My Personal Finance Journey

Category Archives for Saving Money & Frugal Living

Saving Money by Thinning Milk

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Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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 The following is a guest post from fellow Yakezie member, Edward Antrobus. Edward is a construction worker, blogger, tinkerer, and a househusband. He writes about frugality and occasionally rants about what he thinks the personal finance community gets wrong.


Recently, I embarked on a quest. Instead of getting ideas from other personal finance bloggers, I wanted to get the opinions of average people on the topic of frugality. I started asking friends and coworkers one simple question: what is your favorite way of saving money? When I asked Angie, she responded that she thins the milk with water.

I’ve talked to about a dozen people so far, but Angie easily had the most extreme answer of the bunch. But after I stopped to think about it, the answer isn’t as extreme as it sounds. I’m sure everyone has heard stories of grandmothers who made room at the table for unexpected company by adding more water to the soup. Angie just does the same thing to the milk to her grand children’s cereal.

That got me thinking. What other ways could I stretch my food with free or cheap additions. Could I even be doing it already without realizing it? It turns out, there were a few examples that I was already performing without thinking about saving money.

Meat

When I buy discrete cuts of meat, such as chicken breasts I look for the smallest net weight I can find for a specific number of pieces in the package. For instance, the family size package of chicken breasts at my local supermarket always come with 5 breasts. The total weight of the meat can vary by as much as half a pound. Since I’m always eating 1 breast for a meal, I’m not going to notice an ounce and a half missing. So I get the smallest package with 5 breasts and save myself a couple dollars per month on meat.

Milk and Water

Adding a little extra milk or water to a dish that already calls for those ingredients will not be noticed, but can add an extra serving to a meal. I actually have a humorous story about Hamburger Helper and added milk.
Back in high school, my cousin and I were left on our own for dinner one night and we decided to make some hamburger helper. When it was done cooking, it seemed awfully thin (because it thickens as it cools, oops!), so we mixed in some corn starch to thicken the sauce. Of course, by the time we served ourselves, it was thick enough to hold the spoon upright. Back in the pot it went with some added milk to thin it out. We added too much and were back to thin sauce. More corn starch. Too much. More milk. By the time we ate, we had turned one box of Cheeseburger Macaroni into half a gallon of food!

Vegetables

Speaking of hamburger helper, I always add frozen veggies to mine. Adding a cup of peas to the dish and you can feed another person. Sometimes, I’ll substitute the meat in a one pot dish entirely with vegetables. Frozen broccoli costs HALF as much as ground beef!


 For more posts from Edward’s Saving Money Series, check out – http://www.edwardantrobus.com/saving-money-series

How about you all? What tricks do you use to help stretch your food purchases a little further? At what point would you draw the line between wise-frugality and being too cheap?

Share your experiences by commenting below!

    ***Photo courtesy of http://www.flickr.com/photos/tillwe/60825340/sizes/l/in/photostream/

    Would the Envelope Method of Budgeting Work for You?

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    Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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    Click here to enter my free $60 giveaway for a chance to win 5% of My Personal Finance Journey blog income and give another 5% to a charity of your choosing! Deadline to enter is November 30th, 2012.

    The following post is by MPFJ staff writer, Kelly Gurnett. Kelly runs the blog Cordelia Calls It Quits, where she documents her attempts to rid her life of the things that don’t matter and focus more on the things that do. You can also follow her on Twitter and Facebook.


    The dreaded “B” word. Budgeting.

    Even the most gung-ho savers among us can loathe it. Because no matter how carefully you crunch the numbers—no matter how iron-clad your budget categories are—reality always seems to run away from you. Your perfect numbers and what you really wind up spending end up miles apart.


     It’s not surprising. In today’s easy-swipe world, we hardly think twice about the money we’re spending. Even if you’re careful with the credit cards and only use a debit card linked straight to your checking account, plastic is still plastic—and it never quite registers as concretely as real money does.


     Not to mention all those “little” expenses that hardly seem worth tracking, but eventually add up: a 99 cent convenience store coffee here, a $7 fast food lunch there. It’s just so very easy for your spending to get away from you.


