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5 Steps to Creating a More Efficient Budget

Many people cringe when they hear that they need to make a ‘budget’. The fact is, a budget simply gives you control and, in time, may surprise you by how much you will be able to save.  It’s also imperative if you want to stay debt free, (or close to it) pay off your existing debts and grow a nice savings account. Read below to see 5 Tips for Budgeting that will help you become a budget master.

Tip 1) Write down your specific, exact earning as thoroughly as you can, even so far as side money, hobby income and overtime.  This needs to be as accurate a reflection of your true income as possible.

Tip 2) Using the same pad and pen, write a complete list of all your monthly fixed expenses. Rent, your mortgage, utilities, credit card payments, car loan, cell phone, etc.  Once you have that done divide every payment into 4 parts to know what you need to take out of each check to pay for the entire month’s bills.

Tip 3) Use a notebook and keep an exacting record or every single expense for 1 month that isn’t a monthly bill.  Even something as trivial as a cup of coffee or a candy bar.  At month’s end sit down with your list and take a look where you could save money, like buying coffee from the local convenience store instead of Starbucks or bringing lunch a few times a week instead of going out.

Tip 4) Once all of those numbers are crunched subtract your expenses from your income.  If the number you end up with is a negative number you need to go back with a sharp knife and trim more until the numbers work.  The last thing you want to do is relay on credit cards to keep you afloat, they’re only for emergencies.

Tip 5) Experts say that you should put 10% of your paycheck aside every week for savings.  If you crunched the numbers and you can’t do that you need to keep shaving off stuff until you can.

If you can handle all of these tasks and make them happen you will not only have a balanced budget but will be well on your way to building a nice nest egg for yourself.

How to Borrow Without the Sorrow

Keeping control over your finances can be difficult, especially in these economically challenging times. There will inevitably be a point in your life where you may need to borrow money to make important payments, so being properly educated and equipped to make the right call is therefore hugely important.  Here is some advice for those considering borrowing money.

Avoid wasting assets

You should try to avoid borrowing money to buy things that will not produce any income or worse, drain your income. Wasting assets can be anything from holidays to a new car; they are an unnecessary cost that should never be borrowed for to attain.

If it is hugely important that you do borrow money to buy a new car (for business purposes for example) it’s equally important that you borrow sensibly in order to buy it, making sure that the way you borrow leaves you with the most manageable debt to repay.

Use a credit card

There are a number of 0% interest credit cards out there that can help you make payments. 0% interest cards will normally give you 12 months of 0% interest on all your transactions or balance transfers as long as you meet your minimum monthly payments. Provided that you can pay them off, ideally at the end of every month. these cards are a great way to cover the costs of your day-to-day spending.

Making sensible use of a card will give you more flexibility, meaning you can deal with large bills that come out of the blue. On top of that, if you are responsible and quick to pay off your card debt, you can beef up your credit rating.

To reinforce the point, credit cards, managed well, can be beneficial. But fail to pay them off before the initial low interest rate ends, or fail to make repayments, and they can see your debt spiral.

There are a number of different credit card options, suitable for different financial needs, so be sure to compare credit cards to find the right solution for you.

Don’t borrow from friends and family

It can often seem like the best and most convenient way of borrowing money, but borrowing from friends and family is normally a bad idea. Unless the loan is agreed in a fully professional manner, it can lead to many disagreements and possible ending of friendships. Taking loans from proper institutions forces you to take your finances seriously and make payments on time.

Never risk your home

Losing your home because of missed loan payments can heart breaking. You should avoid any form of loan that is secured against your home; you will be surprised how many loans include this in the small print, so do your research! You should only be taking out loans against your property to pay for improvements or extensions to your property because they can add value.

Teaching Kids the Right Financial Mindset

The following is a guest post from Steven Stanich of Financial Planning Tips

I know that many of the great money management skills I have came from my parents, especially when it comes to saving money. And there are definitely certain things I’ve had to learn on my own, and certainly some things I could improve on.

But what if you could teach your kiddos from early on how to be personal financial planning superstars—such that you’d never have to worry about their financial health?
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Can You Guess the 7 Highest Paying Jobs?

The job market has been incredibly scary the last few years. When I read the news headlines, it’s hard to find any good news about a job recovery. I suppose it’s a combination of news outlets competing for eyeballs and the growing sense that things are much different this time.

In that sense, I try to highlight positive aspects about earning and spending for individuals as I cull the interwebs for interesting, entertaining, and enlightening stories.

Known for it’s annual “Best Places to Live” comparison, in conjunction with Money Magazine, the researchers at CNN.com put together other “Top” stories throughout the year.
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Two Income Generating Ideas


I know I’ve been on a “making money” roll the last two weeks or so. After running a few eBay auctions and doing a small bit of consulting on the side, I believe even more now that earning a few extra bucks can dramatically alter your financial position.

So, I took Friday off last week and fired up the brain cells to come up with two more, maybe a little unusual, money making ideas. These are based off my own interests—one food based and one art based. But hear me out. These two ideas are interests I’ve had but, for one reason or another, I didn’t feel they were ready to bear fruit. Until now.
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Stop Job Shopping – Start a Business

Stop Job Shopping

I quit trying to find the perfect job. After nine years of high expectations and much disappointment, I decided the perfect job was more elusive than real.

