Category Archives: Personal Finance

Planning Ahead With Personal Finances

The holidays are over and summer is upon us! it’s time to take hold of your life and get it back on track. Being serious about this now means you won’t be subject to grim news later, especially when it comes to matters pertaining to your personal finances. Reforming how you think about money is the key.

And maybe how you think about money means that you need to start thinking about it: what your relationship to money is, how you might have let expensive habits rule you, and how to work on using willpower to get you out of debt. Once you’ve figured these things out, you’ll be on your way to a successful relationship with your budget.

First, consider the kind of relationship you have to money. Just like a motive is important in solving a whodunit, so is this step vital to solving your financial woes. Any doctor could tell you that identifying a symptom is the first step to establishing a cure. So: do you burn through your paycheck as soon as it arrives, rushing off to get the latest fashion or the just-released game or the updated electronic device?

Or are you a hoarder, too scared to part with a nickel more than you have to? You may wonder, what’s wrong with that? At least my spending isn’t out of control. But fear, when it comes to financial matters, can be just as destructive as ignorance. Either way, you’re letting the money dictate to you instead of vice-versa.

Once you’ve thought about taking emotion out of your relationship with money, turn your attention to the practical. Take pen and paper and a cold hard look at your monthly expenditures. What is your greatest extravagance? New shoes, dining out, expensive coffee drinks, video games? Be honest. Check your debit and credit card statements. Note not only where, but when, you’re prone to spend the most money.

Now challenge yourself to drop one of those pricey habits for the New Year. That’s not depriving yourself of every pleasure; just one. And the boost to your bank balance will be immediately obvious. Frequent trips to the espresso shop can average out to five dollars a day, which adds up to over one hundred dollars a month. That’s on something you could make at home, and probably better.

Finally, take that new savings and start paying down those debts you acquired last year, most especially for the holidays. This reduces the principal, and as that balance goes down, so too does the interest you owe. And interest is the “silent killer” of the budget. Even if you bought that shirt for 50% off, it doesn’t turn out to be such a bargain sitting on a store card that charges 23% for unpaid balances.

It’s not as hard as you imagine, getting control of your personal finances. All it takes is re-evaluating your relationship to money – and adjusting your thinking accordingly. From that practical vein you can proceed to cutting out an extravagance and funneling that extra cash into paying down your debt.

Four Personal Finance Programs You Can Use Free

It is time to get your finances into order. You work too hard for your money to handle it loosely. It is important to manage your budget properly. I know this does not sound like fun and that is before I tell you it is easier said than done. Back in the “old” days you had to either track your spending by tediously making entries in a paper ledger or investing in expensive software and making tedious entries in the computer.

Fortunately, times have changed and technology has come a long way towards making budgeting, if not fun at least easy. There are several remarkable no cost programs that can help you establish and monitor a budget. If the thought of budgeting is enough to send you into shock, do not panic yet. Certainly disciplined spending can be a real pain! However, if you want to enjoy financial success a budget is a necessity. These programs can show you exactly where your money is going. And they will help you spend your money more wisely.

My personal favorite is Mint.com. Mint is brought to us by the makers of Quicken and provides “At-a-glance insights.” This service will download and categorize your balances and transactions automatically every day- making it effortless to see graphs of your spending, income, balances, and net worth.

SimpleD Budget – If you need help establishing a budget, try downloading SimpleD Budget. This program will help you sort out your monthly income and expenses. It is good for creating a personal or household budget. Once you have entered your monthly income, you can allocate it across a number of categories such as bills, savings, entertainment and more. Finally, you can track your spending through the program and monitor how closely you are meeting your goals.

GnuCash – Maybe you want to manage all of your expenses. With this program, as with mint.com, you can track several checking and savings accounts. You can also keep on top of loans, stocks and mutual funds. This program can be labor intensive. But it is also incredibly useful. All of your financial information is compiled into reports and balance sheets with the push of a button.

This program can give you a real snap shot of your financial situation. But it does require some serious work. Just like in the old days, you will be entering a lot of data, especially when getting started. So, this program is a good fit for advanced users or those who do not want to bank online.

AceMoney Lite – This program lets you track a single bank account in detail. It is a toned down version of a more complete program (that costs money). With the free version you can watch all the activity on one account. And you will be able to generate monthly and yearly income and expense reports. It does have all the features the full version, however it is limited to one account. AceMoney Lite will assist you in organizing and managing your personal finances quickly and easily. It also supports all the functions required for home and small-business accounting needs.

I am sure there are more programs available, but these are the ones I am familiar with. Now all you need to do is take a look, choose one, and get that budget set up. You will soon be on your way to a less stressful relationship with your money. By understanding your current financial situation, making financial changes, and following a budget, you will be in a strong position to repay your debts in the most efficient manner and start building financial reserves for your future.

Personal Finance Myths

If you have ever had financial troubles or issues with your credit score, you may be looking to re-examine your personal finances. You can fix any issues or imperfections that you may have from your past so that you can be financially stable. There may be several different ways for you to repair any previous damage, but you should know the facts before you do anything. Learning how to save and spend your money reasonably is very important, so you need to know the truth about some myths about personal finances.

