All posts in category Saving Money

Making a budget, Paying using only cash… Easier and safest approach at this time

Budgeting simplified to allow us to save and to spend using cash only!!!

10 Ways to Simplify Your Budget

Every Tuesday is Finance & Family Day at Zen Habits.

I’m always looking for ways to simplify my finances (I’m weird like that, I know), and recently I’ve been scrutinizing my already-simple budget to make it even simpler.

I thought it would be helpful to share some of the ways to make your budget as simple as possible.

The goal is to

  • reduce headaches,
  • eliminate the need for complicated tracking schemes,
  • and reduce the time you spend on your budget and finances to about 15-20 minutes per week.

I can’t claim these ideas are original, or that I haven’t discussed them in various places before, but in my experience, they work. They’re simple and powerful.

Let’s first look at setting up a budget.

If you haven’t done it yet, it’s probably because budgets seem intimidating to you, or they are too much hassle to set up and maintain.

Those are both valid points — which is why you should follow this simplified plan if these things apply to you. Now, there’s plenty of fancy software out there for setting up budgets, but I don’t think they’re necessary. A simple spreadsheet will do — and if you can create a SUM formula to add up the total of a column of numbers, you have all the spreadsheet knowledge necessary.

1. Create a simple spreadsheet for your budget, if you haven’t already, and start by listing your income and your monthly expenses. Estimate, in round numbers, how much you spend on each expense every month. You can adjust later, but it’s better to err on the side of too high a number, rather than putting a low number and breaking your budget.

Now let’s look at ways to create a simple budget:

2.  60 Percent Solution. There are many ways to structure your budget, but the simplest I’ve found is the 60% solution. Basically, this budget asks you to fit your regular monthly expenses within 60% of your gross income, so that you have room for savings (long-term and short-term), retirement and spending money (“fun money”). These are the things that most often break a budget, because most people don’t budget for them.

Now, your percentage will vary, but the percentages given here are just rough guidelines:Fewer categories.

A lot of budget software asks you to fill in a million categories and subcategories. Those can be useful if you want to track all that stuff, but I don’t. I recommend simplifying: just use broad categories like food and gas and spending and utilities. Use what works.

  • 60 percent: Monthly expenses — such as housing, food, utilities, insurance, Internet, transportation. This is the part most commonly thought of as a budget.
  • 10 percent: Retirement — and if you’re doing it right, this is being automatically deducted from your paycheck for a 401(k) investment.
  • 10 percent: Long-term savings or debt reduction. It’s best to invest this in something such as stocks or an index fund, and this can serve as your emergency fund. But if you are in debt (not including a home mortgage), I would advise that you use this portion of the budget to pay off your debts, and even draw some from the other categories such as retirement to increase this to about 20 percent for now. Once your debts are paid off, you can switch this to long-term savings. You still need to have an emergency fund, but while you’re in debt-reduction mode you can either create a small, temporary emergency fund out of the money from this category or the next.
  • 10 percent: Short-term savings — this is for periodic expenses, such as auto maintenance or repairs, medical expenses (not including insurance premiums), appliances, home maintenance, birthday and Christmas gifts. For this savings account, be sure to spend the money when you need it — that’s what it’s for. When these expenses come up, you will have the money for them, instead of trying to pull them from other budget categories.
  • 10 percent: Fun money — you can spend this on eating out, movies, comic books — whatever you want. Guilt free.

3. Pay bills online. As much as possible, pay your bills online. These would be most of the bills in the first category above — utilities, rent or mortgage, cell phone, Internet, etc. If you can’t pay electronically, have your bank send out a check to the vendor. Make these payments automatic, so you don’t need to worry about them.

