Archive for the ‘Get Out of Debt’ Category

Can’t Save More? Learn How to Earn More!

Thursday, May 12th, 2011

In today’s tough economy, even those lucky to be employed are finding it hard to survive financially.  And while there are infiniteEarn more money nowtheoretical ways to save money, many people are finding that there are few remaining places to cut back.  And while I may just be one of the most frugal people on earth, even I know that sometimes a good path to financial stability is a combination of both saving more and earning more.  The tips below can be useful for those who are currently working full time and those who aren’t – I hope you can use them wisely on your path to financial freedom.

One of the best ways to earn more money is by making sure your money is properly invested.  I’m not an expert financial advisor by any means, but even I know that leaving your money in a standard savings account is nearly akin to leaving it under your mattress and expecting it to multiply naturally.  If you have any extra income, even a small amount per month, make sure that it’s set aside and invested somewhere that it can earn more money.  With this type of passive income, you aren’t likely to see the money directly in your checking account, but you’ll know that it’s there in case of emergency.

Filing your taxes is another way to discover some extra cash, because you may just be entitled to a refund.  If you’re not earning a lot and you have children or a dependent spouse, you may be surprised at your annual tax statements.  Just make sure that you’re getting all of the tax deductions that you can before you sign on the dotted line.  It may not seem like a lot, but each deduction counts.

If you have some time on your hands or a special skill that you can share, giving lessons can be an excellent source of supplemental income.  I have friends who teach everything from art to English.  A creative high school student in my neighborhood even offers soccer lessons to the neighborhood’s boys.  Parents can pay $3 for their child to learn how to play soccer (and can enjoy a bit of afternoon reprieve), and the instructor earns $30-$50 per hour depending on how many children show up.  Private lessons, of course, can be even more lucrative.

If you have skills that don’t translate well into lessons, why not look for work on Elance?  The great part about Elance is that you can find hundreds of projects to bid on.  The downside is that you may have to settle for working at a rate lower than you’d otherwise take.  Still, if you have time or a serious desire for extra cash, Elance can likely meet your needs.

Finally, if you’re really strapped for cash, consider renting out a room in your home for some quick extra income.  SmartMoney magazine recently had an article about mansion owners who took in tenants so that they can avoid foreclosure.  In reality, however, this is not a unique idea.  When I was growing up, taking in ‘boarders’ was a rather common thing to do, not only to earn extra money, but to help children in need find a place to live.  These days, however, taking in a tenant is not only helpful to the tenant, but also a great way to supplement your income.

5 Ways to Save Money in the Shower

Wednesday, February 9th, 2011

Saving money isn’t always easy…but that doesn’t mean that it has to be hard.  In fact, there are a whole bunch of ways that you can save money while taking a shower, something which you probably do regularly anyway.  Wouldn’t it be great if you could save money while getting clean?  I thought so!  That’s why I’ve compiled this list of clever ways to save money in the shower.  The good news is that they’re practical too!

  1. Swap your showerhead. Installing a low-flow showerhead in your shower is a great way to save moneySave money in the showerwithout even feeling it.  Low-flow showerheads are designed to offer a pleasant water pressure while using significantly less water than standard showerheads.
  2. Switch to generic products.  Most standard shampoos and conditioners are available in generic versions for a fraction of the cost of salon-brand products.  Suave, for example, makes a high-end version of Nexxus conditioner, which has kept my hair feeling silky for months.  You can save several dollars per month just by changing your shower products to comparable cheaper versions.
  3. Use an electric razor. Women’s electric razors cost $15 and up and can be used reliably for years.  They pay for themselves after about 2 or 3 months (depending on the type of disposable razor you’ve been using), and they provide a close shave without shaving cream – so you can save even more.
  4. Use less shampoo.  You know how most shampoo and conditioner bottles recommend that you use a dime-sized amount of product?  They’re not lying.  Over-washing or conditioning your hair is not only a waste of money, but it’s also useless.  Your hair won’t be cleaner if you use more shampoo, just like your dishes won’t be cleaner if you use more than a bit of dish soap.  Once your hair is clean, it’s clean.  The same is true for soap.  Instead of over-lathering, reduce the amount of soap that you use, and you’ll still be perfectly clean.  One more thing – using too much soap or shampoo will require more time to wash off, which will raise your water bill.
  5. Take a shorter shower.  A low-flow showerhead uses about 1 gallon of water per minute, while a standard showerhead can use about 2.5 gallons per minute.  With that in mind, you can see that shaving a few minutes of your shower time each week can prevent you from using gallons of water, which is good for your wallet and the environment.

