Build My Budget

Ever wonder what the big deal is about being debt free?  A little credit card debt doesn't hurt, right?  Wrong!  Especially now, credit card companies are charging minimum fees which can almost prevent you from every paying off the balance! So during a recent conversation with a close friend about her debts and why it is such a big deal, we pulled together a list of 20 fantastic reasons to be debt free.  Thankfully this list made her realize that now is the time to do something about her debt.

Here are the twenty reasons why you should make the decision too:

1.  You live in the present, not in the past.

2.  You no longer have to worry about late fees, interest rate changes, interest payments, lost payments or finance charges.

3.  Undoubtedly, you have a much greater peace of mind.  If something were to happen to you, your spouse or family wouldn't have to worry nearly as much about your finances.

4.  You earn interest instead of paying interest! (which is awesome)

5.  You become more aware of the value of a dollar.  In the past, if you could make payments, you could afford it.  Now, if you can’t pay for it, you can’t afford it.  This basic shift in thought will radically change your life!

6.  You will no longer dread going to the mailbox.

7.  You can afford to put away money in retirement accounts.

8.  You can afford to fund education savings accounts.

9.  You can be free from the emotional baggage associated with debt.  It’s impossible to adequately describe how good it feels to be debt free.  If I had known how awesome being debt free felt back in college, I would have gotten out of debt a decade ago!

10.  You can begin to inspire and encourage others.

11.  You can set a much better example for your close family and friends.

12.  You may be able to give more time and more money to those who are in need.  There are only three things one can do with money – give, save, and spend.  It feels good to save.  It feels good to spend.  It feels great to give.

13.  You now know that you can establish a goal, push through difficult times, and overcome your fears to successfully change your life.  These truths will help you take on bigger and bolder challenges and will help fuel your motivation.

14.  You can now make bigger plans.  I have learned to dream of a better and brighter future for myself and my family.

15.  You can spend a little extra on nicer things for my family.  In the past, credit card debt crippled me.  Now, with a proper budget and some forward thinking, I can actually plan for nicer things.

16.  You can disregard every credit card application that comes your way.  Simply tear them up when they arrive in the mail.

17.  You can establish a solid financial foundation.  With your debts eliminated and an emergency fund in place, you can rest assured you will feel much more secure than ever before!  None of us knows what the future holds, but I feel much better now than I did before I began focusing on paying off my debts.

18.  You can listen to your favorite financial guru and smile knowingly when callers request help to get out of debt.

19.  You will have a deep respect for those who have paid off much more than you paid off – and for those who are still in the midst of their debt reduction journeys.  I am constantly amazed by some of the debt reduction stories that I have read over the past several years.  Read a few blogs and you'll be amazed as well as motivated!

20.  You will be motivated to share your story with the world.  You can join blogs and forums, share your story, and provide support for those people who are where you used to be.  It's a fantastic feeling to help others and what better way than to share your true story of how you became debt free?

If you are ready to get out of debt and start your own journey towards being debt free with a strong financial foundation, start today by building a budget.  By seeing where you are heading financially you can make better decisions today about how to pay off your debts faster and reach your financial goals.

Have any other reasons to add?  Please share them in the comments and as always, keep budgeting!

Chris

BuildMyBudget

Recently I was discussing programs such as Dave Ramsey’s Financial Peace University and other such personal finance coaching programs with a few friends.

What they give you

These programs, such as Financial Peace University collect together several personal finance resources into one place. Typically, these programs provide a step-by-step plan for getting out of debt or recovering from a poor financial situation, such as bankruptcy, and offers suggestions on how to build a strong financial foundation.

Once you’ve ordered, these packages typically are delivered as a large package, containing books, workbooks, CDs, DVDs, or even instructions on how to access live seminars via the web. These packages try to reach out to all types of learners - those who learn from reading, those who learn from watching, and those who learn from listening to and having the opportunity to ask questions of a speaker.  Unfortunately, I tend to learn best when I can watch somebody do something, so either a video or live speaker work best for me.

Quite often, such coaching packages revolve around a series of seminars which function a lot like college classes: there are “assignments” of reading, writing, or DVD watching outside of class, as well as other personal finance tasks. The seminars themselves usually reiterate the material but focus on getting you excited and thinking positive - encouraging you and reinforcing the idea that you can do this, even if it seems impossible at the moment.

