How I got started to save money

The first step to saving money was to track everything I spend everyday. And I mean EVERYTHING, every pop for a pop machine, every pack of gum, every ATM service fee, everything. I saved every receipt everyday, and also made sure I kept a small pad of paper and pen with me for anything that didn’t have a receipt. I set up a spreadsheet using openoffice (a FREE alternative to microsoft exel) and everyday when I got home I went thru my notes and receipts and entered them.

I found it useful to break things out into a few categories: groceries and household consumables, entertainment and eating out, healthcare, transportation, and clothing. After looking at a week or two of expenses, its very easy to see where to cut down on costs. Its good to make it a game, see if you can spend less each week until you get it down to the bare bones. For me the easiest place to start saving money was in the entertainment and eating out category. I work in downtown Chicago, and just switching from eating lunch out everyday to brown bagging it saved me $50 a week. I am fortunate in that I am not a coffee drinker and didn’t get swept up in the whole starbucks craze, but it amazes me the amount of coworker I have that drop $8-$10 a day at that place.

Only get as cheap as you can feel comfortable with. Some people just wont be able to bring themselves to stop having the daily starbucks, but try to cut back, maybe skip one day a week.

So start your spreadsheet and start tracking that spending, you will be amazed at how much you spend on little stuff.

Using A Debt Company

No one wants to be in a situation wherein they are dealing with mounting debt. However, it happens more often than it should because it is quite easy to fall under the debt trap of borrowing more than what you can actually pay for. Once you get into the habit of swiping that piece of plastic, it might be difficult for you to monitor your spending.

Now, let us say that you have already committed the sin of borrowing more than what you can afford. Once you see that you are allotting more than 20% of your pay check to credit card debts, it means that you are quite neck-deep in debt. If you are unable to pay even the minimum amount against your credit card bills, it could be time for you to consider hiring a debt company to consolidate or manage your debts in your behalf.

What A Debt Company Can Offer You

Depending on how much you earn and how much you owe, there are debt companies which offer different services which may just solve your financial problems. To give you an idea, here is a quick list of the services that debt companies offer:

Debt Consolidation Loans
There are debt companies which specialize in debt consolidation through lending you more money. Let us say that you owe debts to four different credit card companies. A debt consolidation loan company will offer you a loan which will allow you to pay off your existing debts, so that you will only owe one company. Does not really get rid of your debts and you often end up paying more in the long run.

Debt Management Plans
This is probably the most desirable option out of all these when you have more than one lender reminding you to pay off your debts. A debt management plan is something that debt management companies will set up for you. Once you hire their services, they will be assessing your current financial situation so that a solution to the financial mess that you are in can be found. Usually, the representative from the debt management company will negotiate with your different lenders so that a lower monthly payment and lower interest rate can be given to you. You make one payment each month and it is shared about among your creditors.

Debt Company

Debt Settlement
Debt settlement companies specialize in taking care of your credit card debts, which is an alternative to filing for bankruptcy. This is only an option in the US.

Individual Voluntary Arrangements
These are only available in the UK and they are a way of writing off a lot of your debts. You make an affordable payment for five years and after that you are free of debt.

Credit Repair
Beware of any companies which promise to repair or fix your low credit score. If you have more debt than you can handle which affected your credit score as well as your purchasing power, remember that the process to rebuilding credit is quite slow. No-one has the power to change this and anyone promising to is lying and should be avoided. Continue reading

£144 per Week Flat Rate Pension Confirmed in Queen Speech

A new flat rate state pension of £144 per week as part of government reforms has been revealed as part of the Queens speech. The Pensions Bill will come in to effect in 2016 and would create a ‘simpler state pension system that encourages saving, and provides more help for those who have spent years caring for children’ the Queen said.

The rate is worth £144 in today’s money and expected to be worth £155 by 2016. To get the new single rate pension will that will replace the current two tiered pension system people with have to contribute up to 35 years’ worth of National Insurance.

Flat Rate Pension

The bill also features a change to the age that UK residents can get a state pension, which will rise from 65 to 67 years old between 2026 and 2028. Married couples will no longer be able to claim a married person’s allowance worth £66 per week based on their spouses National Insurance contributions, but the time when people who are unable to work when looking after children or sick relatives will count towards them.

Chris Noon who is a partner at Hymans Robertson welcomes a simpler state pension system but believes that the ‘vast majority’ of workers will end up losing out from the new system. Stating that: ‘The reform has been positioned as a benefit, but in reality it reduces pensions for the vast majority of current employees, including those on minimum wage and part-time workers.’

