Creating Savings From What You Already Have
The plain truth is that most people will spend all of their money every month. They grow to become used to this spending level. It is very, very difficult not to do this.
Financial advisors say it over and over again — you have to pay yourself first. It is the truth. Those of you with 401(k)s don’t miss that money being automatically taken out of your paycheck. You never see it, so you don’t miss it. That is the idea of paying yourself first. If possible, have your employer deposit a portion of your paycheck each month into your savings account. Or perhaps your bank will automatically withdraw that amount from your checking to your savings each month. You never see the money and you don’t have to make any effort to save. It is perfect.
If you pay yourself first, you won’t have a chance to spend the money. When you sit down to write bills out, don’t pay the mortgage first. Pay your savings and then pay your bills. See, most people pay their mortgage, cars and other loans first. Then they pay the electric and water. Then they pay what they can on their credit cards. Whatever is left over is spent on living, gas and food.
Then there is nothing left to save. If you wait to pay your savings last, you probably won’t pay it. You must pay yourself first. Write a check to your savings first, then pay the bills.
We lose a lot of money in just pennies each month. One of the best ways that my husband and I save money is to never spend our change. In fact, every night we dump out our wallets. Anything less than a ten goes in the money jar. It is surprising how in just a month, that money really accumulates. We’ve used the money like a small emergency fund. We grocery shop on it when money is tight or we treat ourselves to a nice evening out. It is an easy way to save.
Another version of this is to put the change you get back from any drive-in in an envelope in your glove box. Do this whether the change is one dollar or ten dollars. When you clean out your vehicle, you will be surprised at how much has accumulated. In fact, it could buy you a tank of gas every once in a while.
When you spend, you can save money as well. Purchase items that grow in value. Extra money lying around? Invest it in the stock market. Invest it in paying off your mortgage early. Use it in ways that make you money. Pay off your debts and invest the rest.
When you save money, the key is to really save it. If you buy something on sale, what happens to the money you saved? You probably spent it on something else. Nothing really went into savings. From now on, when you save $15 on groceries, put that $15 in your savings account. When you don’t buy a new sweater because you know you need to save, put the cost of that sweater into your savings.
Saving money isn’t that hard. It is simply a habit that has to be learned. Experts say it takes two weeks to make an action a habit. So start today, in two weeks it will be easy.
Dealing With Rising Costs
Sadly, we don’t live in a world where one can realistically be expected to save their money. It just doesn’t happen anymore! A few decades ago that could have happened but not any more. It used to be that your income was far greater than your expenses and you could put quite a bit away. But now our income is often outstripped by our expenses! Our income has not kept up with rising prices and rising taxes.
So we’re forced to make due with our current income. Sure we can try to increase that income over time, through pay raises or moonlighting or getting a better job, but the reality for many of us is that we have to figure out a different way. One of those ways is to intelligently use loans to help you with your finances.
Perhaps it means getting a payday loan to bridge us to the next paycheck. Or maybe other times it means using our credit cards to consolidate our monthly expenditures and paying it back once at the end of the month. And still other times it means getting a loan to help us buy the things we need.
There are two types of loans. An unsecured loan is money that a lending agency gives to you based on their assessment of your risk. Your credit rating is one of the ways they make that decision. And since they lose their money if you default on your payment, the risk is higher so the interest rate is higher.
However, if you need to borrow more money or you want a loan at a more attractive interest rate, or you want some flexibility with the repayment terms, then borrowing against your assets is the way to go.
Some examples of assets, or equity, that you just might be able to use include your house your car, your stock certificates, or some other kind of valuable possession. Borrowing against these assets assures the lending institute that they can recoup their losses if you fail to make your payments since there is an alternate form of payment.
Lending agencies like this because it minimizes the risk they take. And you’ll love it because it increases the amount of money you can potentially borrow, it lowers the interest rate you’ll have to pay, and it lengthens the amount of time you’re expected to pay the loan back! What could be better than that?
Some excellent uses for secured loans include such things as debt consolidation or house improvement loans. In both cases, youíll find that a secured loan gives you a good amount of money at an attractive rate so you can reduce your debt payments or increase the value of your house affordably!
We live in a world that expects us to borrow now and then. Don’t you think that a secured loan is the way to go the next time you need to borrow?
Five Budget Tips to Help You Save
Saving money is much easier than earning it from scratch. But it is also much harder than it is to spend money, and as a result, most of us spend what we would rather save. In order to begin saving money, we need to have a plan, and the more automatic the plan works, the better. When we are confronted with the choice between spending money and saving it, we run the risk that we will give in to the temptation to choose instant gratification. So taking the choice out of the equation is one of the first steps to a steady savings program.