     If you find yourself nodding your head ruefully at this, then the envelope method of budgeting may be just what you need to get yourself back on track.

    What the Envelope Method Is and How It Works

    The envelope method of budgeting solves the “where did all my money go???” dilemma by making your monthly allotments undeniably real to you. How? By giving you actual wads of cash to use for the month—and the knowledge that once those bills are gone, they’re gone.


    Here’s how it works:

    • Pay your non-cash bills first. We all have monthly bills we don’t pay in cash—mortgage payments, car loans, utility bills. Anything you pay by check or online payment, pay as soon as your paycheck comes in. That way, that money is effectively “gone” and can’t be spent.
    • Make envelopes for all your other budget categories. Even if they’re things you’d normally use a debit card for (like groceries), you are now operating on a cash-only system. So make an envelope for eating out, clothes, miscellaneous purchases (like gifts for those birthdays you always forget are coming that month).  Label each one clearly, along with the amount you have budgeted for that category.
    • Put your allotment into those envelopes. It’s up to you whether you have monthly envelopes or weekly envelopes, although weekly can make things a bit easier for you, because if you have an unfortunate lapse and spend too much, at least you’ve only wiped out the week’s grocery budget and not the entire month’s.
    • Be conscious of how much is in the envelopes as you spend. When you are literally holding the whole week’s entertainment budget in your hands, it can make it a lot easier to decide if you want to blow the whole wad on an IMAX showing of the latest B-movie or if you’d rather spread it out over several Redbox rentals. The ability to physically see how much you have to spend for that period—and how much will be left after you spend it—can be a fantastic way to make you think twice about your purchases.
    • Once your envelope is depleted, you’re done. It doesn’t matter if there are three more days in the week and you’ve blown your grocery budget—time to get creative with leftovers. It doesn’t matter if you really wanted to see that concert at the beginning of the month, but now your monthly entertainment envelope is empty—time to start enjoying all those DVDs you already own but have never gotten around to watching.

    It will take a little getting used to, but this is one accountability method that is very tangible, and therefore very hard to evade. Try it yourself for a month or two and see how your spending overages suddenly start disappearing.


    Have you ever tried the envelope method?  What did you like or dislike about it?

    ***Photo courtesy of http://www.flickr.com/photos/kgnixer/7941841432/

    Financial Habits to Increase Your Financial Security

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    Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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    The following is a post by MPFJ staff writer, Toi Williams, who is a professional personal finance blogger of Fine Tuned Finances. She has backgrounds in personal finance, sales, and real estate.
    All of us have habits that we have established when it comes to spending money.  Some of these habits can save us a considerable amount of money, while some others can result in us wasting more money than we realize.

    By changing our wasteful spending habits and adopting some habits that help us control our expenses, we can increase our financial security and hold onto more of our wealth.

    Here are some of the best financial habits to adopt for a secure financial future.

    Limit Credit Card Spending To Emergencies

    Many people get into financial trouble because they use their credit cards to pay for everything, and then only pay the minimum amount when the bill is due.  This allows them to build large balances that are subject to interest and fees, making the balance difficult to pay off.

    In order to avoid this debt trap, limit your use of your credit card to true emergencies, such as repairs to your home that need to be made immediately, car repairs needed to keep your car running, or items that are needed quickly but can be paid off within one or two months.  Remember, every time you use your credit card but you do not pay in full by the due date, you could be paying interest on that purchase for months or years to come.

    Comparison Shop Before You Buy

    In many cases, the first price that you see for an item that you want is not the best price available in your area for that item.  By taking a few minutes of your time to search prices online before heading out to the stores, you may find that another retailer has the item for a lower price or currently has the item that you want listed as being on sale.  If you are looking for a large ticket item or something that you do not need to purchase right away, you may want to monitor the sales flyers for the retailers in your area to see when the item will be on sale and which retailer consistently has the lowest prices.

    Document Your Spending

    The best way to see where your money is going is to document the amounts that you are spending and what you are spending your money on.  Having a running total of the amount that you are spending each month will help you limit your spending to what you can afford and prevent you from getting too deeply into debt.  A list of your spending will also help you see where spending could be cut to save more money for the future.  There are a number of different computer programs and online tools that can help you track your spending, but many people are just fine using a notebook or checking account ledger for writing everything down.