4. Automatic savings. Make your savings automatic as well. Every time your paycheck is deducted, have a scheduled transaction transfer a set amount from checking to savings. Use a high-yield online savings account such as Emigrant Direct, HBSD, or ING Direct.        [I am not familiar with any of these companies so I cannot endorse them…. They were in the original article… Please note though that you are not being sent to bank at METABANK. There is a very good reason for that.]
5. Cash. For everything else, use cash. If you’re doing automatic bill payments and savings deductions, the only things you’ll likely need cash for are gas, groceries and fun money. Withdraw these amounts in cash twice a month, rather than using checks or credit cards. The reason is that it’s simpler — with cash, you don’t need to worry about overspending, or tracking how much is left in that category. You can see how much is left. Leave the credit cards for when you absolutely need them — traveling, for example.
6. Envelopes. If you use cash for three categories, for example, use three envelopes. This is an old-fashioned system, but I use it because it works. I have an envelope for groceries, gas and fun money. If I’m going grocery shopping, I bring the groceries envelope. I know how much is left in the envelope before I go grocery shopping. I spend the cash for groceries, and then can easily see how much is left now. Simple, and no tracking necessary. When the money is gone, you’ve spent your budgeted amount. If necessary, you could transfer cash from one envelope to another, and there’s no need to adjust your budget.
7. 15-20 minutes a week. Now, the budget and spending plan I’ve outlined above is fairly simple and headache-free — but you shouldn’t assume that it doesn’t need any maintenance.
You should devote 15-20 minutes a week to ensuring that your finances are in order. Just this little amount of time each week will greatly simplify your financial life, reduce headaches, and prevent any messes from occurring later. Set a day and time when you take a look at your finances each week.
Set aside 30 minutes, just to be safe. Now take 5-10 minutes to enter your transactions into your financial software (I use MS Money, because it came with my computer, but a spreadsheet or other financial software will do fine).
If you’re following the plan above, all you’ll need to do is go online, look at your bank account, and enter your deposits, bills paid, ATM withdrawals (only do this twice a month!), and any other fees. It shouldn’t take long.
Now spend another 5-10 minutes to review your budget and make sure that all bills have been paid that should be paid. If not, pay them.
It’s that simple. You’re done. Now go back to reading your blogs.
8. Fewer accounts. Some people have complicated systems set up with lots of different accounts. I say simplify. You don’t want to be checking a million different accounts. You should have one checking account and one or two savings accounts (one for emergency fund and one for periodic expenses). You could have a bunch of investment accounts if you want, but I’ve found it simpler to just have one. I lose diversity, but my fund is already pretty diversified.
9. Dump credit cards.
[Dump all  bank cards period…. Get rid of all those plastic nooses!!!!] Multiple credit cards are also a headache. Simplify by just having one. Or do what I do — have none.
This will draw the usual outraged or preachy reaction from those who really love their credit cards, but I don’t care.

 

I don’t like credit cards. Call me old fashioned.

 

They charge high interest and they’re potentially dangerous (if you run up a high bill and an expense comes up that you need to pay for which means you can’t pay your credit card bill on time, you now are stuck with high-interest credit card debt).

 

Use a debit card if you need to.

[NO, NO, NO!!!!!  

……We cannot advise using a debit card  either because this amounts to being an interest free loan to a bank and often the consumer is charged activation fees for these cards on top of giving out an inbterest free loan…

…This is the biggest gimmick to come about in centuries… Clever marketing makes the debit card sound like a way to keep yourself from over spending, but the way that METABANK operates internally means that customers are kept from being able to access their own money when they really need it. Some have complained that they had to get a loan to even be able to pay routine monthly bills. METABANK is operating  a fraud on their customers. They lied to me about why they felt they should keep me from accessing my own cash money…. METABANK made themselves into the “PREPAID CARD POLICING SYSTEM.” However, it is METABANK who is doing a major scam…..