Here are five tips for budgeting and saving money, the automatic way:
1) Set up an automatic withdrawal program with your bank, so that every time you make a deposit, a percentage of the money you deposit is automatically transferred to a savings account that is harder for you to access. One way to do this is to have your bank use an automatic deposit system to put a set amount of money ñ for example, $100 ñ into your savings account each month.
2) Save your loose change and small bills. Put a piggybank in your kitchen and every time you come home, empty the change from your pockets and put it in the piggybank. Toss in a few one-dollar donations from time to time. Although it sounds juvenile, you will be surprised how much you can save with this old fashioned method. And it is so much fun to break the bank when it won’t hold another cent.
3) Write down everything ñ and that means no exceptions ñ you buy. Keep a log of every single purchase you make. Write down what you bought and how much it cost. If you left a tip, write that down too. Be diligent about keeping your log book, and if you do it well, you can just do it for a month and gather enough information to help you save even without the log book. Most people find hidden expenses, like $10 per day for coffee or $50 per month for a gym membership that is never used, and then they can easily adjust their budget to save money immediately.
4) Spend less at holidays. And entertain at home. Instead of giving expensive gifts at Christmas, give handcrafted items, poems, or pledges to do errands or barter with friends. One fellow we know agreed to shovel his friends’ sidewalks during one snow season. His friends got a great gift, and he saved some cash to spend once the snow and ice thawed. Instead of going out to eat in restaurants, cook at home or invite friends for a potluck dinner. Rent DVD’s instead of going to the movies.
5) Don’t shop hungry. Scientific studies show that people who have a strong appetite will not only eat more, but they will consume more of everything else, too. Many of us know that if we go grocery shopping while hungry, we will buy more than we need. So don’t do it. Eat first, then shop. But since studies show that it applies to all sorts of shopping, always have a satisfying snack before going to the mall, the clothing boutique, or the sports store. You’ll spend less, and save more.
Learn To Save Money
Living on credit is fashionable. Indulging oneself is fashionable. Saving money isn’t.
This is a pity, as it has much to recommend it. You have more peace in your life. The end on the month is simply a date on the calendar, rather than a countdown to the next pay-cheque. Purchases born of necessity can be made comfortably. Employment becomes a career, rather than a means of survival. You can look your boss in the eye, rather than dreading his gaze.
Why? Because you’ve saved up some money.
Take the cringe-factor out of your life. Erase the dread of the small hours. Put some money in the bank! You may not be able to increase your earnings, but you can decrease your outgoings. This has the same effect as getting a pay-rise; more money for you.
How to save money?
Simple!
Examine what you spend it on.
Then, erase fripperies.
Vices: drinking and smoking are habits that kill you slowly. Save up for your hospital care by giving them up. Your lungs, liver and family will bless you.
Gambling. Gambling is folly. There are only three games the player can use skill to alter the odds even slightly; horse racing, poker and blackjack. These take years of dedicated and expensive research to get good at. And you don’t get rich. All the others will beggar you quickly if you play them. The odds are stacked against you, deliberately, by those who own the game.
Luck favours the bold, special need, or those under the protection of the saints. Betting is not brave, it’s a compulsion, and no god watches out for gamblers. Examine the feelings that surround your impulse to gamble; you will find they eat away at the energy of your life.
Food. There is food that nourishes, and food that enervates. The former is cheaper: fresh fish, fruit, vegetables, clean water. The latter is more expensive, more garishly packaged, and more poisonous: potato crisps, sweets, fizzy drinks, burgers. Consider that you don’t fancy junk food if you are sick; your body knows it takes too much energy to digest, and does not nourish.
Clothes. Do you need to buy fashionable clothes, so you can look like everyone else? If you need to blend in, fine. You can be sure the leaders of fashion don’t. They head to charity shops and buy Harris tweed and old lace for pennies. They get suits made to measure by sweated labour in Thailand. That’s how they get that ‘unique’ look. What’s that, you don’t like the idea of sweat-shops? Guess what, that’s where a lot of fashionable clothes get made anyway. It’s called ‘outsourcing’ and ‘offshoreing’.
Automobiles. Running a car in the UK costs about £5000 ($9000 USD) a year, all-in. Save, by buying a second-hand auto. Save, by buying a less powerful, more fuel efficient model. Save further by thereby getting lower insurance and road-tax.
