Discover Debt Freedom!

Would you like to be able to save $500 or more in a matter of months?  Saving $500 can be a simple task if you are willing to follow some basic advice that can cut your monthly expenses by a significant amount.  Most experts recommend having at least $500 as a cushion in your bank account so that you will be able to handle any financial emergencies that may arise and not have to borrow money or go into debt to handle these problems.  By following these 5 simple steps for increasing the amount of money that you save each month, you can easily save enough money to have a $500 cushion in your bank account.

1. Reduce The Amount Of Gasoline You Are Using
Although it may seem like the price of gasoline is slowly receding back to its previous levels, the cost of a gallon of gas is still much higher than it was even a year ago.  For many families, purchasing gasoline is a significant part of the family budget and by taking steps to reduce the amount of gasoline that you are consuming on a daily basis, you will have more money to save for a rainy day.  Simple changes in your daily routine, such as taking your lunch to work instead of driving somewhere to pick up food or running errands on the way home from work to avoid a second trip out, can stretch the length of time that you will be able to go between fill ups, reducing the amount that you are paying for gasoline each year.

2. Reduce The Amount Of Energy Your Home Is Using
Energy prices across the board have seen dramatic increases in the last few years, battering the budgets of many homeowners, especially those who use natural gas or heating oil to heat their homes.  But households that exclusively use electricity for their homes could benefit from an overall reduction in the amount of energy that they use as well, saving the homeowner a significant amount of money each year.  There are a number of different ways to reduce the amount of energy that your home is using, including moving the thermostat dial closer to the average temperature outdoors, turning off lights and electronic equipment when not in use, and ensuring that your home is not releasing heat or cold through drafty areas around the attic, doors, and windows.

3.  Reduce Your Entertainment Costs
Many people have cable or satellite packages that give them a massive amount of channels to choose from, but will often only watch a small number of these channels on a regular basis.  To stop paying for the dozens of channels that you do not watch or that you watch infrequently, you should reduce your entertainment package to a basic package and invest in a DVD collection of things that you know that you will watch on a fairly regular basis.  With the recent growth in the number of DVD resale shops across the country, many of the movies that you would be watching on cable or satellite can be purchased for less than $5 for a copy that is guaranteed to work like new.

4. Buy Store Brands When Shopping
Many of the name brand items that you purchase at the grocery store have store brand or non-branded counterparts that could be as much as 50% cheaper than the name brand item.  In most cases, you would not even be able to tell the difference between the name brand and the store brand versions of the item other than the change in packaging, and you may even find that you like the store brand version better than the name brand version. Make sure to pay with a best cash back credit card to get paid when shopping.

5. Carefully Monitor Your Spending
Many people spend money each day on items that are wasteful or more expensive than if the person had taken the time to perform the action on their own.  For example, if a person chooses to purchase a specialty coffee on the way to work (about $2.50 per cup) instead of brewing the coffee at home (about $0.20 per cup), then they are spending about $600 more a year to purchase their coffee.  There are many areas in life where people pay extra for convenience, but with some careful time management you can do these things for yourself and save a great deal of money over the course of a year.

With food prices rising at an alarming rate, many people are concerned about their food budget purchasing less and less each month.  In the last year, the price of groceries has risen by 30% and there seems to be no end in sight, causing many people to reevaluate the ways that they are spending their money in the grocery store.  There are some easy ways to cut your costs at the grocery store and following these tips can save you hundreds of dollars on your grocery bills each year.

Look For Sales
One of the easiest ways to save money at the grocery store is to purchase the items that you need while they are on sale.  Every week, most of the grocery stores across the country print or send out a sales flyer that details their sales for the week and by a little careful planning, a person can get many of the groceries that they typically purchase at a discounted rate.  The sales flyers can generally be found in the local paper or even in the entryway of the grocery store and will list numerous items in many different categories that are on sale for that week.

