Earn More Money or Spend Less?

I often talk about how to spend less money. Does that mean I fall into the Spend Less spectrum of the Spend Less vs. Earn More debate? Let’s look at each side:

Spend Less than You Earn

The philosophy here is to focus on keeping expenses low. This person places an emphasis on saving money.

Earn More than You Spend

The philosophy here is to increase your earnings so you are earning more than your expenses. This person puts an emphasis on money-making ventures or income generation.

I have spent a great deal of time and energy over the past year looking at ways to cut our expenses. Does this mean I live by the Spend Less mantra? Not necessarily. The fact is the easiest way to increase your income is to hold onto more of it – cut your costs. But there comes a point where you’ve cut so much that you can’t cut anymore. That’s not a bad thing, it just means you’ve probably been successful at driving down your expenses.

Then what? Are you confident that the delta between your income and expenses will put you on the path to financial freedom? If so, awesome! But I suspect that many of you, like me, are not content with your current income. Even with lower expenses, you would like to, or are actively pursuing ways to increase your income.

So, where do I fall? Earn More or Spend Less? Simple. Both!

I fundamentally believe in keeping your expenses low and not owning lots of things that end up owing you. With careful budgeting we’ve been able to structure our expenses in a way that we can contribute to retirement, save a decent amount of our income and aggressively pay down debt. We’ve largely done this by drastically cutting our costs. Now unplanned expenses don’t phase us the way they used to simply because we aren’t living at – or above – our means, we live well below them. This has removed a great deal of stress from our lives and that is priceless.

But even in my new capacity as a stay at home mom, I’m motivated to find ways to increase our income to bring us closer to achieving our financial goals. My challenge is to find or create ventures that provide the flexibility to work from home and around the demands of an infant. I’ll be writing more about those endeavors in the coming weeks, but my point today is simply this…Spend Less or Earn More need not be mutually exclusive. There are principals on both ends of the spectrum to be embraced, you just need to find the right balance for you.

Where do you fall in the Earn More vs. Spend Less debate?

5 Tips for Eating Out on the Cheap

Eating out is one of our favorite things to do, but it can get expensive. We only allocate $100 month for dining out so we’ve learned to stretch our dollars so we can enjoy more meals out without breaking our budget. Here are five things everyone can do to save $$$ when eating out.

1. Drink water! – Having a soft drink or ice tea will add 20-40% to your bill. Add a glass of wine or a cocktail and you’re looking at 50% or more. Unless it’s a special occasion, drink a glass of water with lemon and enjoy that glass of wine at home.

2. Share a meal – Most restaurants simply serve more food that you can eat in a single meal. We both have healthy appetites. I will literally stab you if you come between me and food when I’m hungry. But we still share meals 90% of the time when we go out for breakfast or lunch and I always leave satisfied. But before you order make sure the restaurant doesn’t charge a split plate fee.

3. Use a coupon – With the down economy restaurants are eager to keep customers coming in and many restaurants that didn’t before are now offering coupons. Check your weekly circular mailings, local newspaper or coupon mailers for offers. Many are offering buy one get one free. But be careful of those that require a two drink purchase as that will eat into any savings on the meal.

4. Go out for lunch instead of dinner – Lunch entrees are typically priced 20% lower than the same entrée on the dinner menu.

In addition, many restaurants offer lunch specials for around $5 or $6 dollars. Chinese restaurants seem to set the standard and serve you enough food for two meals. Many Mexican restaurants serve huge portions and also include chip and salsa bars with unlimited refills. And it’s not hard to fill up on salad and breadsticks at Olive Garden before your entrée even shows up. Lunch and dinner for the price of lunch!

5. Happy Hour – Check out restaurant happy hours. If you’re in the mood for a drink and light meal this could be a great option. Happy hour specials often include drinks and appetizers at half price.

Also, check with your employer to see if they offer any programs. Mr. Frugal works for a large company in the area. They worked with local restaurants to set up a dining program that includes offers ranging from free soft drinks at local fast food joints to buy one entrée get the second free at some of the more upscale restaurants in the area. Often these programs are not promoted well internally. It took 8 years for Mr. Frugal to discover his company’s program!

Using these strategies to cut costs we’re able to eat out 4-6 times a month on $100. We get to do something we really enjoy on a pretty small budget.

What do you do to make your dining out budget go further?

How Getting Organized Can Save You Big Bucks

Consider how much activity and even chaos there is in an average day. Working parents, busy families, social commitments, and volunteerism keeps many consumers on their toes from one day to the next. One consequence of such a busy lifestyle is becoming completely disorganized from one day to the next and most never really have an understanding of how the fast-paced life can affect your financial life.

