Thoughts On Finance

From the rich to the low income, money and stretching a dollar is on everyone’s minds these days.  A recent Dr. Phil show reviewed some of the biggest money mistakes people make, and I found the information very interesting so I am passing it on to you.

1.  Living Beyond Your Means – One of the biggest mistakes people make is that they want more than they can actually afford.  Spending money on things you can’t afford will most definitely put you into financial crisis.  We as American’s must learn to live within our means.  We may not want to but if the math says we can’t afford it, then we can’t.  There is no magical way to afford things that are beyond the dollars you bring in, so live wise and be frugal.  In the long run, being debt free will give you much more than that new TV or car will.

2. No Emergency Back Up Plan – Families must live below there means if they are going to be able to tuck some money away just in case of emergency.  In this country, families used to only have one income, and in that case if one party was unable to work, the other party could just get out there in the work force and earn a paycheck to keep the family afloat.  Now with most families using all the income potential just to get through the day to day, it is more important than ever to have a savings plan and to keep adding to it each paycheck.  Hopefully you won’t ever need it, but it will be nice to know that if you hit a rough patch you have something to fall back on.

3. Fixed Income Is Not The Only Answer – Fixed income is an important regular, steady income and is very helpful to have, however there are other ways to make money, and there is nothing wrong with investigating other options while bringing in the weekly paycheck.  There is a whole world of business opportunities available, everything from starting your own home business, to finding a side job that allows you to work from home.  Be sure to not limit your options to just the jobs that will bring in a paycheck, sometimes your greatest earning potential may lie in a great idea you have, so don’t just dismiss all else, keep your options open.

4. Cashing Out Your 401K – Sometimes you may not have a choice.  Financially, you may absolutely have not other options, however, if at all possible keep that money in there.  It is money that you can use for a down payment on a home or for kids college, and in addition to those things, you may also need need it to supplement your Social Security Income when you are old.  If at all possible, don’t take the money, and if you need to try and take as little of it as possible.  It is not a good idea to steal from your future to pay for today.

5. Believing The Myth Of Fixed Expenses – There are absolutely no fixed expenses.  When budgeting and realizing that you can’t meet your monthly expenses with your income, it is time to cut down to the bare minimum.  A car payment is not fixed, sell the car, pay off the loan, and buy a cheap car to get you back and forth to work.  You can reduce your energy bills by being more conscientious.  There are ways to reduce just about every bill that you have, if you just work at it.  More peace will come into your life if you are living below your means.  Happiness comes directly from the peace in knowing that you don’t owe anyone, anything, so cut back now and reap the rewards, you will probably even live longer being this kind of stress free.

Honestly, when I first heard that a family who had a home built for them by the popular TV show, Extreme Makeover Home Edition, was having their house foreclosed on I honestly thought, wow what a waste. I mean you get a customized home built for you for free, and then you wind up having this home foreclosed on. Well, I heard an interview with the husband and wife who are living in the home and it changed my mind. They did have a beautiful home built for them, when they received the home, they were also given a $100,000 home maintenance fund but they did still have to pay the mortgage, which was the equivalent of what they were paying before the makeover and the taxes, which stayed the same for the first few years and then went up. This couple said that the home itself was costing them $6000 per month to keep up, and in addition to that they have a large family which also included some children with special needs, they didn’t really get into the special needs of each child. In any case, these people said that in addition to almost losing their home and being in financial ruin which is difficult enough, that they were receiving hate mail and threatening letters from viewers of the show who were angered to hear that they might be losing the home the show gave them. Honestly, I learned some things about home ownership in watching this show. I didn’t realize that there is something called a homestead protection, which says that if you own a home the only person who can sell that home out from under you is the mortgage company, however, once you take out a home equity loan, even if it is just for a very small amount, then they can come and sell your home out from under you if you don’t pay back the loan. For instance let’s say you borrow $10,000 dollars off your home, but your home is worth $500,000 if you don’t pay that loan, then that company can come and sell that home right out from under you to get back their $10,000. I didn’t really realize that it worked like that. In any case, these people did borrow money off their Extreme Makeover home, but it was really to put their kids in a rehab program and to start a new business. They didn’t just go out and blow the money and lose the home as some reports might make you think. This just goes to show that anyone can have their finances spiral out of control, it just takes a few mistakes and you can very easily find yourself in a hole without a shovel.

When financial worries start to take over, and your income no longer meets your expenses, the first things that wind up sitting unpaid are those credit card bills.  Many people mean well and really want to pay their debts, but the money is just running out and their survival unfortunately is relying upon them not paying those bills.  Well, most people do eventually begin to catch up, find a new source of income, or a way to cut expenses, but unfortunately by that point it may already be too late.  You see damage to your credit score can sneak up on you really quickly, with just a few payments behind, you can quickly send your credit score plummeting and the thing that you have worked so hard to maintain your whole life, goes down the drain and you find yourself back at square one.  The best thing that you can do to bring your credit score back up is to keep paying those bills, on time.  Paying your bills on time will help you start to bring that credit score back up, but at the same time you need to be finding new ways to cut back and make more money simultaneously.   The best way to make sure that you get on track and stay on track is to start paying your bills and keep putting money into savings at the same time.  If you are living paycheck to paycheck, then you are in fact setting yourself up for failure.  If you don’t have a back up plan then you are just a bump in the road away from the next crisis.  There is potential to be injured, use a job, get ill, something that may prevent you from working, and if you are already banking on the paycheck that is coming on Friday, then this is risky business.  The suggested savings plan means that you have enough money set aside for your family to live for an entire year, I have heard some people say at least 6 months, but the time to start saving is not when things are better, it is right now.  Please don’t wait any longer to start making a good and secure financial future for you and your family.  The economy may not be in good shape but that doesn’t mean that you can’t be.  Start bringing down your expenses today and you will begin to create not only a savings plan, but a feeling of peace of mind and security that your whole family can enjoy for years to come.