And if I wanted to work hard and earn a living in the process, I would have to be the career I was looking for instead of relying on luck and someone else’s good graces.
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The Money and Happiness Relationship

I have an unexpected fascination with money and happiness. Unexpected because I didn’t realize how far my quest to learn about the subject would take me. I’ve written about it before here, here, and here.

A recent Bucks Blog article by Carl Richards resumes my fascination with money and if/how it impacts our overall happiness.

Mr. Richards cites a recent study by Princeton University quoted in Time magazine.

According to the study,

people reported an increase in happiness as their incomes rose to $75,000 a year. Then, the impact of rising income on happiness levels off.

What’s odd about this statement is that it pegs happiness at a specific number—75K per year. Happiness would seem a much more complex issue, don’t you think? What about work environment, level of tangible impact a job has, and whether you actually like your job? And, of course, what about the world’s billions who live in abject poverty?

If you believe that happiness can be reduced to a functional equation up to $75,000, then how do you explain all those stories of people around the world with very little money and a whole lot of happiness?

As soon as you’ve defined happiness in such distinct terms, you’ve drawn a line where most of the world’s population falls woefully short. The moment we do this

we have to deal with the reality that there are plenty of people who seem to have very little money and lots of happiness.

The problem I see with this, and the problem the author finds as well, is that our westernized/capitalistic driven society likes to compare and contrast everything using numbers. We like to know where we stand in our company’s pecking order. And salary is the easiest most clean cut way to do that.

I wonder if linking happiness to money might be part of this continuing obsession we seem to have with measuring, comparing and competing.

I wonder too. I also believe that happiness is more complex. That one man’s happiness may be another man’s nightmare. And that if we can’t define happiness using an objective measure, why keep searching for it? After all,

[p]erhaps the more we try to define, measure and compete for happiness, the harder it is to find.

My thanks to Carl Richards for his enlightening insights.

Can you Visualize One Trillion Dollars?

I knew a trillion$ was big. I just didn’t realize how big. Watch it all the way through. The punch line is at the end.

Money Sucking Financial Products

Financial scams, frauds, and outright criminal activity are easy to spot. Of course, the phrase “there’s a sucker born every minute” didn’t hit our lexicon without good reason. For the most part, we’re wise enough to see through—or at least be skeptical of—too good to be true financial products.

But there are financial products which aren’t outright fraudulent or illegal that can be just as harmful as the bad stuff. Products many of us see everyday and take for granted.

MoneySmartLife recently examined a few of these products. According to the article,

…not all the financial innovations have been positive; there have been some products and services created that can be a major drag on your net worth and even on your quality of life.

First up is payday loans. These storefronts have become so ubiquitous that I make it a game to count how many I can find while driving through a town or city.

These “lenders” use loopholes in state laws to get around maximum interest regulations. Your payday loan could cost you 100% to 500% depending on how deep in the trap you get caught.

Let’s say you borrowed the $400 for the refrigerator and they charged you a $20 fee. You write a check for $420 to be cashed 10 days from now. Even if you paid off the loan after 10 days you’ve paid $20 for 10 day loan on $400. That’s an annual percentage rate of 196%!

In a previous life, I owned a computer service company. I occasionally did work for one of these loan companies. What amazed me most was that they didn’t try to hide the exorbitant rates they charged. Rate sheets were plastered all over the walls in the waiting area. The first time I saw one, I thought it was a joke. I chuckled out loud to a disapproving look from the owner.

Next up are interest only mortgages.

Think about these scenarios that might lead you towards an interest-only loan:

1. You can’t afford a regular mortgage today, but some day your income will go up and you’ll be able to refinance into a standard 15 or 30-year mortgage that includes principle payments that will eventually lead to you owning the home.

2. You will never be able to afford the house, instead you rely on any gains from price appreciation from the price your purchased the house at.

Both of these could potentially result in you never putting a dime toward actually owning the home! Doesn’t sound like a good idea to me.

Another pitfall is that these mortgages “automagically” convert to a fixed rate after a predetermined number of years (3 and 5 years being typical) along with the principal payment. But what happens when the market sours, you lose your job, and you can’t sell your home? Hmm. That sounds a little familiar.

Read the rest of MoneySmartLife’s money sucking financial innovations and healthy alternatives.

Can Money Buy Happiness?

We’re supposed to say no but, according to a recent Gallup World survey, most people think money can buy happiness:

“Pulling in the big bucks makes people more likely to say they are happy with their lives overall—whether they are young or old, male or female, or living in cities or remote villages, the survey of more than 136,000 people in 132 countries found.”

But this may have more to do with our perception of how we think people with more money that us should feel and act:

“…people may initially define their happiness by income because they are comparing themselves to the ubiquitous Joneses…But here’s something to consider: Many of the people you envy for their outward appearance of wealth are probably just as jammed up with debt as you are – or a paycheck away from being broke.”

So our answer to the “money and happiness” question may be based more on what we think money will do for us at some point in the future rather than how money actually affects us today. And all based on the perception of someone else. It truly is about keeping up with the Joneses.

What do you think? Has your current income bought you any happiness? Are you trying to keep up with a lifestyle you don’t want or enjoy?

Read the entire article at the Washington Post.

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