A simple truth: There’s no magic bullet to getting rid of debt. You can pay hundreds of dollars to consolidate your debts into “manageable” monthly payments or at the very worst have your debts liquidated through bankruptcy, but in the end managing your debt comes down to three simple practices that make up the pillars of debt management:
Have a Budget Plan. It’s often said, “Those who fail to plan most certainly plan to fail.” Poor planning and financial mismanagement can only lead to debt. Therefore, if you’re not operating from a long-term budget plan to manage your money and monitor your spending habits, you can expect to play hide-N-seek with your creditors on a regular basis. If you think about it, having a budget makes perfect “cents”. (Pun intended). Every successful business operates from a monthly or quarterly budget. Granted, a budget for a business will be far more detailed than your household budget, but the point here is that no business can operate effectively without knowing exactly how much money is coming in and how much money is going out. And so should you! Creating your budget does take a little work, but if the choice is between spending 20 to 30 minutes to write down your bills and other expenses each month versus continuing to live paycheck-to-paycheck struggling to make ends meet, the choice is simple: Take the time to draft a monthly budget. In drafting your budget, you should plan your expenditures on a quarterly basis (every 3-4 months) instead of working from payday-to-payday or month-to-month. By taking the long view to your finances, you can better plan for future growth in savings and handle most emergencies that may arise. I’d recommend using a spreadsheets for ease in calculating your expenses or you can use an on-line budget calculator to create your budget plan.
Improve your Creditworthiness. We live in a society where having access to credit not to mention having a great credit rating impacts just about everything we do. Whether it’s to get a car loan, a mortgage, travel, auto repairs, retail shopping or in some cases to even get a job, your creditworthiness plays a significant role in your ability to function effectively within the marketplace and sometimes in the workplace. The better your credit rating, the more credit is likely to be extended to you. So, it’s a good idea to maintain a good credit rating in order to do more of what you want more effectively from a financial standpoint. Start by getting a copy of your credit report from the three leading credit bureaus – Experian, Transunion and Equifax – or you can get your credit reports for free from AnnualCreditReport.com. You’re entitled to a free copy of your credit report each year. So, why not take advantage of it! Check your credit reports for errors, such as misspelled named or wrong SSN and correct any errors you find, then clean up any inaccuracies. You can also add a statement to your credit report(s) to clear up any errors or outdated information to your credit history. A bit of caution: Always use credit wisely! Only make purchases using a credit card you can afford and pay your credit card balance in full and on time each month when the bill is due. You can learn more about credit and how to find the type of credit card that’s right for you at Credit.com.
Start Saving – Pay Yourself First! The best advice I’ve ever heard concerning investing was to pay yourself first. After all, you work hard for your money. Does it make sense to spend all or most of your hard earned dollars each payday on debt alone? Of course not! Contrary to popular belief, you can – and should – use your budget to increase your savings each pay period even while trying to pay down your debt. Granted, it’s better to throw every dollar you can spare towards paying down your debts to eliminate them faster, but I would suggest that you take full advantage of the compounding an interest bearing savings account can bring (that is, the cumulative interest earned each month plus the amount of the original deposit) even if you’re only able to stash away $5 a month to start. Over time as your debts are reduced and become more manageable, you can increase the amount you deposit into savings or better yet, increase the amount you contribute to your 401k or IRA assuming you have either or both. And by the way, by increasing the amount you contributions to your 401k or IRA you’ll be decreasing your pre-tax liability on your income and that’s truly “paying yourself first”. To see bank rates on interest bearing savings or checking accounts or to learn more about the various types of investment vehicles, such as, money market accounts, certificates of deposits, stocks, bonds or IRAs, visit BankRate.com or Investopedia.com, respectively.
And there you have it, the three pillars to successful debt management: budget, improve your creditworthiness and invest in yourself.
That’s my blogpost for this week. Join the discussion by posting your comments below. And don’t forget to tune in next week where I’ll once again share more ways you can break the debt cycle and then go…beyond.
If you’ve paid close attention to the news recently, you’ve probably heard about the millions of medical record accounts that were compromised by hackers at a major medical facility in Alabama and the retail accounts that were hacked by Target stores. In this digital age, identity theft and consumer scams are fast becoming a big problem for consumers and retailers alike.