Disorganization is not just about being cluttered in your lifestyle. It can have serious consequences that affect you financially. For one, if you do not have a system for organizing bills and other incoming financial information, there is a strong chance that you will forget to make a payment on time or at all. This can be especially costly if it happens often. The interest and penalties you accrue on your accounts can really hurt. Just one bounced check at a bank these days can cost upwards of $40. Bounce several checks and you are out several hundred dollars in addition to the fines imposed by your creditor.

Getting Organized on the Cheap

Frugal people can be as disorganized as anybody else but it doesn’t have to cost a fortune to get a better system in place for your financial and overall well-being. Here are some tips for organizing on the cheap to save money and keep you on track:

Keep a Calendar

You may have a calendar for daily events in your family’s life but you also need one for you financial affairs. You can usually pick up a free calendar at local businesses you patronize who use them as promotional materials. Print out calendar pages for free from the Internet if you don’t have any extras lying around. Write down dates a week a head of time for bills that you pay via mail and for any that you pay online, make a note of the day in which you need to make payment.

Central Mail Location

As mail comes in each day, establish a particular place in your home where all mail gets placed immediately when you don’t have time to go through it. Decorate an old shoe box to make it more attractive if your mail location is in plain view. Shred junk mail as soon as it is in your hands and store only what you need in the mail location. This will eliminate the big stacks of paper cluttering your home. By establishing one place for all mail, you’ll know exactly where to look when you need something and things will not get lost. Additionally, you may be more inclined to sort through your mail on a regular basis if it is all in one handy location.

Automate Your Finances

If you are familiar with banking online, you should make use of the free services many banks offer these days for paying bills automatically. The catch with this method for keeping up with bills is that you need to have money available to cover the debts. Automating your income through direct deposits is a way to ensure you keep more money in your account.


Developing a budget and then regularly updating it is a sure way to always be in the know of where you stand financially. You can use free budgeting spreadsheets to track your spending, calculate your income, and gauge your expenses. By tracking your budget on a worksheet weekly, you have your figures at a glance whenever you need them

How to Find a Good Financial Planner

For most people earning a modest income, getting the service of a financial planner in managing their money is one step towards the right direction. The financial planner will look at the whole scenario including retirement planning, insurance needs, and estate or asset management which most people miss to look into even if they are experience enough about investing.

It is mandatory to learn the basics of financial management even before the actual act of investing and finance assessment, but if you are a person who is so busy or lacking the motivation to study and even just plain lazy just to keep his/her financial knowledge updated, it is best to go looking for a good financial planner.

A good financial planner will definitely benefit a client but a bad financial planner is more concerned in just earning his commissions than acting for the welfare of his client.

Here are some factors that you need to consider in getting the right financial planner.

Fee-based and Commission based Financial Planners
A financial advisor may make his money by earning fees, a percentage of the amount that is invested or value of the portfolio; and he may earn thru his commissions. Those earning fee-based planner won’t have any conflict of interest with their client mainly because he is not commission-based. He won’t offer his client with products that earns a very hefty commission for himself; so it is best to say immediately that you are seeking for a fee-based financial planner.

Always check the actual credentials of potential financial advisors. Ask for recommendation from relatives and friends about their own financial planners. Check them if they are registered or licensed to the Securities and Exchange Commission.

Experience and Qualification
Financial planners with at least 5 years of experience are always better than a neophyte. Furthermore, he should accomplish necessary qualifications to become a financial advisor. Today, the term “financial planner” is being used by many professionals in their given field. Certifications that financial advisors actually have are: Certified Public Accountant/Personal Financial Specialist (CPA/PFS), Chartered Financial Consultant (ChFC) and CERTIFIED FINANCIAL PLANNER (CFP).

But whatever may be his credentials, he must have some experience in financial planning like insurance, investments, tax planning, estate planning and/or retirement planning.

Lastly, financial planners must be easy to work with. And, even if he has the most level of experience and qualifications, but he is not that willing to even listen to the client’s goals and plans, there is not much that he can offer.  So, double-check your prospective financial planner before even hiring him/her.

6 Ways to Cut Your Debt

Is there a more worser feeling than the feeling of being lodged under a tantamount of debt? We have to admit that we made this debt mainly because of our bad spending habits although there are other times it is due to some circumstances, which is beyond our control. Nevertheless, whatever the reason, the main concern is just how to get out of debt. Moreover, once you learn some methods, you will later be able to cut debt.