Personal foibles: I used to buy a lot of internet magazines. These cost up to £5 each, or about $10 in USD. I found a lot of information about the internet, was already on the internet, so I stopped buying the magazines. There are very few papers or magazines worth reading. Find the few that inform, rather than titillate, waffle or distract. Visit the local library, it’s free. Drop in to a ‘Borders’ bookshop, and have a free read.
Debt. Don’t buy what you can’t afford with someone else’s money. Credit cards are an expensive way of getting a loan. Try your friends or relatives first. Your local credit union is a good option; better rates, better terms, friendlier faces. Better yet, don’t borrow. Live free. Keep away from the loan-sharks. You can manage without that holiday.
Put your saved money in a high interest, 180-day notice account. Put it in a bank different to your current one, in case the latter goes bust. Make a mental note that it’s for emergencies only, then contrive to live ‘safely’.
Save up enough to last you a year and a day off work, and notice how much calmer and confident you feel!
How To Avoid Bankruptcy
Filing for bankruptcy is an extreme move, not a quick fix. It’s a long, painful process with a huge stigma, and you’re unlikely to be able to get any kind of credit for ten years afterwards. Yet bankruptcies are on the rise. Out of ignorance or stupidity, more and more people seem to be using bankruptcy as a first option, instead of a last resort. Before you do it, make sure you’ve considered every alternative.
Have You Reorganised Your Debt?
If you haven’t tried debt consolidation or negotiation, you really should. Yes, you’ll have to pay back your debts eventually, but surely that’s better than bankruptcy, isn’t it?
Sell Everything You Can.
It’s better to sell everything you own than it is to go into bankruptcy. Move to a smaller house. Sell your cars and take the bus. Take a good, hard look at your life, and realise that there are very few true ‘basics’: you can do without almost everything. Your house is probably full of quite valuable things that you never use, so bite the bullet and get rid of them. In short, subtract your debt payments from your income, and live like someone who earns that much.
You are going to lose almost everything you own if you declare bankruptcy, so you might as well try to sell it yourself at a better price and avoid the bankruptcy issue altogether.
Work More.
If you can get extra hours, do it. Being bankrupt is such an indignity that you should at least try going to your boss and asking for a pay rise or promotion. After all, the worst they can do is say no. They’re going to find out about it anyway if you declare bankruptcy, and they might wonder why you didn’t come and ask for their help. Also, if you’re married and only one of you works, try to get the other a job – you never know, it might even be fun!
Use the Power of Threats.
One of the best things to do when you’re considering bankruptcy is to write a letter to absolutely everyone you owe money to, letting them know. Make it a very clear threat: ìif I cannot find a way of paying my debts then I will be forced to file for bankruptcyî. Most creditors would rather let you pay back a tiny fraction of what you owe than have to try to get money out of a bankrupt.
Know Your Local Laws.
Bankruptcy laws vary enormously depending on where you are. There are some places where you’ll be forced to give up everything you own to pay your creditors, some places where you at least get to keep your house, and some where you can declare yourself bankrupt and not even notice! Try to get a lawyer – you might think that you can’t afford one, but many will work ‘pro bono’ (for free) for people who really need a lawyer but can’t pay.
The Key To Protecting Your Money
Have you ever experienced a major paradigm shift? You know, the kind where you think you already know something about something…
But suddenly, you learn something new about that ‘something’ that changes your whole perspective and outlook on the topic. If so, then you know exactly what I’m talking about.
Now, you know that something this powerful doesn’t happen everyday. But somehow you kind of wished it did. Right?
So, what if there was an almost-magical, top-secret way you could rest totally secure in the fact that your money was totally safe…and were absolutely sure that nothing bad would ever happen to you.
What if your money constantly increased exponentially without you having to work a minute longer or a calorie harder? Wouldn’t that be really, really cool?
And on top of that…every time you faced a difficult situation you knew exactly what to do to get that breakthrough solution you happen to be need?
Did you know that there is a rock-solid, scriptural principle that you can accept by faith and watch unfold before your very eyes!
Here it is:
“…Bring the whole tithe into the storehouse, that there may be food in my house and test me now in this, “says the LORD of Hosts, “if I will not open the windows of heaven, and pour you out a blessing, that there shall not be room enough for it. I will rebuke the devourer for you sakes, and he shall not destroy the fruits of your ground; neither shall your vine cast its fruit before its time in the field,” says the LORD of Hosts.
Malachi 3:10,11
How powerful is that? All you have to do is tithe what you get and you will be blessed. All of your assets will be protected. This is way better than any kind of insurance you could purchase anywhere!
And on top of that, not only will you be protected, but the Living God (Creator of the entireuniverse) will open up the windows of heaven upon you, and pour out so many blessings upon you that you won’t have room enough to receive it all!