According to Javelin Strategies and Research, a leading consulting firm on retail merchant transactions, over 13 million consumers fell victim to identity theft in 2013 at a cost of over $18 billion. Such criminal activity also impacts retailers. According to a report by CyberSource Corp, a leading business-to-business payment processing and risk management consulting firm, retailers lost an estimated $3.5 billion in revenue to online fraud in 2012.
The leading cause of identity theft for consumers continues to be weak password protection to websites that conduct ecommerce transactions. For retailers, the problem goes a lot deeper. Most retail merchants fall victim to malicious software that seek to steal consumer Social Security Numbers, credit card numbers or bank account numbers. The good news here is banks, credit card companies and most major department store retailers take various steps to protect consumers who fall victim to identity theft offering everything from refunds on sales to discounts toward their next purchase and free identity theft protection services.
Consumer scams are a constant problem for shoppers and the scams get more elaborate over time. According to the Better Business Bureau, the top 10 consumer scams for 2013 were:
Medical Alert scam
Auction Reseller scam
Arrest Warrant scam
Invisible Home Improvements scam
Casting Call scam
Foreign Currency scam
Do Not Call scams
Fake Friend scam
Affordable Care Act scam (BBB’s “Scam of the Year”)
So, what can you do to protect yourself from identity theft and prevent being scammed? Here are a few suggestions:
Keep your anti-virus software up-to-date. The best way to protect your online identity online is to keep your anti-virus software updated. Most anti-virus programs, including the free versions, allow you to schedule your computer to receive automatic updates on a daily or weekly schedule you set. But a word to the wise: Unless you’re using a paid commercial version of anti-virus software, such as, Norton Antivirus or McAfee All-Access, most free versions only provide limited security features. That doesn’t mean you can’t have decent anti-virus protection using free software. However, it does mean you may need to utilize a combination of other anti-virus, malware and spyware programs to keep your online presence safe and secure. One exception to the rule might be Windows 7 and Vista users since Microsoft’s Security Essentials is built into its operating systems. But in order for its built-in security features to adequately protect your computer and keep your online presence secure, you should keep your anti-virus program up-to-date. You can do this manually from the Security Essentials’ control panel or you can download the latest security updates using the Windows Update feature from your computer’s Control Panel.
Use strong password encryption. A strong password consists of a combination of upper and lower letters, numbers and symbols (e.g., Ab1$3dC$). When deciding on a password, be creative. Mix it up alittle. For example, suppose I wanted to use the word “super cool” as my password. I could use, “souperkool” or “SoupERKoweL”. I could even add numbers or special characters to strengthen the encryption making it even more difficult for hackers to decipher my password. Whatever you do, don’t use personal identifiers such as the name of your spouse, child or family pet as your password. And if you’re still using “password” as your password, you should change it now! I would also recommend changing your password to all Internet-capable devices at least once every 30-60 days. If you must maintain a list, don’t save it on your computer’s hard drive. Save it on a USB drive instead and keep it in a secure location, i.e., a locking file cabinet, away from your computer if possible.
Don’t click on unfamiliar links or email attachments. Whether at home or at the office, never open email attachments or click on links from senders you don’t know or websites that are unfamiliar to you. Keep in mind your bank, mortgage company, utility company or retail department store will never contact your via email seeking confirmation of your personal information. They will either call or send you a letter on company letterhead. But if you suspect someone may be trying to scam you over the phone, try to get as much information from the caller as you can including the caller’s name, employee ID number, business license number, if possible, and a call-back number. If the caller hangs up or refuses to provided the requested information, chances are it’s a scam. Follow-up with the Better Business Bureau or your state’s licensing agency to confirm that the company is who they say they are using the information you obtain.
Shred personal documents. Destroy outdated documents such as bank statements that are more than 3 years old or unwanted credit card applications. You can purchase a shredder at most retail department store for under $50. An alternative to shredding your documents would be to rip them up in small pieces and dispose of the pieces in multiple trash cans to make it more difficult to scammers to look through your trash and find such unused documents. As a last resort, you could burn such documents.
