spending, gifts, auto registration fees, auto maintenance fees, house maintenance fees, furniture and appliance replacement costs, and so on. As you think about it, there are many things that can catch you off guard if you don't plan ahead. These types of expenses were constantly creating problems for Ryan and Christine. Much of their consumer debt was directly associated with being unprepared for periodic spending requirements.

Most people manage spending by their checking or savings account balance at the bank. Unfortunately, this account balance does not prepare you for the periodic spending needs that will arise in the coming months. It also does not alert you to the spending your partner is planning over the next few days or weeks. So you make independent decisions about how much you think you can spend without really understanding the big picture. This is a very dangerous approach and leads to problems, including bounced checks, frustration, and, ultimately, more debt. Most of the overspending in families can be traced to an inability to incorporate periodic spending requirements into their current cash resources and spending practices. A great example of this is the amount of credit card debt that is created during the holidays or on vacations each year as a result of not having money set aside in advance. Many justify this spending by telling themselves that they will pay the credit card balance next month. This rarely happens, because next month's spending requirements are already based on 100 percent of the cash resources for that month.

The Mvelopes Personal System addresses this problem of periodic spending requirements by allowing you to set aside money in advance of periodic spending needs. For example, if you were going to spend $2,400 on Christmas each year, you would be setting aside $200 each month. To state this another way, if you want to spend $2,400 each year for Christmas, you need to spend $200 less on other things each month. Perhaps your parents or grandparents used a similar system. Imagine how they felt each December when they prepared to purchase gifts for Christmas and the Christmas envelope was full! Imagine how you will feel when you want to take a vacation and know that the money is already set aside in advance. Or imagine how nice it will feel to know that you have money set aside to replace the tires on your car the next time it's required.

SECOND: Spend from how much is left

One of the significant secrets to not overspending is to know daily how much you have left to spend in any area of defined spending. While this seems very simple and even obvious, consider how often you make purchases without knowing how much you can really spend before your spending outstrips your available resources-or how many times you buy something without knowing how it will negatively impact your ability to meet other spending requirements. The unplanned gift purchase had a significant impact on the resources Ryan and Christine had for other spending requirements. When people used a traditional system to make purchases-to buy clothes, for example - they would take the clothing envelope with them. They knew immediately how much they had left to spend and how long it had to last before they funded the envelope again. This information was invaluable in assisting them to make sound spending decisions. If you choose to spend less than you make, then spending from what's left becomes very simple. If there is not enough in the envelope to complete the purchase being considered, the purchase is delayed or another purchase decision is made. Without knowing how much is left, you can only hope that the purchase decision you are making will not negatively impact other areas of your financial life. Unfortunately, you will not know this until it is too late. Knowing in advance how much is left to spend is the secret to making smart spending decisions every day.

THIRD: When you run out, you must make a choice

We all want to be fully empowered to make choices. Often, this is one of the justifications we make for spending money. 'It's my money, I've earned it, and I have the right to decide how to spend it! If I want to purchase that coat, I will, period.' The problem with this thinking is that it often takes choices away later on: because you purchased that coat, you may not be able to purchase the birthday gift you wanted for your daughter.

It is quite possible to run out of money before you fund the envelope the next time. If this happens, you have three options: (1) put off the purchase until you fund the envelope the next time, (2) purchase something less expensive, or (3) purchase the item and transfer money from another area to cover the cost. All three choices will still allow you to live within your means. With the third option, you can determine at the point of purchase which other area of spending you would like to impact. For example, if you wanted to purchase the coat and didn't have enough money in the clothing envelope to cover the cost, you could transfer money from your groceries envelope to cover the cost. If you made this decision, you would do it with the knowledge that you would not be able to spend as much on food this month. There's nothing wrong with having made this choice. Perhaps you know that your grocery needs were less this month than in the past, or perhaps you did not spend all the money in your grocery envelope last month and you have extra. Whatever your thinking, you have to be able to make a purchase decision and understand exactly what impact it will have in other areas of your financial life. Making a purchase choice is great as long as you do it on an informed basis.

FOURTH: At the end of the period, what's left is savings

One of the key principles to securing financial fitness is to save something first. In addition to setting aside a specified amount for savings each month, the system allows you to save the balance remaining in many envelopes at the end of each period. For example, if you have some money left in your groceries envelope at the end of the month, you could take that money and apply it to savings, since you would be funding the envelope with enough money next month to take care of your needs for that period. Many of your discretionary spending envelopes would qualify for this review at the end of each period. Discretionary spending id defined as areas of spending that are not tied to fixed or required expenses. Based on the spending decisions you make in these areas, you may often have money left over at the end of each period. Examples of discretionary spending envelopes include clothing, groceries, eating out, entertainment, and so on. By adding the amount left in each of these areas to your defined savings, you can significantly increase the amount you apply to savings, debt repayment, or long-term investments.

While people in our grandparents' day used cash to successfully implement the envelope budgeting system, it is more difficult today. Many purchases can still be made conveniently with cash; however, we often pay for goods and services using checks, debit cards, credit cards, online bill pay, and even automatic withdrawals from our bank accounts. For some, the cash-based envelopes may represent the best approach for ensuring financial management success. For others, cash may simply not be a feasible alternative. The principles outlined above are not dependent on the implementation tool used. As a result, you can successfully incorporate the envelope process using one of four basic approaches: (1) cash, (2) a paper ledger or computer spreadsheet, (3) a computer-based system, or (4) a combination of these.

Personal Finance 101

2005-08-30T09:14:00.000-06:00

The subject of personal finance is very broad, but as a beginning, I would like to discuss what I consider the foundations of personal finance: Security, Stability, Growth and Protection & Management.

Security

Security to me means that I am prepared for the "hit by a bus" scenario.

I have life insurance to provide for my wife and children. Health, disability, auto and home insurance policies also provide me additional protection in their respective areas. I also have a list of where these policies are, who my agents are, phone numbers and basic policy information (#s, amounts, costs, etc.) I keep this information both in a file at my house and in a safety deposit box at the bank (a friends home will also work - think: "house burns down" scenario). Also my wife and my brother and sister-in-law who live nearby also know where these things are.

I also try to maintain an emergency fund of cash in a bank account or money market account (with checks) so that I am prepared for a financial disaster, layoff, or natural disaster. It took several years to build up this cash fund. I started with a goal to have enough cash for 6 months of my normal financial needs (mortgage, food, insurance, transportation, etc.). Now I am trying for 12 months' worth. I do this by saving a little each month, and "investing" a portion of all "found" money (gifts, inheritances, tax returns, anything unexpected).

I have a will and update it each year around New Year's to reflect any changes in my life during the past year (new children, new home or business, etc.). Most people don't need an extensive will, the forms you buy at your office supply store will do. But in some states if you die without one, watch out. What happens to your money and even your children could be entirely up to some state or court appointed official.

Stability

The next level of personal finance is stability. Stability to me means that first of all I live within my means. I don't spend more than I earn. Otherwise I am spending my savings, investments, emergency money, or getting into debt. I have a lot of debt, but most of it is real estate which is producing some income. I try to avoid credit card debt and purchase everything with money I already have. I don't buy things expecting that next month I will have more money or I will get a big raise or promotion. You can't sell me a car based on a monthly payment amount; I want to know the final price!

In order to make sure that I am living within my means, I created a simple budget and I track my expenses using Simple Joe's Expense Tracker. I can tell how much I have spent in each budget category and I know when to keep a closer eye on certain types of expenses, or when and where I can cut expenses and what I can live without in order to stay within my budget. Counting pennies is pretty tedious, but tracking where the dollars go can be eye-opening.

Another aspect of stability is avoiding or eliminating debt. Debt in itself is a form of stability; you always have to make those payments until it is all paid off.

Some recent reports show that the average American is $7,000 - $20,000 in debt. Most of it is consumer debt: credit cards, store accounts, rent-to-own, auto loans, etc. And those types of consumer debt usually charge a higher interest rate than any savings account, CD, or money market account; even more than most high-flying risky investments.

This means that $1,000 in debt at 18% is costing you 9 times what your $1,000 savings account at 2% is producing. Consumer debt is a dangerous spiral that is very hard to get out of.

The first problem is, as mentioned before, living within your means. Don't get further into debt to support an extravagant lifestyle. Or even if you are frugal, if you are using credit cards and debt to finance your purchases, you either need to stop purchasing luxury items or find a way to increase your income to support these purchases/payments.

You may even have to lower your standard-of-living because you have racked up considerable debt and need to free up some money to pay it down. But don't wait to start. Those minimum payments are often designed to keep you paying 18% interest for 40 years! That's longer than most home loans. You could even end up paying more than 10 times the original cost of the item just in interest payments. Is that new stereo really worth that much?

To help people get themselves out of debt we created the "Pay Off My Debts" tool in Simple Joe's Money Tools. It is also available as a stand-alone product called Simple Joe's Debt Eraser. These tools help you create a Rapid Debt Reduction Plan which shows you how much to pay on each debt each month in order to save as much on interest charges as possible and pay off your debts as soon as possible.

These tools can help you systematically eliminate your debts whether you owe $1,000 or $100,000. The key is to start living below your means and start focusing on paying off your debt.

It doesn't make much sense to be worried about whether or not your 401k earns 8 or 9% this year, if you are paying 21% on your credit card debt.

A third aspect that starts in the stability category and transcends to the next personal finance level, growth, is the concept of investing in yourself. By this I mean spending time to educate yourself in personal finance matters, as you are doing right now and spending time gaining more knowledge and improving your skills or even developing new ones.

As an employee, this can have a direct relation to who gets laid off during the next round of cutbacks. If you have some skills or have demonstrated some abilities that are not possessed by your co-workers and these skills make you a more valuable employee, you are less likely to get the pink-slip.

Also while you are making yourself more valuable to your current employer, you are also making yourself worth more to future employers. It is much easier to land a job if you have some special skills that are in high demand or even if you bring some special knowledge or experience that you fellow job-seekers may have overlooked or failed to invest in.

Being in the computer industry, I have to spend hours each week reading trade magazines, exploring web sites, and reading emailed newsletters to keep abreast of what is new in my field. If I stopped learning just five years ago, I would have missed out on the Internet revolution, email, web sites and the majority of the income I now enjoy.

Keeping myself informed and up to date takes time and resources, but it helps me protect my current income and expand my skills to help me earn income in other areas. This increases my stability by allowing me to not have to rely on one client, employer or source of income. A chair with four legs will always be more stable than a stool with only three.

Growth

The next level of personal finance, as I alluded to before, is growth.

Once you are secure and stable, you can begin to think about building your wealth. Not that you have to figure out how to become the next Bill Gates or Warren Buffet. But you have to start building the "nest-egg" that you will rely on when you retire.