    Focus On The Debt With The Highest Interest Rate

    If you are already facing more debt than you are comfortable with, make a plan for paying off those debts by focusing on the highest interest rate first.  The debt with the highest interest rate is costing you more per dollar, so you are paying more to borrow that balance from the lender.  Remember to pay at least the minimum amount for all of your other debt accounts and pay as much as you can towards the balance with the highest interest rate.  Once that balance has been eliminated, focus on the debt with the next highest interest rate and so on until all of your debts have been paid off.

    Pay Your Bills As Soon As They Arrive

    Paying your bills late is one of the worst things you can do when it comes to finances because of the number of negative consequences that can occur from the action.  Paying a bill late can result in expensive late fees, a reduction in your credit line, an increase in the interest rate for the account, and a decrease in your credit score.  In order to insure that none of your bills are ever paid late, pay each of them as they arrive in the mail.  This virtually eliminates the chance that you will forget to pay them and increases the chances that your bills will be paid before the money is spent on other items.

    Review Your Credit Reports Regularly

    It is very important to know what has been added to your credit report, as the information in your credit report affects your life in many different ways.  The information in your credit report is used to calculate your credit score, which determines the interest rate you receive for various financial products.  The information is also used by property owners and employers to determine your suitability for their location after you have submitted your application.

    Every person is entitled to one free copy of their credit report each year from each of the three main credit bureaus, so reviewing one of your credit reports every four months will give you a good picture of your creditworthiness without costing you a dime.

    Pay Yourself First

    Many people do not have any savings available because, by the time they are done spending on everything else during the month there is little money left.  If you want to make sure that you are saving money for your future, put the money into your savings account as soon as you are paid and before you begin to pay your bills.  This removes the money from your available funds, decreasing the chance that you will spend it on something else.  Many employers now allow their employees to direct deposit their paychecks into multiple bank accounts, so set up an automatic deposit of a portion of your paycheck into your savings account each pay period.  This allows you to save money without having to think about it.
    How about you all? What habits have you adopted to help you save money? 

     Share your experiences by commenting below!

      ***Photo courtesy of http://upload.wikimedia.org/wikipedia/commons/3/33/Money_555.jpg

      The Money is in the Kitchen – Save Yourself Money and Time by Cooking at Home

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      Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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      The following post is by MPFJ staff writer, Melissa Batai. Melissa is a freelance writer who covers topics ranging from personal finance to business to organics to food.  She blogs at Mom’s Plans where she shares her family’s journey to healthier living and paying down debt.

      Scour the Internet or read books about frugality, and you will learn hundreds of ways to save money, from the practical such as air drying your clothes and cutting your family members’ hair at home, to more ridiculous methods such as splitting a 2 ply roll of toilet paper into two one ply roles or taking the condiments from a restaurant so you don’t have to buy your own mustard and ketchup.
      However, in my experience, one of the quickest ways you can save a substantial amount of money is to cook at home and make a weekly meal plan.
      I know, cooking at home isn’t glamorous, and it takes time.  Yet, it doesn’t have to take a lot of time.  If you have 10 to 20 minutes extra a day, you can get a hot meal on the table in no time.

      How to Maximize Your Savings

      If you just decide to shop at home and only make quick cooking foods such as boxed mixes and frozen foods, you will save money over dining out every day. 
      However, if you instead commit to making your own food from scratch, you will save even more money, and your health will also benefit.

      Methods to Make Quick Meals

      You don’t have to spend an hour over a hot stove after work to make a nice meal at home.  Here are some strategies you can use to reduce your cooking time:

      1.  Use a slow cooker.  Simply prep your vegetables and meats, put them in the slow cooker, and turn it on and go.  When you come home, you will come home to a hot meal.  There are many books that are slow cooker only, but two of my favorites are Fix It and Forget It and Holiday Slow Cooker (which has recipes that are good for any time, not just holidays).
      If you don’t want to spend the money to buy the books, check them out from the library or look at some websites.  The blog, A Year of Slow Cooking, contains hundreds of slow cooker recipes.

