Chill Maadi

When a couple are used to relying one two incomes to stay afloat, it can be frightening to have to get by on just one income. Circumstances can change overnight, disturbing a family’s sense of financial security, such as being made redundant or having a serious accident that results in lifelong disability.

A drastic change in circumstances does not mean that bankruptcy is the next step. A family can often make changes that will allow them to stay afloat temporarily or permanently.

Eat out less often

Eating out is so popular and convenient. It takes away the trouble of having to prepare a meal from scratch after a long day at work or getting one ready for a packed lunch. The money spent over a given week, month and year will quickly rise. Add the cost of coffee, snacks and the money will increase even further.

For the spouse who is still employed, they can save a lot of money by taking a packed lunch in with them to work. It does not have to be a sandwich day after day.

Leftovers heated back up will work just as well and a variety of items will help prevent boredom. This is a much cheaper alternative and will save a lot of money over time that can be put towards more pressing expenses.

Make a budget and stick to it

A budget can help a couple see what their total income is and where their money goes. Cutbacks are easier to make if they can see for themselves what they need to spend to keep within their means. This may mean shopping in bulk and keeping an eye out for sales.

Reduce or pay off outstanding debt

Not everyone is in a position to completely clear the debt that they have built up. Credit card companies love customers who only pay the minimum on their bill each month. One way to free up more cash for other essential expenses is to put money aside for the credit card company and then either pay a large chunk of it or the outstanding balance.

Paying off creditors will create a great sense of achievement. It will mean putting off buying a new vehicle or other luxuries for a while, but it is worth it if there will be more residual income coming in each month as a result.

Downsize

Moving to a smaller, more affordable home seems like a step back to many people. But a family who are strapped for cash will not have many choices open to them. It will mean they will have more money at their disposal than when they were paying a substantial amount towards the rent or mortgage.

Take in a lodger

Some families decide that having a lodger would help with some of the household expenses. They will need to search carefully for a suitable person and carry out some background checks. Asking for references is not unreasonable. But there is a downside to having a lodger.

Families will not have the same privacy that they enjoyed before and they will need to consider what to do if the lodger defaults on any payments or they find that they do not get along. Also, once the lodger moves out, the income will immediately dry up.

Savings

Having a savings account will help to build back some financial security. Small monthly deposits will soon accumulate. Some money market accounts offer very good interest rates and CD’s can also yield a good percentage over a period of time. Even $100 a month will become $1200 within a year or $6000 over a five year period and this is excluding interest.

Stop smoking

Smoking is not only a bad habit, but it is also an expensive one. Smokers spend a great deal of money on cigarettes and other tobacco products on the market. Quitting the habit will produce wonderful health benefits and it will also help a couple who are in dire financial straits to save extra money.

One income families can and do survive. Some careful planning, cut backs in some areas of life and making the best of fewer luxuries can free up a lot of money that can help a family to cope better on one income.

Paying cash is always safe while paying credit card can be somewhat complicated. When to pay cash and when to use a credit card?

When to pay cash:

1. The store where you purchase something will not accept credit card. Isn’t it obvious?
2. You have to pay cash when the purchase you’ve made is a little amount of value.
3. You can pay cash when you think that the store where you purchased something is somewhat not reliable.
4. Pay cash when you think you can and pay cash when you don’t like to be billed with a high interest next month.

When to use a credit card:

1. Use your credit card when you purchased a big amount of price.
2. If you have an aim to make your credit card reach to its high limit, let’s say you aim for a 10,000 credit limit, used your credit card always. I’m sure the bank will upgrade your credit limit.
3. Use your credit card when you don’t have cash.
4. Pay by the used of credit card when you cannot afford the price right now and you know you can afford it next month(huh?, just the same…)
5. If you wanna purchased, like cars, computers and any appliances, using your credit card is very helpful. Though, you need to pay for the interest.
6. When you want to shop online, you can used your credit card. When you pay something on the internet you can used it. You need to be cautious about it though.

Well, cash or credit card? It’s just the same, you still have to pay for it.