Although I’ve investigated only a few of these coaching “systems,” the mainstream programs (like Dave’s Financial Peace University) tend to package a good deal of valuable information with proven motivational techniques. It can have much the same impact as a physical trainer at the gym, providing the motivation and encouragement one needs to push themselves to the next level.

What they take from you

These personal finance systems aren’t free, however.  Typically they are relatively expensive, and if you’re already in financial trouble, another expense is often prohibitive if not a downright poor decision.  For example, the Financial Peace University package costs $119 and includes worksheets, books, a journal, software, and the opportunity to attend any FPU seminars you want. The version with DVD materials is even more, costing $229.

As I mentioned, for a lot of people that’s prohibitively expensive. If you’re working a minimum wage job, that could be as much as a week’s pay!  Even if you’re earning more, that’s more cash than you probably need or want to spend.

Another important thing to consider is that most of the information you’ll get from such courses is already out there.  Such courses rarely provide any significant new information that can’t be found for free at the library or on the internet by searching for “debt help” or by reading through the “debt” category at a good personal finance blog.   I know I’ve seen Dave Ramsey’s Financial Peace Revisited at the library and it contained much of the material in the course—all for free!

Should I or Shouldn’t I?

If you’re simply seeking out the information from these courses, I recommend looking for other sources, such as the library or the internet. You can find all the information you need for getting out of debt without the expense or annoying email advertising that you will be subjected to following a purchase.  Of course, the first step to building a strong financial foundation is to begin tracking your expenses and create a budget.

I think that the most valuable parts of these systems comes from the motivational support that they provide. Many people need step by step guidance on what to do today to start fixing their financial situation.  Many simply thrive on having a person motivate them to make better choices - dietitians and personal trainers are two examples of this—and can mean the difference between success and failure.

Of course, you also have the option of seeking out your own motivation. Find a friend who is in a similar circumstance who can serve as a watchful eye and motivator—and you do the same for them. Alternately, talk about your situation with the people in your life who do the best job of inspiring you to better things - and you’ll feel driven by their knowledge of your situation to improve things.

Of course, good old fashioned direct coaching is the best option for some people and if you’re in that boat, programs like FPU can be just what you need to turn your situation around.

As always, keep budgeting!

Chris

BuildMyBudget

BuildMyBudget receives many visitors each day. Some pop onto the home page, check out what articles are new, read through them, and bop onto another site. What you might not realize is that there are several additional ways through which you can enjoy and get useful information from this site. Here are six of them.

1. Check out the Budgeting Help.

The second main section of BuildMyBudget contains several subsections containing budgeting tips and strategies. If you have a specific topic in mind that you’re interested in at the moment, you can click through the sections to find the topic you’re looking for - you’ll likely find that I’ve written something about it.

You can check out 10 reasons to create a budget, find new ways to save a little extra cash, learn how to manage your debt or focus on ways to stick to your budget.

2. Subscribe by RSS.

A great way to stay up to date with the most recent blog posts on BuildMyBudget is to receive the site’s contents via RSS feed. RSS stands for Really Simple Syndication and it refers to a very simple method that allows for people to read the latest articles at the blogs that they read all at once. The easiest way to get started with RSS feeds is by using Google Reader, where you can read as many blogs at once as you like. Sign up for the BuildMyBudget RSS feed here.

3. If you have a blog idea, tell me.

Readers seem to always have great ideas for articles for BuildMyBudget.  If you have an idea for a post you’d like to see, the easiest way to let me know about it is to contact me with an email with the subject line “recommendation.”  If I see something like that, I always read it and jot down the idea - and fairly regularly those ideas become the articles you read here.

4. Use a Blog or Forum post to start a discussion with others.

An article on BuildMyBudget might spur you on to some positive internal thinking, but you can also use the articles to start a discussion with friends and family.

For example, if you read something that really resonates with the state of your budget, you might print out an article and give it to your spouse to read, then bring it up at the dinner table the next night for open discussion. It can open the door to the kind of valuable discussion that is the bedrock of a good marriage.  Another example: if you see a great list of tips on the site, you might print off a few copies and give them to your friends so they can utilize the advice as well.