Use browser security features. Internet Explorer, FireFox and Chrome all provide “InPrivate Browsing” to keep websites from tracking the websites you last visited. Never set your website to automatically save your passwords. This may be a convenient way to quickly log back into a website your frequent, but it’s also an easy way for hackers to obtain your password using keystroke tracking malware.
Report suspected activity immediately. Monitor your bank and credit card statements frequently (online if possible) and contact your bank or credit card company as soon as possible if you notice questionable activity on your accounts. If you suspect you’ve been scammed, you should contact the Better Business Bureau and report any information you can recall or present any correspondence or solicitations you suspect may be a scam.
That’s my blogpost for this week. Post your comments below to join the discussion. And don’t forget to tune in next week where I’ll once again share more ways you can break the debt cycle and then go…beyond.
Whenever I ask people what’s their #1 reason for not sticking to a budget, I normally get “lack of time” to manage it properly. I then ask, “Have you tried automating your finances?” It’s at this point folks do that old “I Could’ve Had a V8” bonk upside the head thing.
In today’s busy world, it can be difficult to keep track of your spending especially if you’re still doing it the old fashioned way with pen, paper and calculator. But if you automate your finances, your world will become a whole lot easier. Trust me!
I remember the first time I automated my finances using Direct Deposit back when it was the newest wave in banking. At the time, I would receive paper checks because I didn’t trust the accuracy or timeliness of the Electronic Funds Transfer system. But once I saw the benefits of it – no waiting in lines to cash my check and instant access to my money – I was hooked on the new banking technology and I haven’t looked back since. I’ve even paid off three vehicles using auto-payroll deduction where the car payments were automatically deducted from my paycheck and my budget never missed it!
Today, there are multiple ways to ease the burden of maintaining your budget and you can increase your net worth in the process just by automating your finances.
Saving and Investing through Auto Payroll Deduction. The easiest way to get started in investing is to pay yourself first. That means making regular deposits to your savings account. But if making regular deposits into your savings account is a habit that remains elusive, you can take the strain out of the process by automating your savings using automatic payroll deduction. The process is easy: Just contact your HR department, determine the amount of funds to be withdrawn from your pay each pay period, fill out the necessary paperwork and submit them to your bank, credit union or other financial institution and within a payday or two you should start seeing your savings increase. You can also automate contributions to your 401(k) or IRA (whether Traditional or Roth) using auto-payroll deductions. Not only is this a fast and effective way to increase your investment portfolio, you can also reduce your taxable income in some cases allowing more of your earnings to go into your bank account and less going to Uncle Same. Once established, all you’ll have to do is sit back and watch your retirement nest-egg grow and grow and grow.
Online Bill Pay. Ever miss a payment on a bill and kick yourself for it? You can save yourself the agony of watching all those late fees eat away at your hard earned income and stop kicking yourself in the butt in the process by paying your bills online. In most cases, you simply log in to your creditor’s website, i.e., utility company, mortgage company, car finance company, insurance premium, etc., provide the appropriate account information and the payment is automatically withdrawn from your bank account or credit card. The neat thing about online bill pay is you can either make a one-time payment or set up a payment schedule where a specific amount is withdrawn from your bank account at the interval you specify (i.e., once a week, bi-weekly, once a month). There are three benefits to online bill pay: 1) your payment is usually processed within 24-hours saving you a late fee; 2) you save money on postage; and 3) you can stop or start the process, or change the payment method at your convenience.
Easy to fall into that “out of sight, out of mind” mentality and forget to account for such deductions in your budget
Halting or changing payments made by auto-payroll deduction can take time for the required paperwork to get processed
An error in a payment amount could throw off your account balance and take time to correct
It’s important to monitor your banking statements and your budget in order to keep on top of your spending when automating your finances, but the pros far out-weigh the cons. One word of caution: You should automate your finances only when you’re absolutely sure your budget can handle it. If your finances are tight and you’re still not comfortable with your spending being on auto-pilot, automating your finances may not be for you. But once you get your finances on track and you start seeing consistent positive cashflow in your budget on a regular basis, I would highly recommend calling “All Systems Go” to automating your finances.
That’s my blogpost for this week. Join the discussion by posting your comments below. And don’t forget to tune in next week where I’ll once again share more ways you can break the debt cycle and then go…beyond.
