There is no denying that families are struggling in these tough economic times and it is very common to be dealing with financial stress. Between rising food and fuel prices, staggering utility bills and a tightened job market, all contribute to the financial difficulties families are facing. Creating a budget is one excellent tool for getting a handle on your finances and, contrary to popular opinion, does not have to be complicated. You can budget your way out of debt with careful planning, effort and even a little creativity. Here are some tips to help you budget your way out of debt and get your financial situation heading in the right direction.
Look for Bad Spending Habits
The best way to do this is to keep a journal for thirty days and write down all expenses. Not just some of them, all of them. Even that eighty five cent candy bar you get out of the vending machine at work every day. You may not even realize how fast the small purchases can add up. Once you get a good idea of where your money is going, you can make the effort to cut back on unnecessary expenses. You can also look for overspending patterns. Look to see if you shop when you are bored, lonely, as soon as you get paid or the like. By writing all expenses down, you not only see what and where your money is going, you are actively and consciously paying attention to your spending as it happens.
That may sound funny when you are trying to budget your way out of debt, but this is also an essential debt management tool to not only help you pay off your debts, but also get you financially stable as well. Start a savings account, but treat it like another bill. Make a deposit every week, twice a month or once a month depending on your specific financial situation and how often you get paid. Do not touch this money, unless it is an absolute emergency. Even if you can only put in ten dollars a week, still pay yourself. Little amounts add up fast, as you saw from your spending journal. If you pay yourself twenty-five dollars every week, in one year you will have over a thousand dollars in the bank.
If you have multiple bills with high interest rates and you are struggling to make monthly payments or if you are being harassed by bill collectors, debt consolidation may be right for you. The best thing to do is make a consultation with a reputable debt consolidation institute and talk numbers. A good debt management company will not charge for a consultation, so if it is not free, find a different one. The debt consolidation specialist can help you organize your bills into categories and see which ones can be consolidated. If you have bad credit, you may have to obtain a bad credit debt consolidation loan, and you will pay higher interest rates. However, overall, you will more than likely be paying less per month with one monthly payment rather than multiple payments. Debt consolidating is essentially getting one loan large enough to pay off multiple bills. This will also help your credit as those bills are shown on your credit record as paid off and will improve your score. Bad credit debt consolidation works best for those with high interest credit card debt. The interest rate of a debt consolidation loan is determined by the weighted average of all debt being consolidated.
Unleash Your Creativity
Look for creative ways to save money whether it is making homemade Halloween costumes for the kids, trying your hand at extreme couponing or hitting up garage sales on the weekends. There are countless ways to save money when you sit down and start thinking about it. Get rid of your landline phone and switch to a cell phone. Look for a phone through places like Amazon when you need to renew or upgrade your current cell phone. Many times, you can find the phone you want for up to a hundred dollars cheaper than the discounted phone your cellular carrier is trying to sell you.
A household budget (or personal budget, if you are single) allows you to know where you are with your personal finances, and tells you if you can get where you want to go with your financial goals.
If you are in debt and want to eliminate it, or want to save more for retirement and retire early, unless you are extremely thrifty with your spending, you need to know what your are spending your money on, and how much, in order to put more money towards debt reduction or retirement savings.
Run your household like a business
Companies or businesses can’t exist very long without a budget- Almost all businesses of any size create a business budget to track expenses vs. income throughout the year. They must get deep into the numbers, and be able to show that they are operating within their means to get bank loans or lines of credit to make payroll. Why should your household be any different?
How to set up a personal or household budget
You need to figure out where your money is coming from, and more important and difficult, where it is going.
List all income sources- If you only have a paycheck from a regular job, for you and/or your spouse, this in your total income. If you have other sources like a part-time job or hobby that makes some money, list those as well. If you want to budget with your after tax income, or your take home pay (after insurance deductibles and 401k or retirement contributions), that is OK, or you can include those in your budget if you want. Since that money is not available to me, I use my take home pay, but I think either way is probably fine.