      2.  Make your meals for the week in one day.  Spend an hour or two Sunday afternoon making your meals for the week, and you won’t have to do any cooking for the rest of the week.  Rachael Ray has a television show about creating 5 meals in a day, and she also has a sample menu on her website.  I like this method because you get all of the cooking dishes dirty once, and you only have to clean up once.

      3.  Freeze extra meals.  If you are making a slow cooker recipe, simply double the ingredients.  Then, put one half of the meal in a freezer bag, squeeze out the air, and freeze.  The morning you would like to serve it, simply put it in the refrigerator to defrost and reheat when you get home from work.  You can do this each night over a period of two weeks, and you will have another two weeks’ worth of meals in the freezer.  It really doesn’t take any longer when prepping, and you save yourself  time and money.

      4.  Make meal components.  Another way to save money and time is to make meal components.  Instead of buying little packets of oatmeal, buy a tub of oatmeal, and add your own flavorings like cinnamon and brown sugar.  Divide the mix into several single serve containers and use them as you would the packets in the morning.  If you eat oatmeal every morning, over the course of a year, you could save a hundred dollars or more depending on the size of your family.
      If you buy frozen chicken breasts at the store, why not put a few pieces in a freezer bag with sauce and cut up veggies?  Then, just dump it all in the slow cooker before you leave for work, saving yourself prep time in the morning.

      Make a Weekly Meal Plan

      Now that you are pumped to start cooking more at home, make sure to make a weekly meal plan.  You don’t have to be married to the meal plan, but when the week gets hectic and you’re tempted to eat out, having your meal plan ready will take away the burden of deciding what to make for dinner that night.  Also, if you shop with a meal plan, you can save yourself from buying all of those impulse purchases because you will be shopping from a list.
      We all say that going out to eat saves us time, but when you consider the travel time as well as the wait time at the restaurant, you can easily make your own meals at home for half the cost or less of the restaurant meal.  Plus, your body will thank you.  I’ll take eating at home over separating toilet paper rolls any day.

      How about you all? What steps do you take to optimize both the your time and monetary resources involved when cooking at home?

       Share your experiences by commenting below!

        ***Photo courtesy of http://www.flickr.com/photos/greencolander/1087828804/sizes/l/in/photostream/

        How the Frugal Mindset Will Change Your Life

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        Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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        The following is a post by MPFJ staff writer, SK. SK writes about the reasons we get into debt, changing the patterns that get us into debt, and examines small business ownership and real estate investing at her blog, American Debt Project. 

        Being American wasn’t always synonymous with being wasteful. The facts are fairly well cited by now: 

        • Americans consume nearly a quarter of the world’s energy even though we make up only 5% of the population. 
        • We’re known for throwing away more garbage per capita than any other country in the world. 


        We’ve become the ultimate conspicuous consumers with little to show for it. But, what I love about America is that we are one bootstrapping place, and we’re not afraid to make changes when we need to. I want to talk about how being just a little more frugal (or thrifty) will change your life and hopefully make the unflattering stereotype of the wasteful, reckless American a little less prevalent.


        1. Being Frugal Means Being More Resourceful and Creative

        When you first become frugal, you’ll start looking at every thing twice. Can I use these extra ripe bananas in a smoothie or some banana bread? If this cell phone bill is too high, can I find another option like getting a phone through work or finding a cheap prepaid option? What other entertainment can I take advantage of besides cable television? Do I really need day moisturizer and night moisturizer, or do they pretty much do the same thing? You’ll be able to cut out what you don’t need, make better use of what you have, and be excited about all the cool things you can do without a lot of money.


        2. Being Frugal Gives You Discipline

        Being frugal means making a choice. You may not be able to go to every single new release movie or eat at every fine restaurant within a 20-mile radius, and you have to cut out some or all of these activities to get to your goals. We don’t like to discipline ourselves: getting up early in the morning, working out everyday, staying on top of your tasks daily. None of those sound extra exciting, but we need to discipline to keep ourselves on track and make our lives and bodies what we want them to be. Seeing the changes that come about in your finances will make you excited to what else you can change, and suddenly, getting up a little earlier to work out doesn’t seem nearly as daunting.