And don't think that Social Security has you covered, or that your 401k will grow back to what it was a couple years ago. Or that your current employer is going to re-institute the generous pension plans of yesteryear. 401ks are much cheaper to administer and you, the employee, take the hit when the market goes down, not the employer.

My father is nearing retirement age and I think he has a good plan. He has done some research and estimated what his expenses are going to be when he is retired. He then took a look at his potential sources of income during his retirement.

He figured that Social Security would cover about a third of what he wanted to live on. Only a third! And he has worked his entire life. Would you like to instantly have to live on only one third of what you currently make? Retirement is suppose to be the golden years, so where's the gold?

Luckily throughout his career, my father has worked for companies that have had pension plans and he had worked long enough at each company to be eligible for some pension money. This is rare these days because today the average worker will change jobs and companies at least five times during his/her career. Also, as I mentioned before, companies are switching to lower cost 401k plans that do not guarantee you any fixed payments.

In my father's situation, his pension money would cover another third of the retirement income he wanted. So now he had to either figure out where the last third was going to come from, or start cutting out expenses during retirement, like not visiting his children so much. None of us liked the sound of that.

So my father started learning about the stock market and investing in stocks and mutual funds. He made a plan for growing his wealth and then educated himself as to how he could accomplish his plan.

I wish I could say that he is doing better than he is, but luckily he has some time still to put his plan into action and ride out any market downturns. (He can do this because he has the security of insurance and emergency money, and the stability of little debt and a strong set of skills.)

By learning about how stocks, bonds, mutual funds, index funds, options, futures, commodities, real estate and other financial tools work you lay the foundation for growing your wealth. You may start with just $100 in a bank CD, but as you learn more and become more sophisticated, you can invest in more and more opportunities.

You will learn about how risk and reward are related, that as the risk increases so does the size of the potential reward. Just like at the race track, you'll make more on the long shot, but the odds are against it. Also you can learn how to tilt the odds in your favor and protect yourself against risk.

For those who are just starting out in the growth phase or who want to dabble a bit before completing the other levels of personal finance, my suggestion would be to look into index mutual funds. Especially no-load index funds (no initial/sales fee).

These funds are made up of the same stocks that make up the popular market indexes like the Dow Jones, S&P and NASDAQ100. The costs are low because management is simple and as a mutual fund you can invest a little at a time. Also they are easy to follow since you see them on all the news shows and in the newspaper.

Protection and Management

The final level of personal finance is the protection and management of your wealth. Most people never develop wealth enough to need this level. But some of the concepts can be applied to any amount of wealth you possess, $10,000 to $10,000,000.

Part of the protection harks back to your will as we discussed on the first personal finance level: security.

With any significant wealth or valuable asset (your home, car, heirlooms, 401k, IRA, business, etc.) you will want some way of disposing of that asset upon your death. Whether it is go to go your family, favorite charity, or local church, if no one knows about it, "it ain't gonna happen".

As you start to accumulate wealth in excess of $350,000, you may want to consult an attorney about creating a trust. A trust is an entity that can own property and pass that property to anyone you name in your will. Usually the trust is designed to provide income to children from the assets that are placed in the trust.

The trust can survive you so that your assets and income may be passed on to your children or next-of-kin without excessive taxation and legal entanglements. Some states will take up to 55% of your assets as taxes when you pass away.

Protection also relates back to insurance. Now it may be time to look at a multi-million dollar umbrella policy that will protect you from lawsuits designed to part you and your wealth. You may now be a bigger target, so purchase a suit of armor.

The management aspect comes into play where you may start to concern yourself with taxation, ownership, distribution of income and possibly endowments to charities or other non-profit institutions.

You may hire a person or company to manage your wealth, or you may choose to do it yourself. Most people who have earned their wealth through the "sweat of their brow" have already become adept at managing their assets. Some continue to personally manage their wealth because of the enjoyment or challenge it gives them.

Others are ready to turn it over to a trustworthy manager (who only gets paid a percentage of your increase) and travel the world, or sit on a beach and count the waves.

Whatever your dreams for retirement (and why wait until you are 65), understanding the different levels of personal finance and spending the time and resources to educate yourself will pay off whether you live next to Bill Gates or Homer Simpson.

Author: David Berky
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© Simple Joe, Inc.
David Berky is president of Simple Joe, Inc. a marketing company that sells simple software under the brand name of Simple Joe. One of Simple Joe's best selling products is Simple Joe's Money Tools - a collection of 14 personal finance and investment calculators.

The Falsehood of "Living Within Your Means"

2005-08-22T08:46:00.000-06:00

You hear it time and again from the financial experts. Live within your means and all will be okay with your finances. While living within your means is better than living beyond your means, it doesn't address your future saving needs. If you get paid $2000 a month and spend $2000 a month, you are living within your means, but you aren't saving a cent for a rainy day. The true way to get and stay out of debt is not by living within your means, but taking it a step further and living below your means.

There seems to be a negative connotation with the phrase of "living below your means" for many. It conjures up the image that you must give something up that you could have if you wanted. Most people think that "living below your means" entails extreme sacrifice and scrimping and scraping just to get by. The truth is that there is a simple way to live below your means without changing you current lifestyle if you are already living within your means.

One of the best ways to maintain a "living below your means" cycle that you can use for the rest of your employment life is to simply live a pay raise behind. Instead of adjusting up to your higher income the next time you get a raise (what most people do when they receive a raise without even thinking), continue to live on the money you had been living on up until the raise and place the difference into savings or reducing debt. Since you are living as you had been, there is nothing you have to give up or sacrifice when approaching living below your means this way.

For example, if you're earning $2,000 a month and get a $100 a month raise to earn $2,100 a month, you'd continue to live as if you were only earning $2,000 a month placing the $100 raise toward debt reduction or savings. Then if at a later date you get a raise of $250, you'd budget your living on $2,100 with the $250 going to savings or debt reduction. This way you're always living on the money from one raise behind and below your means without ever having to make the sacrifices of cutting back.

A simple way to accomplish this is to set up a system where the extra money from the most recent raise is automatically taken out of your normal spending account. When the money from the raise is mixed into your regular spending account, it'll more than likely get spent.

There are a number of ways to do this. Probably the best is to set up a banking account where you direct deposit your paycheck and then have a specified amount automatically sent to the debts you are paying off or into your long term savings account. You can set up an account with this service at most banks or credit unions.

By deciding to live one raise behind, you can live below your means without it effecting your current lifestyle while paying down your debt and saving for your future.

Copyright Jeffrey Strain and SavingAdvice.com 2003 - 2005, All Rights Reserved.

7 Power Habits for personal budgeting tips that would Build Financial Independence

2005-08-18T17:15:00.000-06:00

Financial independence is having the financial freedom to support yourself through your own efforts by personal budgeting. Here are seven fundamental budgeting tips that will help you to manage money to maintain financial independence.

1. Express Gratitude

Financial independence begins with gratitude. Set aside a daily period to offer a sincere thank you for every blessing in your life. Include people, places, possessions, talents, and memories. Offer gratitude for your future dreams as though they were already in your possession.

Gratitude will allow you to attract the blessings you want. When they arrive, protect them from the thieves that could rob you of your financial independence.

2. Liberate Your Future

Debts of the past are thieves of the future but you can bank on saving money. If you want financial peace, live a simple life style that does not create unnecessary personal debt. Living with class does not require being extravagant. If you are conservative most of the time, you can be extravagant at the right times.

Do not allow credit card companies to hold your future hostage. Take control. Seek professional help to get rid of credit card debt that robs you of high monthly interest payments. Borrowing is a tool that should produce a return on your investment, not cost your future security.

3. Commit to Wellness

Your health is also an asset that you need to protect. Wellness allows you to manage and enjoy financial freedom. Get regular physical checkups and maintain a sensible physician-approved exercise program. These can help to minimize illnesses and maximize the rewards of a productive life.

Maintaining wellness requires an ongoing commitment. Another area of commitment that is equally important to financial freedom is one of personal financial discipline.

4. Develop a Saving Discipline

A financially independent future requires saving, and saving requires discipline. As credit card debt diminishes, savings can begin to increase. An emergency savings fund of six to twelve months living expenses is a wise idea.For that you need to manage money by personal budgeting using softwares like mvelopes, microsoft money, quicken..etc. You will also want major long-term savings plans for such goals as education and retirement.

Do not expect the government to take care of your financial future. If you want to remain financially independent, take ultimate responsibility for every chapter of your financial life. That responsibility begins with wise investing and respect for money.

5. Invest Wisely and Respect Money

My father taught me to have several investments that produce an ongoing, passive income. These investments are like "feeding geese that lay golden eggs". Passive income streams also provide additional capital to place in other financial growth investments.

Respect for money is the beginning of saving and investing. Respect for a dollar begins with respect for a penny. You will always have dollars if you take care of your pennies. Even the smallest of assets and investments need protection.

6. Protect Yourself and Your Loved Ones

Ensuring the safety of your financial assets is part of doing this.

Adequate insurance coverage for your life, health, and property is a wise investment. You should also use professional legal, financial, and security services to help protect your business, property, and all the things you have worked to acquire.

7. Design Your Financial Independence with Qualified Help

To become financially independent its not necessary to be a financial expert, but its necessary to be a financially literate.Seek some expert advice on financial planning for taxes and accounting.

(C) Copyright 2005 by Steve Brunkhorst. Steve, the editor of Achieve! 60-Second Nuggets of Inspiration, which helps you achieve more in your career and personal life. Get the next issue by visiting http://www.AchieveEzine.com

Steve Brunkhorst may be contacted at http://www.achieveezine.com Get budget advice here.

Money Is A Family Affair

2005-08-04T15:05:00.000-06:00

If you are single and don't have kids this tip won't mean much to you. For the rest of us that have others to consider when making money decisions it just may make things a little easier.

I guess the best knock-down, drag-out fights my wife and I ever had was about money. No, it never came to blows because she's meaner than I am. Believe me you can have a lot of fights in almost 40 years.

At some point we realized that it wasn't accomplishing anything. We still didn't have any money but we never earned a nickel fighting about it.

To get a handle on your finances it is going to take a team effort. The whole family has to be working in the same direction.

My suggestion would be to sit down and talk your money situation over with your spouse and the kids. It's important for everybody in the family to know what is going on.

You may be surprised at what the kids will come up with.

When I bought my first house I made a miscalculation on how much I would need to come up with for the down payment. When I realized it we had maxed out our credit cards and wasn't sure where we would get the rest of the money.

