Financial Worries: How to Trim the Monthly Budget
Fighting the Budget Battle
During these tough economic times the first step towards financial solvency is to examine the monthly expenses and determine if there is any fat that needs to be trimmed - or better yet - axed. The vast majority of Americans have no idea where their money is going - only that it is exiting their pocketbooks. Several banks now provide online help to extrapolate from the day to day receipts where your cash has gone. Sign up online and examine your expenses after a month of utilizing just your debit card; what you will find will shock you.
American's spend an obscene amount of money on the unnecessary. From coffee shops, to fast-food chains, gym memberships, to magazine subscriptions, we are sacrificing our financial futures for the conveniences of today. The average American is now carrying an astonishing $2,000 in credit card debt and cannot afford to make the minimum payment. How the vast majority of Americans came to be in this quagmire is not the point - this discussion's goal is to empower you with tools to stop the financial hemorrhaging.
To begin, get rid of the wasteful spending. Make a decision to buy a coffee maker and brew a cup at home instead of visiting your local Starbucks watering hole every morning - you could save over $1,000 every year by this simple change. Buy some dumbbells and start running/walking instead of joining a gym. Read magazines and newspapers online - it saves both your pocketbook and the environment. Stay in rather than going out for meals, you will save both on gas and overall meal cost.
Beyond axing the waste, learn to be lean where you can. Create a spreadsheet of your monthly bills, and include your total income at the bottom. The goal here is to arrive at a total not only below your total income, but well below it to better prepare you for the unexpected, the future, and to reduce outstanding debt. Here are some good guidelines to follow:
1. Start with your home payment. If you owe more on your home than it is worth, it's a good idea to call your county and ask for them to re-assess your property's value. With the current economic crisis, chances are that it has become de-valued and your monthly taxes/and payment could go down based off of a re-assessment. If this is the case, be sure to follow up with your home insurance company - they too will need to adjust your premium downward based on the new property value.
2. Car insurance. Usually insurance companies base a premium based on a year's contract. Find out when your contract is up and shop around for a lower premium. Most American's can shave $30-50.00 a month by doing this.
3. Cell phones/Land lines. Make the decision to have one or the other. With Bluetooth becoming a popular byproduct of recent laws, it makes sense to utilize a cell phone rather than a land line. If, however, you do choose to keep the landline try to package it into a group rate with other existing lines like cable and internet. You'll get more bang for your buck. Keep track of when your cell phone contract is up. Are there cheaper plans out there? Do you need more/less minutes?
4. Energy bills. When was the last time your winterized your home? Grab some caulk at your local handy-man store and make your abode climate tight. Change air filters, normal light bulbs to incandescent, and clean the lint from your dryer. Unplug cell phone charges and all appliances that are not in use like toasters and coffee makers - all of these will lower your monthly electricity bill.
5. Groceries. Rather than going to the high-end grocery store chains, choose a store that has lower prices - you can usually recognize grocery outlets/warehouses easily because they require you to bag your groceries yourself. This can potentially save you over $200 a month alone.
6. Gas. Do you live close to work? Is it possible to bike? Commute via rail or carpool? With the volatility of the oil market, there really is no way to predict what the cost at the pump will be from one day to the next. Prepare early and find a carpool or other way to get to work.
Finally, with all these life adjustments there will be a sum at the end of each month that you have saved. First set a sizeable amount of these funds each month into a savings account for those unexpected expenses: car maintenance, healthcare deductibles, etc. If you are in debt, use what is left over to pay the maximum amount you can on your credit card - rather than the minimum. The key to eliminating debt is to payoff an outstanding loan - whether it is a credit card, student loan, or car - and use the cash that would have gone to make that payment towards another debt. This will ultimately create a new cash infusion once the debt is gone that can go into savings, retirement, or to pay for that cup of Starbucks you've been dying to have!