        3. Your Frugal Mindset has Less Stress and Gets More Done

        Even though you might think you get more done working at the last minute before a deadline or when you are filled with stress, less stress makes you more productive. If you get serious about being frugal, saving money on your current expenses and approaching your new expenses with better insight and planning, then you won’t feel stressed with each new financial situation or expense. You’ll know you can handle your upcoming expenses and your relaxed mind can now focus on more important things: like a project or a business idea. It’s easier to focus and concentrate when you are not reacting to stress or feeling stressed constantly.

        How about you all? Has being more frugal changed your life in other ways? 

         Share your experiences by commenting below!

          ***Photo courtesy of http://www.flickr.com/photos/smemon/4518528819/sizes/o/in/photostream/

          Help a Reader: Getting a Second Credit Card

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          Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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          Recently, I received the question below from a reader:

          Hey Jacob! I had a quick question I wanted to run by you. I think I should get another credit card, and I was wondering if you had any suggestions. 

          I currently have a Chase Freedom Visa that I use all the time. I was thinking of getting a Mastercard for diversity of cards (in case Visa is not accepted somewhere) and maybe something with good miles points. I got an application for a US Airways Mastercard that has great benefits, but it carries an annual fee and that generally goes against what I think a credit card is for. I don’t use my car very much, so I don’t think getting a gas credit card would make much sense. But anyway, if you have any advice to pass along that would be great! Thanks. 


          What advice would you give this reader? Should they get a second credit card? If so, what type of credit card would you recommend?


          Listed below are my thoughts (before I found out that they didn’t want a gas credit card):
          Great to hear from you! I hope you’re doing well.

          That’s a good question you have there! Personally, I think it’s a good idea to have a couple of different credit cards in the unlikely event that you lose one and need a backup for personal use. 

          There really is no diversification benefit as far as getting several credit cards in the event that one of the companies fails like you would diversify with stock investing, since 1) Mastercard and Visa I believe are owned by the same people and 2) the institution that actually ‘loans’ you the money for the transaction is the bank that you have the card with (Chase, for example). Mastercard or Visa only handle the path through infrastructure. 

          In addition, in the past 4 years, I personally have not been to an establishment that accepted MasterCard, but not Visa, so I think you would be OK with getting either type of card.

          In general, credit cards with annual fees aren’t worth it unless you are REALLY going to utilize the card for the benefits. For example, airways credit cards aren’t worth the annual fee unless you fly every week or use the card to pay for work trip flights. 

          There are a lot of great no annual fee credit cards out there. This web site gives a good list of them if you want to take a look –http://www.creditcards.com/reward.php.

          I use the Chase Freedom Card that you have for all of my purchases, but I also have a Chase BP Credit Card that I use for all of my gas purchases. It gives 5 percent cash back for all purchases at BP gas stations and has no annual fee. You might think about getting a gas credit card for your second card as well! Hope it all works out for you and thanks for your question!

            ***Photo courtesy of http://www.flickr.com/photos/imtfi/5867775813/lightbox/

            Getting Travel Insurance is Worth the Risk

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            Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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            The following is a guest post written on behalf of Hughes Carlisle – http://www.hughescarlisle.com. You can visit their site for additional advice on a range of issues.

            Getting Travel Insurance is Worth the Risk


            If you plan to take a vacation abroad, there will be many things to organize  However, the one thing that many people leave to the last minute is the decision whether or not to buy travel insurance. Some people choose not to bother because they are confused by the types of policies and levels of cover available; however for anyone travelling abroad, travel insurance is vital. Follow our guide to travel insurance and find out why everyone should have it.