Be sure to check out the latest forum posts too, where you can learn about others’ stories or share your own.  It’s a great place to find support or provide it to others if you have already experienced what they are going through.

5. Use the budget tools.

The Tools section of the site contains many different worksheets, calculators, and other resources.  Many of the worksheets can be used to help you plan or supplement your monthly budget.  The calculators can be used to learn how to pay off a credit card or auto loan and how to save for retirement.  There is quite a long list of links under the “resources” section for practically any financial service or topic which you can use to research budgeting or financial topics.  If you can’t find a specific worksheet that you need or calculator, contact me and I can upload one to the site for your use.

6. Distribute an article from BuildMyBudget to your friends, or using Facebook

This last one is a very useful tip if you want to help your friends or family take control of their financial future(or at least begin thinking about it!) .  You can print out a copy of a blog or simply copy and paste the blog link in Facebook to share it with your friends.  You never know, they may be looking for a financial tip or quote to jump start their path to financial wellness.

You can also copy and paste excerpts into emails to your friends if you’d like, or any similar activity.  A link back to BuildMyBudget would be appreciated, but you’re not only welcome to copy in this fashion, but I encourage it. If you find something useful here, it’s likely useful to others, and I’d love for you to share it with them.

As always, keep up the budgeting!

Chris
BuildMyBudget

Recently I was discussing ways to save a buck with some friends – such as using coupons or the library.  I also encouraged members to their share own ideas and received quite a response.

Below is the list of some of the best ideas. These aren’t in any particular order, but if you’re looking for some ideas to save a buck, here is a great list to get you started.

1. Make your own lunch. Instead of eating out every day, get your butt out of bed early and make a peanut butter and jelly sandwich!  Or, prepare a lunch the night before and take that lunch with you to work the next day. It can be leftovers, it can be a fresh meal (like a sandwich), but either way, it can cut into your costs tremendously and make a big impact on helping you reach your goals.

2. Break a Bad Habit. Expensive habits such as smoking or drinking can be a huge drain on your financial situation. Eliminating an expensive habit can quickly improve your financial situation while also improving your health (which can also improve your financial situation by reducing health care costs).  It doesn’t have to be smoking or drinking either—habits such as online-gaming or shopping in general can prove to be expensive habits that prohibit financial health.  Breaking such a habit can prove to be invaluable to getting your finances back on track.

3. Visit the library. How many times do you read a book and then place it on a bookshelf to gather dust?  Well, the library can singlehandedly save you money, by just borrowing books instead of buying them, but also save you time cleaning all that dust!  It can also save you on the cost of buying books, provide DVDs for viewing, CDs for listening, and many other interesting cultural experiences if you pay attention to the schedule of events.

4. Stop shopping for fun. If you shop for fun, you are probably in more trouble than you think.  Instead of shopping with your free time, find other fun things to do - almost anything is cheaper!  Leave the shopping trips for the times when you actually need an item, and budget for those items accordingly.

5. Cancel your cable. One of expenses I constantly argue with my wife about is our cable bill.  All it seems to do is provide you with more channels that repeat variations on the same content. Websites such as Hulu provide a good deal of the same content for much less than cable.  Or, you can get a digital converter box instead and watch the channels that come in over the air - ABC, CBS, NBC, PBS, Fox, and often others for free - no monthly bill!

6. Utilize direct deposit at work. Instead of receiving a paper paycheck, have your paycheck directly deposited into your checking account. This spares you the need to have to go to the bank to cash your check, plus relieves you of the temptation to have some cash taken out of the check when you deposit it.

7. Use online bill pay. Billpay saves you the expense of envelopes and stamps (roughly fifty cents per bill paid online), it also provides you the convenience of auto-calculating your bills and comparing them immediately to your checking and savings account balances. No more checkbook math necessary.

8. Start your emergency fund. An emergency fund is a cash reserve that can help you in the event of a crisis such as a job loss or an automobile breakdown. It’s easy to get one started, just sweep a small amount of money on a regular basis into a savings account, watch it build, and utilize that cash whenever you’re down and out.