‘The savings are then used to increase the state pensions of the self-employed and, rightly, the very, very low paid.’

‘A private sector employee earning minimum wage could be worse-off by up to £48-a-week in state pension when they come to retire.’

Buy Only What You Need

You remember the lectures that your parents used to give you. We all got them. Don’t do drugs. Don’t drink. It doesn’t matter what the other kids are doing. Just because he is jumping off a bridge doesn’t mean that you should, too. We were told from a very young age that peer pressure was a bad thing. Once we grew up and became adults, we thought we could forget these lessons. We were too old to be a victim of peer pressure, we told ourselves. We were fine.

When it comes to our personal financial health, though, peer pressure may still be causing us all sorts of problems. Trying to keep up with our friends may be causing us more trouble than we may have ever thought.

financial health

Here’s an example. Pam has a good friend named Emily. They are the same age and they have many of the same interests. They have many of the same friend and they always end up at the same parties. Pam really admires how Emily dresses. Emily always wears boots and she always looks spectacular. She has four or five pairs of boots and they are all great. Pam likes boots, too, and she often goes shopping for new boots with Emily. But there’s a problem. Pam can’t afford to be buying new boots all the time. She wants to keep up with Emily, but keeping up is making her go broke.

What can we learn from this? Well, by giving in to peer pressure and buying boots she doesn’t really need and can’t really afford she is damaging her personal financial health. Just because Emily can afford to keep buying more boots doesn’t mean that Pam can or should. Maybe Emily makes more than Pam does, or maybe she has investment income or an allowance. Pam is trying to keep up to Emily, but she doesn’t have a chance.

There is something else to consider, too. Just because Emily is buying lots of boots doesn’t mean she can afford them, either. Maybe she is spending herself into debt, spending more than she has. Maybe she is giving in to peer pressure and trying to keep up with someone else, too. She might not be someone you want to pattern yourself after.

This is just one example. Your friends could try to get you to eat out more than you can afford, go to concerts or shows you can’t afford or spend money you don’t have in many ways. You’re an adult now, so it is okay to say no once in a while. You might be missing out on some fun now, but it is not fun at all to run out of money. Take care of yourself first.

Why are savings important?

Saving money isn’t the most fun. Every time you think about doing it, you think of other, much more fun things that you could do with the money. Saving money means that you have less money to spend. That can be a pain. Saving money is very important, though. Having some money saved can stop you from getting into real financial troubles. Taking the time and making the effort to save now can pay huge dividends in the future.

You don’t have to save millions of dollars to make it worthwhile. Just putting aside a few dollars every month can make a huge difference in the long run. Little bits of money can quickly add up to a significant amount which can help when you really need it. In this case, when we talk about savings, we mean liquid reserves like cash or a savings account. Liquid means that you can quickly and easily access the money when you need it. Cash is liquid. Real estate is not. Here are three reasons why savings are important:

Emergencies.

If something comes up that you have not predicted and prepared for and it is going to cost you some money, it could create a real problem if you are not prepared for it. An injury requiring medical treatment, a major car repair or a trip that has to be taken at the last minute are all examples of emergencies. Without savings set aside, these situations can put you into a huge hole. By having money saved you are prepared for these unexpected emergencies and you can deal with them.

savingsMajor payments.

Say, for example, you are going on your honeymoon. The wedding was a bit more expensive than you anticipated and you are a bit short on money for your trip. You could use your credit card, but then you will be paying high interest rates on those costs, meaning your trip will cost you more than you intended. Instead, you can use your savings, which will cost you nothing in interest. The money you save in interest payments will let you build your savings up again quickly.

Peace of mind.

It seems that problems happen at the times when you are least ready to deal with it. Being in a situation where you are financially unprepared is very stressful. By having some savings built up you are ready for anything that might arise. This means that you are less stressed out and happier. Taking the time to build up your savings now will be more than worth it in the comfort and happiness it allows you to feel.

Talking About Credit Cards For a New Year

It’s the holiday season, and the year is slowly coming to a close. Now is definitely the time to check out all things finance, even though it might not seem that way. There are many banks and lenders in the UK that will be practically giving away money, and it’s up to you to check them out. Do you need a new credit card? Believe it or not, the answer might be yes. Let’s go back into things a bit to really give you the full picture around the issue.

