For your enjoyment and benefit, the following is a brief reference guide to help you learn the importance of avoiding debt, how to save (regardless of your income), and and how to save painlessly (and for the masochists- painfully). (more…)
Archive for the ‘creating a budget’ Category
Tags: debt, finances, financial, money
Well I wanted to post on money saving investments today, and all I could come up with was one idea. So I will share my one idea and in return I hope you guys share some ideas on investments that will save money in the long term.
Buy a Freezer: Who hasn’t been frustrated by the inability of their freezer to adequately contain the fruits of a trip to the grocery store? And when meat goes on sale, a rare occurrence, it is a great idea to scoop up as much as possible (and reasonable). For example, our local grocery store occasionally puts 3 lb bags of chicken breast on sale for $3.50 each. The usual price is 7.99-8.99 per bag.
Now, if you owned an individual freezer unit you would have somewhere to put that discount meat- not to mention pastries, frozen veggies, and frozen fruits.
How much can you save with this idea? Well let’s just take the chicken example. My family goes through three bags a month (sometimes four). At $8.50 per bag the cost over the year is $306, while the the cost at $3.50 per bag is less than $130 per year. A savings of $176 dollars over the year. And that is JUST the chicken.
Now I know there are some costs associated with this. For example electricity to run the unit. But, to the best of my knowledge, once the unit is full it is relatively inexpensive to run- as the frozen goods in a packed refrigerator allow the unit to use less electricity than an empty freezer.
So what are your ideas?
As we near out first pay check in over two months (times have been tough but God provided) we are set to implement some money saving procedures and a much improved budget. What have we done? Well I will share with you three tips today to shrink your expenses and saved lots of money
First, perhaps the biggest change for us, we are limiting our grocery/all things Wal-Mart budget (excluding dog food) to $250 per month. We are going to enforce this budget limit by taking out $250 cash at the beginning of the month and placing said cash in an envelope to be used each time we shop. When the money runs out, no more groceries. As an incentive to save more, 50% of the money left over at the end of the month can be used for ANYTHING we want.
Estimated Savings: $200-400/month
Second, we are going automatic. We are signing up as many bills as possible for automatic bill pay. We have been paying anywhere from $5 to $25 dollars in late fees each month. The main offender is our water bill. It is the only bill that comes without a return envelope and is therefore easy to forget about. To make matters worse the local water department are known in our house as the water Nazi’s- if you are two weeks late with your bill they shut off the water and charge $20 bucks (plus late fee) to reconnect. As if they weren’t selling the most abundant resource that only cost about $30 a month, and we were somehow going to run off without paying that hefty $35 dollar water bill….geesh.
Estimated Savings: $5-$25 dollars
Third, we will be paying down our lowest balance credit card in a month or two and using that card for gasoline- NOTHING else! Well okay, emergencies, but only real emergencies. The card will be paid off before the end of each month. It will help us budget our gas money and allow for quick and easy gas purchases. Tried buying gas without a credit card lately? It isn’t fun.
Estimated Savings: $10-$25/month on interest
OVERALL estimated servings: $215-$450 dollars
Why don’t you make your savings automatic- that is after you finish paying off those high interest credit cards? Let me address the latter before tackling the former.
It makes no sense to put your savings in a bank account with less than 2% interest while your credit cards accumulate debt at 16-20% interest. Plus, if a true emergency occurs (i.e. your car breaks down) you can access that money on your credit card just as easily, if not more so, as if it were in your savings account.
Our present financial condition is similar to my physical condition back in February. My wallet is horribly out of shape; my credit cards are stretched like me waist used to be; and cash flow is almost non-existent (much like my previously well concealed six pack). I think that is enough analogies for now, you get the point.
Where are we right now? Well, sad to say, we are burdened by about $15,000+ dollars in credit card debt. That debt costs us about $525/month just to stay on top on minimum payments. Crazy, isn’t it? It wasn’t always like this, when we got married we had three credit cards. It got this way because we (and most often me/I) got suckered into those credit card giveaways. We bought a new mattress and took advantage of the no interest, no payments for a year if you signed up for store credit card “special.” Of course we didn’t pay it off within the year, so we got charged the back interest. Same thing with a digital camera. We also had medical bills we couldn’t pay, so that ended up in a medical credit card. So right now we have about 9 credit cards. I could just smack myself for getting into this mess.
To make matters worse all those cards are maxed out. Why? Well, since my wife is a school teacher and I am a grad student we had two months each year with NO paycheck. We didn’t save/budget well so we ended up living off our credit cards.
So what now? I can’t go back and change this, but I can create an action plan to pay-off this debt. Chances are you could use an action plan too.