            Types of insurance and cover

            There are several types of travel insurance on the market, and they are usually broken down into gold, silver and bronze cover; with the main difference being that the amount paid out for each eventuality increases depending on which level you choose. There will also be a different excess (deductibles) for each type of policy. The main types of policy are ‘single trip’ or ‘annual multi-trip’ with other specialist policies being available such as those that cover winter sports and people travelling on a gap year or extended holiday.
            Policies do vary, but the sorts of things that are normally covered include emergency medical expenses, personal accident, personal money, passport, documents, and cancellations or delays to your trip. The amount that will be paid out in each eventuality will vary depending on the level of cover you have chosen.
            Most policies will also include an element of legal cover, and this can be necessary, if, for example you are involved in any incidents or accidents during your holiday which may involve the emergency services. There are solicitors in the UK who cover both holiday and road traffic accidents in Liverpool among other places and will be able to help you and whose costs should be covered, if you need them when you return from your holiday.
            There will be certain circumstances where travel insurance will almost always not pay out, including drinking too much alcohol, participating in activities that are not covered (Running of Bulls might be included in this!) and loss of enjoyment.

            Why you should buy travel insurance

            Although travel insurance can seem like another expense on top of the cost of your holiday, if you do not have it, you could end up paying out much more if anything should happen. Circumstances where your insurance could be invaluable include your flight being cancelled, if you have a medical emergency while you are away, or you are a victim of theft.

            Making sure you buy the right travel insurance 


            Ensuring that you are purchasing the most appropriate cover is not just important in terms of what is covered but also in financial terms. You may discover that you already have some things covered through home, life and car insurance, so you might only need the most basic travel insurance policy and can avoid paying out unnecessarily for a more expensive policy.

            The most cost-effective way to purchase insurance is through an independent insurer rather than your tour operator or travel agent and to shop around. Use price comparison websites to make sure that you are getting the best value for money. It is also important to make sure you mention any medical conditions which may affect the insurance. While this may mean that your premium will be higher, as long as the insurer is fully aware of any conditions, they should pay out if necessary.
            The value of getting travel insurance before you go abroad cannot be underestimated and knowing that you have it will mean that you can have a stress-free and enjoyable holiday.

            How about you all? Have you ever taken out a travel insurance policy before going on a trip to another country? Are you aware of if any of your existing insurance policies covers travel-related incidents?

             Share your experiences by commenting below!

              ***Photo courtesy of http://www.flickr.com/photos/uggboy/5566283661/sizes/l/in/photostream/

              The Snowball Effect: Simple, Effective Debt Reduction

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              Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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               The following article is by MPFJ staff writer, Miss T, from Prairie Eco-Thrifter. If you want to learn how to live your dream life in a sustainable, healthy, and money savvy way, check out her site here.

               Are you snowed under with debt? 

               If you are, you are among the tens of thousands of people struggling to keep their heads above water. A growing number of people are struggling with a home mortgage, a couple of loans, as well as numerous credit cards (the other day, I heard of one guy who has more than thirty cards!) 

               Every month, they have to perform a juggling act to find the payments and not fall behind. When you use the snowball effect, you target one debt at a time, freeing up extra funds to get it paid off faster. It’s really quite simple, but you’ll need to be disciplined and committed to sticking to it.

              Let’s look at a fictional case study:

              Bob and Margaret are a couple in their mid thirties with three kids at school. Bob has a well-paying job as a Sales Manager; Margaret works part-time in a fashion boutique so she can be home for the children after school. They have a mortgage, a car loan for the new SUV they bought last year, a personal loan for the holiday they took to Disneyland with the kids, three store cards, and six credit cards. 

              They use their credit cards for most things they buy and just make the minimum repayments each month. Usually, this means that they have to use one card to make the payment of another – a process commonly called robbing Peter to pay Paul.


               They sound like a fairly typical family, don’t they? Like so many others, they were managing OK, until an unexpected emergency happened. Margaret got sick, so they had extra medical bills, and she couldn’t work for six weeks. The credit card and loan payments fell behind, and all cards became maxed out; they started receiving letters of demand. This was when Bob and Margaret realized that they needed help; they did the best thing they could have done – they consulted a debt consolidation specialist (which can often be costly in and of themselves!). Ignoring your worsening debt situation is the worst thing you can do.

               This was when they heard about the snowball strategy, among other things. 