List all expenses- You should be able to rattle off your fixed expenses, like mortgage or rent, car payments, etc., but you may want to average other bills, like electricity or gas, as some of them fluctuate based on the season. You also need to figure out how much you spend on groceries, eating out, and other miscellaneous spending categories. Basically, you need to see where all of your money is going. I find looking at several months to a year of bank statements and credit card bills should suffice.
List all of the categories you have, and get a pretty good number on your total monthly expenses. You need to categorize “unaccounted for” transactions as well, such as ATM withdrawals. If you take out a lot of cash from ATMs regularly, you need to set a limit for that on a regular basis, such as weekly, monthly, or when you get paid, especially if this accounts for a large number in your expenses or expenditures column and you are not sure where it really goes.
If your expenses exceed your income, you obviously need to reduce expenses to below your income.
Once you see where your money is coming from and where it is going, it is up to you to decide where you are spending too much, and try to cut back in those areas-or reduce your budget- in order to free up money for the things you want to use it for, such as debt reduction, etc.
When you look at the numbers, don’t be surprised if you are surprised by where your money actually goes-If you haven’t been sticking to a budget, it is very easy to spend more than you think you are, especially on casual spending. Now that you have examined your expenses and set up a budget, stick to it, and you will find it a lot easier to reach your goals.
When it comes to managing your family finances, it's important to have a stable foundation… and a stable foundation can only come from a stable budget.
So, how could you create a stable family budget? Well, we're going to have a quick look at just one of the ways you could create your very own budget now.
Creating your family budget
Your budget should start with you understanding exactly how much money comes into your family's household every month, and where it all goes.
You'll need to write down your monthly income - which includes everything your family earns/receives (including salaries, benefits and grants).
Once you've got this noted down, you'll need to move on to your essential expenditure. This includes your priority debts (mortgage/rent, utility bills, etc.) and your everyday living costs (food, clothing, etc.).
Do not, at this stage, write down the monthly cost of repaying your unsecured debts (credit cards, loans, overdrafts, etc.).
You'll now have two totals in front of you. From here, simply subtract your family's monthly expenditure from your family's monthly income - this will leave you with your disposable income.
What's your disposable income?
In simple terms, your disposable income is the money you've got at your 'disposal' each month to spend on your unsecured debts and (if you've got any after doing this) saving and non-essential purchases.
Once you know how much disposable income you'll be left with each month, you need to figure out if it will be enough to cover the cost of servicing your debts.
If it isn't, you need to take action as soon as you can. The solution to your problem will depend on your situation, but you could seek some debt advice to find out what sort of path you could/should take out of debt. Alternatively, if you'd like to read more about dealing with any debts you may have, this page has some great guides on debt topics.
If your disposable income is enough, you could save yourself some money in interest in the long run if you can afford to pay more than the required amount each month. So, once you've made your required payments each month, rather than spending the money left over on non-essential purchases, why not put this towards overpaying your debts? Just make sure you understand if you'll get any 'early repayment charges' before you do this.
There you have it then, your guide to creating a stable family budget. The rest (sticking to it) is up to you!
so many things we buy, food prices rise with the price of oil. If it costs more to get the food to your grocery store, you
will pay more for that box of cereal, head of lettuce, or bag of rice. Then,
add the fluctuation in prices for other commodities, like wheat, and you,
the consumer, will see the difference at the grocery store.
If your only
source for food is the grocery store, it’s going to be increasingly difficult for
you to control your household food cost. If you’re heavily dependent upon
others for your food--like the people who grow the lettuce in California and then ship it to Toronto, Canada--it’s going to make successful
frugal living a lot more challenging.
course of only a couple of weeks, I noticed that some of the food items I buy
on a regular basis have already gone up in price by as much as 60 per cent.