…All that we can do is to warn others not to use any kind of METABANK PRODUCT]

10. Pay all bills at the same time. It often just takes a simple call to get a vendor or creditor to change the due date on your bills. If you can get all your bills to be due on, let’s say, the 10th of the month, you can do all your bill paying at once. For some people, this will mean they will need to do a bit of scrimping to get ahead enough so that they can afford to make all their month’s payments at the beginning of the month, but it’s worth it. You can pay all your bills and be done with it.
[Because the product that METABANK, a PREPAID CARD, didn’t work at all from a consumer’s perspective for us and many others who complain regularly about how they have been kept from being able to access their own money once they gave METABANK cash money to place on a prepaid card, we feel compelled to alert other consumers that the METABANK PREPAID CARD isn’t good for customers/consumers.]

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by mrnd5 on February 5, 2013  •  Permalink
Posted in Bank Reform and Proper Regulations are Needed, BANK REFORMS NEEDED TO BE CAREFULLY REGULATED, Bank regulators shut down MetaBank payday loans, banking in Storm Lake IOWA, Banks Designed To Keep Consumers in Debt, Banks have created all the rules for PREPAID CARDS, Banks Lying to Consumers To Trick Them into taking on Debt, but it is still Meta Bank's same service and poor quality, Complaints Against Meta Bank, Consumer Advocate, Consumer Alert, Consumer Rights Advocacy, Consumer Rights- consumers have no or few protections from predatory banking practices, Consumers align to protect yourselves, Consumers are Vulnerable: Help each other, Consumers being forced to use plastic, Consumers Demand Bank Reforms That Serve Their Real Needs, Consumers Join Forces to Protect Each Other from Bank Scams and Frauds, Consumers must speak out, Consumers Need To Save Money And Stay Out of Debt, Corrupt Practices found within METABANK, Creating Easy Preys Doesn't Make METABANK's Practices Moral, Customer Service isn't listed as being one of META FINANCIAL GROUP INC areas of interest or studied skills, Customer's being scammed by Money Network, Customers of METABANK continue to complain about how they have been mistreated by METABANK, debit card fraud is always a possibility, Don't Invest in META BANK, Don't pay using a debit card, don't take on more debt to pay off the first debt, Don't use PREPAID BANK CARDS of any kind, Economic Servitude needs to be studied and abolished in the USA, fast paced banking systems, Fight Corruption, future oriented, getting out of debt, Gift Cards May be Suspended After Purchase and without notice, Holiday Gift Cards: have hidden fees, How to make a budget and to save money, Just try to save, marketing is basically Meta Bank's major strength just behind collections, Meta Bank charges customers for spending their own money, META BANK doesn’t serve the general public, Meta Bank is nothing but a publicity scam, Meta Bank never accepts responsibility, META BANK same poor service as always, METABANK CEOs create and require all of the rules, METABANK CEOs make huge annual incomes, METABANK customers are still complaining about the abuse they have received from METABANK, METABANK Customers complain about METABANK's mistreatment, METABANK is a collections agency and not a bank, MetaBank is corrupt, METABANK lies to their own customers, METABANK operates using many different names, METABANK practices are dragging the economy down, METABANK PREPAID CARD, METABANK uses both Pyramid and Ponzi Schemes, METABANK uses false awards- false testimonials, METABANK's partner company provides METABANK with access to their customer base, METABANK's publicity says that their prepaid card will meet your specific needs but in reality they are the exact same card just using different publicitty, Money and Spending Wisely, Narcissistic practices found to be within METABANK's operation, personal finance, PREPAID CARDS are not adequately regulated, PREPAID CARDS are not consumer friendly, PrePaid Name Brand Bank Card Association a non-profit is a scam, Saving Money, Scams by banks like METABANK, Stay Out of Debt, Stay out of debt- don't get loans to pay off loans, Success shouldn't be about profits - People mattter, Suspicious Activity is within Meta Bank's internal practices and policies
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Posted by mrnd5 on February 5, 2013

https://mrnd5.wordpress.com/2013/02/05/making-a-budget-paying-using-only-cash-easier-and-safest-approach-at-this-time/

No bank wants you to read this!!!!