9. Try the “envelope” budgeting system. Many people swear by this method, in which one actually budgets their money for a month using “envelopes.” Whenever you need money for, say, groceries, you take money out of the groceries envelope - when that envelope is empty, you’re out for the month. This forces you to be careful with your spending in all respects.

Personally, I don’t think this method is terribly realistic because I don’t think that one will put say, $56, into an envelope each month in order to pay a bill for $336 six months later.  One reason is because you would be losing interest that money could earn if you simply left the money in a savings account (although it wouldn’t be much).

10. Date Night In. Instead of going out on the town for entertainment, stay at home and enjoy the activities available in your own home. Most of the activities you can do at home - reading, watching television, exercising, playing games with friends, meditating, listening to music, cooking, etc. - are far cheaper than similar activities you might do out of the home.

11. Drink more tap water. Drinking regular tap water can help make you healthier (most people are dehydrated, even if they don’t realize it), fills you up (keeping you from overeating expensive food at meals), and is incredibly cheap compared to any other beverage out there. Take advantage of the tap - it can save you a ton of money on beverages, especially when you eat out!

12. Plan ahead for meals. At the start of a each week, sit down and create a plan of what meals you’re going to eat during the week, including what leftovers you will have for lunch the next day.  Then make a grocery shopping list based solely on those meals.  When you go grocery shopping, stick to that list. This is a great way to keep your food shopping bill low while keeping the food you want and need on the table.

13. Set up an automatic savings plan. The best way you can save is to pay yourself first, but If you’re getting your paycheck automatically deposited, consider setting up an automatic savings plan to have some of that money routed into retirement or into a savings account for an emergency fund. It’s much easier to start saving if the actual transfer of money happens automatically without your intervention.

14. Avoid Window Shopping. Shopping and looking at advertisements of all kinds - from television commercials to flyers from the Sunday paper simply serve to coerce you into spending money on things you don’t actually need. Minimizing your exposure to window shopping and advertisement minimizes the temptation to spend that money, keeping it at home in your wallet where it belongs.

15. Cook at home. Every time you purchase prepared food outside the home, you’re spending more than you would making a similar meal at home. Cooking at home also ensures the quality of the ingredients that you are consuming, as well as the opportunity to portion your meals appropriately.  Cooking can also be fun!  Learn how to cook at home, make your own meals, and save a lot of money.

16. Stop trying to keep up with the Johnsons. Don’t let the opinion of others influence the choices you make in your personal life. It’s not their life to live - it’s your life. Instead, make choices that will help you reach your financial goals - and don’t worry about what the Johnsons have to say about it.

17. Try the “ten second rule.” Whenever you are tempted to spend your money on something frivolous, stop and consider for ten seconds whether you really need this item and what you could otherwise do with the money you are about to spend. Ten seconds is usually enough - many people also recommend putting the item down and leaving the store, only returning if you’ve decided you actually want it after some serious consideration.

18. Eliminate expensive hobbies. Are you engaged in a hobby that requires a lot of financial upkeep, like golf or collecting? Instead of continuing to spend on your hobby, watching it drain all your money, choose a different path entirely - find a new hobby to focus your energy on that doesn’t require so much upkeep cost such as simply exercising or reading.  With a library card you can read all you like for a few bucks a year.

19. Be prepared to accept help from others. We all need help sometimes in life.  It’s easy to let pride get in the way of accepting help from others. Don’t let that happen. Be willing to accept help if others offer it, and be thankful for it. Later on, when your situation improves, you can pay it forward and help someone who needs it.

20. Create a budget that shows you where you’re headed. If you can’t seem to get a grip on your spending, try creating a budget that shows you exactly where you are headed financially. Spend a month or two keeping careful track of what you actually do spend on certain items, then set a spending goal for that type of item. This can help serve as a wake-up call and as a start to establishing good financial habits.

21. Try going on a diet. Many people recommended healthy dieting as a tactic for saving money, especially if you eat out a lot. If you make a conscious choice to eat less, not only will you save money on your food bill, you’ll also reduce your health care bill and perhaps your clothing bill as well (since it’ll be easier to find consignment clothes).