Use Coupons
Many manufacturers place coupons for their products in the local newspapers or online to entice more people to try their products in the hopes of obtaining a regular consumer.  The coupons serve another purpose as well; saving average consumers a good amount of money on the products that they purchase regularly.  Grocery store coupons can be found for every category, from cleaning supplies to dog food to meats, so chances are pretty good that you will be able to find coupons for many of the things that you purchase regularly from the grocery store, which could save you as much as 25% off of the price of the item.  The savings are even more dramatic when the coupons are applied to items that are already on sale.

Buy In Season
Certain types of foods are more abundant at different times of the year, such as apples in the fall and strawberries in the summer.  Because these items are more abundant at these times of year, they are generally priced lower so that more of them can be sold during the harvest season and may even be marked as a sale item during the season to attract the attention of more shoppers.  By purchasing the items when they are in season, you will be purchasing them at their lower price and may even be adding some variety to your diet by eating different types of fruits and vegetables at different times of the year.

Stock Up On Staples
There are a number of items that people use on a regular basis that can last for months inside their packaging and purchasing these items in bulk when they are on sale can save you a great deal of money over the course of the year.  For example, if your family goes through a bag of rice that costs $5 every month, then the price that you will be paying for the rice over five months would be $25.  Now, imagine if you bought those same five bags of rice in the week that they were on sale for $3 per bag.  You would be able to purchase all five bags for $15, resulting in a net savings of 40% off of the regular price.

One of the biggest reasons that people fall into insurmountable debt is because they routinely spend more than they intend to, reducing the amount of money that they have available for any financial emergencies that arise.  For many people, it is very difficult to get out of debt and the troubles caused by a high amount of debt could last for many years.  The best way to avoid getting into debt is to learn some money management tips that can help you save more of your money and provide a cushion for any financial emergencies that you may encounter.

Tip 1 – Document Your Spending Habits
In order to learn how much money you are spending on a monthly basis, you should document all of your financial transaction and whether they were paid with money from your bank account or placed on your credit card.  This will give you a good idea of how much money you are spending and identify areas where your spending could be cut to save money.  It will also prevent you from spending more than you intend because you will be able to see the amount of money that you are spending add up each month.

Tip 2 – Avoiding Paying For Overpriced Items
There are a number of items that many people purchase everyday that are greatly overpriced compared to purchasing the items from the grocery store or preparing the items for themselves.  For example, purchasing a six pack of beer at the grocery store will cost you about $5.00, but purchasing those same six beers at your neighborhood bar will cost you about $18.00, an increase in price of 260%.  Specialty coffees are another item that could be avoided in order to save more money as coffee made at home costs about 1/8 of the price.

Tip 3 – Use Automatic Deposits For Your Savings Account
Many businesses will now allow direct deposited paychecks to be split into as many as three different accounts, so take advantage of this benefit and set up to have a percentage of your paycheck paid into directly into your savings account each payday.  Having the money directly deposited into your savings account prevents you from spending the money just because it is in your checking account and saves you from having to remember to make the transfer.

Tip 4 – Round Up Your Purchase Amounts
Want an easy way to create a cushion of money in your checking account?  Every time that you write a check or use your debit card, round up the amount of the purchase in your ledger to the nearest whole dollar.  This makes it easier to subtract the purchases from your balance because you are not dealing with dollars and cents and over time the cents that were not included in the accounting will add up to a significant amount of money to hedge against going over the balance of your checking account by accident.

Tip 5 – Remember To Check Your Credit Report
Experts estimate that as many as 25% of the credit reports held by the three major credit bureaus contain mistakes that can be very costly.  By reviewing your credit report on a regular basis, you will notice any mistakes that have been placed on your credit report and take the steps to correct the information in a timely manner, which will make resolving the issue much easier.