  1. List down all debts you have – You cannot get out of debt without even knowing how much you owed. Start listing all bills with balances, credit cards, personal loans, auto loans, etc and get the total. Organize them along with corresponding interest rates; then set a payment order.
  2. Hide credit cards away – If you can, cut up your credit cards, or hide them in a safe place avoiding your wallet, phone or even computer. And after your debt has been paid off, you can consider using them again — sparingly.
  3. Hold on spending – Now’s the time to make the “budget”. Start tracking down your spending. Identify things you don’t actually and other frills that you can eliminate. If a particular item isn’t essential, eliminate it immediately. Make a spending plan that only covers essential items, and direct any savings you identified towards paying off your debt.
  4. Learn to use cash – Use cash in all of your spending habits; receipts so it will help you track what you’re spending. You can also make use of debit cards. These cards are always wearing bankcard logos and mostly welcome in stores that accepts credit cards. A convenient way to pay cash without actually carrying it.
  5. Learn the do it yourself program – Early generations are capable of “do-it-yourself” repairs. If there is no need to employ help for doing some repairs or services; then do so yourself. If this option works for you, you might save a gracious amount of money.
  6. Plan shopping in advance – Impulsive buying is the main culprit in debt accumulation. Start doing some centralized list of necessities; mark off what is not necessary. And if you have some, use coupons and discounts. Always utilize discounts and coupon codes in saving money in overall purchase price.

The overall take, after you get out of debt, is to never restart the problem. After the slate comes clean, avoid unnecessary spending again and start saving.

How to Get Rid of Credit Card Debt

While talking about the retirement plan, financial advisers mostly focus on how much you need to save. But you should know, that to cut your debt is not any less important, especially your mortgage and credit cards. And in order to get out of debt you need to:

1. Evaluate Your Debt
The first thing you should start with is figuring out how much debt you have to deal with. So, take a piece of paper, and put down all of your debts. This includes credit cards, charge cards, mortgages, home equity loans, car loans, personal loans, medical bills and any other debts that you’ve got. Beside each debt, include in this list the associated interest rate and minimum monthly payment. Now, count up all of your entries, and you see a true picture of your current debt load.

2. Make a Budget
A carefully thought out budget will help you to get out and stay out of debt. Be honest with yourself about your spending habits and you’ll receive a much more realistic picture. Make a list of your usual monthly expenses (do not forget about fun things, hobbies and entertainment) and calculate how much you make per month including all forms of your income. And then create a budget that will minimize the usage of credit cards, cash-only is your goal.

3. Reduce Your Spending
In order to get money for debt repayment you will have to cut your spending. Look for some ways to lower your phone and electronic bills, auto and homeowner’s insurance and all your other bills. In such way, you’ll able to use your savings directly for your debts and enjoy the fact, that you’re on the right way to a debt-free life.

4. Begin Saving
While getting out of debt, the avoiding new debt is important as well as paying off debt. So, it’s very important for you to be prepared for some unexpected expenses – such as medical bills or car repairs – that could make you start spending with your credit card again. Assess how much it may cost you and put that sum aside. You should understand that fact that building up your emergency fund may take a lot of time. So, even $20 a month will help, just do not worry if that’s all you can afford.

5. Struggle With Your Debt
Now, when you have finished with all of the previous steps, it is the right time to start struggling with your debt. Apply the money you’ve saved with your new budget to your debt. Keep this way until all your debts will gone. Of course, it may take a while, but if you adhere to this plan you’ll become a happier, stronger and debt-free person.

How to Avoid Credit Card Fees


Credit card distributors always advertise handsome promotional rates just to allure potential cardholders. If you want to become a new cardholder, you must watch out for credit card fees. Although they offer the lowest of interest rates, the credit card company will definitely be getting back at you by embedding extra fees. How to avoid paying them more than what you owe?

Many people just rush into applying to get a credit card without even being aware of all of the accumulated costs. Almost all credit cards come with some hidden fees and unknown charges; and you should always pay extra attention to them before applying.

Almost all cases, all of these fees and extra charges will not even be noticed until it is too late. And you easily end up paying thousands in the end without even realizing it.

Here are some tips to help guide you in avoiding excess credit card fees:

Pay the bill ahead of time

Never wait until you’re the due date arrives before settling payment. Pay off all the necessary charges as soon as you got cash to do it. It is required that all credit card issuers provide at least 28 days grace period.

Try to sign up for an automatic payment facility especially if you are prone to forgetting monthly due dates. This very ideal for people who have multiple credit cards and those who are managing many types of credit lines like car loans, mortgage, and personal loans.

