Trim your budget the easy way

We all know that to save money we need to spend less, however it’s not always so easy to see through the areas that need to be tightened a bit.  And unless you know where to look, or you’re well versed in budgeting, you won’t find them so easily.

Here are a few tips on tightening your spending:

• Many people have two phone lines at home, one a landline, and one a cell. You can safely cut one of the two and use only one. Alternatively try shopping around for companies that provide in one place with your phone, cable and Internet services.
• When shopping, buy in bulk. Buy generic brand names,  as they cost less (you don’t have to pay for the brand name, only for the actual product). Shop more often during sales, use coupons (particularly the combination of sales and coupons is very powerful), and buy only things you will need one week ahead, nothing that would spoil in your fridge because it was not consumed the week before.
• Pay off your credit cards as soon as possible. I mentioned here before that you need do this, and start by  paying off the heavy interest cards first. Once the first card is paid off, you can then go on to the next one.
• When holidays come, make the gifts rather than buy them. There are plenty of things you can make with your own hands, and people for a while now appreciate hand made gifts way better than bought one. They see them as more personal and having more value. And it’s only in your benefit that they cost less to do as well!
• For reading, or watching movie, borrow and rent instead of buying them new. Also make sure you return them on time, to avoid having to pay any late fees. Also there are some online book trading websites where you get used books for free from other reading enthusiasts, your only fees to pay are the shipping costs to the person who wants you book. Paying $2 for a highly wishlisted book beats paying $12 for a new hardcover! One of these online book trading places is Bookmooch, I highly recommend it.

How to Budget Your Money

One of the important aspects of saving money is budgeting it. If you’re spending more than your saving, well, you aren’t doing yourself any favors in your quest to save money! You really need to calculate everything you’re spending, down to the last cent, because as I’ve said before, it all adds up.

But how can you actually budget your money, what are the steps for it? It’s easy to say ‘count your spending’, but not so easy to implement, unless you know what you’re doing.

• Calculate what income you’re getting – not only from your regular earnings, but any other income, such as coming from savings interest, child support (if any), tips, overtime money, anything that is considered ‘extra’.
• Make sure you can identify all your expenses – this includes housing, utilities, taxes, house repairs, extra purchases (cars, computers, etc). Keep every single receipt. Now it is a good time to learn an efficient filing system (buy a cheap binder where you can save all these papers in).
• Now you need to compare your income with your expenses – What is more, income or expenses? If income is more, you’re on the right track. But if expenses are more, this is where the red flag should come up, as this is where you need to start saving big time, by cutting back on extra spending.

Unfortunately there are so few people who ever think of budgeting, which is pretty much why there are so many people in debt. Very few of them realize that they spend too much on worthless expenses, because they are not budgeting and don’t see the forest from the trees, as they say.

Pay Off Your Credit Cards

By way of managing your money, a very important aspect is paying off your credit card(s) fast. We are all used to make the minimum payment on our credit cards, however this means that the interest is quite high, which in turn means that it will take you literally years to pay off your credit card.

What you can do is add a bit more to paying every month, as much as you can comfortably afford. Remember that you are saving money from your grocery shopping, from around the house, so you can use that money to pay off the credit cards as fast as possible.

Work on one card at a time. Start with the card that has the highest interest, and in the meantime just use the minimum payment on the other cards, so you don’t fall behind. Put the majority of your money in the high-interest card. As soon as the card is paid off, go on to the next card that has a higher interest than the rest. Faster than you’ll know, you will have paid off each card, instead of struggling to manage juggling between multiple cards and seeing no end to the nightmare at all!

Watch this video to find further financial tips for 2009.