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Living On A Budget: Don’t Knock It Until You Try It

February 7th, 2008

NCN

My fellow members of the Money Blog Network are writing articles about budgets and budgeting.

As most of my readers know, I’m a little ‘old school’. I don’t use credit cards. I don’t borrow money. I use cash. And, I live on a budget.

Each month, I sit down at my computer and ‘map-out’ the month.

I list my monthly income and then I list expected monthly expenses.

At the end of the month, I take a ‘look back’ – looking for areas where I over- or under-estimated.

I use a budget for three reasons -

1. I struggle with organization, and using a budget helps me to stay organized.

2. My wife and I work on the budget together, and it gives us a chance to talk (about money, life, finances, etc.). Having a monthly ‘business meeting’ helps keep us focused and on the same ‘team’.

3. I have found that when I ‘write it down’, I spend less money, period.

I would strongly urge you to ‘give budgeting a try’ – especially if you are new to personal finance management. I think you’ll find that using a budget ‘frees your mind’ to think about more important things – like friends, faith, and family.

Here are a few articles that I’ve written about creating and using a budget -

How To Create A Budget If You Have Irregular Income

Annual Expenses: When Dividing By 12 Doesn’t Work

Simple – A Simple Zero-Based Budget

If you are looking for a great, easy-to-use budget software, consider site sponsor -

YNAB Personal Budget

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Debt Cures For Living Debt-Free

February 3rd, 2008

NCN

Here are a the strategies that I’ve adopted so that I can remain debt-free for the rest of my life -

I live on a budget.
I use cash, debit cards, or checks.
I do not use credit cards. Period.
If I cannot pay for it, I don’t buy it.
If I want it, I save for it.
I make a house payment to ‘myself’ each month.
I look for opportunities to create ’side income’.
I look for opportunities to reduce taxes.
I talk with my spouse about our hopes, plans, and dreams.
I write down my goals and I work very hard to achieve them.

Here are the accounts that I’m funding so that I can remain debt-free for the rest of my life -

For Pre-Tax Retirement Savings -

I am fully-funding my 403b.

My wife is fully-funding her Pension Plan.

These plans allow us to save for retirement AND reduce our annual income taxes.

For After-Tax Retirement And Education Savings -

I am fully-funding my Roth IRA.

My wife is fully-funding her Roth IRA.

We are fully-funding 3 ESAs.

These plans allow us to save for retirement AND our contributions grow tax-free.

For Non-Retirement Savings -

I maintain an emergency fund (inside of my savings account).

I am rebuilding my non-retirement savings (inside my savings account).

I am ‘making a house payment’ to ‘myself’, each month, through a deposit to my savings account.

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NCN Top 3: My Favorite Books About Debt Reduction And Credit

February 2nd, 2008

NCN

After writing about (and reading about) debt reduction for almost three years, I’ve amassed quite a collection of books about the topic. I thought it might be helpful to present my personal ‘Top 3′. If you click on any of the links below, and make a purchase from Amazon, I’ll make a little bit of money. If you don’t want to buy the books, I recommend that you head to your local library and see if you can find them there. Either way, these books are on my personal ‘must read’ list.

The Total Money Makeover: A Proven Plan for Financial Fitness

This book, quite literally, changed my life. I know that there are some people who do not like Dave Ramsey, but I think that he speaks in a way that ‘regular’ folks can understand. I will, forever, be grateful for for this book. That might sound a little corny, but it’s true, nonetheless.

Debt Free Living

Years ago, I started listening to Larry Burkett on the radio. (Larry, sadly, passed away a few years ago, but his books and writings are still relevant.) This book is strongly influenced by Larry’s Christian-faith (and it’s better for it, in my opinion). I have friends who still use Larry’s budgeting techniques.

Debt-Proof Your Marriage: How to Achieve Financial Harmony (Debt-Proof Living)

Mary Hunt always finds practical ways to inspire and inform. I received one of her books years ago, as a wedding present, I think. I WISH that I would have read it, way back then. I could have saved myself from so many financial headaches.

Posted in 2008's Best Of The Best, Resources

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Back To The Basics: How To Get Out Of Debt

January 25th, 2008

NCN

Are you ready to get out of debt? Great! Here’s one method that works. In fact, it worked for me!

List all of your debts (including or excluding your first mortgage).
Make your minimum payments (on time) each month.
Send extra payments to a single account -
1. The account with the highest interest rate (or)
2. The account with the lowest balance
Continue to make minimum payments and extra payments, until first account on your list is paid off.
Take the minimum payment that you were sending to the first account, combine it with the extra payments, and send this entire amount to the second account on your list.
Continue this process of paying off accounts, combining those minimums with extra payments, until you are debt free.

Click here to see an illustration of how this debt reduction process works.

Once you get a hang of the process, here are some additional ideas that you might want to keep in mind -

If you get a chance to move debt from a credit card with a high rate to a credit card with a low rate – do it! But, only if you understand the terms of the balance transfer. (Be sure to figure in any balance transfer fees, before you pull the trigger.)
In most cases, you do not need a debt consolidation company. If you will create a plan, and stick to it, you can get yourself out of debt.
It NEVER hurts to call your credit card company and ask for lower rates. (Also, you can call your phone company, cellphone company, satellite provider, etc. and ask for discounts. The more money you save, the more money you have for debt reduction.)
Every dollar matters. Even if you only have two extra dollars to send, send those two dollars.
Before you start sending extra payments, be sure that you have some money set aside in a ‘rainy day fund’. The amount of money in this fund will vary, according to the size of your family. (You’ll need this fund, just in case you have a mini-emergency. This fund will keep you from having to use your credit card. I always kept (at least) $1000 in mine.)

Posted in 2008's Best Of The Best, Debt Reduction

18 Comments »

Time To Call The Credit Card Company

January 10th, 2008

NCN

If you are trying to get out of credit card debt, you might want to think about giving your credit card company a call. Why?

If you have a high interest rate, you can ask them to charge you a lower rate…

If you have been charged a late fee, you can ask them to waive it…

If you are over your limit, you can ask them to increase it…

If you want to consolidate balances, you can ask them to waive balance transfer fees…

If you decide to call, be patient, be polite, get first names, and be persistent.

When I was getting out of debt, I called each credit card company once a month and I asked them to lower my rates. Over a 10 month period, my rates were lowered on three different occasions.

One quick note – If you are averse to confrontation – if you struggle when talking to people – simply ‘work’ your way through the conversation -confidently.

Put your emotions to the side.

Avoid sounding desperate.

Let them know that you are thinking about taking your business to another company.

Never be intimidated.

Remember, the number on the back of the card is toll-free. Shoot, even if they don’t change your rate, at least they have to pay for the phone call. (Before you leave a comment reminding me that the credit card company will pass that phone charge on to their customers – I know, I know. I’m making a joke.)