How cool is that? What are you waiting for? Go pay your tithes!
Look at this way. If the Living God were to say to you right now, “Stand on your head for 15 minutes every day at 6:00 a.m. and you will exponentially increase the amount of money you make each week.” Would you do it? I tell you what…I sure would.
So, why do time-tested, proven concepts seem so difficult to comprehend? It’s like they’re hidden right in front of our eyes. All we have to do to see them is open up our eyes.
Open your eyes, and take a look around. You might be surprised at what you start to see.
6 Proven Wealth Building Strategies
Building wealth is as simple as saving a little bit here and a little bit there. You need not have great riches in order to accumulate wealth, but you need to have the drive, determination, and discipline to successfully increase your wealth. Letís look at 6 proven wealth building strategies you can put to use today.
1. Pay Yourself First. If you do not set aside money before you start paying your bills, chances are you will never save any many after you pay these same bills. If your employer has a 401(k) or 403(b) plan, enroll in it and set up a reasonable percentage to invest. The money will come out before you see your paycheck, therefore the ìlossî of discretionary income will be less noticeable to you. Maximize your contribution if you are able, especially if your employer matches your contribution.
2. Save Now. The earlier you start to save in your life, the more you will have later in life. Of course, if you arenít able to save much until after your children are grown, you can step up your savings until you retire and still have a decent nest egg.
3. Get Rid of Debt. Even before you build up your savings it is best to get rid of your debt first before starting a wealth building campaign. If your credit card rate is 14% you will find it difficult to find any investment that gives you a return that exceeds that rate. It would be better for you to pay down your debt first and then implement an investment strategy.
4. Pick The Right Mortgage. If you plan on holding onto your home for a short period of time, select an adjustable rate mortgage as your rate will be lower than a fixed rate mortgage. Use the amount saved to pay down your mortgage quicker; refinance your home if rates begin to climb.
5. Build An Emergency Fund. Nothing wrecks the best laid plan more than an emergency, particularly one that costs you money. Set aside up to six months of your income to live on in case catastrophe hits. Without an emergency fund you will be tempted to take on debt, cash in your retirement accounts, and sell valuable investments. Try recovering quickly from this sort of hit to your wealth without an effective back up plan!
6. Protect Your Assets. You can have a healthy portfolio and see it disappear quickly if you are not properly insured. Make sure that your health/dental, homeowner, life, and disability insurance coverage is adequate to meet your needs. All it takes is one legal judgment against you to wipe out your assets.
Instance riches come to a few, but most riches are realized after careful planning and effective management of your resources. You can properly prepare for the days ahead by implementing these six proven wealth building strategies today.
Do’s And Don’s Of Building Wealth
Don’t fall behind
Finance charges, interest payments, getting discouraged about your finances all problems that can occur if you let yourself fall behind. Whether itís bills, credit cards, or student loan payments, falling behind can be a very difficult problem to come back from. The more you have to pay out in charges, the less you will have to invest in your future.
Set goals
If you donít know where you are headed, how do you get there? In order to accumulate wealth you need a plan. Write out your goals, a way to achieve them, and youíll be on your way to an early retirement.
Invest early
The greatest thing you can do to build wealth is start early. Even if you canít invest much, start with what you can and let your money grow over time. As Albert Einstein said, ìcompound interest is the greatest mathematical discovery of all time.î
Invest in what you know
Whether you are looking to invest in real estate, stocks, or anything else, make sure you know how the investment works. The great Warren Buffett was often criticized for not investing in technology during the dot-com boom. His answer was simple. If you donít know the business model, what the company does on a day to day basis, or how it generates revenue now, and in the future, then stay away from it. This principle can be applied to all types of investing.
Donít do what the crowd is doing
When everyone is starting to get into an investment, that is generally when the smart investors are getting out. If everybody knows a stock is hot, or that their real estate market is booming, it generally indicates a bubble and that itís time to cash out. Investors make money buying low and selling high. If an investment is hot and lots of money is flowing into it, you canít buy low.
Donít try get rich quick schemes
Donít get greedy. This is easier said then done, but donít try to gain too much too fast. Building wealth takes time and hard work there is no easy way to get rich.
Save more
This is another one that sounds pretty basic, but can be difficult to achieve. Often times people want the instant gratification and go out and treat themselves. If you have some money burning a hole in your pocket at the end of the month, save it. Think about how nice it will be when that money is working for you rather than heading out shopping.
Financial Mistakes To Learn From
In this day and age, there really shouldn’t be any reason to make certain financial mistakes. Do a search of the internet and you will find that there are thousands of articles out there that warn you of the pitfalls of certain choices. Advice for living a financially stable life is everywhere. What are you waiting for?