My wife and I discussed this with the kids and they offered to baby-sit and mow lawns. They came up with enough to cover the down payment. I'll never forget how proud that made them feel and how proud we were of them.

All too often one person in the family is strapped with making the money decisions. This is a great idea and the best way to keep things organized but they shouldn't take all the blame when something doesn't work out.

A family solves difficult problems everyday. Money is just one of them.

Terry Rigg is the author of Living Within Your Means - The Easy Way and editor of The FREE Budget Stretcher Newsletter and Budget Stretcher web site. He has 25 years of experience counseling individuals and families concerning their personal finances.

Personal Budgeting Program

2005-07-26T09:22:00.000-06:00

Do you have financial problems? Then a budget is the answer if you are tired of wondering where your income went. A budget is the answer, if you don’t have savings. A budget is also the only solution to getting out of credit card debt.

You can purchase a 6-column ledger or use an electronic ledger in recording your expenses and income. Or purchase budget software. While an electronic ledger (like Excel) functions by keeping your financial records and doing your computations, budget software programs will do much more.

Here are several features your budget software should have, to effectively help you keep track of expenditures and record your savings.

The budget software should with a worksheet, show you where your funds go, and provide you with the exact amount of your current financial situation.
The budget software should have in addition to the more common ledger title columns, make available the option for you to create your own personalized account titles. This makes it more accurate, and enables you to keep track of daily expenses, of your saving accounts, payments for insurance, auto, utilities payments and even entertainment expenses.
The budget software should allow you to compare the financial differences between the budget you set against actual expenditures. It would be great if this feature were accompanied by a reminder feature that tells you, you’re overspending.
The budget software should provide you the option of creating and tracking individual accounts, should you wish to set one for you and your spouse, or your children. You can use this to monitor each child’s expenses.
The worksheet visuals of the budget software should be easy to understand.
Usage of the budget software must be user friendly and have help menus that are built in the program.

After you’ve read the company brochures, and spoken to the sales staff, request for a demonstration. Personally test the budget software, to make certain you have ease of use. Ask the company they provide product updates at discounted prices.

Make sure that the budget software vendor have an efficient customer support and after sales services. Request for list of their clients and talk with these people. Ask to be sure that you can reach them on the net, by phone and email. List their physical address, should you need to drive by their shop.

You need to be honest, committed and disciplined in making and keeping a budget. If you do, you’ll be able to get the most out of your income in spending along with saving wisely.

Timothy Gorman is a successful Webmaster and publisher of Debt-Relief-Solutions.com. He provides more debt relief, consolidation and free financial planning information that you can research in your pajamas on his website. You can also get mortgage advice online.

Slowing Spending

2005-07-19T15:30:00.000-06:00

Slowing Spending. The Key To Your Debt Plan Success

Anyone who embarks on a debt reduction program should know the rules for success. There are two. You need to stop adding to your debt. You need to find extra money to pay it off quickly.

You also need to know the deck is stacked against you. The sellers of goods and services have gobs of information at their fingertips. They know where you live. They have a close approximation of your income. They are aware of your interests. They also know your buying habits.

The information to which they have access is endless. They know the age of your car through its registration. The appliances you have because of the warranty cards returned. Where you shop because of the credit and store cards you have used. How old your mortgage is and what you owe from public recording of the deeds.

Because they have this information, you end up on a number of lists. The sorting and use of these lists are an art and science. It is the source of the mail you receive, the offers you are made, and the advertising to which you are exposed.

This makes for very effective advertising. They can target your “known” wants and desires. Huge amounts of money are spent to convince you to buy this or that product. You have heard how expensive Super Bowl ads are each year. They pay this type of money because it works.

Then to top it all off they make it so easy to buy. If you don’t have the cash, they provide you with credit, easy-pay plans, personal loans; anything to make the purchase possible. Many companies make as much from their financing divisions as they do from selling you their products. So what do you do? How do you fight this financial onslaught and win? It requires effort and advance planning. You need to wring all the value you can from your money. Become adept at making each dollar do the work of two.

You need to budget for purchases. Even if that means that you think about it for just a few minutes before you plunk down your hard earn money. Justify your purchases; do you need it, does it make sense, can you do without? These are questions you need to ask yourself. They may fly in the face of the materialism which surrounds us all, but they need to be answered nonetheless.

You may find using a purchase-checklist helpful. Anytime a purchase exceeds what you have in your pocket tick down this list and see if it really makes sense to buy it.

How much is it?
Is this a sale price?
If so what am I saving over regular price?
What will happen if I don’t buy it now?
Can I pay cash?
Where will the money come from?
If not cash, what will be the credit cost?
Is it worth it at the price with the credit cost added in?
Does the purchase fill a need or a want? (think hard)
Why do I need this item?
Why do I want this item?
Can I justify this purchase to another person?
What would I say?
Would I accept these reasons from someone else?

This should help in slowing you down. Couple this with not taking your credit cards with you when you shop. It does take work, but a little extra work is better than being a slave to your debt.

Now with the money you save go to work on your debt reduction plans. Work that side of the equation as hard as you do the spending side. Place as much as you can on your bills. Reduce and eliminate them.

by David Wilding. David Wilding has, for the past ten years, been helping people rid their lives of debt. Through changing their attitudes toward, and their acceptance of, debt in their lives, he has helped many to reach the goal : living debt free. Visit his website http://www.debtattack.com for more ideas, tools, and strategies. David Wilding may be contacted at http://www.debtattack.com or contact@debtattack.com

10 Steps To Improve Your Financial Situation

2005-07-06T16:14:00.000-06:00

Here are ten tips you can use to help improve your financial personal financial situation and inevitably save more money:

1. Pay Yourself Weekly
This may seem a bit odd, but this is an excellent way to start building a substantial savings. On a weekly basis, pay yourself $25-$50 and immediately put it in a safe place. You can even open a special savings account where this weekly "payday" can by placed to help minimize or eliminate impulsive spending. Think about it this way, if you paid yourself $25 a week, in two years you'll have accumulated $2600 (not including interest)!!! That's almost $3000 from just putting $25 aside every week! Take advantage of this money-saving opportunity. Simple, yet very effective.

2. Don't Shop
For those of you that love to shop, you may find that this is one tip that could save you hundreds, maybe even thousands every year. Start using the "Need or Want" strategy. Before you spend a single dollar on anything, ask yourself, "Do I really NEED this item, or do I just WANT it??" You may find that many of the items we purchase, we do so just because it "caught our eye" or it was "an impulse buy" or "my friend bought the same thing". All these excuses just add up to wasteful spending. You can probably get by without another sweater, or a new pair of jeans, so just buy what you absolutely need, and pass on those items that aren't necessities.

3. Use Your Bank's Own ATMs
Some banks will charge you money for using other ATM machines. Even though you will be able to withdraw money using your ATM/debit card from literally any machine, banks will charge you $2 (generally) for using a machine other than theirs, in addition to a standard $1.50 charge the machine charges for its use. In other words, if you use the ATM at your local 7-11 to take out $20, you'll most likely end up paying $3.50 in additional charges! If you do that 5 times a month, you'll lose $17.50 for that month, or $210 per year! What a waste! Try and stick with your own bank's ATMs whenever possible.

4. Track Your Spending
Take the time to track your spending habits for one week. Take note of every single dollar you spend, even those sodas and candy bars purchased here and there. This will give you a "birds-eye" view of exactly where your money is being spent, thus allowing you to refine your spending habits to essentially save more money.

5. Lower Credit Card Balances
Another very important tip that many often overlook. Pay off those pesky credit cards as soon as possible because you are losing up to 19% of the total. What a waste of your hard earned money! Keep chopping away at the balances until you get to an amount that is reasonable $100-$500 dollars.

6. Use Your Debit Card Instead of Credit Cards
Get in the habit of using your debit card instead of your credit cards. For the most part, debit cards are accepted anywhere a credit card is accepted, however as you know, with a debit card the amount is taken directly from your checking account whereas credit card usage is billed at a later date (along with a hefty interest rate).

7. Changing Jobs? Roll-Over that 401(k)
When people change jobs/careers they will be faced with a decision to either "rollover" their 401k (retirement plan) or to withdraw it. It will be ever so tempting to withdraw the money since it will be a substantial amount, but don't! You will be charged fines and penalties for an early withdrawal that will cut YOUR total by 40%-60%! That's like giving half of your earned retirement savings away to a stranger. Why would you do that? Even though you may want the money now, resist the temptation and roll it over. It will be well worth it in the long run.

8. Avoid Getting Too Many Credit Cards
Why have eight credit cards? That's just going to provide you with more opportunities to go further into debt. It's fine to keep 1-3 cards to build credit, establish yourself, and for emergencies, but credit cards are double-edged swords. They can help or hurt you depending on your self-control.

9. Check Your Credit Score/Report
It's important to know where you currently stand as a consumer and since your credit report is the most important historical list of your financial past and present, it's a very good idea to check it from time to time. There are a number of places where you can get your credit report, however the most detailed compares information from the top three national credit bureaus: Experian, Equifax, and TransUnion. Once you get your report, look through it carefully to see if all the information is accurate. If there are any discrepancies, get those solved as quickly as possible to improve your credit rating - a score of up to 800. Often times, consumers are unaware of unsettled accounts, or accounts that are still open/active when they should be closed. Pay close attention to this when inspecting your report.

10. Finally: Review - Revise - Retry
Once you start implementing these tips and become more familiar with the money saving opportunities you have, take the time to REVIEW your progress. Check and see where it may be possible to REVISE some of your techniques or where you can implement new ones. Once you have revised your plan, RETRY to see if your results improve. The more frequent you review, revise, and retry your saving ideas, the more "in tune" you'll be with your finances and spending habits, and learn what works and what doesn't for you.

**©2004 http://www.SavingSecrets.com Get credit report tips, hints, and instant access by clicking here: http://www.SavingSecrets.com/creditreport.html

How Much Should My Grocery Budget Be?

2005-06-30T12:57:00.000-06:00

How Much Should My Grocery Budget Be?

You talk about a question without an answer! But, I'm going to try to answer it anyway.

First, when we are talking about setting an exact dollar amount for groceries for each family that asks, that's almost impossible. What we can do is allot a portion (percentage) of our income for food.

There again, you have all of the variables like the size of your family, eating habits, etc. Also, a family with a low income may have to allot a larger percentage of their income toward buying food.

The question I would like to ask you is how much are you spending on groceries per month? I would have to say that most people wouldn't have any idea.

Better yet, how much could you be spending on food? In other words if you are currently spending $600 on food for your family let's try to cut that down to $500 or even $400. But first you will need to know how much you are spending now.

This is going to be a real hassle for a month or two because you will need to keep track of your grocery purchases. All of them!