22. Stop reading women’s magazines. I think watching Oprah should be included with this, but several readers swear that women’s magazines are extremely effective at convincing you to shop for things you don’t necessarily need, convincing you that you need some item in order to keep up with the crowd. Spare yourself the guilt - skip those magazines, and any tv shows like Oprah that push products in the same fashion.

23. Sell your car. A car is perhaps the worst investment you can make. It can depreciate rapidly, break down at the worst possible time, and requires constant upkeep. Most people have almost an emotional attachment to their car, but instead of dealing with this, sell the car and make do with the other transportation options available to you - a bicycle, buses, trains, and so forth.

24. Set financial goals, and stick to them. Don’t think about how you wish things were.  Instead, sketch out exactly how you want your life to be in, say, three years, then focus all of your actions toward that goal.  Chances are you will run into roadblocks along the way so make sure you stick to your plan.  Not only can this cut out frivolous spending, it can also help you to make strong choices to improve every aspect of your life.

25. Take responsibility for your spending. Finally, try having a weekly or monthly review of all of your spending. Make yourself face the mistakes you’ve made - don’t let a bad spending move lie in the dust and be forgotten. Use it as a tool to make sure it never happens again and better yet, determine what you are going to do in your next pay period to compensate for any over-spending.

I’m confident that at least one of these tactics will help you achieve your goals, so get started!  If you have any you’d like to add to the list, please leave a comment.  Cheers!

Chris

BuildMyBudget.com

Each day we must make difficult decisions about how to live our lives.  An especially difficult time for me, when it came to managing money, was when I first graduated from Florida State and had to enter the real world to find a job.  I made quite a few mistakes along the way but have also learned so much since that difficult time.  Some of the mistakes I could have avoided, however, if I would have just followed a few simple rules to live by.   It's tough sometimes to find good advice, but I'm hoping you'll find the following '100 Money Moves to Make Today' useful in your own life.  Please don't forget to add your own in the comments if I've left something out!