According to the U.S. Department of Agriculture, a family of four spends approximately $627.90 a month on groceries – and that’s being on the thrifty side! For most Americans, their grocery bill constitutes the third largest household expense behind paying the mortgage and transportation costs. And from the looks of things it doesn’t appear that foods costs will be coming down any time soon. So, what can you do to reduce your grocery bill? Here are 10 cost-saving tips that can save you big bucks on your grocery bill:
Plan your meals. It might sound tedious, but planning your meals a week at a time helps to streamline your grocery shopping. This way you only purchase those food items you need. This works whether you’re on a tight budget or a fixed income.
Make a grocery list. If done right, your grocery list should include all the necessary ingredients to make your menus complete. By making a grocery list, you also minimize the risk of impulse buying which only adds to your grocery bill. And at today’s food prices, who wants to spend more than they have to on food?
Price Matching. Most grocery store chains will match the price of a competitor’s sales price provided you can show them the sales price. Bring coupons or competitor’s sales ads with you and present them at the check-out to save a few bucks.
Use Coupons. The stories you’ve heard of The Coupon Lady saving hundreds on her grocery bill are true! Clipping coupons remains the best way to save money on your grocery bill. It’s no easy task; you have to do a lot of work up front to get organized, but the cost savings are worth it provided you’re willing to look for bargains. Collect weekly circulars for coupons or print them from such on-line sites as Coupons.com, MyCoupons.com or GrocerySmarts.com.
Use In-Store Discount Cards. We all look for the sale price whenever we go shopping, but many grocery store chains, such a Kroger, offer in-store discounts using their store discount card on top of their sale price. Using a store’s discount card can add extra savings to your grocery bill.
Shop Generic. We’ve heard it said before, “shop generic”, and it’s true that buying off-brand food items can save you money. In fact, many name brand grocery store chains now offer store brand items of their own in place of the old white or yellow “generic” packaged food items. If you’re worried about taste or quality, don’t be! Most store brand foods taste just as good as the retail brands or better, and are of high quality, too. So, don’t be afraid to try an off-brand item. You won’t be able to tell the difference and you’ll save a lot of money in the process.
Shop at Discount Stores. While the big grocery store chains offer many of the name brand items we all love, discount stores, such as Dollar Tree, Dollar General and Aldi’s, offer quality grocery items at very competitive prices. In most cases, their every day low prices beat the retail grocery store chains hands down. So, don’t be fooled into thinking low-cost means “cheap”. Discount stores offer significant cost-savings on many of the common food items you routinely buy at a faction of the cost. And they taste good, too.
Be tech savvy – Use Shopping Apps. You can compare prices of name brand grocery store items or even create shopping lists using shopping apps, such as GroceryIQ or Grocery Pay. So, if you think $2.95 is too expensive for that 20 oz. can of named brand soup, compare prices right from your iphone and if you find the same item for a cheaper price at another store in your neighborhood, head across town and by it there. Better yet, show the cashier at check-out and if they price match, buy it! Talk about choice and competition!! There are several other grocery shopping apps you can download at the Google Play store and most apps are free. So, shop around and find the best app that works for you.
Shop at Farmer’s Markets. Fresh fruits and vegetables are already expensive and unstable weather conditions can only mean prices will go higher. But your local Farmer’s Market can help lower the cost of fresh produce because all items are locally grown providing you with significant savings. All Farmer’s Markets undergo rigorous state health and safety inspections. So, you can rest assured they meet the highest health and safety standards. But just as important, the cost of fresh fruits and vegetables are cheap compared to your local grocery store chain. So, give your local Farmer’s Market a try. You can find a Farmer’s Market near you at www.localharvest.org.
Buy in Bulk. If you’re feeding a small army, chances are buying bulk is worth your time and can save you money. But even if you’re feeding a family of four, buying in bulk can provide long-term savings for those grocery items you buy routinely. Simply use what you need for the here-and-now, and store the excess away for later use. Membership at the leading two bulk buying stores, Sam’s Club and CostCo., is relatively inexpensive. So, if you have extra pantry space, buying in bulk can be worth it in the long-run.
That’s my blogpost for this week. Join the discussion and post your comments below. And don’t forget to tune in next week where I’ll once again share more ways you can break the debt cycle and then go…beyond.