Now, we can make that a little easier but you will need to have your finances set up a certain way. I always suggest that you only use 4 categories for your budget. These are Housing, Other Bills, Household Expenses and Savings.

Your grocery bill would come under that category of Household expenses. If you have your finances set up this way each member of the family will have an allowance each payday for things like car gas, lunches, parking, snacks, etc. Doing it this way would eliminate the need to keep up with each family member's food spending except for the family pizza night.

All you would have to do is save your grocery receipts for about 30 to 60 days and add them up. This should give you a good idea of how much you spend on a monthly basis for food.

When you have this information it's time to start looking for ways to cut that figure down as low as you can and still provide good nutritious meals for your family.

If I started telling just the ways I know of how to save on groceries, this article would turn into a book. There are
endless ways to cut back on your food spending. The best way to start learning is to search the web. Here are a couple of web sites you can start with:

The Frugal Shopper http://www.thefrugalshopper.com

Money Saving Grocery Tips http://homeparents.about.com/od/groceryshoppingtips/

Grocery Saving Tips http://www.grocerysavingtips.com/

With all of that said, the bottom line is that you need to spend what ever it takes on groceries to survive. In too many cases people will pay their bills out of their grocery budget. This won't work. Water, Food and shelter are the basics. Put them first no matter what your bills are or how many times they call to harass you.

I know you are still looking for a dollar amount for your family. If you pin me down I would have to say about 15% to 20% of your income could be spent on food. For a family making $3000 a month that would mean you would set aside about $450 to $600 for food. This is great unless you have teenagers that go through the kitchen like vacuum cleaners.

Terry Rigg is the author of Living Within Your Means - The Easy Way http://www.homemoneyhelp.com/ebookadpage.html and editor of the Budget Stretcher web site. Join the thousands of subscribers to The FREE Budget Stretcher Newsletter and get great articles, tips, downloads and a lot of Budget Help by visiting his home page at http://www.homemoneyhelp.com

Biggest Budgeting Blunders

2005-06-16T14:39:00.000-06:00

Does your budget never seem to balance the way it should? Are you constantly digging into the savings to make ends meet? If you find that your budget isn't doing the job, then it's time to take a good look at essential components you might be missing or you have not allowed sufficiently for. Some of the biggest budget blunders are . . . . . .

1. Failure to plan for inevitable expenses

We all have irregular expenses that we naively refer to as "unexpected." Come on, is that flat tire really unexpected? Don't you secretly know that these things happen? Have you ever owned a car that did not need repairs or maintenance? If you have, you probably didn't own it long enough. The solution; Start counting on the car breaking down instead of hoping it doesn't! The car isn't the only area we slight in the budget. Do you find yourself hoping and praying that the hot water heater, washer, dryer, or some other major appliance doesn't need to be repaired or, worse yet, replaced. Home maintenance is always a factor in our finances. Even if you rent, you probably have some home related expenses waiting to creep up on you. These are just a couple examples of variable expenses that we often overlook. When you consider the following other categories that could be included in this list, you can see the serious consequences this oversight can have on your budget.

Property, Auto, Health and Life Insurance if not paid on a monthly schedule. Even if you do pay monthly, you should try to save for a lump payment if at all possible. Most companies charge up to a $3 fee for monthly payment options. It doesn't sound like a lot but, over a years time it's $36 you won't be investing in their cause. I say, it's always best to invest in yourself. Don't you agree? Put the $36 in your savings!
Taxes - Property, Federal, and State - If you know you will have to pay Uncle Sam, prepare for it. If you value your home or other property investment, prepare for the costs. Don't scramble at the last minute to come up with enough to pay your obligations. It's likely other areas of your budget will suffer greatly, since these expenses have a high priority.
Clothing - Now, I can wear a piece of clothing 'til you can see through the threads. I work at home, so I only have a few choice pieces for special occasions. I'm a no frills kind of gal. But, I have four kids. Do I expect them to stop growing or somehow not care how they look to their peers? Of course not! But, I'm working on it. Just kidding! I know that they will need more clothes, more shoes, more accessories....etc., etc., etc., etc..... I use every resource available to me to cut down the clothing budget, I know I must account for this expense. It will arise, whether I am prepared or not!
School Supplies - This is another one you just can't omit if you have kids. You can, however, use some clever money saving techniques and multiple resources to keep this expense to a minimum.
Pet Care - If you have a pet, you most likely have expenses that come with this beloved family member. Vaccinations, flea control, veterinarian, and food are just a few that come to mind. Again, minimize the costs by using all your resources. Tip: My local county animal shelter gives rabies vaccines for $5. Good for three years if regularly vaccinated. Does yours?
Gifts - If your friends, family, and kids don't care if they don't get gifts from you, if you've declared war on the holidays, or have a convenient hiding place when these occasions take place, then you can skip this one! I'm guessing most of you are including this one. It's inevitable. My best advice is to set strict limits and be a smart shopper. Seek out the bargains and buy when it's a deal, even if it's months ahead of time.
Medical - Unless you're lucky enough, or not lucky (depending on how you look at it), to qualify for medical assistance, you undoubtedly have medical expenses over and above the cost of your health insurance; Co-pays for doctors and medicines, over-the-counter medications, dental and eye care expenses. Nope, can't omit it, have to include it. Sorry, it's a must have!
Vacation - If you have the income, include this one to make planning less stressful. Get inventive if you don't have enough income. You can still have a vacation with limited, or no, travel expenses.

2. No Emergency Fund...

. . .or misconceptions about what warrants an emergency. An emergency is this case should be limited to an unexpected occurrence. No, if you've been listening, having to replace the water pump on your car is not an emergency. A real emergency might include; loss of income, severe illness, or death in the family. Although we all hope such occurrences never happen to us, sometimes we aren't lucky enough to escape these unfortunate events in life. You should try to set aside a specific amount, no matter how little, each month in an emergency fund to eventually equal at least three to six months of your current income.

3. Living Above Your Means.

This is simply spending more than you earn. Unfortunately, this is a direct consequence of budget blunders #1 and #2. When funds are not set aside for variable expenses and emergencies, you will inevitably turn to plastic money (credit cards) to bail out. Spending more than you earn is a sure sign that you're headed for trouble. When you spend future earnings it's like "counting your chickens before the eggs hatch." The long term consequences are usually devastating. It's likely you'll end up in deep debt and eventually have no where to turn except counseling or bankruptcy. Don't let it get that far. Take control of your money. Now!

If you've been making these budget blunders, you're probably exhausted just considering all the work you have to do on your budget. I'm exhausted just writing about it. The sooner you get started, the sooner you'll be on the path to a really successful budget. Add up all your variable expenses and divide by twelve to come up with a monthly amount that you should be setting aside for this expense. Keep these funds separate from your monthly bill fund to avoid dipping into it accidentally. Start with 5-10% of your income to start a savings, or apply to an existing savings, each month for your emergency fund. Make sure your expenses are within your income. If not, start reviewing, eliminating, and reducing those expenses to fit into your income limits. A good budget is like a good friend. It helps keep you strong and steady.

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Resource: Cheryl Johnson is a mother of four helping herself and others become and remain debt free. Publisher of Simple Debt Free Living - A self-help plan, ideas, and resources for debt

The First Step in Budgeting – Track Your Spending

2005-06-15T09:25:00.000-06:00

Many people have asked me what is the first step in setting up a personal budget. If you have ever tried to fill out a budget you know it is impossible to do it right unless you know exactly how much you are currently spending and on what. How much do you spend eating out each month? Exactly how much do you spend in gas? Groceries? If you are like me when I started I didn’t even know how much my utilities where every month.

So prepare yourself by tracking every aspect of your spending for one full month. Write down how much you spend on everything. At the end of the month it should add up to exactly your income for the month. Once you do this you can easily fill out a budget worksheet or enter it into a budgeting program. This first step can be difficult if you are not used to doing it. But with a bit of work you will know where you are starting from so that you can get going down the road of taking control of your financial life.

Types Of Spending

2005-06-14T12:27:00.000-06:00

Over the years I have talked to many people about personal finances and budgeting. But my neighbor is one of my favorite people to talk about finances. He is a loan officer for a local financial institution and has over 20 years of experience helping people with their finances.

One of our favorite topics is how to choose between “needs” and “wants”. It is an interesting test to ask people what types of things they could group as a need. Grouping wants is fairly easy. But when you ask someone “do you really NEED to spend your money on X” you would be surprised the responses you receive. My neighbor has an easy formula to distinguish between the two and here it is:

“A need is something that you DIE if you don’t have!”

Now this may seem overly simplistic and dramatic. But you would be surprised at how many people think that their “extended cable package with all the movie channel packages” is an absolute need! Or at how many people just HAVE to have that $4 latte and muffin every morning.

As you are creating your budget you will have to make decisions about what are your wants and needs. I am not judging how people should spend their money. I am guilty myself of some “frivolous” spending from time to time. But you need to make sure that your necessities are getting paid for first. And by that I mean not only food, shelter, and clothing but things like saving for my children’s college and saving for my own retirement. After all if I compare a trip to the convenience store every day to my child’s education it is not a hard decision to eliminate that daily Coke and a candy bar(you can send your child to college for a few dollars a day if you start saving early).

In “budgeting lingo” there are two types of spending: discretionary and required. Required spending are the bills that you just have to pay every month. Things like your mortgage or rent, auto fuel, utilities, groceries and monthly memberships. Discretionary spending is those items that you can choose to spend you money on or not each month. Things like clothing, eating out and entertainment. If you are trying to reduce your spending to pay off debts or to increase your investments the discretionary spending areas are usually the first to be analyzed.

Discretionary and required spending can then be split up into 2 additional categories. Periodic and monthly spending. Monthly spending are items that are paid each month, month after month. All the examples I have given so far are monthly expenses. Periodic spending are items that only come up once or twice a year like property taxes, insurance premiums, vacations and holiday expenses.

So as you are creating your budget it helps to group all of your spending into 4 possible categories. 1) Monthly Required, 2) Monthly Discretionary, 3) Periodic Required, and 4) Periodic Discretionary. By placing everything into one of these categories you can more easily plan your monthly expenses while at the same time have a plan for your periodic expenses. After all, I think most people are very good at planning for those expenses that come up every month. People get into debt when those unexpected (or expected) periodic expenses come up like Christmas, car repairs, or emergencies. So get your budget organized and you will be prepared for any expense that may come your way throughout the year.

More on Billpay - Industry Facts

2005-06-10T10:02:00.000-06:00

Here are some interesting tid-bits I found on the web today at checkfree.com about billpay. These numbers are impressive and show that if you are not paying your bills online today, you soon will be.