I don’t really understand why our government is allowing price gouging. I do understand that the cost of oil is up, but did you know that the cost of a gallon of gas in Iraq is just .39 and right now the average price in the US is about $3.50. I do understand that oil costs us more than it does in the US, but I have started thinking that the local food companies are taking advantage of the increase in trying to claim that it is costing them so much more to produce and transport products than it actually is. Don’t get me wrong, I do believe that there has been a cost increase to the companies, and I don’t mind contributing to absorbing that cost, but the prices of groceries are climbing so intensely that the sticker price on some items is up to almost double what it was just 6 months ago, and quite honestly the gas prices have not risen enough to truly warrant those types of increases on each product. I have spoken to some people about this, and many people are buying the fact that it is costing these companies so much more to produce and transport these items, but I am not biting. It seems to me that stores, food manufacturers and transport companies are using this difficult financial time to convince consumers to pay more for their items, and it is working. A friend recently told me, don’t worry the gasoline prices should come down again in the next 6 months, and my response was, do you really think that the grocery prices will? This kind of price gouging should not be tolerated, and our government had better intervene before this problem gets completely over the top.

All the focus in the media and on the street is that we are all going under and it is just a matter of time before we see the next great depression in this country, but is all the negative hype making matters worse? Well, there are many schools of thought on this subject and the consensus is yes, worrying will make your financial situation even worse.

Worrying is creating and wasting energy that could be better used to focus on what you can do to help yourself.  Worrying creates depression and a feeling of matters being totally out of your control.  This leads to feeling overwhelmed and helpless, and that is a hard place to function from.  How can you avoid feeling like this?

Start focusing on the positive.  Things that can help reduce your monthly expenses will help you to feel empowered.  Take the reigns and get your spending and your finances under control.  Don’t think negatively about money, think positively focus on the fact that there is plenty of money in the world and plenty of it for you.  Tell yourself that each day you will work to conserve not only money but all of the resources that you have available to you.  Always treat your money with respect.  Keep it well organized and neat and treat it well.  Experts say that treating your money with respect is a good way to obtain wealth.  If you think about it there aren’t too many millionaires with crumpled up money stuffed in their pockets or money lying all around their homes, so show money the respect that it deserves.

Following these simple rules can not only help you feel empowered to deal with your personal budget, but can also keep you from getting down in the dumps when the going gets tough.  Just a few tips to keep your sanity during this time of growth.

The focus is definitely on financial stability these days, with cost rising and unemployment rising, there is an air of concern throughout our society. Taking our finances seriously is very important, but it doesn’t necessarily mean cutting out any extra spending. If you just cut out all the extras you will become depressed and frustrated. That doesn’t mean that you don’t have to cut out some of them, but you still need to have something to look forward to. The question then is where you should cut back, and the answer is quite simple, the necessities. That’s right, less of the necessities, not actually less of them, but spending on them. The following are some money saving ideas that don’t need to impinge on your current lifestyle, and can still save you some big $$$ when you put them all together.

1. Car Insurance (and all other insurance) – Rates tend to gradually rise as you stay with a company, so if you really want to make a dent, shop around about every 6 months, this won’t cost you anything, but it can save you a bundle.

2. Electricity – Change to energy saving light bulbs and start unplugging items especially those items like TVs and Computers. These items drain electricity even when they are off, so unplugging them will help save you money. Also line drying items saves on electricity and is an especially good idea for the big bedding items that can take a long time to dry in the dryer. Also, the clothes dryer tends to run for longer than it actually takes to dry the clothes, doing laundry while you are home, can cut back on the costs of running the clothes dryer.

3. Groceries – Eat what is on sale, buy only what is on sale and use coupons. They are available online and in the local papers on Sunday. Cut them, organize them and shop the sales. Also, try to shop in stores that offer double coupons. Buy lots of what is on sale and a little less of the other stuff. It takes a few weeks to build up a good base, but in the long run it will not only save you money each week, but you will go to the store less and that will save you money on gas.

4. Eliminate your home phone service – That’s right, get a phone that runs through your internet provider or just stick with a cell phone for home. Sometimes with the right company it will only cost about $10.00 per month to add a second phone to your plan and this will virtually eliminate a monthly bill.

5. Shop around on the cell phone. There are a lot of new companies popping up on the scene that don’t require a contract and don’t have any roaming or long distance charges. This can be an incredible amount of savings if you use your phone a lot.

6. Find alternative heating sources. Heating bills will be especially high this year, so look into some energy saving alternatives. Seal the windows, put some extra padding around doors and windows that lead outside or to the drafty attic or basement. This can save you quite a bit of money in the coming months.

There are many ways to save and cut back and you may still have to cut out some of the extras, but if you work hard you can save a lot of money without giving up anything, and that is a really nice feeling.