When it comes to your savings, people say you should always put a portion of it into stocks or mutual funds. Only do this if it is something that will fit in your financial plan. Everyone has different ways of saving or investing their money, but it normally fits their financial goals in the end. You can use your savings account in whatever way that you want, and depending on where the account is, you may be able to earn interest if you stay above a certain amount.

Some people think that they will be better off buying than renting a home. Yes, there are cases when buying is better than renting, but it is different from person to person. If you have bad credit, it may be better for you to rent so you can repair and establish new credit instead of buying a house. Buying a home with bad credit may mean that your monthly interest will be higher than someone with a good score. Your credit score shows lenders how big of a risk you are, so if you hold off on buying so you can improve your score, it is possible you will pay a lower monthly rate and save money in the long run.

Closing your credit cards will help your credit score and prevent you from acquiring debt. It is true that if you have no credit card, then you won’t be able to build up credit card debt. However, closing your account can actually hurt you in the long run. Instead, pay off your debt as you are supposed to, then simply don’t use the card anymore. Doing so will keep that card and card history on your credit report, but will also show that you have paid it off. After about seven years, the information will no longer show up in your credit history. Also, by keeping your credit card accounts open you can teach yourself how to properly use and pay off your card.

Another very popular myth is that you cannot get a loan if you either have bad credit or have debt. There are loans out there that are specifically for people who have bad scores. Getting a loan like a personal loan can help you pay off your debt, and even work to rebuild your score. A lot of people who have financial troubles may opt for a personal loan so they can use it to consolidate their debts. Doing this allows for the person to pay off multiple debts they may have with the personal loan, and then only have to make one payment instead of multiple.

Managing Personal Finance in Times of Crisis

Managing your financial outlook is a challenging task specially during these times of crisis. Many people are asking, “How are we supposed to manage our budgets, when we don’t have anything to budget in the first place?” That may not be an entirely accurate statement. Remember, managing a budget is not simply about managing the money that comes in. It’s also about managing the money that comes out. Personal finance is personal responsibility. If you lost your job and are struggling to make ends meet, then consider downsizing your expenses to the barest minimum possible. Cutting down on luxuries and even daily needs is possible. Most of the time, people say that they’ve done everything that they could to minimize their expenses. So, instead of driving to work using the BMW, they’d use that gas guzzling SUV. Obviously, that is not cutting down on expenses.

Perhaps, the most extreme way of exemplifying cost cutting is by observing the lives of people in third world countries. Life is very different and priorities are drastically dissimilar. In Vietnam for example, people go to their places of work using bicycles. It’s actually a good idea since not only do they save on gasoline, they also protect the environment. If you own a company, you might consider saving on costs by outsourcing. With the advent of Internet telephony and communication, it’s now possible to have a receptionist or even an accountant somewhere in India. Your choice of food is also critical. With the high obesity rate in America, you’d begin to wonder how much of that budget is actually spent on food. Compare that with a delicious mongo meal in the Philippines, which only costs a dollar. It could feed four to five members of your family and at the same time give them their daily requirement for protein.

That’s not to say that you should live like a person who is living in a third world country. Having a broader outlook broadens your horizons, so that you’ll have more options in deciding. The more options you have, the better leverage that you get in managing your personal finance.

Planning Your Personal Finances

When planning your personal finances it is essential to be organised and realistic. You may just wish to balance your monthly or annual budget, but most families have some longer term objectives. These can include a new house, health care, retirement plan or the children’s education costs.

Monthly or Annual Budget

Personally I think an annual budget makes more sense and is easier to organise as it irons out the fluctuations in costs such as heating, car expenses and house insurance.

This is very easy to do, simply make a list of all expected income for the year and another list of expected expenses and hopefully the income will exceed the expenses! If this is not the case, you have two options, either increase your income or reduce your expenses – easier said than done!

You could increase your income by finding extra work or perhaps borrowing against your assets – for instance re-mortgaging your property if you have a lot of equity tied up in it.

You could perhaps reduce your expenses by shopping around and finding better deals for your power supplies, insurance and telecoms. There are a number of comparison sites out there, so it is worth a bit of effort if you can get cheaper deals.

Remember things can change over the course of a year so it is important to revise and amend your budget as and when required.

If you are in the happy position of having more income than expense, the next step is to decide what to do with the money.

Savings

There are many different schemes that will be happy to look after your surplus income. These range from the simple easy access deposit account, which has the advantage of getting your savings back to meet an unexpected expense – the return will not be very high – to the various Isis and offset mortgages.

One of the best schemes is the offset mortgage. Under this scheme you link your savings account(s) and current account to your mortgage account and only pay interest on the outstanding amount at any one time. For example if you have a mortgage of £100,000, savings of £8,000 and a current account balance of £2000, you will only be paying interest on £90,000. The added advantage of this scheme is that you can take your savings back at any time.