Discover Debt Freedom!

Many people have bad financial habits that are costing them a large amount of money over the course of a year.  Many of these habits are unconscious, everyday routines that people have learned by observing others that display these damaging behaviors.  Bad financial habits have the ability to destroy your credit score, cost thousands of dollars in late fees and penalty payments, and cut you off from economic activities that could improve your financial standing.  If you are able to change these bad financial habits, you will find your financial situation much more stable and your ability to handle financial emergencies assured.

Spending Freely

One of the worst financial habits to cultivate is being a free spender.  Spending without planning or considering the consequences of your spending can lead to a lot of wasted money on things that are desired, but not necessarily needed.  Many of us have seen the “hoarders” reality shows on television where desperate homeowners are drowning in piles of stuff that they bought that they didn’t need.  By planning your purchasing ahead of time and limiting impulse purchases, you can reduce the amount of money spent on unnecessary purchases and use that money for more useful activities.

Opening Many Credit Card Accounts

A number of retailers have taking to stalking their customers in the store and online to encourage them to sign up for the retailer’s “exclusive” credit accounts for their stores.  The reason why you are asked when you enter the store, as you shop, and as you attempt to check out is that these credit accounts can be very lucrative for the retailer, but not so good for you.  Retailer credit card accounts often have higher interest rates, higher fees, and lower credit limits than credit cards issued by the major credit card companies that can be used anywhere.  Add to this the hassle of keeping track of multiple payment dates, minimum payment amounts, and credit card terms, and the chances of accidentally missing a payment and incurring hefty charges increases dramatically.

Using Credit As An Emergency Fund

The recent boom in the credit markets steered many people away from saving cash to use for emergencies to depending on their credit cards to handle any financial issues that arose.  As a result, many people found themselves with high levels of credit card debt at high interest rates that they have great difficulty repaying within a reasonable period.  Placing the cost of a financial emergency on a credit card increases the cost of that emergency dramatically as interest charges and financing fees are added to the original cost on a monthly basis.  Saving money in an emergency fund to handle unexpected financial issues is the best way to solve the problem without creating more issues for the future.

There are many ways to save money and some are easier than others are.  Some of the best ways to save money is by changing your lifestyle in small ways.  Many of our daily habits cost us a great deal of money without us realizing it and these charges add up over time.  Making these small lifestyle changes can result in big bucks in your bank account.

Give Up The Bottled Water

Bottled water is one lifestyle choice that many of us can do without.  The cost of bottled water is very expensive when compared to tap water, costing the average consumer nearly $1,400 annually.  Most bottled water is just purified municipal water, so you can get the same results by placing tap water in a reusable filtered water bottle and save yourself a ton of money.

Cancel Unused Memberships

Many people are paying for memberships that they never use.  Whether the membership is for a wine club or a fitness club, if you are not using the membership you are just wasting money.  The average gym membership will cost you around $600 per year and some memberships cost even more, so if the membership is not being used, cancel it and keep the money in your pocket.

Boot Your Bad Habits

Many of the most common bad habits are very expensive.  People who smoke a pack of cigarettes a day are spending between $1,800 to $2,700 per year, depending on where they live.  Individuals that drink high calorie lattes on a regular basis are spending around $900 annually for their habit.  Gambling is the most expensive bad habit, costing regular gamblers thousands of dollars as they try to beat the house.  Instead of indulging in these habits that are costly and unhealthy, place that money into your savings account and watch your savings grow.

If taking care of your finances seems to be taking up a large amount of your time, you may want to consider taking steps to streamline your financial life.  By streamlining and simplifying the handling of your finances, you will find that taking care of your financial needs is easier and requires less of your time than before.  There are several different methods that can be used for streamlining your financial life and incorporating one or more of these methods into your regular routine is one of the best things you can do for your financial health.

Use Automatic Deductions To Increase Your Savings

A very effective method for increasing your savings is to use automatic deductions from your paycheck or your checking account to make automatic deposits in your savings account.  This allows you to save money every pay without having to think about it and removes the money from your available spending funds before you will miss it.  It is important to leave the money deposited in your savings account alone to allow the funds to grow and to ensure that you will have the funds to handle a financial emergency.