And…if you’re a super-saver, here are three more radical ways to save (that are still hygienic, of course):

  1. Collect the water while it’s heating up.  Standard showers take 30 seconds or more to warm up before you can comfortably get in.  Instead of letting it go down the drain, collect it in a bucket and use it to water your garden or clean the floor.
  2. Skip the shaving cream.  There’s no question that shaving cream can leave your legs feeling smooth, but you can likely simulate the same feeling by using conditioner or a lotion-based soap, both of which cost less than a shaving cream does.
  3. Lower the temperature by a few degrees.  You may enjoy a steaming hot shower, but you likely won’t notice if it’s a few degrees cooler, a concession that will reduce your heating bill.  This does not mean that you need to take a cold shower, just a slightly cooler one.  If you don’t want to give up your hot shower, consider cooling it down just at the end – you may even find it easier to get out.

Budget Boot Camp 2 – New Month, New Budget

Monday, November 1st, 2010

Welcome to November!  What better time is there to start a new budget than the start of a new month?  And today is anCalculate your budget carefully especially good time to start anew, because Christmas is only 55 days away, and sticking to a budget is a great way to avoid overspending on holiday gifts.  If you’ve never built a budget before, take heed – the exercise can be extremely overwhelming and emotionally draining.  And if you’ve built a budget before but haven’t been able to stick to it, just consider this your opportunity to start anew.

A budget is a very personal thing and it depends on a myriad of factors, the most important of which are your income, your monthly expenses, and your accrued debt.  It’s a really good idea to track your expenses for a month before creating your budget.  But if you haven’t done that yet, you may lose track of your goal – so just jump right in and see where it takes you.  Here are some things to consider so that you’ll build a manageable budget:

  • Housing – I once learned that housing expenses should be no more than 1/3 of your total income.  When possible, they should be less.  If your housing expenses are too high, consider refinancing your mortgage or moving in with a roommate to reduce your costs.  Because housing is a non-negotiable expense, it’s in your best interest to work hard at finding ways to reduce the cost so that you’ll live comfortably without overextending yourself.
  • Food and clothing – It may seem funny to lump these together, but they’re actually quite similar, since they’re both necessities whose expenses can be flexed whenever necessary.  For example, if you need to purchase clothing on any given month, you can purchase cheaper food or eat out less.  Alternatively, if you know that you’ll be having dinner guests, you can cut back on your clothing purchases.
  • Transportation – You may think that you can’t possibly cut back on your transportation costs, but you probably can.  For starters, take a refresher in how to save on gas and other driving expenses.  You should, of course, also consider whether you can get a reduction of your car insurance expenses, and whether you even need your car.
  • Taxes – Sorry, but taxes are a necessary part of every budget, so make sure that you factor in the taxes that you pay.
  • Utilities – There’s no way to cut out utility expenses entirely, but there are ways in which you can reduce your utility costs so that you’ll know they’re as reasonable as possible.  Make sure to turn off lights when they’re not in use and to use the normal cycle on your washer instead of permanent press…little by little you’ll see the savings as a result of your efforts.
  • Debt – The only way to get rid (and prevent it from growing) of it is to pay it off slowly (or quickly, if you happen to win the lottery).  You may already feel constrained by your budget, but failing to include a gradual debt-repayment plan will prevent your budget from succeeding.

Once you’ve done the preliminary calculations for your budget, you’ll see one of three things – your expenses are greater than your income, your income is greater than your expenses, or you’re pretty much breaking even.  If you’re not in the red, congratulations!  Even if you don’t have money for extras right now, hopefully after a few months of sticking to the budget you’ll be able to reconfigure your spending to find some extra cash for retirement, savings or a specific item you’ve been wanting.  If you find that you aren’t earning enough to support your spending habits, you’ll need to either change your spending habits or find a way to earn more money.  But don’t panic – you’re not alone, and with determination and a bit of hard work, you should be able to climb out of the deficit.  I hope to address many of these issues in the next installment of Budget Boot Camp.  Until then, stay focused and positive, and enjoy watching as you take proactive steps to improving your life.

Budget Boot Camp: Examining the Excuses

Thursday, October 21st, 2010

I’m embarrassed to admit it, but recently I tried a new workout video, and it was painful.  Excruciating, actually.  And yet, despite agonizing muscle aches, I felt an odd sense ofBudget Boot Campaccomplishment because I knew that I’d done something constructive for myself that would yield positive results over time.  And while I was going through this agonizing experience (I still am), I realized that financial fitness is actually quite similar to physical fitness in the sense that you often need to sacrifice your own comfort in order to reach a concrete goal.  While there are a million reasons to avoid both exercise and strict budgeting, most of them are simply excuses.   Let’s jump into the budgeting process by examining some of the most common excuses and overcoming them – one painful step at a time.  After all, with no pain, there’s no gain.