Rice crackers, for example, went from a steady 99 cents a package to $1.59 in
just 10 days. A club-sized box of Nature’s Path cereal went from $8.29 to $9 in
one week. And don’t even get me started on the produce.
been watching my grocery bills inch up and up in price, it’s become even more
apparent to me that learning the skills necessary for growing, preserving and
storing your own food is crucial. No number of money saving tips and coupons
will prevent you from putting too much of your monthly budget toward groceries,
if you aren’t willing to learn some do it yourself skills for food and food
so many do it yourself skills that you can learn when it comes to food and
learning even a couple of them is sure to put you in a better position, financially speaking; canning, meat curing, growing fruits and vegetables,
raising livestock or laying hens. All of these food-related skills are important
assets for frugal living.
we introduced you to Marie, who is also known as Lil Farm Chic on her You Tube
channel, because she and her husband have been doing some amazing things at
their homestead in Georgia. One of the many do it yourself
projects that Marie and her husband took on was to build a root cellar in which
they could store much of the produce they grow in their garden as well as the
other foods that Marie preserves for the winter.
As you will
see from the video, the root cellar project was a work in progress and they
certainly had a couple of setbacks while building the structure. In the end,
however, their do it yourself root cellar cost them next to nothing to build
and they had a safe and proper place to store food.
her husband grow or raise almost 90 per cent of the food they consume. Not only
do they enjoy deliciously fresh food that they’ve grown with their own hands,
but they also get the peace of mind that comes from knowing that should lettuce
skyrocket in price to $4 a head (for greens that likely traveled hundreds of
miles), it won’t make any difference to them or their wallets.
who are most successful in their frugal living efforts look for ways to save
money in any and every area of their households. Money saving tips that include
re-purposing and reusing the resources, like water, that you pay for and use
daily are amazing and often very successful.
to reduce water consumption in your house can range from very simple money
saving tips, like taking shorter showers or washing vegetables in a small bowl
of water instead of under the running faucet, to do it yourself projects that
require a little more effort but can help to conserve water significantly.
following video shows how a simple do it yourself project that re-purposes the
grey water from your washing machine is a very effective way to conserve water.
Imagine if you could reuse all of the water that was already used to wash your
clothes, soap and all, instead of just letting it go down the drain.
grey water has grown in popularity because it’s a great way to reduce water use
and save money. There are a lot of ways in which you can reuse your grey water,
such as watering your plants, washing your patios, sidewalks and siding, or
flushing your toilets, and there are also a number of options for how you can
go about collecting your grey water so that it can be re-purposed. At Thrift Culture Now, we of course love
the do it yourself options and this video, courtesy of Andrew Fletcher, is one
of a number of videos on You Tube that will show you just how easy it is to
make and use your own grey water pump for your washing machine.
are some important things to take note of, however, specifically with regards
to using the grey water to water plants and to ensure that you’re using grey
water in the safest way possible for your family and pets:
While the phosphates and nitrogen in many
laundry detergents may be very beneficial to some plants, it’s recommended that
you look up which plants in particular enjoy added nitrogen and phosphates
because some do not. Another option is that you use one of the ‘garden-safe’ laundry
detergents that are now available and that are much more agreeable to all
plants. Also, grey water isn’t potable and it’s not recommended that you water
vegetables with this water, unless it’s been treated.
you’re using grey water to water plants, water the plants directly at their
base and it’s recommended that if you have a hose attachment on your grey water
pump, that you only use this hose to fill watering cans or buckets instead of
spraying large quantities of the grey water around your yard.
any do it yourself project for frugal living, do a little research and see what’s
the best and most cost effective way for you to build your own grey water pump.
You would be amazed by how much money you can save by learning how to save
water around your house. Money saving tips abound. Find them and start using
living and practical skills go hand in hand. Really, no number of money saving
tips will bring you close to your financial goals or quest for a sustainable
life if you don’t attempt a do it yourself project or two on a regular basis.
know, we at Thrift Culture Now have
been putting great emphasis on diy auto repairs lately. We think that learning
some practical skills, like how to change oil, are amazing ways to save money
and reduce your automobile expenses because, let’s face it, owning and
maintaining a car can be costly. A car, although sometimes necessary, can be
one of your largest household expenses and so it’s in your best interest to
protect the financial investment you made by properly and regularly servicing
your vehicle. A car that has been looked after will last longer and can be re-sold
for a higher price than one that hasn’t.