In today’s troubled economy, many people are learning the value of a dollar and are increasingly trying to save money on the things that they would like to purchase.  In the past, people did not take the time to research ways to save money on their purchases because they believed that the task would be time consuming and the amount of money that they saved would not justify the time spent.  Today, people are realizing that there are many simple ways to save money on their shopping trips that do not take a lot of time and can result in a savings of between 30% and 70% on their purchases.

1. Using Coupons
Clipping coupons is one of the oldest ways around to save money on purchases, but in recent years the coupon has evolved into something much more than a slip of paper for a few cents off of a product at the grocery store.  Today, coupons can be found for everything from clothing to furniture to household appliances and can be redeemed in stores as varied as toy stores and retailers of electronics.  Most coupons can be found in the advertising section of your local newspaper, but some companies have begun to mail their coupons directly to the homes of consumers or place their coupons online to be reviewed and printed out by the consumer at their convenience.

In order to get the best deals on products by using coupons, one effective strategy is to take the time each week to clip or print the coupons for products that you use regularly or need to get soon.  Most coupons are only valid for about a month before they expire so you have until then to use them to purchase the products.  Then, each week you should review the advertisements to see if any of the products that you have coupons for have gone on sale.  Purchasing the products with a coupon while they are on sale can save you as much as 70% off the price of the product depending on how deeply the product was discounted for the sale.

2. Price Match Guarantees
Many stores have begun offering price match guarantees for the products that they carry in their stores.  The way that this works is if the person can find a lower price at a different retailer for a specific item within a certain time frame, either before purchase or within a few week after purchase, then the retailer will either honor the advertised price for new purchases or refund the difference between the advertised price and the price that was paid for the item.  This is especially useful if you purchase an expensive item, such as a home appliance, and notice that the item has gone on sale within the next few weeks after you have made your purchase.  In these cases, you may be able to claim a refund of several hundred dollars.

3. Taking Advantage Of Sales
Most stores will have sales on different items at different times of the month and by keeping track of the things that you need and when they have gone on sale, you may be able to get most of the things that you need for a sale price, effectively cutting 30% to 60% off the amount of money that you are spending each month.  The trick is to always purchase the items while they are on sale and never paying the full retail price for an item. 

Some people will only purchase grocery items that are on sale at a deep discount and then will use a coupon for the item that will reduce the cost even further.  For example, let’s say that you have a coupon for $0.75 off a specific type of chicken that would cost $5 a pack and you notice that your local grocery store is selling that particular type of chicken as a buy one, get one free offer.  By using your coupon, which will probably be doubled by the store because it is less than $1.00, you can get $10 worth of chicken for $4.50 for a net savings of 55%.  This is even more lucrative when applied to higher valued items and you can save a great deal of money over the course of a year.

In recent years, the easy access to credit severely reduced the amount of people across the nation that saved up their money to purchase the things that they desired.  Instead of budgeting their money and putting a little of it away each paycheck to save up for the expensive items and vacations that they wanted, people began to place these massive purchases on their credit cards with the realization that they could pay off the balance of the credit card over time.  In effect, the common trend was reversed with people buying first and paying later instead of saving first and buying later.

What Makes Debt A Bad Idea?

What many people forget to remember is that there was a reason that our parents and our grandparents tried to stay away from debt as much as possible.  In most cases, debt is not a good thing and it can get you into a lot of trouble fairly quickly.  As people get into debt, they find that their financial options are limited, they are less able to handle emergencies, and they can lose every thing that they have worked for in order for their debt to be paid off.

Let’s take a look at how debt works.  When you are incurring debt, you are paying someone to lend you money for a short period of time and the person that is lending you the money gets all of their money back plus some of yours for having the money for you to borrow.  When you are buying items on credit, you are paying more for the item than you would have if you had paid in cash and sometimes it can be significantly more depending on the interest rate on the credit card that you used to pay for the purchase.  For example, if you purchased a table that costs $200 on a credit card that had a 15% interest rate and took six months to pay off the purchase, you could end up spending around $450 to buy the table – $250 more than you would have paid if you would have purchased the table with cash.