Here are the most common mistakes that I’ve seen people make. I’ve even made a few of them myself. These are the financial mistakes that you can learn from. You’ve probably made a few of them yourself, they are very common.
Mistake #1: Using that little plastic card to get what you want.
We’ll just start off with the number one mistake out there. This is probably the most common mistake in the country. Almost every person in the US today has a credit card. It is almost like a right of passage when you turn eighteen. There are even people out there that aren’t eighteen yet that have them.
Credit card debt is the fastest way to ruin your finances. It is easy to acquire and difficult to pay off. The minimum balance doesn’t pay off enough of your outstanding balance to help you very much. You will be paying on your balances for decades. Even a $500 balance can take you over a decade to pay off if you simply make the minimum payment.
Add in the interest rate, which rarely goes down. If you miss a payment, you will really be paying the bank. Thirty percent interest is common on a credit card once a payment has been missed. And you only have to miss that payment by a day — which can happen in the mail or processing if you don’t plan ahead well enough.
Mistake #2: Buying more home than you can afford.
With the real estate market in the state it is today, many people are regretting their housing decisions. Adjustable rate mortgages are acceptable loan products for some people. But only if they can afford the maximum rate that the loan can hit if interest rates go up. Too many people only consider that introductory rate. They stretch and purchase as much as they can afford. Then, when rates go up and their rate adjusts, they can’t afford the payment. Add that to a slowing housing market, and you may have a foreclosure on your hands.
If you are going to buy a home, make sure that you purchase what you can afford. Take out a fixed-rate mortgage so that you know what your payments will be. If rates go drastically down in the next couple of years, you can always refinance. If rates go up, you are protected. Try to aim for a 15-year mortgage over a 30-year. It will save you hundreds of thousands in interest. But if you can’t do it, a 30-year fixed-rate mortgage is an acceptable loan choice for the purchase of a home.
Mistake #3: Not controlling your money.
Too many people live paycheck to paycheck. They have no savings. They have no retirement plan. They have nothing to back them up in the case of an emergency. They have no control over their money.
You have to take control of your finances if you want to retire someday. You have to learn how to budget, save, invest and spend. All it takes is a little time. And once you get in the habit, you will notice that your life has more control. You should say where your money goes, not lenders or creditors or anyone else.
Mistake #4: Not saving for retirement.
There are more seniors in the work place now than there were twenty years ago. And even more than there were fifty years ago. If you want to retire with enough money to live comfortably, you have to start putting something back today. Start an IRA. Contribute to your employer’s 401(k) plan. Figure out how much you need to invest and find a way to do it. This is your future. You don’t want to reach sixty and realize that you can’t afford to stop working. There is no guarantee that you will be able to draw social security or other forms of assistance then. What if you become ill and have to retire? What if you get hurt? Prepare for the future. Start saving for retirement today.
Family Finance
One of the hardest things that young couples report during their first year of marriage is getting to grips with joint finances. While most are willing to share what they have with their partner, they are not sure on the best way to bring this sharing into effect so that they can share with their new partner, but at the same time maintain financial security and a degree of independence. Some couples resolve this by resorting to separate finances and others find a way to keep things together, but it is generally reported as one of the biggest strains on newly married couples.
As well as this, there is also the problem that many people find it difficult to budget and control their finances. It is one thing to fail to keep track of expenditures when you are single, but when you are married you have more to answer to than just yourself. This is especially true once you have children. If one partner fails to keep control of their spending while the other is forced to worry about finances, it can create an enormous strain on the relationship.
Family Budget
One of the best answers to this dilemma is to create a family budget. This should outline what is allowed for the various expenses, which is to be responsible for what expenses and how much each partner can spend on discretionary expenses. While this may seem like a drastic response that takes away all the responsibility and financial independence from both partners, all it is really doing is getting both parties to sit down together beforehand and work out how much they can afford to spend on what, and then sticking to this. It is about being in control of your expenses rather than letting them have control over you.
Other ways of taking care of difficulties between married couples is to divide out the family expenses depending on how much each partner earns. This way both will feel responsible for the security of the family and will feel like they are an important contributor to the family finances.
Financial Matters
While each partner should have a degree of financial freedom, and also privacy, finances should be discussed openly and with without shame. Past debts or mistakes that one party has made should be put in the past and should be forgotten. At the same time, if one partner shows that they are unable stick to the budgets they have agreed, their financial freedom will have to be taken from them and they should be given a tight leash in financial matters.