Use Automatic Bill Payment Systems

Using automatic bill payment systems to ensure that monthly bills are paid on time is quickly gaining in popularity as people discover how simple the service is to use.  The name of the company to be paid and the account number are entered into the system and the payment for the bill is automatically deducted from the person’s checking account.  The service can be used for a wide variety of payments, including mortgage payments, rental payments, loans, utility bills, credit card payments, and subscriptions.  Many banks offer this service for free through their secure websites.

Create Financial Goals

Most people must have financial goals to motivate them to save money and spend wisely.  Without financial goals, much money is wasted on fruitless pursuits and unnecessary purchases.  Creating financial goals identifies something desirable to aim for and allows you to create a plan for reaching that goal.  There are many worthy financial goals that can be used to help focus your financial planning, including paying off credit card debt, saving to purchase a home, or saving for a child’s tuition.

When you’re trying to map out a budget plan to get your finances under control, there shouldn’t be any single approach to doing this. It’s very attractive to focus on one way to create a budget, but unless you’re taking extensive action to remodel your life and spending habits, you’re going to find yourself right back in the same situation.

As just one of the approaches to financing and budgeting, there are thousands of apps that can help you reach this goal. Apple and the iPhone get way too much attention when the Android market is getting better all the time. If you have a 4G Slide Android Phone or similar Android device, there are tons of apps out there for you as well:

Personal Budget Droid

This app is a free and simple approach to app budgeting. Personal Budget Droid is very user friendly and you can easily pick it up. It’s important to note that it’s simplicity should not imply that it’s not effective. With this app, you can use a bill tracking system where you can make multiple monthly budgets for different things. You can plan the entire month for housing costs, utilities, groceries, and anything else you can think of. The app has an added feature that allows you to keep a record of all of your transactions, and will calculate how much is remaining in each budget category every month.

Loot

The Loot app will help anyone keep track of the money that they already have and will log every transaction and penny you spend. It’s very easy to use and will give an an electronic record of your checkbook. This is a really popular app on the Android market and gives people the advantage of not having to rely on a bunch of paper. You can create multiple accounts and log any bills that you have paid or need to pay in the future.

Firewallet

Where the Personal Budget Droid is a simple and user friendly application, Firewallet takes a different approach. The application is very sophisticated and allows users to budget various accounts within accounts. It’s comprehensive approach might be more than the average person needs, but it does have a much more intricate and hands-on approach to budgeting and finances. You get a lot more bells and whistles with the graphs and charts that visualize your spending. There’s also a feature that alerts you when a bill is scheduled to come up.

Budgeting approaches are a lot like fad diets: there’s a ton of them and by themselves, no matter how hard you want it to work, it won’t. You should be using these apps as a way to keep track of your spending and get it under control. Concurrently, you need to contact a financial professional that can help you reign in your bad habits and give you a fresh approach to the way you look at your finances.

Getting out of debt and staying out of debt should be the goal of every consumer, especially those that have gotten themselves into trouble with excessive debt in the past.  It is estimated that nearly 33% of American households have more debt than wealth and this number continues to increase as high unemployment and tight credit markets squeeze the American consumer.  Getting out of debt is becoming increasingly more difficult as new rules are put into place to limit debt relief, but following some simple tips can help an individual find financial freedom and remain debt free.

Banks and credit card companies make a profit of billions of dollars in over-limit charges and bounced check fees annually.  Each transaction that goes over the limit of your credit card will cost around $35 in penalty charges and many financial institutions will process large purchases before small ones in order to charge more fees.  Knowing how much money or credit is available for your account before you begin to spend money will help you avoid numerous fees and avoid destroying you credit score.

If you are one of the people that do not like carrying cash, consider using a debit card.  Many people do not like to carry cash with them because they are afraid of being robbed, having money stolen, or losing cash out of inattention.  Debit cards use the money in a bank account to pay for purchases and you will not have to worry about interest payments or late fees on the items that you purchase.

In many cases, the first price you see for an item is not the best or cheapest price for that item.  Comparing prices before you shop will help you save money on everything from groceries to insurance to club memberships.  People that comparison shop before heading to the stores often get more for their money as they find deep discounts and 2-for-1 specials on the merchandise they desire.  Price comparisons are so popular that there are many websites on the internet that allows consumers to compare items across a number of different retailers to determine which one has the best price.