Request for waive

In some cases, wherein an emergency could not be avoided, at the same time you will not be able to make your payment on time, try to call the credit card company immediately and request them to waive some late payment fees and promise to make your next month’s payment on time. In addition, if your records prove that you have become a very reliable client, chances are, you may be granted that wish, thus avoiding additional credit card fees.

Do not go over the credit limit

It is obvious that exceeding your credit limit will automatically cost you extra fees on your bill. Always check your credit account to assure that all the charges are accurate. Before making a large purchase using a credit card, be sure that you have enough credit left. And always keep your credit card spending to just a minimal portion.

Don’t borrow cash from your card

All credit cards offer cash advance features. This provides the cardholder an option to get from their account by withdrawing cash thru the ATM. Although it seems like a good provision, especially in times of emergency, these are charged with very high interest rate. And cash advances are not automatically covered by the grace period; you will incur extra credit card fees every time you make cash withdrawal.

How Much Debt Do You Have?

Getting out of debt involves composing a clear picture of the debts you want to get rid of, any assets you are willing to liquidate to make debt payments, and your monthly cash flow. You will want to have copies of your most recent credit card and loan statements, bank or investment statements, and a pay stub. A calculator and pen and paper will also be helpful. Ready?

Prioritize your debts
Begin by writing down the most recent balances of each of your debts. Next to that balance write the annual percentage rate (APR) you are paying on that account, and, if applicable, the minimum monthly payment. (Not sure where to find your APR? Look at the bottom of your credit card statements where it says “finance charges”. You should see a column that says “corresponding annual percentage rate”.

There are myriad ways to prioritize your debts. Some people recommend simply paying the balances with the highest interest rates first. This will save you the most money. Others, like Dave Ramsey, recommend starting with the smallest balance first, because paying that off first will provide some motivation to keep going. If either of these methods seems right for you, then go with it.

As an alternative, here’s a simple method that directs you to pay-off the card with the highest balance to minimum payment ratio first. It’s like the best of both worlds.

To calculate this ratio divide each account’s balance by the minimum payment. You will then pay the card with the highest ratio first. For example, with the following three credit cards you would want to dedicate additional money to pay off the MasterCard first, followed by the Discover and Visa cards. If two cards have very similar ratios, pay the card with the higher interest rate first.

Debt One $4,832 balance / $65 min. payment = 74.3
Debt Two: $2,191 balance / $40 min. payment = 54.7
Debt Three: $8,392 balance / $165 min. payment = 50.8

In this example, you would want to pay off debt one first, then debt two and debt three.

Apply existing assets to your debt
Now that you have your debts prioritized, take a look at your assets. If you have any cash in savings accounts or under the mattress, you should immediately consider using all of it to pay off some debt. Likewise, if you have valuable items that you aren’t using, sell them on eBay or hold a garage sale and put the cash towards your debt. You will want to save up money later, but right now the enormous interest rates you paying on your debt is far more devastating to your long-term finances than cashing out a savings account.

Calculate your budget
After you have put any cash-on-hand towards your debt, it’s time to determine your monthly expenses.

If you haven’t tracked your monthly spending before, estimate the best you can, leaving enough padding for unexpected expenses without inflating categories that are not necessary. For example, if you currently spend $50 a month on coffee, enter $30 and resolve to cut back in the future. In the debt payment fields, enter only the minimum payments. When you are done the calculator will tell you how much money you have left over each month after your minimum obligations are met.

This is the additional amount that you will send to your top priority debt each month, in addition to the existing minimum payment. Each month you will continue to make minimum payments to your other creditors. Once you begin your plan you will use what is called the snowball technique to decrease both the time it will take you to get out of debt and the overall interest you will pay.

Each month going forward, the minimum payments on your non-priority debts will go down, usually by a dollar or two. You will take these few dollars (trust me, they add up over time), and put them on top of the total amount you are sending to your top priority account. When that debt is paid you will shift the entire monthly payment to the next debt on your list, until each and everyone is paid off!

Create Financial Goals to get out of Debt

Faced with debt it is tempting to spend sleepless nights aimlessly crunching numbers, as if the right few calculator taps will make that red ink disappear. Sadly we both know that won’t happen—wading through your bills unnecessarily will only exasperate you, and tomorrow you could end up charging three lattes just to perk up for work. But don’t take debt off your mind just yet; ignoring those bills is another fast way further into the hole.

Write down why you are in debt, why you want out, and where you want to go financially.

