To all of you just starting out and to everyone else trying to take control of your finances, this blog will give you some ideas to help you reduce your monthly expenses. By following the tips and ideas discussed, you will learn how to save more as you analyze your current money habits and make minor changes to improve them.
This blog started as a workbook I created for friends who had asked me to help get their spending habits under control. The thought process behind it is that you can help people take control of their finances by breaking down their monthly expenditure into its respective categories, and showing them how to make simple changes and choices in each of these categories.
By immediately doing a few things differently, you can free up some more of your money, cut down your monthly cost of living, pay off your debts sooner, and ultimately keep more of what you earn. Also, a number of the personal finance books out there only show you how to better invest money. There is nothing wrong with that, except that they do not address the needs of people who are living pay check to pay check and have little or no savings to start investing.
We address this on this blog by showing you step by step, how you can free up some cash while maintaining your present standard of living and meeting your daily needs. If you are like most people, you go to work, earn a pay check, and buy things as you need them without consideration for what your actions might mean to your overall financial health and that of your family.
This is one of the reason many people end up living pay check to pay check with little or no savings, and are only a short step from financial ruin, if their source of income is interrupted for a month or even a week.
Yes, we live in a society of instant gratification. The media advertisements are always showing us how to get more stuff, today, with fancy easy-to- swallow monthly payments, while hiding from us the actual total cost of the item when the interest is added to the advertised price.
Here is an example: an entertainment system is advertised on sale for only $ 2299.99, and the store tells the buyer they can put it on their credit or store card and make equal payments for 12 months, here is what the buyer actually pays in the end as the total cost for the item. If it is a credit card with a 17% rate, the monthly payments would be about $ 209.77 and the total interest about $ 217.25 (Total payment of $ 2517.24). Worse, if we do the same calculations using the average store charge card interest rate of 27%, the monthly payments would be about $ 220.84 while the interest paid would be about $ 350.08 which is 15.22% above the original asking price.. (Total payment of $ 2640.07).The funny thing is that if you ask most people who finance purchases like this how much they paid, they would tell you it cost them only $ 2299.99 completely excluding how much extra they paid in interest.
This is how most of us get robbed of our pay checks without even realizing it. You can use this same example for bigger purchases like cars, vacations, e.t.c and the results are the same, except that the actual total dollar amounts paid at the end is greater. (Regard credit card balances as very expensive loans, because that is what they truly are).Most importantly, you should try to have some fun while you are at it. Give yourself a treat every now and then as a reward for being disciplined. You can include giving yourself a reward as milestones in your financial plan.We all work hard, and have every right to get some satisfaction (reward) from the money we earn, (and we should) or else, what is the sense in working hard. The key here though is to make sure that we do not go over-board by buying things we cannot afford, or recklessly spending without thinking of the long term implications to our over-all financial health.
Topics covered in current and future posts/pages include how to Track and Control your spending and also save money on :
- Home & Cell Phone
- TV Service
- Internet Service
- Heating & Electricity
- Your Home
- Work Lunches and Drinks
- Budgeting Tools
- General Buying and Selling
- Alternative Energy
- …. and much more……..
This blog will continue to grow and stay relevant as everyone shares from their experiences. So please feel free to add any comments, tips or suggestions to help other readers on their journey towards financial freedom.