Almost everyone with an average income has one thing in common – debt. It is everywhere; it corners you in every way possible. The last thing you want to do is add it up mistakenly. How can you add it up by mistake? Simple, increase your line of credit now, rack it up later. That is what tends to happen when someone accepts an increase. All major banks are good at one thing: calling you to offer a credit limit increase. They want you to feel “comfortable” knowing that in the event of an emergency, you have that credit sitting there waiting for you. Unfortunately, this is not how it usually goes. The amount of people that have racked up credit cards – and have it racked up with non-emergency items (furniture) – is astounding. If you are not personally in this situation then someone close to you definitely is.

The best way to stay away from debt is to pay for everything in cash and don’t apply for credit cards. Since this is nearly impossible for the average moneymaker, let’s explore some ways to stay away from it as much as possible.

• Keep your credit card limit as low as possible.

  $500 – $1000 is more than enough to have for emergency “peace of mind”. Anything higher than that will give you temptation to use the overly convenient line of loan money. Even with a low-interest rate, a credit card that is maxed-out can be a heavy, head-spinning burden.

• Save, don’t borrow!

  Let’s put borrowing money into perspective here: You open an account with a bank. Then you willingly give that bank your money, which they freely invest into whatever they want. They pay you tiny interest rates while they make huge returns off of your money. Then, you take out a loan from that same bank and pay interest rates that usually double the interest you are gaining on the money you gave them! Banks make billions of dollars profit a year off of money that comes from hardworking low-mid income “customers”.

  Save your money for what you are looking to purchase, then buy. Do not borrow money for something that you do not necessarily need now! Save now, buy later -or – borrow now and pay way more over the long run. It is definitely easier said than done, but if you plan your expenditures – it can be done.

The easiest way to stay away from debt is to stay away from reasons that require you to obtain it. Do not impulse buy with your credit card – this is the biggest hole you can fall in! It is too easy to leave yourself circumambient with payments… leaving you with nothing at the end of the month to put into savings. Think before you buy should be common knowledge, however sometimes that “want” purchase can be too tempting. Fight temptations with realizations of your financial goals.

Do not get yourself stuck fighting off your debt from your own overspending habits! If you find yourself wanting to use your credit to buy something that is not necessity, remember this: Purchasing it on your credit card will automatically make the item more expensive (through interest on your credit card). We all say we will pay it off right away, but how often does that actually happen? THINK before you BUY, and don’t have too much credit waiting for you to trap yourself with.

While a significant portion of the just-out-of-college population is overwhelmed by student loans, rent, and other miscellaneous expense, it is possible for any person at any stage of life to begin planning for the future by saving for it.

The key to saving money is to stop thoughtless spending. Sometimes, creating a strict budget can be useful. However, you would be surprised by how quickly the costs of unnecessary indulgences add up. For instance, buying a pop every day will likely cost you around $500 over the course of the year. That is $500 that could be invested and earn interest. Imagine adding that to other common indulgences, such as expensive lattes from the fancy coffee stores, or pricey salon highlights and touch ups.

Eating out can also cost more than it’s worth. One large pizza from a pizzeria can cost $20-$25, whereas a freshly made pizza from a grocer’s deli will only run you about $5-$6. So, if you were to have a pizza a week, you could save as much as $1050 a year by avoiding the pizzeria! This is a spectacular amount considering the minimal difference between the types of pizza.

Entertainment can be a huge expense. One movie, with the treats, can cost $15 for one person. Instead, opt for a rental, pop some popcorn at home and enjoy the savings. The least expensive rental method I’ve come across is the movie rental machines that are set up in some convenience or drug stores. The rental can be as cheap as $1.99, provided that you return the movie within a certain time span. So a couple can relax with a great new release and a bowl of popcorn for as little as $3, rather than spending almost $30 at a movie theatre. If you want to go to the theatre to catch a new flick, go to a matinee or Tuesday cheap night to save a few bucks. Avoiding the snack counter will also keep that cash in your pocket.

Another important tip is to pay off all debt and not incur more. And don’t use credit cards to pay off debt. You want to earn interest, not pay it! Every month, allocate a certain amount from your paycheck to go towards your debt. If you have an extra $25 at the end of the month, put it towards your loans or credit cards, not towards the newest DVD release.