One of the biggest money drains commonly seen today is the impulse purchase.  Many items bought on impulse are rarely used and often sit in a closet with the price tag still attached for months or years after the purchase.  By learning how to resist the temptation of the impulse purchase, you will save a great deal of money and avoid cluttering your home with unnecessary items.  Identifying problem spending areas in your life and correcting them is one of the best ways to get out of debt and stay out of debt.

Cutting costs and eliminating expenses in your daily life is a good way to ensure that you will have money to save for emergencies or for other needs.  Many of the things that we purchase and bad habits we pick up are the result of choosing convenience over taking the time to do things for ourselves.  These simple ways to cut costs in your daily life can save you thousands of dollars every year.

Eliminate Coffee House Purchases

Many people would be surprised to learn that specialty coffees from coffee houses have one of the highest markups of any product purchased.  The costs of these specialty coffees add up quickly, with those who have a regular habit of purchasing one of these coffees each workday spending nearly $1,000 per year on the caffeinated calorie bombs.  Instead of purchasing these specialty drinks, get ready for work a little earlier and brew your own coffee at home.

Reduce Entertainment Expenses

In the quest for great entertainment, some people pay more than they should for access to entertainment items.  There are many different ways to reduce your entertainment expenses, including scaling down your cable package to basic service, renting books from the library instead of purchasing them, and choosing inexpensive concerts featuring local artists instead of shelling out big bucks to see big name artists in large venues.  Although you may have fewer options that you are familiar with, you will have more opportunities to discover new things for a lot less money.

Use Your Bank’s ATM

Using an ATM for any company other than the bank holding the account you are withdrawing from will cost you multiple fees for every occurrence.  In many cases, you will pay a fee to your bank for using a competitor’s ATM and another fee to the other company for the convenience of using their ATM.  The charge for each transaction can be $3.50 or more, with a twice a week habit costing you nearly $400 in additional bank fees annually.

Perform Regular Car Maintenance

Performing regular maintenance on your car can lengthen the life of your car, help you avoid costly repairs, and save money in gasoline expenses.  Important maintenance items to perform include keeping the right amount of air in your tires, getting your oil changed at regular intervals, and keeping adequate amounts of fluids in the vehicle.

Many people that find themselves living paycheck to paycheck or facing large amounts of debt know that reducing their expenses can help them regain their financial footing, but most do not consider using an alternate income plan to boost their earnings.  The problem with many employment positions today is that the hours worked and the salaries paid are fixed, giving the employee no opportunity to make additional money when needed.  Having an alternate income plan allows a person to choose when and where they can make additional money when they want.

Options

There are many options available for earning money with an alternate income plan, so the choice of which revenue stream to use will depend mainly on the personal preferences of the person making the choice.  Some people have creative hobbies that they can turn into a revenue stream, such as knitting baby blankets, sewing home furnishings, or woodworking.  Others choose to do odd jobs around the neighborhood in their free time or baby-sit neighborhood children on weekends.  Freelancing or consulting is another good way to bring in additional revenue as long as you are not violating your employment agreement with your primary employer by doing so.

Review Your Talents, Finances, And Time Constraints

Depending on your current situation, not every idea for an alternate income may be viable.  It is important to capitalize on what you are good at and balance that with how much time and money you can afford to invest in making your ideas a reality.  You must remember that materials and equipment, if needed, can be upgraded later using the proceeds from previous success.  This way, you are not investing a lot of money in a plan that proves to be unprofitable.

The amount of time you are willing to spend earning additional income is another important consideration when creating an alternate income plan.  Think realistically about how much time you will be able to devote to the activity daily or weekly and whether you will need the activity to generate income immediately or whether you can afford to take the time to grow your own business.

Creating The Plan

Once you have narrowed your options down to between one and three activities, it is time to make a detailed plan of how you will accomplish your goal of creating an additional revenue stream.  Make a list of the item that you will need, tasks that you will need to accomplish to get started, and steps to increase your income over time.  Building an alternate income stream takes time and hard work, but the benefits of having an increased income is worth the effort.

There are numerous actions that individuals perform on a regular basis that can result in the destruction of their financial stability.  Although the consequences of these actions may not be noticeable at first, in time these actions will cost the individual a lot of money in various charges and fees.  These actions can also damage a person’s credit score, causing a decrease that continues month after month.  Changing or eliminating these actions from your daily life will lessen their effects on your financial stability and you will be more financially stable within a short time.