Five easy ways to save $1,000 during difficult economic times

(http://foodincubator.wordpress.com/2012/09/26/office-hours/, http://foodincubator.wordpress.com/2012/09/26/office-hours/)

Reported by: Robb Hanrahan

1/31

 

You’re feeling the pinch. Despite avoiding the so-called “fiscal cliff,” you’re socked with another two percent in taxes because the social security tax reduction was phased out this year.

The average family earning about $50,000 a year is now paying $1,000 a year more in taxes, nearly a hundred dollars a month.

CBS 21 is watching out for your dollars, showing you five easy ways to get even with the new taxes of 2013.

Number five: Cut the morning coffee! Your morning coffee house ritual is costing you big time.

Just by cutting your five dollar a day cup of coffee, you can save $100 per month or $1,200 a year. Bring your coffee from home and you’ve just paid for your tax increase.

Number four is to brown bag it. Your colleagues might tempt you to go out for lunch every day, but it adds up.

Plan ahead because you can save $10 a day carrying your lunch, based on a $15 dollar lunch out and a $5 dollar brown bag. Do it three times a week and you save $120 per month, or $1,440 a year. You’ve made your tax increase and may even eat healthier. Financial expert Rick Rodgers says every little bit counts. “If we think of a little here and a little there, it can make a difference,” Rodgers explained.

Number three: Evaluate your cell phone bill.

Most people are on a plan and Rodgers says almost no one meets the plan exactly, either going over in expensive minutes and data or not using what they’re paying for. Rodgers says put away your ego and give up the trendy expensive phone. Consider a pre-paid phone plan, especially for teen-agers because they have unlimited data and messaging. Rodgers has one for his son. “His phone is like my phone, except it is pre-paid, it’s like an iPhone,” Rodgers commented. Going from a $200 a month plan to a $40 per month pre-paid plan can save you as much as $160 per month or $1,920 a year. That’s twice your tax increase.

Number two: Avoid impulse buying. Just because it’s on sale, or you’re conveniently at the store and see something you want, don’t buy it now. Rodgers says wait one day.

“And if you still want it tomorrow consider buying it, but chances are you’ll forget it and you’re not going to get it,” Rodgers told us. Savings here will vary, but if you passed on impulse purchases of 21 dollars a week, that’s $84 a month or $1,008 a year, covering your tax increase.

And number one: Don’t use credit cards.

Rodgers recommends we buy everything with cash. Leave the plastic at home, even your debit card.

“The simplest way to explain it is it removes the pain of spending.” A Dunn and Bradstreet study says we spend about 18 percent more with plastic. That nearly 20 percent of increased spending is why credit card companies offer deals such as points, discounts and cash back. Leaving your credit cards at home is key because it eliminates temptation. if I make a list and have cash in my pocket to pay for it, I can’t overspend. It all adds up to huge savings. Leave the credit card at home and you could spend up to 20 percent less every time you check out.

If you normally spend $1,000 per month on your debit and credit cards, the study shows you’d actually only spend about $800, saving $200 a month or a whopping $2,400 a year. (No bank wants you to read this!!)

That’s more than twice the average family’s 2013 tax increase. Now if that is not enough tips for you, we have a few more too.

  1. One is what to set your home thermostat at. To save money it is recommended you set your home at 68 degrees in the winter and 78 degrees in the summer. You can save $4 to $5 for each degree a month.
  2. Another is to buy paper goods in bulk. Buying items like toilet paper, paper towels and printer paper in bulk makes sense because they are easy to store and never go bad.
  3. One more way is to ride a bike or carpool and to combine errands. Taking these steps will help you save money, as the average family spends $40 per week in gas. 
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by mrnd5 on February 5, 2013  •  Permalink
Posted in Don't pay by credit card, Don't pay using a debit card, Don't use PREPAID BANK CARDS of any kind, Getting by in a tough economy, Saving Money
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Posted by mrnd5 on February 5, 2013

https://mrnd5.wordpress.com/2013/02/05/no-bank-wants-you-to-read-this/