Industry Fast Facts

CheckFree delivers more than 30 million e-Bills each quarter.
Online bill payment is fast becoming a mainstream consumer practice, with at least one-third of U.S. households expected to pay bills via the Internet in 2004. (TowerGroup, May 2004)
By 2007, 65 million U.S. adults will view their bills online. (Gartner, January 2004)
The practice of electronic bill and invoice presentment are becoming increasingly common. Fully 47 percent of large consumer billers are expected to have an electronic billing application in place this year. (TowerGroup, May 2004)
In the next five years electronic billing and payment services will grow by nearly 80 percent – nearly doubling the number of U.S. households paying bills online by 2008. (Forrester, November 2003)
Paying bills online was the fastest growing consumer Web application in 2002, up from fourth in 2000. (Javelin Strategy & Research, April 2003)
The use of online banking among U.S. consumers will grow from the present rate of 17 percent to 30 percent by 2007. In addition, market penetration will reach 50 percent of consumers in some desirable market segments during the same period. (Gartner, February 2003)

Financial Fitness— It's not about hitting some magic number

2005-06-07T12:13:00.000-06:00

What does it mean to be Financially Fit?

First let’s ask, ‘What does it mean to be physically fit?’ For some, being physically fit means having the strength and endurance necessary to win a marathon; for others, it is simply to finish. While some want to be able to compete at a professional level, most agree that being physically fit means having a level of fitness necessary to look good, enjoy a healthy life, and be able to participate comfortably in the activities they like.

There is no predefined point at which we suddenly become physically fit. Physical fitness is more about being on the right path and doing the right things from a diet and exercise perspective than reaching some magical point in time. However, having specific and attainable objectives that provide motivation for continual improvement is very important. Otherwise, we may struggle with direction and find it difficult to stay on the right path.

It's a State of Mind!

Financial fitness is also more about being on the right path than it is about reaching some magical number on a net-worth statement. Clearly, it is more a state of mind than a specific level of wealth. And like the concept of physical fitness, setting appropriate goals and objectives will provide motivation for continual improvement. Most people know if they need to become more financially fit. This knowledge generally stems from their daily interaction with issues surrounding money.

Measure Your Financial Fitness

Perhaps financial fitness can best be measured by how we feel as we interact with money on a daily basis. The following is a list of the many thoughts and feelings that you may experience as you progress towards a goal of becoming financially fit:

You have money set aside for the holidays before the shopping begins.
You are able to go to work every day knowing that if you lose your job or have a major illness, you have sufficient emergency funds set aside to carry you through.
Next year when school starts, you are able to purchase school clothes and supplies from money that is already set aside.
You never need to worry about checking the account balance at the bank before you pay a bill.
You are excited to get the next credit card statement, because you know that the balance is shrinking and if any purchases have been made, you already have the money set aside to pay for them in full.
Picking up the mail every day is not a drudgery, because you know that all of the bills coming in are just part of your spending plan and have been anticipated in advance.
You look forward to making decisions regarding the education of your children, because you are actively saving money for this purpose.
You spend time planning and anticipating retirement, because you are debt free and prudently investing money to fund the lifestyle you want to have.
Financial discussions with your partner are more focused on reviewing progress and planning for the future than on the last credit card statement, late bill, or emotional purchase.
The last thought on your mind as you drift off to sleep is about how much fun your upcoming vacation will be rather than a worrisome question of how you will be able to make ends meet.

There is a new tool that can help you better understand your financial fitness. This

Financial Fitness Quiz asks 25 simple multiple choice questions and tells you your financial fitness level. Take the Financial Fitness Quiz and find out how you score. You may want to take the quiz yourself and also have your spouse take the quiz separately. You can then compare answers to help you better understand how you each look at your finances (the quiz has a convenient print function at the end to allow you to save your results for later review).

Why Is It So Difficult?

Often this isn’t for lack of desire or even knowledge—many of us know the basic principles necessary to achieve financial fitness. However, in today’s world we have many convenient methods by which we can access and spend money. Most families have multiple checking accounts, overdraft protection, a home equity line, debit cards, credit cards, and store cards. The problem many of us face is that these convenient methods of spending ‘mask’ the root of our financial challenges—which are overspending and debt. People often spend as much as 10% more than they make every month… That adds up quickly! And most people aren’t even aware they’re doing it… until it’s too late.

Many of you may already be financially fit, and are already experiencing some of these feelings and thoughts mentioned above. However, for the majority of us, keeping our financial house in order is a daily struggle. We often spend a lot of time and energy worrying about paying bills, running out of money, increasing debt, or even maxing out our credit cards.

The First Step

If you want to become financially fit, the first thing you need to do is stop overspending. This sounds simple, but for most, it’s anything but. The fact is, if you don’t have a spending plan, you will continue to struggle with overspending and debt accumulation.

As soon as you stop living within your means, you begin to jeopardize your financial future and the achievement of the goals you have set. Consistently following the five steps outlined below will help you maintain and enhance your long-term financial fitness:

Complete a spending plan, and then review it and make appropriate adjustments each month. This should always be done with your partner. Make sure you continue to live within your means every month. At the end of each month, transfer the amount you have saved to additional savings, prudent investments, or increased debt reduction.
Set aside at least 5 percent of your net monthly income for savings. Consistently increase this amount as you eliminate debt and find other ways to save.
Define a net-worth statement, and then update it every 90 days. Review your progress and make appropriate adjustments to your long-term financial goals.
Define a debt-elimination plan, and then review your progress every 90 days and make sure you are on track with your debt-reduction objectives.
As you successfully eliminate debt, transfer the amount you were paying to satisfy debt into savings and sound investments. This added amount will assist you greatly in achieving your long-term financial objectives.

Being financially fit is not contingent on the amount of money you make or your net worth. You do not have to be rich to enjoy this level of financial peace and happiness. Recent studies have shown that happiness is more a function of principles you live by than the amount of money you make. The only question is, Will you take the steps necessary to change direction and start down the path to financial fitness?

You Choose Your Financial Fitness

The financial position you are in today will not be the financial position you are in tomorrow—it will be either better or worse. Change is inevitable. You cannot stop change from taking place; you can only determine the direction it will take. You know better than anyone else the rewards associated with the way you currently interact with money. Achieving long-term financial fitness takes courage, discipline, sacrifice, and consistent effort, but the rewards can be extraordinary. What direction will you choose?

Take the financial fitness quiz here.

Your Secret Weapon - A Budget

2005-06-06T12:00:00.000-06:00

For many, the word 'budget' immediately sends shivers down the spine. Why in the world would anyone need or want to budget their money?

First off, budgeting your money does NOT mean you are poor, or are in need of financial assistance. You'd be surprised to know how many considered to be "middle class", regularly budget their money in order to make the most of what they have.

Secondly, designing and implementing a budget does NOT take a Harvard doctorate degree requiring hours upon hours of tedious work.

What is a budget?

Simply put, a budget helps you to track your income and keep your spending habits in check over a certain period of time, allowing you to reach specific goals.

Why Start A Budget

There are many reasons why a family may want to implement a budget. These "reasons" can be labeled BUDGET GOALS. The reason(s) you are budgeting your money.

It is imperative that you actually determine what your GOALS are before actually designing a budget plan.This is what you will be striving for.

Answer the question - 'Why do I want to start budgeting my money?' To save for a new house or car? Saving for your childrens' college education? What about an early retirement?

These are all very important goals that many of us will have to face at some point in our lives. And these are some of the goals that can be tackled through the implementation of a budget.

Summary - Set Your Goal(s)

Cash Flow Analysis

It is now time to determine the amount of "cash" that comes into your pocket every month, and the amount that leaves your pocket every month.

This is one of the most important steps in planning your budget, for it allows you to get a whole perspective of your current financial situation. At the same time, analyzing your "cash-flow" allows you to actually see where your incomes are coming from and how it is being spent.

Remember, this does not have to be done professionally nor does it need to be time consuming. In addition to that, try not to track every single penny that you spend. You'll drive yourself crazy. A budget should not frustrate you to death.

Start with your income(s). It's best to take it a month at a time so you get a clear, concise view of what you make on a monthly basis. Don't forget to include any benefit or interest payments you receive.

After you have an idea of the TOTAL amount you receive monthly, it's time to add up the expenses you pay every month. Generally, you can group most expenditures into two categories - fixed and variable.

Fixed bills - mortgage, car, insurance loans, etc...Variable bills - utilities, phone, car maintenance, entertainment, food, etc...

It is really important that you tally up EVERYTHING that is paid out monthly. That includes all taxes, social security, 401(k) (retirement funds), and any other deductions that you might have taken directly out of your paycheck.

It works best if you write down ALL the expenses/bills that you pay monthly.

If you are having difficulty remembering what is paid every month, take a look back through your financial records, checkbook or bank statements for more accurate numbers.

Remember, you do not want to spend hours and hours, sweating over this. Budgeting should not be like another 9-5 job. The quicker and easier this analysis process is, the more you will be willing to go through with it.

Summary - Write Down ALL Incomes and Expenditures

Review Your List

Now that you have your list of incomes and expenditures, it is time to review what you have written. Look and see what bills/expenses can possibly be lowered. Do you notice any excessive spending areas? Any bills you know for sure that can be lowered?

This is where you might have to make some sacrifices. Is your dream of a brand new BMW worth giving up your restaurant outings three times a week? These are the choices you are faced with when you must decide how you are going to reach your goal(s).

Start out small. There's no need to become a first-rate miser overnight. That's hard to do! Take things a step at a time. Implement one money saving strategy a week, or month. Remember though, you decide at how quickly you accomplish your goals.

Summary - Review And Decide Where To "Cut-Back"

Track You Spending

In the real world, you are faced with thousands of advertisements and gimmicks begging you to 'buy their product'.

Buy what you must, just keep in mind your budget.

In order for accurate records, track as much of your spending as possible. Simply save all the receipts you get from your purchases.This is important because you need to tally everything to see how much money you saved at the end of the month.

Summary - Keep Track Of The Money You Spend

Compare Results & Modify

Now it's time to find out if all your hard work has paid off. Were you able to lower some bills? Finding out how much you saved is the best part of budgeting. It's exciting! This is what makes the whole budgeting process worthwhile.

Stick with your budget! Modify your spending habits to try and lower bills bit, by bit. You'll soon forget about the whole budget idea, and just see it as a game, where you try and save as much money as possible month by month.

You can find 50+ money saving articles and 5 complete Ebooks to help lower your bills at:
http://www.SavingSecrets.com/access.html

Summary - Compare and Make Necessary Changes For Increased Results

Conclusion

The hardest part of the whole budget process is starting one. Once you set your mind to implement a budget, and take the time to formulate a written agenda, the rest falls into place.