Why Is ‘Save To Spend’ A Good Idea?

When you use the save to spend method, you determine what item you would like to purchase and place a certain amount of money aside each month to be able to pay for the purchase in cash when the time comes.  For example, a person who would like to go on a vacation that will cost $1,000 may decide to save $200 per month for 5 months in order to have the money that they need to take their vacation.  This makes obtaining the money more manageable and ensures that you will not be working off the costs of the vacation for months to come.

Items purchased using the save to spend method cost less than purchasing items with a credit card and if the person is really savvy with their money, they will be more inclined to seek out deals on the things that they want in order to maximize what they are getting for their money.  People seem to be more aware of money leaving their bank account than they are of charges racking up on their credit card and tend to be more cautious about the prices of items when they are paying for the purchases out of their pocket or out of their bank account.  They will also avoid having interest charges placed on the cost of the items that they will have to pay off eventually which can greatly increase the cost of owning the items.

Saving enough money to be able to handle most of the issues that occur in life can be very difficult for many people.  They may believe that they do not make enough money to be able to save any significant amount in their savings account or they may be constantly taking the money out of their savings account to pay for other items that they believe that they need.  Saving money can be accomplished by anyone at any income level, as long as they are dedicated to creating a system for saving and sticking to it until they have reached their financial goals.

1 – Trim The Fat From Your Everyday Expenses
Most people have many things that they spend money on each day that they could trim from their budget and possibly never even miss.  Instead of purchasing lunch at a casual or fast food restaurant each workday, try taking your lunch with you to work and pocketing that $5 or more that you are spending each work day.  At the end of the year, you will have saved over $1,000 simply by changing your eating habits and taking your lunch to work each day.

2 – Find Alternate Forms Of Entertainment
Cable television is one of the biggest expenses in a household and many people do not watch the television enough to justify all of the channels that they are purchased with their cable package.  Many movies and DVD box sets of television shows can be purchased at a reasonable price and there are a number of stores that specialize in reselling used DVDs at an inexpensive price.  If you are only watching a few hours of television today, consider getting rid of that expensive cable package and investing in a collection of DVD’s of the shows and movies that you really enjoy watching.

3 – Reduce Your Energy Consumption
Energy bills for the home can take a large bite out of your available finances each month.  By using some simple energy saving methods, such as replacing old weather stripping that may be letting heat out of the home, turning down the thermostat a few degrees, or turning off the lights and the television set when you leave the room, you could be saving hundreds of dollars on your energy bills each year.

4 – Reduce Your Gasoline Consumption
Over the last five years, the price of gasoline has skyrocketed to levels that have never been seen before.  By carefully planning your day, you may be able to reduce the amount of miles that you drive and the amount of gasoline that you consume each day.  Plan to run errands on the way home from work so that you are not making a separate trip or plan to carpool to work with a coworker on certain days of the week in order to save a significant amount of gasoline each month.

5 – Reduce The Number Of Brand Names That You Purchase
Many people purchase brand name items, not because they are better, but because that is what they have been programmed by commercials to do.  Many store brands and items that have no brands are just as good as the name brand items, but cost a lot less because you are not paying for the name and the advertising associated with the product.

Are you interested in getting out of debt and stopping the monthly payments you must make to your creditors?  If so, you are in the company of about 75% of the population that has found themselves with more debt than they are comfortable with.  There are certain steps that can be taken to eliminate the debt that you have and prevent you from accumulating more, which is the only way to truly realize debt freedom.

Step 1 – Changing The Way You Think About Debt
In recent years, debt has become an acceptable way to get the things that you want quickly, instead of saving up for the items over time as our parents did and only purchasing the things that you can afford.  This has translated into the highest level of consumer debt in history and millions of people across the nation filing for bankruptcy protection from crushing debt.  In order to become debt free, you must begin to think of debt as something to be avoided at all cost and conduct your life accordingly.