It may seem as though you are depriving yourself in the short-run, but you will be amazed at how much more quickly you will move into a comfortable, debt-free lifestyle! Treat yourself, but do it less often and think about what you’re spending before you spend it and what the ramifications will be. Will going to the concert prevent you from making your loan payment this month? Can you afford both a new DVD and a new watch, or can you wait on both? Are you willing to save less for mindless indulgence?

And remember: it’s not just about the money you are saving; it’s about the interest you will be making off of the money you are saving. Be sure to invest your money, even if it’s only in a low risk GIC. Not only will it earn you a higher amount in interest, but it will deter you from spending it. The more savings you have now, the more money you’ll make off of it.

Preparing a personal budget is never a fun task. Let’s face it—we don’t like for anyone, including ourselves to come between us and what we want to buy.

If you hate budgeting, then you are probably looking at it the wrong way. Most people see a budget similar to a diet. We want certain things, and we feel guilty when we deviate from our plan.

A budget can be much more than that though. Instead of cutting out your guilty pleasures, embrace them. You do work for a living, and you deserve to appreciate the rewards of that hard work.

When I help a client develop a budget, I let them know that it is not my job to tell them they need to cut things out or do without certain things. That is actually the opposite of what my job is.

The truth is that my job as a financial counselor is to help you obtain everything you want in life. You might be surprised at the lifestyle you can lead if you plan for it. Planning is the key budget concept that gives you what you want now while achieving financial success in the long term.

Planning can allow you to obtain a nicer car than you drive now while paying less for it. Planning can put you in the house of your dreams.

Budgeting with a Financial Counselor

If you have a deficit, then there are certain options to correct that deficit. One option is to give you an opportunity to adjust some of your expenses. Another option is to find a supplemental source of income.

If high interest debt payments are contributing to your deficit, then you might benefit from credit counseling. An action plan can consist of either a self-guided repayment plan or a debt management program. Both are designed to lower your interest rates and reduce your debt at an accelerated pace.

My goal is to help you eliminate your debt, boost your financial reserves and build a solid credit rating. Budgeting is the first step to that.

If you have certain activities or optional expenses that are important to you, then I want you to keep them in your budget. You deserve to be able to enjoy life.

If you want to go it alone, feel free to utilize one of our budgeting tools. Alternatively, you may prefer to talk with an Accredited Financial Counselor to get help developing a budget. This way, you can get some insight on methods to improve your finances.

In this economy, money that isn’t nailed down needs to be saved and budgeted. It’s the best way to keep your finances afloat. So, to continue our efforts to keep your and your family’s economic situation square, we are going to provide one of the best ways to save lots of money – saving on your electricity bill. Thankfully there are many small ways to save on your electricity bill, that when added up, can save you a pretty good chunk of cash.

First and foremost, there are a few small things you can do that will add up. For example, don’t use too many lights that you do not need to use. Turn off the lights when you leave a room, open up the blinds as an alternative, turn off the hot water in between washing dishes, and try to limit your shower times. These tips alone will save you a good deal of money from the onset.

According to MSN.com, most of the electricity bill in an average household comes from heating and cooling. Backing off on the heater and the air conditioning can be a really quick way to save money. If it’s too cold, put on some extra clothes and some socks before turning up the heat, and when you do, be sure not to exceed more than five or ten degrees. If it’s the summer, and you cannot stand the heat, consider moving to Michigan. If that’s not on your agenda, you might be able to save some money if you buy a more accurate thermostat. Another alternative to air conditioning is a ceiling fan, which consumes much less energy. As far as heating is concerned, another consumer of heat comes from your hot water heater. If you turn down the temperature on your hot water heater, that is another fast and easy way of saving money and unless you actually enjoy cold showers, you will also save money on your water bill.

Another fantastic way to save money on electricity is to install energy-efficient devices and lightbulbs. However, if you do not have the money on hand, it is definitely an investment worth saving up for. When considering how much you save on your electricity bills with these appliances, such as dishwashers, washer and dryers, they eventually end up paying for themselves.

These are only a few tips for saving money on your electricity bill, but they can go a long way.

Getting a loan is, generally, far easier than paying it. But that fact would no way dismay borrowers. Still, credit opportunity tends to be availed of once presented. For some, getting a loan is really a way out of their pressing financial predicament, for some just to make their credit scores look better, and others just for the heck of it, like it’s just another habit.