Budgeting requires some small sacrifices. Changes in lifestyle. Changes in spending habits. Be creative and have fun saving money off your bills. You are doing this for YOU, to accomplish your GOALS, so stick with your budget plan and your will be rewarded!

Summary - Start YOUR Budget and Accomplish Your Goals!

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Budgeting Tips

2005-06-03T16:21:00.000-06:00

Budgeting Tips

Creative Ways to Budget. How to get Started.

Tips:

Don’t get discouraged! On average people overspend by 10%, don’t get discouraged that you do too. Stick with it and be committed to fixing it!
Be consistent
Get everyone involved. At the beginning you may even want to have a weekly family meeting where everyone who spends money is together, reviewing the spending plan. Its critical for you and your spouse to work together but, why not start educating the kids about spending management too?
Learn to “Pay Cash”. Don’t rely on “credit”. If you don’t have the funds in your envelope, don’t make the purchase.
Avoid Department Store or other merchant credit accounts. People tend to spend more with these cards and they often have higher interest rates.

Creative ways to Budget:

Spending Management is a whole new way to look at the old concept of budgeting. A spending plan is proactive and puts you in control.
Envelope Method of Budgeting
Make it a game by seeing how much you can ‘sweep’ at the end of the month from your monthly discretionary envelopes into savings, debt reduction, or a new car fund/vacation fund.
Mvelopes Personal- all online, with access from anywhere, at anytime.
Use the Debt Roll-Down principle to quickly eliminate debt.

Ways to Start Budgeting:

Make a commitment, and truly have the desire to change and succeed.
Take stock of where you stand right now.
Spend less than you make. Follow the success cycle (Plan, Track, Compare, Adjust) every month.

Budgeting eCourse - Day 5

2005-06-02T15:12:00.000-06:00

Congratulations on completing Day 4! Welcome back! Only one day left, so let’s get started!

Today, in Day 5, we will cover a variety of things concerning debt – the reduction of debt and how to use the debt roll down principle. We will also review how to use credit cards effectively without increasing debt, as well as reading about some additional ways to save money.

The following checklist will assist you in keeping today’s tasks straight: Read Getting out of Debt by Steven B Smith

Create a list of debt obligations
Create a debt elimination plan using the debt roll-down principle
Read Saving some extra money is easy!
Read Save a little extra…

Getting out of Debt

By Steven B. Smith

Getting out of debt is one of the key elements to becoming financially fit. In a society driven by financial excess, reaching this goal is increasingly difficult but can be done with some determination and the right tools to help you get there.

According to a survey conducted by Impulse Research Corporation, 59% of Americans stated that they regularly maintain a household budget. This number is shocking considering the average household debt in America has grown to $18,700, with credit cards and auto loans combined. This ever-increasing debt load suggests that American families continue to spend more than they make. Obviously, many of the methods being used to manage household finances are not effective. Read the entire article …

Create a list of debt obligations

Before we can start to eliminate your debt, we need to first understand what your debt load is. Download the Debt Obligations Worksheet and let’s create a list of your debt obligations. We can use the example below to help us complete this task. If you used this worksheet in the ‘Define your Net-Worth’ exercise in day 2, simply use this section as a review to ensure that you have not left anything off.

In your list of debt obligations you will want to include the creditors name, the interest rate, the minimum amount due each month, and the balance on the account or loan. Make sure to include all debt accounts that you have – auto loans, mortgage, credit card balances, store accounts, personal loans, etc. Review your statements and monthly bills to ensure that you have included everything.

Once you have all the items listed, you will want to review your Monthly Spending Plan (that you created in Day 4) to ensure that you have included envelope spending accounts for each of these debts payments. If you missed any, take a minute or two now and revise your monthly spending plan.

The last thing we need to do before moving on to your debt elimination plan is to prioritize your debts in order of either lowest balance or highest interest rate. Often times the list turns out in a very similar order with either method. Number the items and have the paper handy during the next phase of today’s lesson.

Create a debt elimination plan using the debt roll-down principle

One of the most crippling effects on personal financial fitness is debt. Debt is every bit as damaging to your financial health as extra weight is to your physical health. Losing your debt load can be the most financially liberating thing you will ever do; while continuing to add to your debt, will likely be the most financially restricting thing that you can do. To successfully tackle personal debt, the first thing you must do is stop creating more. Simply put – if you continue to spend more than you make, you will never be debt free.

Let’s use the debt roll-down principle that was introduced in Steve Smith’s article, “Getting out of Debt” to create your plan. We will use this method to create a debt elimination plan designed to rapidly eliminate all of your debt.

Using an envelope system is the key ingredient to finding success with this approach. The debt roll-down principle works by maximizing the total monthly payment that you can make toward debt repayment. Each time you pay off a debt, you add the payment for that debt to the monthly payment for the next priority debt (from your list of debt obligations), which accelerates the rate at which that second debt is paid. When the second debt is paid, you add the payment you have been making on this debt to the monthly payment for the third priority debt. This process is continued until all of your debt has been eliminated. The key is to continue making the same aggregate debt payment each month, even after some debts have been eliminated. Following this debt elimination principle can often assist you in eliminating all of your debt, including your mortgage, in as few as seven to eight years. Read the entire article...

Saving some extra money is easy!

By Steven B. Smith, author of Money for Life, Budgeting Success and Financial Fitness in just 12 weeks ( www.moneyforlifebook.com)

The first step to finding a little extra savings each month is to find out exactly where your money is going. To do this:

Track your purchases and put together a spending plan.
Make sure your spending is less than or equal to your income.
If your spending is more, make adjustments to your spending plan by reviewing your spending categories.

Once you know where your money is going, it’s easy to find ways to make small adjustments that really add up. Read the entire article…

Save a little extra…
By Steven B. Smith, author of Money for Life – Budgeting Success and Financial Fitness in just 12 weeks (www.moneyforlifebook.com)

Saving additional money each month is really about discovering where you’re paying too much for goods and services. Once you know where your money is going, it’s easy to find ways to make small adjustments that really add up. Look first at reducing your spending in discretionary categories – such as eating out, lunch, entertainment, clothing, and personal items – can often be reduced. If you cut a little in each area, you likely won’t feel the pinch, but you can still make a difference in the big picture. Read the entire article…

Congratulations on completing the Financial Fitness University Spending Management Course, brought to you by Money for Life!

Budgeting eCourse - Day 4

2005-06-01T11:50:00.000-06:00

Welcome back to Day 4 of the Money for Life Spending Management E-Course!

Congratulations on completing Day 3 – you are now more than half way through! In Day 4 we will create a balanced spending plan, review the success cycle and learn how to use the envelope budgeting method in today’s high-tech and often cashless world.

The following checklist will assist you in keeping today’s tasks straight:

Learn the four steps of the Success Cycle
Create a balanced Monthly Spending Plan
Read Using the envelope budgeting method in today’s cashless society

Learn the Four Steps of the Success Cycle.

In order to make changes, you need to have a system that you can really use. The Success Cycle is a system that many businesses use – it is ideal for individuals as well. The Success Cycle will help you stick with your plan to spend less than you make. There are four basic steps to this system:

FIGURE Success Cycle

The Success Cycle seems relatively simple, but results can be extraordinary when these steps are followed consistently. All four of the steps must be followed for this system to be work effectively – the steps cannot be shortened or eliminated. In our society we often like a quick fix, however, we need to keep in mind that financial fitness and stability will come through the steady and persistent application of these proven principles.

Let’s review each of the four steps in detail to ensure that you understand them clearly.

Step 1: Create a plan

Just like you wouldn’t consider taking a trip without a plan and a road map, you don’t want to navigate your financial world without a plan. You created your Net-Worth Statement – the next step will be to determine what direction you want to take next. An important element of this will be how you plan to spend your money on a day-to-day basis so that you can get closer to your financial goals—that’s where creating your balanced spending plan comes in. We will do that a little later in today’s lesson.

Step 2: Track every transaction

Once your balanced monthly spending plan is completed, it will be critical that you track all of your transactions so that you can assess your progress. The only way to get complete value from tracking is to track every transaction – that includes expenses and deposits in all your budget categories, but also in all of your accounts. Tracking every transaction can seem overwhelming at first, but with the right tools, this can be very simple. There are many different tools you can use to do this effectively—You can use paper, an electronic spreadsheet, software, or an online application such as Mvelopes® Personal, or even a combination of all of these.

Step 3: Compare your actual performance with your plan

Unless you take the time to compare your plan with your actual results, having a written plan will do you very little good. This comparison step is a crucial one – it includes looking at both your income and your expenses. As you make this comparison, you will immediately understand how and where to make necessary adjustments. You should compare your results on at least a monthly basis.

Step 4: Make adjustments

Creating a perfect plan the first time around would be nearly impossible. Planning is a process that takes time, information and experience. As you plan, track and compare, you will gain the information and experience needed to adjust your spending plan accordingly.

You may want to increase spending in certain areas, and decrease the allocation for another. The plan should be tailored to your own personal needs, and that of your family, if applicable. That is the only way you will find success.

Create a Balanced Monthly Spending Plan

In Day 3 you created your list of spending accounts, or categories, for your spending plan. The next step we will want to take is to assign a spending amount to each of these categories.
Define the amount of monthly spending for each envelope spending account. Starting with the list of envelope spending accounts, determine the amount that you have previously spent in each category. To do this, it may help to look at past statements and/or receipts.

Sometimes it’s easier to determine the amount you spend annually. If that’s the case, simply divide the annual amount by 12 to determine the monthly amount. This is especially true for your periodic spending expenses. Calculate how much you will spend on vacation, car registration, annual insurance premiums, holiday gifts, etc. Divide those amounts by 12 to determine how much you need to set aside each month to cover these periodic expenses.

Using the Monthly Spending Plan Worksheet record your annual and monthly spending for each of your envelope spending accounts. You will likely need to make adjustments, so please be sure to use a pencil to record this information. Use the example below as a guide if needed.

When you have entered a monthly and annual spending amount for each spending category, calculate the totals for monthly required, monthly discretionary, periodic required, and periodic discretionary accounts. Next calculate the total annual spending and total monthly spending by adding up those sub-totals.

Don’t worry if at this point your spending appears to exceed your net income. On average people spend 10% more than they bring home, often without realizing it – just as the case may be with you. In the next step we will work to balance your spending plan so that this overspending does not continue to occur.

This spending plan is a working document. Once you start tracking your expenses from day-to-day, you will be able to review your spending plan and make adjustments as needed.
Balance your monthly spending planNow that you have calculated your total monthly spending, lets compare it against your total monthly net income so that we can determine if you are over or under spending. As I mentioned, people spend on average 10% more than they bring home, so don’t be surprised if you are amongst those that are doing just that.