Step 2 – Stop Digging The Hole That You Are In
The biggest step in eliminating your debt is to stop creating more debt.  You will never eliminate the pile of debt you have accumulated if you are adding to the total each month by purchasing more items.  If you have credit cards, put them away somewhere that they are not easily accessible and stay away from the stores where you know that you always purchase more than you intended to.

Step 3 – Make All Of Your Payments On Time
Nothing increases debt faster than penalty fees on an account and you are not receiving any benefits from the extra money that you are paying to the companies.  Penalty fees assessed against an account for paying the bill late can range from $5 for the cable bill to $39 for a credit card bill.  If you are being assessed numerous penalty fees on several different accounts each year, you could end up paying thousands of dollars extra to these companies in a very short period of time.

Step 4 – Cut Out The Convenience Fees
There are many different things that people do without thinking that could be classified as a “convenience fee”, such as the $2.50 paid for the convenience of using an ATM that is not branded to your bank or the $4 paid for the convenience of purchasing a coffee instead of brewing your own at home.  Over time, these convenience fees can add up to thousands of dollars that could have been saved by taking a few minutes out of your busy schedule to do things for yourself or to plan ahead for the things that you will need throughout your day.

Step 5 – Save Money For Emergency Expenses
One of the biggest reasons that people fall into debt and remain in debt is that they spend all of the money that they make and do not have a cushion to use in the event of an emergency.  If you have no savings when an emergency financial situation arises, you are much more likely to charge the amount to your credit card, where you will pay up to 30% interest, or you will take out a payday loan, which charges 390% interest packaged to look like a fee and can trap you in a cycle of debt that may take months to release yourself from.  By placing some money aside in a savings account, you can ensure that you will not have to use either of these options when a financial emergency arises.

Planning for retirement is one of the hardest financial decisions for a person to make because there are so many unknown factors that could affect the outcome of the decision.  Many people do not want to put too much into their retirement savings because it could affect their quality of life today, but do not want to under fund their retirement because that will make it harder to live comfortably during their retirement.  So how much should an individual put into their retirement savings?

The Rule Of Retirement Funding

A good rule of thumb to use for determining the amount of money an individual should be putting into their retirement savings is to save 10% for the basic needs, save 15% for comfortable living, and save 20% to be able to travel.  This rule of thumb is intended for the people that begin to save for retirement at age 30 or before and is a pretty good measure of how much money you will need to maintain your current lifestyle during your retirement years.    If you are starting to save for retirement after the age of 30, you will need to add 5% to the amount of money that is recommended for saving in order to be fully financed when you reach retirement age.

The 10% savings rate that is recommended to cover the basics will ensure that the person will have their basic needs taken care of during their retirement.  This includes housing, utilities, food, and clothing, but not much else.  If you are not making very much money, or your family obligations do not leave a lot of extra room in the budget for retirement savings, then saving 10% is a good beginning to make sure that you have some money for retirement.

To maintain your current standard of living, experts recommend that you save at least 15% of your earnings in a retirement savings account.  This will ensure that you have enough money to cover the basics, plus some extra cushioning for emergencies and small luxuries.  Although this will not allow you to live a life of luxury during your retirement, you will be comfortable and be able to handle any small emergencies that come your way.

If you would like to travel around the country or see distant lands during your retirement, then you should be saving at least 20% of your income in a retirement savings account each year.  Traveling can become very expensive and, even if you only plan one or two trips each year, the expense of traveling can quickly deplete your retirement savings.  By following this retirement rule of thumb, you can make sure that you will be living comfortably and have the funds to do the things that you would like to do after you retire.

Short term savings are very important for life’s little hiccups, such as repairs to your home or medical bills for an unexpected illness, but many people are unprepared for these minor emergencies because they do not have any savings in the bank to use for these issues.  Unexpected expenses are a major cause of people falling into debt that they cannot get themselves out of or credit card bills that continue to mount each month because of the steep interest rates charged to the purchases made with the credit card.  With six simple steps and a little bit of time, you can remedy your situation and begin to build up your short term savings account.