               This method of debt reduction involves paying just the minimum repayment on all debts while throwing all the extra cash you can at one debt to get it paid off quickly. When you get one out of the way, you put the money you were paying off the first debt, onto the next one to get it paid off quickly too. Make sense?

               If you have multiple credit cards and/or store cards, and are struggling to maintain their payments and get the balances down, the snowball method is for you.

               It’s simple, but it isn’t going to be easy, especially at first. You’re going to have to have commitment, discipline and persistence. It will only work effectively if you are committed to becoming debt-free, and have the discipline to pay as much as you can every month off the debt you are working on. Can you do that, do you think? Of course you can!

              Here’s what to do to get started: 

              • Make a list of every debt you have.
                •  Against each debt, list the amount owing, the minimum repayment and the interest rate. 
              • Now, arrange them with the smallest account balance at the top of the list and the biggest at the bottom.
              • Next, add up all your minimum repayments. Check your household budget.

              What! You don’t have a budget written down?

              OK, that’s the first job. You have to know where your income goes and how much excess cash you can find to throw at these debts. (I said you needed commitment and discipline, didn’t I?)

               The biggest thing your budget should tell you is that you spend less than you earn. Maybe you are like so many others and you have been spending more than you earn – this is a recipe for financial disaster, as you’ve probably already found out.

              To make this method work for you, you need to have sufficient income to cover all your minimum repayments and still have some money left over. If you don’t, get some professional financial help right away before it gets any worse.

              OK, now you’re ready to get started on getting rid of one credit card completely. Sound good? Great!

              Decide which one it will be – usually the one with the smallest balance because it will be the quickest one to get rid of and you’ll feel fantastic when you have your first financial ‘win’.

              So, you keep making all your minimum repayments, including the one you are targeting first to snowball – this is really important as you don’t want to fall behind with anything.

              Check your budget to see how much extra you have each month, because you are going to throw all the spare cash you can lay your hands on, at your smallest balance. Be creative; look for new ways to find an extra few dollars every month – eat at home more; take your lunch to work; hold a yard sale. The more you can throw at it, the sooner it will be gone! So will some of your stress!

              This first account will soon be paid in full. This next step is vital – cut the credit card up! This is the only way to prevent getting back where you were before.

              Now, choose the next lowest balance to attack.

              Like before, you keep making all those minimum repayments; at the same time, put the amount you were paying off the first account, onto your new target along with its minimum repayment. Keep finding ways to free up some extra cash and throw this at your new target too. When you pay this one off, cut up that card too and then throw all the money you had been paying off it onto the next one on your list.

              See how the cash has snowballed so you can throw so much more at the one debt as you get more paid off?

              You must keep the discipline up, or all will be lost. Don’t be tempted to use the money you were paying off an account for any other purpose than throwing at the next debt. Give yourself a little reward each month for staying on track and reducing your balances. Soon all those nasty cards will be paid off!

               So, are you in debt? If so, what have you tried to do in reducing it?

              ****Photo courtesy of sparkia

              Increasing Fuel Prices Require Increased Creativity

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              Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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              The following is a guest post sponsored by the Energ Group, which specializes in assisting people with additional cost saving measures to help with their energy bills or general energy updates and building management systems. Enjoy! 


              Increasing Fuel Prices Requires Increased Creativity


              As fuel bills continue to rise, energy efficiency is a vital part of every household budget. The best strategy is to start from the outside and the structure of the house and then work inwards to the fixtures and fittings.

              Insulation

              The heat in every house rises through the ceiling of a room, into the attic, and out of the roof to the outdoors. Preserve this heat by insulating the attic. Newly built homes will have cavity walls, so ensure that these, as well as the attic in older homes, are well insulated. Use fiberglass  cellulose, or polystyrene as the insulating material, depending on your budget and the shape of the spaces to be insulated.
              Double glazed windows are superior insulators to single glazing. If your budget cannot stretch to replacing the windows, make sure that any air spaces or leaks around the windows are well sealed. Curtains are some of the best insulating material for windows. Try to hang some that extend from the floor to the ceiling for the best insulation effect.