A balanced monthly spending plan means your monthly spending requirements equal your total monthly net income. First thing, determine the amount, if any, that you have left after you have satisfied all of your monthly spending requirements. You would calculate this number by subtracting your total monthly spending (the amount you just calculated in the section above) from your total monthly net income (the amount you calculated in the lesson on Day 3). This is easy to do right on your Monthly Spending Plan Worksheet – simply record your monthly net income in the space provided and subtract the total monthly spending from your total monthly net income.

As stated before, don’t be shocked when you see this number for the first time. Most people in our society are over spending their income each month. If you are one of the fortunate few who are spending within your monthly net income, you have a few choices:

Allocate the remaining balance to one of your envelope spending accounts, such as savings
Increase the amount you are allocating for debt repayment or investments

It is important that you allocate all remaining income to an envelope spending account or accounts. Income that is not allocated may be spent in ways that are haphazard and unplanned. Or even in ways that are contrary to your financial goals.

For the rest of us, who are overspending, we need to find ways to reduce the amount of our monthly expenses, so that the total monthly spending is equal to our total monthly net income. The first envelope spending accounts that you will want to review for reductions are your discretionary accounts – both monthly and periodic. Review the list you have created and look for areas where you believe you can make reductions in your initial spending amounts. Keep track of the adjustments that you are making and subtract these adjustments from the total amount of overspending.

Remember, the goal is to live within your means. If you spend less than you make consistently, you will be able to build wealth, rather than debt.

If you really want to make a change in your financial life, you may need to make some sacrifices. No discretionary envelope spending account should be spared – cut expenses wherever possible to get your spending down below your income. If you are married, make these decisions with your partner – this will ensure greater success. When you are involved in the budgeting process together, you can count on successfully reaching your financial goals.

If you still need to make reductions after you have reviewed your discretionary accounts, it’s now time to look at your required expenses. Adjustments to these accounts are more difficult, as they usually require more significant changes. Carefully review each spending account to determine which can be adjusted. Sometimes you can negotiate reductions in your insurance expenses, reduce your cable or cell phone plan, or even refinance existing debt to facilitate a lower interest rate; therefore, reducing your monthly payment.

Once you have balanced your spending plan, you will likely feel a sense of relief, knowing that you can live within your means. If you can master the principle of spending less than you make, you will very soon start to see the positive results. As you continue to reduce your debt and increase savings, you will be able to reach a financial fitness level that few others enjoy.

Using the Envelope Budgeting Method in Today’s Cashless SocietyTraditionally the envelope budgeting method used cash and actual paper envelopes; however, in today’s high-tech and often cashless society, that would be a little unrealistic. Some expenses simply cannot be paid in cash and, therefore, we need to find ways to use these tried and true principles of envelope budgeting, in today’s world.

The major problem with many budgeting systems has been that they provide after-the-fact information, meaning you create a plan in advance and determine the amount you will spend in each spending category. At the end of the month, you then run a report, which tells you all the categories in which you have overspent. With this approach, the information is not real time—in other words, you did not have the information you needed at the time you were making a purchase decision. Systems like this do not tell you how much is left to spend. An envelope budgeting system provides this critical information. Read the entire article on Envelope Budgeting…

Congratulations on completing Day 4 – you are almost done! In Day 5 we will learn how to use credit cards effectively without increasing debt using an envelope system, we will create a debt elimination plan to rapidly decrease your debt load, and we will read some articles on how to save some extra money.

See you tomorrow!

Budgeting eCourse - Day 3

2005-05-29T11:09:00.000-06:00

Welcome back!

Congratulations on completing Day 2! In Day 3 we will introduce you to a budget calculator, show you how to calculate your net income and start your list of spending envelopes for your spending plan.

The following checklist will assist you in keeping today’s tasks straight:

Calculate your Net Income
Use the Budget Calculator to see where you are spending your money
Create your list of Envelope Spending Accounts
Read Budgeting – Tips for Succes

Calculate your Net Income

The first thing we want to do today is calculate your net monthly income – it’s a fairly easy and quick process. Your net income is the amount of income that you 'take home' from each paycheck, after taxes and other deductions. Your net monthly income is the total that you take home each month.

Download your net monthly income worksheet and let’s get started! To calculate your monthly income, we need to first look at how often you get paid.

The most common pay periods are every two weeks, paid twice monthly, or paid weekly. These options apply to salaried individuals whose paychecks are a consistent amount for each pay period. (If you are paid on commission, or on an hourly basis, you will want to review the section on variable income a few paragraphs down.)

The following chart will help you to calculate your monthly net income based on the your pay schedule. Simply find your pay schedule in the left column to start.

Once you have determined your pay schedule, take the net amount of your paycheck and multiply it by the number of weeks shown in the chart. This will give you your net income for the year. Simply divide that number by 12 to calculate your monthly net income.

If you have variable income (commission based, hourly or an other wise changing amount for each paycheck) it is still easy to plan for your monthly income. You can either average your income, or select the least amount you expect to receive in a month.

If you go with the least amount, then you know that you will never overspend, as long as you make the minimum. When you have extra income, you can apply it to savings, debt reduction, periodic spending, etc.

If you go with the average method, simply take your last years’ income, or 6 months of the previous year, total it up and then divide by the number of months that you counted. Use this average amount for your monthly income.

Filling in the Monthly Net Income WorksheetNow that you know how to calculate the monthly net income, we need to do that for each income source that you and your spouse or partner if applicable, have. Simply enter in the "income source" column of the fixed or periodic net income areas.

Fixed Net Income – Fixed income refers to income that you receive every month on a regular basis, such as your salary or wage.
Periodic Net Income – Periodic income refers to income that you do not receive every month. This may be a bonus that you receive quarterly or yearly. Or if your ‘pay period’ is, for example, every two weeks, periodic income refers to the extra paychecks that you receive during the two months of the year where there is one extra pay period.

After filling in all of your income sources, the net amounts, and the pay periods, calculate the monthly and annual income. After making the calculations for each income source, total the fixed and periodic sections to get your total fixed net income and your total periodic net income. Next of course, you will calculate the monthly net income by adding the fixed and the periodic income totals.

Use the Budget Calculator

Now that you have your total monthly net income, we can start down the road to creating your balanced monthly spending plan. Let’s use the Mvelopes® Personal Online Budget Calculator to give you an idea of how much you are spending in each category and how that relates to not only your monthly net income, but also to the national spending averages. Click here to use the budget calculator.

Follow the steps through the Mvelopes Personal Budget Calculator and be sure to print out your results. Keep that report handy; we will use it today to create your list of spending envelopes for your monthly spending plan, as well as using it Day 4.

Create your list of Envelope Spending Accounts

Download the Spending Accounts Worksheet and we will get started on creating your personal list of envelope spending accounts for your personal monthly spending plan.

First thing we will want to do is identify the different type of envelope spending accounts that you will need. There are two types of envelope spending accounts— monthly and periodic.
Monthly envelope spending accounts are for areas of spending that have spending activity each month.

Periodic envelope spending accounts are for areas of spending that have spending activity only periodically—for example, quarterly or even annually.

Let’s first deal with the monthly envelope spending accounts, which can be either required or discretionary. Monthly required accounts include planned savings; car payments; and the minimum or planned payments for credit cards, mortgage payments, and the like. Monthly discretionary accounts include groceries, dining out, clothing, entertainment, allowances, and so on.

Next, let’s address periodic envelope spending accounts. As with monthly accounts, these can also be split into required and discretionary spending. Periodic required accounts include items such as property taxes, periodic insurance payments, annual auto registration fees, and the like. Periodic discretionary accounts include items such as gifts, vacations, house maintenance, holiday spending, etc.

Using your report from the Budget Calculator, start filling in the envelope spending account names that you will need for your spending plan. Place them in the appropriate category for monthly or periodic, as well as required or discretionary. The sample below will help you to classify all your expenditures and may also help you think of a few that may have been missing from the budget calculator.

Keep your list handy once you have completed your list of envelope spending accounts; We will transfer the list to the appropriate sections of the Monthly Spending Plan Worksheet in Day 4’s lesson.

Budgeting – Tips for Success

As we approach the end of the 3rd Day of the Money for Life Financial Fitness University Course, the following tips for success will help you stay focused on your goal of becoming financially fit. Let’s just take it one step at a time and you will be pleasantly surprised at how much you can accomplish in a very short period of time!

Don’t get discouraged! On average, people spend 10% more than they make. Don’t get discouraged if you do too. Stick with a spending plan and be committed to fixing the problem of overspending!

Be consistent. Put together a plan, track your expenses, compare your results and make adjustments. Do this every month.

Get everyone involved. At the beginning you may even want to have a weekly family meeting where everyone who spends money is together, reviewing the spending plan. Its critical for you and your spouse to work together but, why not start educating the kids about spending management too?

Learn to “Pay Cash”. Don’t rely on “credit”. If you don’t have the funds in your envelope, don’t make the purchase.

Avoid Department Store or other merchant credit accounts. People tend to spend more with these cards and they often have higher interest rates.

Use the Debt Roll-Down Principle to quickly eliminate debt. With this method, you will see fast results and stay motivated.

Congratulations on completing Day 3! In Day 4 we will learn how to create a balanced spending plan, review the Success Cycle, and read about how to manage, and overcome, the challenges with managing spending in today’s cashless society.
See you tomorrow!

Budgeting eCourse - Day 2

2005-05-26T11:37:00.000-06:00

Welcome back to Day 2 of the Money for Life Spending Management E-Course!

Congratulations on completing all your tasks from Day 1!

Now that you have your financial fitness score, have set your goals, and have made your commitment to spend less than you make, you are ready to take the next step! You now know more about your attitudes and habits surrounding money, spending, debt, and savings; And by setting your financial objectives, you also now know what you are trying to accomplish. For the next step, let’s figure out where you currently stand.

In Day 2, you will work through creating a Net-Worth Statement and a listing of your debt obligations. You will also learn about the envelope budgeting method, the method we will use to create your spending plan in day 3 and 4.

The following checklist will help you keep track of the tasks that you will complete during today’s lesson:
Create a Net-Worth Statement
List out your Debt Obligations
Read The Secrets of Envelope Budgeting

Create a Net-Worth Statement

Before you can determine what changes you need to make in your financial life, we need to get a realistic idea of where you stand today. Let’s start with your net-worth.

Creating a Net-Worth Statement will help you to get an idea of the big financial picture, as it pertains to your assets, your debt, and your overall net-worth.