I absolutely cannot give up my (fill in the blank).  It may seem impossible to forego your cleaning help, your birthday dinner or your annual vacation, but let’s face it – none of these are life-or-death necessities.  If you’re looking to clean up your budget, the first thing to do is to take an honest look at your expenses and to make the necessary cuts.  It hurts.  It’s hard.  But hopefully, once your finances are under control you’ll be able to add some of these extras back into your life.  And when that time comes, you’ll appreciate them so much more.

I don’t like feeling constrained.  Really?  Do you answer to a boss?  To a spouse?  If so, you’re used to being constrained by others.  But even if the constraint of a budget really does ruffle your feathers, why not look at it in a positive way?  The structure of a budget will allow you the freedom to have extra money to use as you see fit, instead of constantly struggling with your bills at the end of the month.  Doesn’t that sound better?

I don’t have time to make a budget.  I’ll concede that budgeting does take time, but once the initial setup is complete, the maintenance is minimal.  If you truly wanted to, you could find the time (perhaps by sacrificing one hour of exercise a week for a few weeks, or recording a few TV shows instead of watching them live).  I could even argue that the time invested in setting up a budget will save you time in the long run as it’ll keep your finances organized so that you won’t have to spend time worrying or wondering about lost bills, late payments and other unfortunate blunders.

There’s no use – we’re already too far in debt.  Unfortunately, the people who need exercise the most are those who are morbidly obese.  Likewise, those who need a budget the most are those who are the furthest in debt.  If this applies to you, you shouldn’t be embarrassed, ashamed or overwhelmed.  Instead, you should be determined to dig yourself out of debt…and a proper budget can do just that.

Budgeting is depressing.  Budgeting isn’t only for those facing financial difficulties, it also helps people seeking to maintain their financial health.  If you aren’t currently following a budget, remind yourself that while it may be a cure for your financial distress, it is also a protection for your financial future.  And instead of feeling depressed, you should feel empowered and secure knowing that you’re doing the right thing for yourself and your family.

Get out of Debt Now – Internet Tools that can Help

Thursday, July 8th, 2010

Everyone wants to get out of debt, but few know how to tackle this challenge successfully.  With hundreds of finance websites, budgeting strategies and money management suggestions floating around the web, how can you know which ones are truly worthwhile and which are just a waste of time?  To prevent you from wasting time and to help you get out of debt, I’ve decided to share some of my favorite tools with you.  I hope that you find them useful for saving, budgeting and reducing your monthly expenses so that you’ll soon be well on your way to debt-free living.

The first thing that you must do before figuring out how to become debt free is to realize that it is possible to do it, with just a little bit of work and sacrifice.  One of the easiest ways to see the possibilities is to use Mint.com’s calculator that shows the value of reducing or foregoing expenses.  In short, the goal of this calculator is to help you realize how much you’ll save if you just cut back on a few splurges.  If you spend $30/month on gourmet coffee, for example, the calculator will tell you that by foregoing this expense (and, let’s say, brewing your own coffee), you can save $360/year, which translates into $3,600 over 10 years.  Not only does that sum translate into a not-insignificant amount that you can use for retirement, weddings or other future expenses, but the calculator then estimates how much you could earn with a potential rate of return of 8%, for a total sum of $5,525 in ten years.  If you think that cutting back on your small splurges won’t make a difference in your overall debt, this calculator will make you think again.

Even if you’re not willing to cut back on all of your indulgences, you can also find ways to save on necessary items.  Spending less means that less debt will accrue and that you may even have extra money to start paying off your debts (or to save if you aren’t currently in debt).  My favorite tool to help people save money on regular expenses is anything from BillShrink, and specifically their gas calculator, which will tell you exactly where and how to fill up in order to spend the least.  You’d be surprised at how much you can save at the pump with a bit of forethought.

Simlifi also has a great tool to help you determine how to reduce your debt.  The setup takes a while, but at the end, it will be worthwhile.  If you have questions, the site has an easy video to explain how to input your information correctly.  Once you’ve reduced/eliminated your debt, you can find other cool tools about how to manage your finances directly on the site.

Likewise, if you’re ready to start managing your finances on your own, you can do it easily (for free), by using an Excel spreadsheet on your personal computer.  Microsoft offers dozens of free budgeting spreadsheets that can help you keep your finances in check, so that even if you’re not a computer whiz, you’ll be able to put in your information and have it calculated for you.

Of course, there are thousands of other financial tools that can help you get out of debt if you don’t like the ones I’ve suggested.  When looking for one that will better suit your needs, just make sure to find something that sets reasonable goals and offers encouragement – the right financial tool will make getting out of debt seem doable instead of depressing.