People feel good when their loan is approved and released, but, would feel the other way around when paying time comes. Getting a loan may solve one’s financial problems, the way it may worsen another’s. Default in payment is no joke. Surcharges and penalties imputed can really mess someone’s financial situation. And of course, such would impact negatively on his credit standing as well.

Therefore, to avoid being swayed by your borrower-instincts once a credit opportunity comes up, consider the following factors before applying for a loan.

1. 1. THE NEED
      Define what the loan is for. Is it to settle a financial obligation, or just to buy something you want? Is it for additional working capital, to fund a new investment, or just to finance travel plans? If it is something that can wait, it is always better to save for it.
   2. BENEFITS
      How does the loan benefit you? Is it worth the interest you will incur? Will it be a quick solution yet a greater burden later? Loans, especially long-term ones, require financial planning and projections. The loan proceeds you get now may temporarily ease your tight liquidity, but you need to look forward to what situation it may put you into later.
   3. PAYING CAPACITY
      Here’s the most important factor – your capacity to pay. How will you repay the loan? Of course the creditor’s major consideration here is your source of income. Are you employed? How much is your net salary? Do you have your own business? Does your cashflow suit the loan amortization/payment schedule? After deducting all your regular expenses, will you have enough excess cash to pay for the loan?
   4. EQUITY
      This item is for those getting a loan to increase working capital or fund investments. Equity pertains to your capital share or funds you have put in your business, representing ownership interest. Most lenders want to see that you are risking your own money before asking for a loan.
   5. SECURITY
      Adequate collateral is usually required. For emergency loans like payday advances, a written check would be enough to serve as loan security. However, for long-term and big credit tickets, most lenders would ask for worthwhile assets. Collateral can consist of either personal or business assets, or both. Borrowers can assume that all assets financed with borrowed funds will collateralize the loan.
   6. CREDIT BACKGROUND
      Now, are you ready to present your credit record? Is your credit score favorable? In getting a loan, you should consider not only your current credit standing but, think out how the loan you are applying for would affect it once granted. Are you over-exposed, meaning, will this loan be an addition to the so-many-outstanding financial obligations you already have? According to FICO (the major credit scoring agency) representatives, it is best to have at least four reportable credit accounts active on your credit history (i.e. car loan, home loan, visa, & mastercard). However, having a lot of credit obligations would make it difficult for you to monitor, more so to pay. And take note, if some payments are received one day late, lenders may raise your interest rates and perhaps report you delinquent.
   7. PREVAILING CONDITIONS
      After checking your internal situation, check also the prevailing external conditions vis-à-vis your loan purpose and paying capacity (i.e. retrenchment peak, business slack season, loan rates, inflation, etc). Inadequate or ill-timed financing is a close second to an inappropriate loan when it comes to bad credit.

It is always good to know that one can apply and qualify for a loan, but it is always better to make the preliminary assessment, because if there is anyone who knows one’s self and his real situation better than any creditor, it is the borrower himself. On top of all these, any negative consequences from the credit transaction entered into, remember that the borrower is the ultimate casualty.

The wisdom you get from being financially distressed are as follows:

1. You learn to budget (and plan financial solutions)
2. You learn to switch off unnecessary lights and unplug electric equipment
3. You learn to schedule the use of your PC and AC
4. You learn self-control (no impulse-buying)
5. You learn to save on everything (no eating out, watch old movies on tv instead of renting dvds)
6. You learn the road short-cuts to save on gas (hey, you’re even improving your navigational skills!)
7. You learn to read newspapers and ads (what’s on sale, clearances, promos, roll-backs, discount coupons)
8. You learn to discover and be creative (i.e. recycling)
9. You learn to be patient (a virtue indeed!)
10. You learn to pray (hopefully)

Teens are great. They are becoming adults and exploring the world. They are going through many changes both physically and mentally. They often are driven by over-active hormones that they don’t understand. As a parent of teens I will share some experiences in this series of articles that I have found helpful to make these exciting years a positive experience and not a battle ground.

In part one of this series I considered music and the way this can unite us with the teenagers in our family or it can divide us from them. In the second article I looked at alcohol. The third article looked at motivating kids for success at school or college. This fourth article looks at how we taught our youngsters about money and financial responsibility.