              Heating

              Try replacing your existing heating system with a ground source heat pump. These pumps harness the heat from the earth with a mechanism that operates rather like a fridge in reverse. A network of pipes is buried in the ground to a depth of between four and 100 feet. A mixture of water an anti freeze is pumped through the pipes, warmed by the deep ground temperature, and is pumped back to a domestic heating system. Ground heat pumps use a combination of an evaporator, compressor, and condenser connected to the domestic hot water supply, and heating will increase the temperature to about 48 degrees C. This heat is sufficient to use in radiators, hot water systems, and under floor heating.
              Meanwhile, turn down the thermostats on your heating and hot water systems. You always need far less heat than you imagine. There is little purpose in having scalding hot water coming out from a tap. If you have a hot water tank, make sure it is properly insulated.

              Fixtures

              Replace incandescent light bulbs with LED lights. LED lights have between four and 20 times the lifetime of both incandescent bulbs and compact fluorescent bulbs (CFLs). They do not shatter to pieces and do not produce poisonous mercury vapor like the CFLs.
              Throw away old electric appliances. These eat up more energy than you may calculate. If you are keeping party food in an old fridge for another occasion, you’ll probably save more money by buying a fresh supply. The best rule is to have just one fridge in the house but make sure you have the most energy efficient model. Also, work out the configuration of your fridge and freezer. It can be more energy efficient to have a freezer incorporated into the fridge rather than a stand alone freezing cabinet. It may be worth calculating just how much food you need to keep frozen and how much you can buy fresh day to day.
              Always turn off electrical appliances when they are not in use. A television or computer on stand by uses as much electricity as when it is functioning.

              How about you all? What strategies do you use to save some money on your energy bills? 

              Share your experiences by commenting below!

                ***Photo courtesy of http://www.flickr.com/photos/gavinmusic/39529798/sizes/l/in/photostream/

                Big Debt, Big Relief

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                Welcome to My Personal Finance Journey! If you are new here, please read the “About” or “First-Time Visitor” pages to find out more about us. If you would like to receive free updates on articles like this by email, then sign up here or you can subscribe to the RSS feed. Also, check us out on Twitter or Facebook. Thanks for visiting! Keep on learning!
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                The following is a guest post by Amanda Green. Enjoy! 

                Big Debt, Big Relief

                Being in debt is financially and emotionally stressful. Not only do you have to worry about how you are going to pay off your debt and make ends meet, but you also have to deal with harassing creditors. If you are tired of the chaos, it is time to take action.

                There are many resources available to help you get out of debt and stay debt free. If you have good credit, you can apply for a debt consolidation loan. This will make your debt more manageable, and you can pay it off more easily. As long as you live within your means at the same time, you will eventually be debt free.
                There are also debt relief agencies that help you get out of debt. Some of these agencies are non-profit, while others charge a small fee for their services. The agencies help you negotiate with creditors to stop collections activity, giving you immediate emotional relief.

                Then, they help you create a budget that will allow you to pay off your debt over a period of time, and still live within your means. Once the debt is paid, you can use the budget to ensure that you do not get into debt again.

                This is the best way to get out of debt. If you are not able to pay a portion of the debt to all of your creditors and still make ends meet, you can try another option. You can make one payment to your most expensive creditor each month until that debt is paid off. Then, you make a payment of the same amount to your next expensive creditor, getting that debt paid off faster. You continue in this fashion until all of the debt is repaid. The downside to this method is that you have to suffer through collections activity on the accounts you are not currently paying on.

                Many people turn to bankruptcy whenever they find themselves in debt. However, unless you have more than ten or twenty thousand in outstanding debt, this is generally not a good option. Not only will your credit suffer, but you will also have to fight to keep your mortgage or car loan.

                You could wind up with much less than you have now by filing bankruptcy. It is much better to use one of these methods to get out of debt. Click here for more information on how you can become debt free and stay that way.

                How about you all? What resources have you used to help you pay off debt?

                Share your experiences by commenting below!

                  ***Photo courtesy of http://www.flickr.com/photos/paparutzi/2758346373/sizes/o/in/photostream/

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