You see, it’s all about being able to get the best credit terms without having to spend a lot of money overall. If you’re still dealing with the same credit cards that you opened up years ago, you might qualify for lower interest rates. This means that more of your monthly payment will go to what you actually charged and not just the interest. The trouble with high interest cards is that so much of the minimum monthly payment is going to pay the credit card company itself, not necessarily for the things that you bought. Smart credit management means looking at these things as a way to get the full benefit out of them. That’s the true issue of the matter, and you need to take it seriously.

What if you’ve cleaned up your credit in the last few years? Believe it or not, new offers aren’t just going to come to your door. It’s possible, but if you’re not already being targeted on several mailing lists or you’ve chosen to opt out of that system, you really have to make sure that you’re looking at the best offers in the market. If you apply for multiple credit cards in a tight window, you should avoid making heavy damage to your credit score. Sometimes having too many credit inquiries on your reference file can be a big problem, but when done in a short window, the damage is lessened sharply.

Do you travel often? A rewards card might make sense for your needs. There are a lot of people that go only on the advertising alone, and that’s a really bad way to select credit cards for the upcoming financial year. You want to go with a card that has features that matter to your lifestyle. If you don’t do a lot of traveling, all of the miles in the world aren’t going to do you any good. However, if you can turn miles into points that can be used in other places, that’s going to be much more beneficial to your life. Continue reading

Broke and Miserable For the Holidays

Two things that no one wants to be this holiday season: broke and miserable. It can feel like everything is just collapsing upon you, like you can’t even breathe. Sure, you might think about going to that holiday party, but then you’re going to feel out of place because you don’t have any money to bring a food tray. Or you might want to hit that concert with your friends…until you realize that you just don’t have much after paying the bills and paying for food.

This is a story that affects us all, but that doesn’t mean that you have to be miserable. If you don’t have a lot of money for the holiday season, there are a few things that you can do right now to make it better.

Broke
First and foremost, you need to make sure that you’re not just going through the motions to make other people happy. If people ask you, sit down and tell them that you are trying to save money for other things, and this holiday season needs to be as low key for you as possible. Some will tell you that you’re missing the holiday spirit, but you’ll know better. You’ll be in a position where other people’s hang-ups really aren’t your problem. You’ll be able to move on without fear, doubt, or worry, which is the best feeling ever.

As long as you’re thinking about the bigger picture, how can you fail? Sure, some people won’t understand you, and that’s part of the process too. You can’t worry about what they’re going to be able to handle. Ask yourself this: are they paying your bills? Are they trying to do anything and everything to make you a happier person? Probably not. This is where you have to get tough and look at your real options, not just what you think should be there. Sometimes it hurts to realize that we don’t have nearly as much money as we would like, but that’s part of life. Some people will have money, others will not. This is a process that’s constantly evolving too. It’s possible to gain a fortune…but it’s equally possible to lose it. How you approach money actually said as lot about you. Do you have to have to be out there spending money in order to feel complete? If so, you might want to change a few things about your life.

There are small things that you can do — most communities will have free events. It doesn’t cost you a thing to get into the holiday spirit. Also, consider volunteering. You get to help people that are far less fortunate than you can imagine, while feeling good at the same time. Volunteers often get small gifts and tokens of appreciation, so don’t discount that. If you volunteer for an event, you will probably get the leftovers after the party is all said and done. It just depends on the event that you sign up for.

Get into the holiday spirit with your heart, not your wallet. You’ll end up far richer than you could ever dream of being!

What Age Group Are Worst For Overspending?

Overspending is a problem that any of us can find ourselves in at any given time. Whether you’re a blue collar worker or an office clerk, you may struggle to stretch your monthly wage, especially during the current financial climate.

With the cost of living rising and an increase in taxation, coupled with the freezing of many salaries, it’s getting tougher and tougher each month for your wages to see you through the month. What many people end up doing is spending more than they can actually afford.

Whether its overdrafts, loans or credit cards, there are options everywhere for whoever is in a financial struggle. Whilst some people keep a close eye on their outgoings, being strict on what they spend, others are more frivolous when it comes to spending. Generally speaking, overspending occurs amongst any age group, depending on their circumstances. However, there is increasing evidence which is telling us that it’s younger people who are in fact the worst age group for overspending.

Overspending uk

Young People

Several reports have indicated that there may well be an impending crisis amongst the population, notably amongst young people. Savings are being dipped into to pay for luxury items that many household don’t want to give up, e.g. a luxury holiday or large Christmases. Overspending here is being offset by the use of savings, however not everyone has savings, especially younger consumers.