Money

Kids are expensive. Period. From before they are born until long after they have left home they will cost you more money than you can ever imagine. Good parents want to give the best to their children and one of the most valuable and useful gifts we can bestow is an appreciation of the value of money and a mature attitude on to how to use it.

Now before I start I must explain I have a job and we are not broke as a family. What I write here comes from this background – if you are not working and money is very tight your approach will probably be different but some of the principles that I outline should work for every one.

Pocket money

When kids first start wanting money to spend most parents give them an allowance or pocket money. This may be a basic weekly sum which they know can be augmented by extra payments that are linked to doing certain extra chores. It is some peoples practice to make the whole allowance dependent on chores. That can encourage a healthy attitude linking work and money but it can also have a downside. My youngsters have to do a considerable amount of school work in the evenings and at weekends. If all of their allowance was dependent on chores they would not earn very much. I want to encourage them to study. So we came to a compromise. We agreed a basic allowance with extra to be paid for chores and we agreed a scale for the various jobs that needed doing. That worked for many years.

Spending patterns

At an early age they want money for sweets, chocolate, candy, games, toys, books and magazines. The allowance is usually too small to buy everything they want so they learn to save up for what they want. They put some money away each week until they have enough for the new play station game or Harry Potter book that they want.

Work

For many kids getting a part time job is a great way of getting extra money and learning that it has to be earned. We live out in a rural area and it would be difficult for my teens to get into town to get a part time evening or Saturday job. It has only been possible for them to find work in the school vacations – and often that has involved my wife and myself ferrying them back and forward. If we took account of the time and expense of doing this it was really not worth all the effort.

Buying clothes

As my daughter became older she wanted to have a much greater say in the choice of her clothes. In fact like all teenagers she became very conscious of her appearance and what she was wearing. Fortunately her high school has a strict uniform policy so the majority of each week-day she has to wear the uniform. This is great from a parents point of view. There are never any disagreements about what she will wear for class. However for leisure time all teens are very self conscious and want to be fashionable and appropriately dressed for the various social activities they enjoy.

Designer labels

You probably know that for many teens “labels” are the most important thing. They must have the “right” designer labels. This is the same for clothes, sports shoes, bags, and all the little accessories that teenage girls seem to say they need. Having the right shoes is also very important for boys too. There have been cases I know of where boys have been bullied because they wear cheap supermarket track shoes rather that the latest designer ones. Or some children have been attacked or mugged for wearing very expensive designer shoes and had them stolen on the first day they have worn them on the street.

Shopping for sports shoes was a pain. The ones my son liked were based not on the price or the fit but whether the label was cool. And invariably the ones that were most cool were the ones that were most expensive. And likewise my daughter looked at clothes not for fit and price but for label and would ask us to pay for things we considered highly overpriced.

Responsibility

Then we had a brainwave. At the age of 15 we passed the responsibility for buying their clothes to the teenagers themselves. My wife and I worked out what we considered a sensible monthly budget. We gave them a list of what we expected it to cover and what we would continue to pay for. We agreed to pay for school uniform clothes. But all their casual clothes and shoes would have to come out of their much larger allowance. They would also have to pay for the social outings and trips and buy birthday and Christmas presents for their friends.

We sat back and watched what would happen as they discovered that they had more money to spend than they had ever had before. We were anxious and we wondered if they would blow the whole months allowance on some expensive designer gear and then come groveling to us for an advance on next months allowance. We had decided that there would be no money that could be brought forward – they would have to live off the months allowance and we would stick strictly to these limits for three months.

The outcome

We were surprised by the result. They competed with each other in looking for bargains. They went to discount stores and thrift shops and saved enough money to have a full social life. They worked out for themselves that the very cheapest shoes and clothes were not going to last for more than a couple of months but the designer labels were vastly overpriced. They began to look for quality and link this to value for money. They even both managed to have a little money left at the end of the month. They were happy to justify what they spent to their friends who seemed to envy the freedom of choice that they had. And most of all, as well as becoming financially responsible, they actually both enjoyed the experience. And so this has now become our way of handling their allowances, and we are delighted to see them becoming financially mature and responsible.