Home Budget – How to Live Within Your Means

Spending a little time creating a home budget will help you live within your means and live a better life. Unfortunately few families view this as an important part of their lives – those same families are finding it more and more difficult to make ends meet.

I read lots of experts that recommend that you track every penny that you spend, that you develop a budget that has 50, or 60, or more categories for everything from postage to pasta, from envelopes to electricity.

I don’t know about you but that seems like an awful lot of work to me! I tried this method back in my 20’s but could never stick to it, I found it wasn’t any fun and was overkill.

A am a big believer in home budgeting, you can’t improve what you can’t measure is a business axiom that I think fits when it comes to using a budget to improve your personal finances.

Here are some tips to help you with your budgeting:

Keep it simple: Start out by creating a budget uses a dozen or so main categories that fit your lifestyle and that you want to understand where your money is going. By starting simple you can build the habits you need to succeed, and begin the process of learning.

Make it fun: Let’s be real…for most of us tracking where our money goes is not very exciting. I found that finding ways to make the process fun helps me stay on track, and provides incentive to continue. Try rewarding yourself for accomplishing a certain goal, or look for creative ways to reduce your spending.

Make it meaningful. This is your money we are talking about, your life. Simply because someone recommends you budget for electricity does not mean you have to or should. Electricity might be a very small portion of your monthly expenses because of the part of the country you live in or your lifestyle. Why spend the time and energy tracking a small item when you are spending $300.00 a month on a coffee habit.

Make change. A budget is a plan. It is a road map for getting from where you are to where you want to go. It is meant to change, and you need to accept this fact. If something is not working, or you need to create more detail…then do it. Develop a process and routine that works for you, and then continue to review what is working for you and what isn’t…then make the necessary adjustments.

Budgeting requires that you take personal responsibility for your finances and that you are disciplined. Like anything that is new, it takes time to learn. If this is your first budget it will probably be a mess, that is ok…it is supposed to be. Allow yourself to make mistakes, make changes from what your learn and get a little better the next time. With home budgeting, in a years time you will not only have more knowledge about the process of budgeting but you will also have more money in the bank as a result of living within your means.

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Five Ways to Stop Creating Debt

Most of us have been there – incurring credit card debt and seeking ways to consolidate the debt by utilizing another credit card. The “borrowing from Peter to pay Paul” syndrome is alive and well and as a result consumer debt is higher than it has ever been.

The current economic crisis has produced a credit crunch that is wreaking havoc on credit card interest rates. Even though the Federal Reserve has lowered interest rates dramatically, it has not decreased the interest rates on credit cards. To the contrary; because of the increased burden on consumers, many individuals are either going into default or declaring bankruptcy. Moreover, the banks are raising interest rates for those who have been making late payments and/or skipping monthly payments. People are scrambling to consolidate student loans debt

If you are concerned about your current debt, here are five ways to help you deal with the situation:

1. Debt Consolidation. When you receive a credit card offer in the mail stating that you can pay off other credit cards by applying for the card with a 0% APR – read the fine print. The 0% APR is applicable for a short time only. Unless you can pay off the new card within the time frame given, you are just creating additional debt.

2. One Card Only. If you have more than one credit card, save one for emergencies only and cut up the rest. If you cannot afford to buy an item with cash, don’t buy it at all.

3. Pay Down Debt. The next few years are going to be difficult during this recession. Start paying off credit cards using the Snowball Method. Make a list of the credit cards, with the highest interest rate card at the top of the list. Instead of paying the minimum for the card on top of the list, add additional money to the payment. Once the first card is paid off, use this same method with the second, and so on.

4. Credit Card Checks. Every month you may receive credit card checks, one of which is probably made out to you for the amount of $1000 or more. The rest of the checks can be used for purchases or transfers. Rip them up! It is very tempting to deposit the check and use the rest to make purchases.

5. Department Store Credit Cards. No doubt you have been asked by the cashier at a department store if you wish to apply for instant credit in order to obtain a discount on your purchases. Do not apply. Department store credit cards have the highest interest rate among all credit cards.

We are a nation in debt - over a trillion dollars’ worth. Since we do not know how long this recession will last nor how it will affect our income and retirement savings, it would be prudent to resist any temptations that may come your way inviting you to spend more than you can afford.

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Frugal Living Tips - A Beginners Guide to a Simple Lifestyle

More and more people are looking for a beginners guide to frugal living as they face tough economic conditions, or from their desire to have a more positive personal impact on our planet. For those just starting out, learning to live a simple lifestyle may prove challenging. It may be rough going at first, but eventually you will get the hang of it.

Frugal doesn’t necessarily mean cheap – at least not the way it was thought of years ago. It simply means living within one’s means and not going overboard. It is about setting a personal gauge as to when enough is enough and using this as a benchmark or foundation from which to make decisions.

Living a frugal life allows you to save money for important things such as a child’s college education, or health care, or getting through hard times.

Being frugal offers a valuable lesson to children by showing them that one can live a modest lifestyle and still come out ahead. It teaches children the value of a dollar and, by witnessing how mom and dad conduct the financial area of their lives, sets an example that the children will utilize in their adult years.

Sometimes it’s the lessons of the past that come back to remind us of just how lucky we are. Our parents made purchases with cash only, rarely had debt, and certainly never used credit cards. If you think back to your childhood, you can probably remember instances where your parents didn’t buy anything unless they could afford it.

It seems we have come full circle. As adults and parents, we too are finding alternative ways to save money. You can label it any word you desire, but the bottom line is that family is important. We will do whatever we can to make our loved ones comfortable. We will feed them, clothe them, and keep them healthy and happy. That’s all that matters.

When frugal living tips are applied to your life as part of an overall plan, tremendous growth and change is possible. Frugality combined with sound personal finance basics and personal growth principles can propel your life forward and help you achieve financial independence. More and more people are choosing to adopt a frugal lifestyle more in harmony with their personal values and as part of living a more balanced life.

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