No, this  doesn’t involve a single calculation or even the need to write any ugly numbers defining what you owe. This simply affirms for yourself (and anybody you choose to share it with) that you will get out of debt.

Why write down financial goals?
There are two reasons to do this.

First, psychologists agree that a critical key to personal change is visualizing the “changed you” (in this case, becoming debt-free). Personal development gurus fold this principle into the practice of goal-writing, arguing that the simple act of putting your desires in writing has affects your subconscious and increases the chance they will happen. Writing down your intention to become debt-free cements in your mind your wish to get out of debt, which will be important when the temptation to spend pops up.

The second reason for this step is to evaluate why you got into debt. Did unexpected medical bills pile up or did you use credit cards to spend beyond your means? If you had control over the accumulation of your debt, you will need to deal with the cause of the debt before you can hope to get out of it. If you are like me, you may have brought the overspending that got you into debt under control, but certain situations may cause you to lose sight of your goals and spend a few dollars “just this once”. In situations like this your debt free plan should include steps you will take to combat these bad habits.

How to write down your financial goals
Writing this part of your plan is simple. Basically, answer the following questions briefly but honestly. For question five, put in your (semi-realistic) ideal date to be free of debt. No need to calculate anything yet. In fact, be optimistic with this date, and you can adjust it in future steps. Following the questions is an example from my plan.

  1. I am in debt because:
  2. I will now live below my means by:
  3. If I am tempted to overspend I will:
  4. I want to get out of debt because:
  5. I will be out of debt on or before:

Example: My debt free plan
1. I am in debt because I used credit cards to live beyond my means for more than five years.

2. I will now live below my means by budgeting and not buying anything I don’t absolutely need. I will cook instead of eating out whenever possible, and I will work a second job as long as is necessary to pay down my debt.

3. If I am tempted to overspend I will take out my mission statement and remind myself how a few mistakes could defeat my debt-free plan.

4. I want to get out of debt because debt is inhibiting my ability to save for my future, buy a home, and have financial peace of mind. I am tired of wasting hundreds of dollars each month on finance charges alone. I will be wealthier and happier when I am out of debt.

5. I will be out of debt on or before July 31, 2008.

Wrapping up
Now that you have the first part of your debt plan, I suggest printing it on bright paper and posting it somewhere you will see it daily: on the bathroom mirror, a kitchen cabinet, or your dashboard. Also, write your response to question four on a business card and put it in your wallet where your credit cards are or used to be. It should be the first thing you see anytime you open your wallet to spend money!

When is it Time to Move from Saving to Investing?

Retirement plans aside, not everybody is fortunate enough to begin investing in their twenties. Paying back credit card debt, establishing an emergency fund, and saving for home ownership all take priority over building a stock portfolio.

But if you can start investing, you certainly should. So how do you know when to start? Here is run-down of what the financial priorities in your twenties should look like.

Start with Retirement

Even if you haven’t tackled all of your other financial priorities, think about saving for retirement right away either through your employer-sponsored retirement plan (401k / NPS / EPF) or an individual retirement account (IRA / PPF).

Even if it’s just $200 a year into an IRA, it’s important to get in the habit of setting aside part of your income for the distant future and you won’t have to pay federal income taxes on your contributions.

If you haven’t already, start saving for retirement now, and if you can, contribute the maximum up to IRA contribution limits.

Pay Off Credit Card Debt

Even in its best years, you won’t earn a return in the stock market that can surpass credit card interest rates. So tally up what you owe, take a deep breath, and knock out that ugly debt.

Get an Emergency Fund

Unlike cash in short-term savings accounts, investments aren’t always liquid, meaning you might not be able to use the assets you have invested in emergencies like if you lose your job or face medical expenses.

Once your debts are paid off, concentrate on building an emergency fund equal to at least three months of your income. In time you will want to grow this to about six months, but three months is a good start.

Keep Saving, Start Investing

Once you have an emergency fund established it’s time to start investing!

At first you won’t want to be quite as aggressive with how much you invest as you have been with paying off debt and saving.

Keep saving for upcoming expenses like your home, vacations, cars, even weddings.

Your investing priority should be retirement, and you’ll want to exhaust the ways you can save for retirement before turning to the general stock market.

If reach your retirement contribution maximums and are rearing to keep going, congratulations! Then it’s time to start considering buying some securities with an online brokerage.

What About Student Loans?

In most cases, it’s wise to start investing even if your student loans aren’t fully paid-off. Student loans generally have long terms but at fairly reasonable interest rates thanks to federal subsidies. With some aggressive investing you make more than you’re paying on student loans.