1. Stop using credit cards
2. Create a budget
3. Find out where you are headed financially so you can do something about it
4. Pay yourself first out of every paycheck and make it automatic
5. Pay off your credit cards and other consumer debt
6. Pay off your credit cards on time and avoid the high late fees
7. Never have a revolving balance on your credit cards again
8. Learn about the power of compound interest
9. Ask for a lower interest rate on your credit cards
10. Use a charge card you pay off every month and earn rewards points
11. Start investing in a mutual fund with a Roth IRA
12. Invest enough in a 401-k to get your company’s matching contribution
13. Invest in index funds
14. Invest in no load mutual funds with low fees
15. Diversify your investments to avoid having all your eggs in one basket
16. Invest using dollar cost averaging
17. Don’t invest in crazy, exotic investments
18. If you are going to use a CFP, find one you trust
19. Sign up for direct deposit at work
20. Bounce ideas off of your CFP
21. Hire an accountant for your taxes if you get overwhelmed
22. Track what you spend ruthlessly every month in order to find places to save
23. Do your best to comparison shop
24. Double check your W-2 Tax Statements for needed changes
25. Pay down debt with your income tax return or save it
26. Change your W-2′s to ensure that you do not get back much in the way of a tax refund
27. Spend less money than you earn every month
28. Use BillPay to make paying your bills automatic
29. Check your credit report every year
30. Protect yourself against identity theft
31. Be honest with yourself about your bad spending habits
32. Safeguard your personal information (on paper & on the internet)
33. Check all three credit reports when making a large purchase
34. Understand how your FICO credit score is calculated
35. Protect your FICO credit score
36. Avoid bouncing checks and overdrafting your bank accounts
37. Begin tracking your net worth
38. Establish an emergency fund with 3-6 months of expenses
39. Nickname your savings accounts for your goals
40. Write your financial goals and look at them daily
41. Write notes on those little credit card sleeves to keep you from spending
42. Avoid purchasing books by utilizing your local library
43. Plan for major purchases and purchase them with cash
44. Start saving in January for Christmas
45. Consider earning a greater rate of return on savings with Peer-to-Peer Lending companies such as Lending Club or Prosper
46. Consider investing in Dividend Reinvestment Plans (DRIPS)
47. Don’t give up on renting an apartment in favor of buying a home
48. Consider a 15 year mortgage instead of a 30 year one if you can afford it
49. Use financial software that works for you and not against you
50. Negotiate your mortgage interest rate for a huge savings
51. Check out your neighborhood before moving to a new home
52. Consider carefully who you marry (divorce is expensive!)
53. Buy a car instead of lease, and never buy a brand new car.
54. Buy a car with a 48 month note
55. Don’t buy an automobile extended warranty
56. Minimize how often you eat out
57. Make your own gifts
58. Shop at the grocery store with a list and not while you are hungry
59. Shop around for disability insurance if it is not offered by your employer
60. Make sure that you have enough life insurance
61. Consider buying additional term life insurance
62. Avoid whole life insurance like the plague
63. Keep your resume polished at all times
64. Shelter as much money from taxation as possible
65. Continue to network with peers, coworkers, professors, etc
66. Join networking websites like LinkedIn
67. Use buffering in your monthly budget
68. Pick a career as soon as you can
69. Learn as much as you can about your career and become an expert
70. Work as hard as you can at your job
71. Never use payday lenders, ever!
72. Buy dividend stocks and reinvest the dividends annually
73. Bundle up your internet, phone, and cable
74. Use your cell phone and skip the landline
75. Do not use ATMs that are not your bank’s
76. Buy generic medication
77. Practice being frugal wherever you can
78. Be cautious when making home improvements in order to ensure you will earn your money back when you sell
79. Learn from your financial mistakes and then let them go.
80. Find a mentor with whom you can discuss personal finance
81. Don’t buy gold from late night television
82. Take a brown bag lunch to work
83. Continue learning and earning education, credentials, certifications, etc
84. Don’t cash out a Roth IRA before you are 59 ½ years old
85. Never take out a 401-k loan unless absolutely necessary
86. Teach personal finance skills to your children as soon as you can
87. Open a 529 college savings plan for your children when they are born
88. Buy used books, movies, CDs, and video games from websites like Amazon or eBay.com
89. Earn points for everyday purchases you make through websites like Upromise
90. Click coupons and use them as often as possible
91. Read as many books and educational materials as you can
92. Follow great people on Twitter
93. Read as many blogs as you can
94. Take vacations to enjoy the fruits of you labor, without using a Credit Card
95. Start a side business doing something you truly enjoy
96. Read financial forums such as SavingAdvice for financial tips and advice
97. Stop your daily trip to the vending machine
98. Only purchase items that make you truly happy
99. Find a few good financial quotes and make them your mantra
100. Cancel cable if possible and use Netflix and Hulu instead

Cheers, and keep budgeting!

Chris

BuildMyBudget

I read a very interesting passage recently which really hit home:

"Since 1980, we have transformed ourselves from the world's biggest creditor nation to the nation most in debt. Mirroring this change, personal debt has skyrocketed. Credit cards allow us to get it "now," and make it easy to dig ourselves into some very deep holes.

Ok, so I was reading the latest issue of Business Week and came across quite a substantial article about rethinking retirement. Of course, we all know what’s happened in the stock market and have probably been avoiding our 401k statement as a result.  Or at least I can say I have been avoiding mine.

One individual who contributed to the article put it all out on the table by saying “If I put it in the market I’m going to lose it, and if I put it in the bank I won’t make any money, so I might as well spend it.”  Is this you?  Are you thinking the same thing?  If so, you need to stop and seriously think about what you’re saying!  There are many ways you can compensate for the damage you have incurred in your 401k or other investment accounts.

I recently  read a fabulous quote:

"If you don't design your own life plan, chances are you'll fall into someone elses plan.  And guess what they have planned for you?  Not much.

- Jim Rohn

Growing up in a large family, few things were certain. I could always count on my brother waking me up before my alarm went off, my mom putting dinner on the table, and being forced to clean the entire house if I chose to stay home from school "sick." Another thing I could always count on is that if I wanted some money, I was going to have to find a way to earn it myself.

In ninth grade I started washing cars and mowing lawns on the weekend to earn cash to spend going out with my friends or on my hobbies. I always smile when I think about those days I spent working four or five hours for 30 or 40 bucks...no bills or responsibilities to worry about and whatever I made I could practically throw away and it wouldn't matter. Even though I was tired and looked a mess when I was done, I was really happy.