One of the
main reasons people don’t keep their vehicles properly maintained and operating
as best as they should be, is that they think they have to have all of the work
done by a mechanic and cheap mechanic’s fees are hard to come by. Little do
they know, however, that it’s very easy to reduce car expenses by doing some of
the simple, routine maintenance, like changing oil, themselves.
courtesy of NowAuto, shows you the
step-by-step process for how to change oil. Wait until you see just how easy it
is to change oil and how few tools the job requires. You will wonder why you
didn’t learn this practical skill a long time ago.
featured David, the founder of New Jura
Natural Building, in one of our weekly Thrifty Blogger articles. We love
how David and others at New Jura are
using their practical skills in one diy project after another, building a
sustainable community in which they’re not only living in a way that’s good for
the earth, but they’ve also found some amazing ways to save money too.
of building houses, David decided that he wanted to get back to building the
way that people used to build, using locally-sourced, more natural materials.
Through their building of cob and pallet houses, to name a couple of examples,
and using a large amount of recycled, re-purposed, and often free materials,
David and his team are re-defining simple living. Think getting back to basics,
using wind and solar power to run your home, recycling rain water for use in
your garden or shower, growing a large quantity of your own food, and building
the devices that you need to do it all yourself. When it comes to
resourcefulness and practical skills, leading a sustainable lifestyle, David is
a thrift master!
checking out David’s You Tube channel to see what he’s been up to and to see
his practical skills and simple living expertise in action. It’s definitely
inspiring to watch him build a wind turbine, solar water heater, or whole house
with his own two hands.
could easily save on transportation bills by learning some practical skills
that would not only help you save on gasoline but also mean fewer or at
least cheap mechanic’s fees, wouldn’t you want to know what to do? I know I
start with a small but important diy car maintenance task; checking
transmission fluid. If you want to safeguard yourself from pricey car expenses
then checking the fluids and especially the transmission fluid in your vehicle
is a must. You don’t, however, have to pay someone else to do this for you
because checking transmission fluid is a very simple task that you can perform
any time, in your driveway, at the gas station, or the side of the road (okay,
hopefully not on the side of the road, but at least you would know how to do
transmission fluid isn’t where it’s supposed to be or it’s really dirty, your
car doesn’t perform as well as it should, making it virtually impossible to
save fuel, and it can even cause significant damage to your engine, resulting
in a very hefty mechanic’s bill. When it comes to frugal living and especially automobile
expenses finding ways to save money and doing what needs to be done to prevent
bigger, more expensive problems is important.
video, courtesy of vlaka72, and see just how easy it is to check your transmission
fluid. Stay tuned because we plan to show lots of other diy car maintenance
videos and to teach you the practical skills that will help you save money on car expenses.
noticed a sound coming from your toilet like there’s water constantly running?
If there’s excess water leaking into your toilet tank or there’s a problem with the fill valve
then you’re using a lot of unnecessary water. Plumbing problems like this one need
to be repaired so that you don’t continue to waste water and money but, in this
case, you don’t have to pay a plumber to fix your toilet. In most places, if
you hire a plumber you will be charged $100 or more straight away for the house
visit and then you’ll pay for parts and sometimes additional labour on top of
video, Joe shows us how to identify the problem with the toilet plumbing and shows
us how inexpensive and simple it is to fix this problem yourself. Educate
yourself and learn a few plumbing practical skills. That way you can save your
money for the instances when a bigger plumbing disaster hits and you’re forced
to hire a plumber.
almost three decades worth of experience as a general contractor and he’s
started his own You Tube channel where he regularly posts videos to teach
homeowners diy plumbing and electrical repairs. An important part of frugal living is learning valuable practical skills like these.
If you've never shopped in a thrift store, or you're looking
to sharpen your thrift-store-shopping skills, check out this video from Sammy
Davis Vintage. Shopping at thrift stores instead of regular retail stores, and knowing how to do it efficiently, is an amazing way to save money at home.
Sammy's site is all about great style and fashion but, more
importantly, about teaching others to find great style, clothing, and
accessories in thrift stores. There are tons of money saving ideas and tips on
her site and Sammy's constantly writing about new vintage fashion topics.
We love what Sammy Davis Vintage represents:
"Sustainable Style with Substance."