39% of 18 – 34 year olds have no savings whatsoever, and 36% of 16 – 24 year olds are finding that they are constantly out of money. The cost of living, the reduction in wages and no savings to fall back on means it’s particularly tough for this age group. So if you earn a modest wage which can’t see you through the month and you have no savings to fall back on, what do you do?

Lending Solutions

As mentioned, overdrafts, loans and credit cards are all potential lending solutions for any young person who is need of financial fix. Some of these solutions are more applicable than others given each person’s individual circumstances.

For example, as a young person you may have spent the majority of your monthly wages on rent, food and bills. Unfortunately, even if you have allocated all of your money for the month, something unexpected can happen, e.g. your bike or car may suddenly need fixing. This can hit you in the pocket and because it’s unexpected you may not be financial prepared to pay.

In this circumstance what would a young person do? Well payday loans are an unrivalled financial solution for any young person needing to take out a small amount of money, which they can pay back on their next payday.

The beauty of payday loans is that anyone can get approved one, provided you’re over the age of 18 and that you’re in full time or part time work earning over £500 per month, which gets paid via direct debit into a valid bank account.

5 Top Ways To Save On Days Out

With budgets tight at the moment, it’s hard to get out and about with the family. Well here are our  top 5 tips to make the most of our time for less.

Save Money On Top Attractions

A lot of the big stores offer great vouchers and discounts to get you into theme parks across the country such as Thorpe Park, Alton Towers and Legoland. Check out what your clubcard and nector points can get you, by checking out their websites before you travel. Bear in mind that these can take a couple of days to arrive though, so always check in advance.

Free Attractions

If you’re looking for something to do that costs nothing at all, then why not consider all of the free attractions available across the country. Trips such as to museums or galleries can be free of charge a lot of the time and also a bit educational for the kids. The Natural History Museum and the Science Museum are great examples of these and are fun for the kids.

If you’re looking for something further afield than London, then other free museums are the National Museum of Cardiff and the Pitt Rivers Museum in Oxford.

Enjoy Being Outdoors

I know that the weather can be a bit unpredictable in the UK, but if we have a rare day of sunshine then you could make the most of the beautiful countryside. Across the UK there are 15 free National Parks to explore.

Eating Out On A Budget

If you fancy taking the family out for a meal, then you don’t have to break the bank. There are load of apps now which can offer you discounts and vouchers which you can either show to them on your phone or print off before you leave.

Cinema On The Cheap

If the weather isn’t on your side, the cinema could be a great way to take the family out together. However, usually they can be a costly affair, but luckily many big chains offer great deals such as Kids AM at Vue and special screening for kids from Odeon. Check out their websites for more information.

Be A Smart Trader – Ignore the Prediction Crowd

We get a lot of questions about the economy, investing, and personal finance. Most of the questions that we get can be answered in a few short sentences, but some questions take a little more thinking. This is a time of the year where everyone puts out predictions about what will happen in the upcoming year.

However, there’s something important that you need to realize; the predictions shouldn’t matter. Treat them as entertainment. Market predictions are just speculation, but it’s not based on anything solid. You just need to go back to solid investing principles.

First and foremost, do you understand the history of what you’re dealing with? Securities are such that you either know what’s going on with the market, or you really don’t. Trying to just guess is like betting from the gut at a casino while you’re playing poker. Sure, you might get some lucky breaks but there’s going to be a point where you fail miserably. Why? It’s easy — you just don’t have anything else going on in your life. You would love to be able to go out on your own and really do something incredible, but you find yourself falling short of that. As a trader, you might even feel like you’re being judged against what all of the other traders are doing. That’s not a world that you want to occupy if you can help it. It’s better to truly look at everything you want to do as an investor, and then go from there.

Smart Trader
For example, some people start promoting automated software this time of year, because they know that investors are thinking about what they want to do with the future. The reality here is that no automated software can replace the power of the human mind. So if you’re looking for push button profits, you really won’t find them. However, if you go back to the principles of technical analysis, of fundamental analysis, and of sentimental considerations as far as the investor mind in general, you will go a lot farther.

We’re trained and literally hard wired to deal with patterns, but that doesn’t mean that we have to give in. We can be stronger than the patterns that we live under.

There’s nothing wrong with thinking about the road ahead, but make sure that you’re being smart. Have you looked over your portfolio? Can you join an investing group that meets regularly to discuss this type of thing? Where do you really want to be a year from now as an investor? As long as you’re considering all of these issues ahead of time, you should be just fine.

Get in the game, review the numbers carefully, and then go from there!