Many individuals forget about budgeting and do not track the money that is coming into the household and being paid out for expenses.  This can result in an individual spending more than they intend to spend and leaves them with no money for saving.  In some cases, overspending affects their ability to pay their bills, resulting in late charges and higher interest rates for accounts.

Various retail stores offer a discount on merchandise when you open up a credit card account with the store.  This is good for individuals that do most of their shopping at the retailer offering the credit card, but most individuals open up credit card accounts simply for the discount on merchandise.  Opening a new credit account decreases your credit score and the number of open accounts available to you may cause you to be denied credit in the future.

Countless individuals do not check their credit report because they don’t think that they can change the information contained in the report.  Nearly 25% of credit reports available from the three major credit bureaus contain mistakes that cost consumers hundreds of dollars in increased interest payments and cause them to be denied credit.  Experts recommend reviewing the credit report from each major credit reporting bureau annually to check for mistakes.

Years of easy access to credit caused many individuals to stop placing money into their savings accounts for emergencies.  They believed that they could handle anything with the credit available on their credit cards.  Unfortunately, any purchases that they place on their credit cards will have interest charges placed on them, making the total amount paid for the item much higher.  Placing the amount on the credit card also means that you will not have that money available for any other emergencies until that balance has been paid off.

Preparing a spending plan will benefit you in many areas of your financial life.  It increases your responsibility with spending and helps you recognize issues before they become disasters.  Spending plans organizes personal finances by carefully detailing income and expenses and creates a spending ratio that allows you to save a certain percentage of your income.

Benefits Of A Spending Plan

Following a spending plan can help you stay out of debt by managing your finances and placing limits on your spending.  The level of detail used can identify areas where potential savings can be obtained and following the plan will help you create a financial cushion that can be used in the event of a financial emergency.  Putting more of your money towards savings will help you meet more of your long-term goals by ensuring that the funding needed for these endeavors are available when needed.

Developing A Spending Plan

Developing a spending plan is not difficult.  The first step is creating an estimation of your monthly expenditures and income.  Gather all of the financial information that you can find, including paycheck information, statements, check registers, and bills, to create an estimate of how much you spend in particular categories each month and the percentage of your income you are spending on each category.  A good estimation will help you see a clear picture of your financial life.

The next step is to monitor your spending to ensure that you are not spending more than you intend in any particular category.  Keep all of your receipts for purchases and copies of your bills for accurate record keeping.  Amounts for items purchased with cash should be written down for inclusion in the spending monitoring.  All purchases and payments should be written into your spending plan on a daily or weekly basis.

Constant review of your progress is important for successfully creating and following a spending plan.  Reviewing your progress on a regular basis can help you identify areas where adjustments are needed and can help you eliminate unnecessary spending.  Any changes that are needed should be implemented quickly to ensure that your spending plan continues to help you advance towards your long term financial goals.

Every year about this time, people across the nation begin their spring cleaning rituals, making their homes clean and clutter free as soon as the days begin to warm from winter’s freezing temperatures.  Many things are discarded during the spring cleaning process that may still have some value to other individuals, so instead of consigning those items to the trash can you should try to turn them into money for your needs.  There are many different ways to turn your unwanted items into cash.

Selling Items

There are many venues available for selling unwanted items and nearly anything can be resold.  There are consignment stores that purchase clothing, handbags, and hats.  There are reseller stores that specialize in electronics, sports equipment, media items, or items for the home.  Most of these stores pay cash for the items they determine that they would like to buy after a brief inspection for quality and ability to function. 

The amount that is paid for each item sold to these stores will depend on a number of factors.  The popularity of the item sold, the condition of the item, and the age of the item all play a part in determining how much a particular item is worth.  You will not get a great deal of money from these stores for each item, but the amount you get is better than the zero money you would get if you threw the item in the trash.

You can also choose to have a garage sale to sell your items yourself.  Many local newspapers will allow you to list the date and address of your garage sale in a specific section of the newspaper for a nominal fee to increase the chances that an interested party will learn about your garage sale.  Some cities require a permit to hold a garage sale so be sure to review the rules for your area before you begin setting out your items.

Donating Items

Any items that cannot be sold can be donated to a worthy charity to be restored, refurbished, or used for parts.  Many charities will pick up the items from your home if you call them directly and schedule a pick up date.  Some will also give you a receipt for your items so that they can be claimed as a charitable contribution on your annual income taxes.