Remember, when you have completed this form, don’t be discouraged if the number is lower than you expected. Frankly, if you are in the positive, you are doing better than many in today’s world!

Download the Net-Worth Statement Worksheet by clicking here, and then follow these three easy steps to fill it out:

Step 1 – Create a list of your assets

The first list you will want to create is a list of your assets. Let’s start with your cash-equivalent assets. This would
be any asset that is in cash or could be quickly turned to cash. Examples of this type of asset are:

The balance in your checking accounts, savings accounts, 401(k) accounts, and IRA accounts

The cash value of life insurance policies

The current market value of stocks, bonds, or other marketable securities

Another item you may include in this list is money that is owed to you, if you have a reasonable likelihood of collecting the outstanding balance.

Second let’s move on to your real estate assets. Your real estate holdings will include the market value of your home and any other property that you own. List the approximate value of your home and property from a competitive analysis or an appraisal.

The third section of assets is the listing of your personal property. This would include the current value of any vehicles you own, furniture, and other high-priced personal items such as recreational vehicles, jewelry, collectibles and even electronics. For current value of your vehicles use a site such as www.bluebook.com. To estimate the price of other personal property, deduct 25% from the purchase price for each year you have owned the item. Jewelry and collectibles are the exception to this, they often retain their value, or in some cases they even increase in value over time. Using the purchase price of these items would be a safe bet for this exercise.

Step 2 – Complete a list of your debt obligations

Access the Debt Obligations Worksheet by clicking here, or simply list the debts on the worksheet you are using for your Net-Worth Statement. In Day 5 we will use your list of debt obligations to create a Debt Roll-Down Plan, so be sure to keep that list where you can easily find it.

To create your list of debt obligations, or liabilities, you will include items, such as your mortgage, your car loan or loans, a home equity loan if you have one, etc. Don’t forget that debt consolidation loan you took out last year to pay off your credit cards.

Next you will want to list the balances owed on any personal loans, student loans, charge accounts, credit card accounts, and any other type of consumer debt. You should be able to find the current balance for each of your debts by checking your most recent statement or by checking for the balance online.

Step 3 – Calculate your net worth

Now that you have your assets and liabilities clearly defined, you will want to total each list – add up the assets, and then separately add up the liabilities. Next you will take the total liability amount and subtract it from the total asset amount. The resulting number is the approximate value of your current net worth.

Don’t forget, many people will have a low number, or even a negative amount. If you have a positive number, that is great! Don’t be discouraged, however, if the number is lower than you expected. With some proactive planning, you can get that number to increase more quickly than you realize.

After completing your Net-Worth Statement, place the date at the top and keep it handy. Every few month, or perhaps twice a year, repeat this exercise so that you can see the progress you are making. You will be amazed at how quickly you can make changes when you have become committed to following the path to financial fitness.

Start Down the Path Toward Change

Now that we have a clearer picture of where you stand financially speaking, let’s move on to how to change your inancial habits so that you can improve your financial fitness and create a more stable financial future.

One way to do that is to learn a new way to manage your spending. The envelope method of budgeting is a tried and true way to do just that.

Read the following excerpt from Money for Life – Budgeting Success and Financial Fitness in Just 12-Weeks and learn the Secrets of Envelope Budgeting and why it has always been so effective.

Congratulations on completing Day 2! In Day 3 we will introduce a budget calculator to help you start on your spending plan, review the spending envelopes that you will want to include in your spending plan, calculate your net income, and read an article on how to be successful at budgeting. See you tomorrow!!

Day 1 - Financial Fitness University

2005-05-25T10:42:00.000-06:00

I found this great resource from the folks at Mvelopes.com. I will post each of the 5 days in this budgeting e-course.

Welcome to the Financial Fitness University, 5-Day course on personal finance and spending management.

It is often said that the first step in overcoming a challenge is to acknowledge that there needs to be a change. By signing up for this financial fitness e-course, you have decided to make a change – Congratulations on taking this first step!

Let’s get started!
Sometimes the most difficult part of any worthwhile journey is just getting started. Often the tasks ahead seem daunting—even impossible. If you break down the tasks into manageable pieces, however, you can more easily achieve success – so let’s take this one day at a time, one task at a time, and we will achieve success together.

In today’s lesson, you will work through activities that will help you understand your current personal financial position and lay the foundation for successfully achieving financial fitness moving forward.

The following check list will help you keep track of the tasks you should complete during today’s lesson:

Make a commitment to change your financial direction
Read Financial Fitness – Its not about hitting some magical number
Take the Financial Fitness Quiz
Set your personal financial goals
Make a commitment to spend less than you make
Read the Money for Life E-Book
Read the Money for Life Success Planner E-Book

Make a Commitment to Change Your Financial Direction.
First – Let’s make sure you are ready to shed your old financial habits and replace them with new and improved habits.

Becoming financially fit will require you to break from our old thought processes in order to forge new habits and behaviors. You must have the courage and commitment to make these changes. You must be prepared to win the battle of the mind before you can move on to the battle of the checkbook.

Read and commit to the following statements showing your commitment to change your financial direction and become financially fit:

I/We will evaluate my/our old thought processes and be prepared to make necessary adjustments in my/our thinking where appropriate.

I/We will evaluate my/our existing financial habits and behaviors and be prepared to forge new habits and behaviors where appropriate.

Financial Fitness— It's not about hitting some magical number
By Steven B. Smith

What does it mean to be Financially Fit? First let’s ask, ‘What does it mean to be physically fit?’ For some, being physically fit means having the strength and endurance necessary to win a marathon; for others, it is simply to finish. While some want to be able to compete at a professional level, most agree that being physically fit means having a level of fitness necessary to look good, enjoy a healthy life, and be able to participate comfortably in the activities they like.

There is no predefined point at which we suddenly become physically fit. Physical fitness is more about being on the right path and doing the right things from a diet and exercise perspective than reaching some magical point in time. However, having specific and attainable objectives that provide motivation for continual improvement is very important. Otherwise, we may struggle with direction and find it difficult to stay on the right path. Read the entire article...

Set your personal financial goals.
The Financial Fitness Quiz should have helped you to focus your thoughts on the areas in your financial life that you would most like to change. Understanding what these areas are and then making a commitment to change them is a very important step in achieving success.

For some tips on effective goal setting, read Tips for Successful Goal Setting, simply click here to view the article. Next, write down the things you would most like to change in your financial life. Some examples are as follows:

No longer living paycheck to paycheck
Having the money saved for your next vacation before you leave
Having the money saved for holiday expenses before the spending is required
Paying cash for your next vehicle purchase
Reducing or eliminating consumer debt
Saving for long-term spending requirements, including college and retirement
Being able to travel without going into debt
Having money set aside for emergencies
Creating and living within a budget
Purchasing only those things you can truly afford
Working together with your partner to achieve financial goals
Eliminating the fear, uncertainty, and doubt surrounding finances
Having the peace and happiness that comes from knowing you are financially fit
No longer spending more than you make

Write down a list of your personal financial objectives—things in your financial life that you would most like to change, or achieve:

Make a commitment to spend less than you make.
While financial fitness is not contingent on how much money you make, it is contingent on how you manage and spend that income.

For the majority of people, managing our spending and keeping our financial house in order is a constant challenge. We spend a great deal of time and energy worrying about running out of money, paying the bills, and increasing our debt load.

Many people have the desire and even the knowledge necessary to be financially fit; They just simply haven’t had the right tools to be able to accomplish it. In today’s world of financial excess and convenience, we have many methods by which we can access and spend money; We, however, have not had an easy way to track all this spending or a tool that helps us plan ahead. Unfortunately, without these tools, people have continued to overspend, increase their debt, and then move on to the next month – often without even realizing what they have done.

If you want to become financially fit, the first thing you need to do is stop overspending. This sounds simple, but for most, it’s anything but. The fact is, if you don’t have the right tools, including a spending plan, you will continue to struggle with overspending and debt accumulation.

Being financially fit is a realistic goal and one that everyone – regardless of income – can attain. Make the commitment to spend less than you make on a consistent basis and you too can reach financial fitness.

Take the Financial Fitness Quiz.
The Online Financial Fitness Quiz will calculate your results for you. Simply click here to take the quiz. If you would rather download a printable version, just click here to do so.

Download the Money for Life E-Book
All of the principles discussed above are included in the book, Money for Life. Download the e-book version so that you can find out more. (1.54 MB)

"Thank you very much for this little jewel of a book. I didn’t think that a book on the subject of budgeting and finances could be as enjoyable and informative as this one. It was such an easy read. I understood the lessons, and then I immediately shared it with my bookkeeper and told friends about it. I look forward to using the Mvelopes Personal System."
Donna Yerman

Download the Money for Life Success Planner E-Book
Many of the worksheets, forms and exercises in the 5 day e-course are included in the Money for Life Success Planner. Download your free e-book version now so that you can find out more. (5.36 MB)

Coming up in Day 2, of the Money for Life Financial Fitness University – 5 day spending management course, you will get the opportunity to create a Net-Worth Statement and learn about the envelope method of budgeting.

See you tomorrow!

Why bother with a personal budget?

2005-05-24T09:24:00.000-06:00

Hello! And welcome to the inaugural posting to the Personal Budget Blog. I plan on updating this blog several times a week.

My name is Adam Speed and I LOVE personal budgeting. Ok, maybe love is too strong a word. But I consider myself to be the unofficial personal budgeting spokesman, promoter, and flat out “preach it from the corner” guy. The reason for this is that budgeting made such a huge difference in my financial life. I was in debt and tried everything to get out of debt. Loans, debt consolidators, debt counseling, book, seminars, financial advisors, I tried everything and nothing worked for me. I wanted an easy fix and I really wanted someone to do it for me. It sounds kind of funny as I type this, but this is what I thought (and millions out there think just like this).

Well, it wasn’t until I learned one single concept that I finally “GOT IT!”. It was SOOO simple in principle but SOOO difficult in practice. And the secret is……………

“Spend LESS than you make!”

It really is simple when you think about it but very difficult when it comes down to actually doing it. And there is a reason it is difficult. It is because in the modern technological society we live in today it is almost impossible to know where you money is and how much you have left to spend. Today we live in a near "cash less" society. Using debit cards, credit cards, automatic deposits, and wire transfers we rarely even see our money. It's easier than ever to spend, spend, spend!

How can I spend less than I make if I don’t have any idea how much I have left? This is why most Americans spend 10% more than they make each month. AMAZING!

So I have a website dedicated to personal budgeting located at http://www.personalfinancebudgeting.com. Check it out if you have any specific questions or need an article on a specific topic. There is also a very active personal budgeting forum where you can post your questions and get answers quickly.