1.  Add Up Your Monthly Expenses
Before beginning a savings program, you must first calculate how much you are spending each month on all of your normal expenses.  This should include both large expenses, such as your monthly mortgage or rent payment, and small everyday expenses, such as paying for gas to get back and forth to work.  It is important to be honest about the amount you are spending for each item in order for the calculation to be accurate.

2.  Multiply This Number By 6 
Multiplying the number reached in the previous calculation by six will give you the total amount of money needed to maintain your current lifestyle for six months.  This is the recommended amount of savings that every person should have in the bank according to many financial experts.

3.  Add Additional Funds For Unexpected Surprises And Upcoming Expenses
It is always a good idea to pad your short term savings account with a little extra just in case you’ve forgotten anything in your previous calculations.  If you know that your child will be needing braces in the next few years or that you will need to replace the water heater in your home, add the cost of these items into your short term savings calculation as well to ensure that the money will be available when it is needed.

4.  Comparison Shop For A Place To Stash Your Cash
Different banks and different banking products will often offer different interest rates for placing your money into a specific type of account.  Because your short term savings will (hopefully) remain in this account for a significant period of time, it is important to get the best return on the money being held in the account.  Shopping around for the best interest rate will help your money grow more quickly and give you an even larger cushion for unexpected life events.

5.  Begin Making Payments Into Your Short Term Savings Account
Once you have determined how much you will need to save and where the best place to put your money will be, it is time to begin an aggressive savings plan to reach your calculated savings goal.  Paying into your short term savings account should be treated like paying a monthly bill and money should go into the savings account before you begin spending money on entertainment or unnecessary luxury items.

6.  Don’t Touch The Account
The most important part of starting a savings account is actually saving it.  After your savings goal has been reached, your short term savings account should remain untouched unless there is an actual emergency, such as the loss of a job, an illness that prevents you from working, or emergency repairs that need to be completed quickly.  After all, that is what the money has been saved for.

One of the biggest reasons that many individuals fall into debt is that they do not have emergency funds available to take care of the emergencies that arise in their lives.  Unexpected expenses can arise at any moment and can be devastating to an individual or family that is not prepared for it.  It is very important for everyone to have an emergency fund and here are a few quick tips for creating one.

Beginning An Emergency Fund

It is very easy to create an emergency fund.  The first step is to calculate how much money you spend on your monthly expenses each month.  It is important to add in some extra money to cover those expenses that are unexpected but tend to occur with some frequency, such as having to purchase a new pair of shoes because the old ones are worn out or spending extra money in gas because you have to travel much farther than you expect.

The next step is to choose a time frame to save for.  Everyone should try to have enough money in savings to cover at least six months of their expenses, in case they lose their job or face a huge financial issue, but many individuals could get by with around three months worth of savings in the bank.  Individuals that make more money should be trying to put more money away, but even individuals that are living paycheck to paycheck will be able to save some money for a rainy day.

Time To Save Money

Saving enough money for a good emergency fund will take some sacrifice on the part of the individual, but it will be well worth it in the long run.  There are many daily expenses in most individual’s lives that they can do without for a period of time and the money saved can be placed directly into the emergency fund so that it can build quickly.  Unnecessary items that many individuals spend money on during their daily lives, such as specialty coffees or expensive lunches out during the work week, can be sacrificed for the greater good of padding your emergency fund.

Many individuals find that the items that they sacrificed to create their emergency fund are not as important to their daily lives as the items first seemed.  These individuals continue to avoid the extra expenses and save more money towards their emergency fund or for things that they desire to make their lives better.  Learning to save money can be difficult for individuals that do not have much experience with saving money, but the skill will help the individual live a better life and assist them in preparing for their future.