BUDGET BASICS

You can use basic budgeting to better mange your money and financially reposition yourself.

Clarify Your Income and Expenses. List all sources of gross income. Then, list all of your fixed expenses and subtract them from your gross income. Fixed expenses are things like mortgage or rent, daycare, savings, credit cards, car payments, loans and insurance payments. The amount left is what you have for variable expenses. Variable expenses include groceries, clothing, memberships, personal maintenance, eating out, and entertainment. Variable expenses are the easiest to reduce.

Track Your Spending. Keep an envelope in your car or purse to track your expenses, whenever you or anyone in your household makes a purchase keep the receipt. Use financial software to track all of your expenditures. Programs like Quicken or MS Money do an excellent job of helping you understand where the money goes. Use online bill paying services, (which are typically free through your bank) to help manage fixed monthly expenses as well.

Reduce Fixed Expenses. Look at all of your bills to see how you can reduce them. Do you really need HD or HBO? Do you have newspapers and monthly magazines that no one is reading? Do you need to get your hair done every week? Do you have to hit the bar with the boys every Friday night? One at a time, cancel extras you don't need or use. Don't overwhelm yourself, pick one area a month to change.

Pay Down Those Credit Cards. Use bonus money and tax refunds to pay down debt. Once you have eliminated the credit cards with balances under 5K (which will cut down your fixed monthly expenses.) Start on the cards with the highest interest rate. Pick out one card to focus on at a time. If you only made the minimum payments, Pay 10% more each month, until you pay off the card. You will need to spend 10% less each month as well.

Use Cash Instead of Credit Cards. It’s harder to spend cash than it is to use the credit card. You’ll spend less and save on interest charges.

Plan Your Purchases to Avoid Impulse Buying. A common problem is food shopping. Take a list to the grocery store and do not freelance off it. Get a deep freezer and buy in bulk only when things are on sale.


Analyze Your Spending. After tracking all of your spending habits for at least a month, look to see where you can reduce your spending. You could consider using your cell phone and getting rid of your house phone. That daily Starbucks or Dunkin Donuts habit could be costing you an extra $25 bucks a week. Even regular trips to the vending machine in your office building can add up. Make it a treat instead of a habit. You’ll save money and probably lose weight too!

Pay Your Mortgage Payment Bi-weekly instead of monthly. Your mortgage company or a third party vendor offers the service for a low fee. You’ll pay less interest and pay off your mortgage faster a 30-year mortgage eight to ten years faster.

Raise the Deductible on your homeowners and auto insurance policies. It’s not wise to file claims for small losses anyway, a higher deductible will save you money now and in the future.

How to Reduce Expenses. Is there an area that you would like to reduce, but don't know how? Look it up on the Internet. For example, if you are spending entirely too much on your utility bills. Grab a sweater and turn your thermostat down a few degrees to save on heating costs. Replace every standard light bulb with an energy efficient light bulb. Turn down your water heater to 115-120 degrees.

Manage Food Expenses. Do you spend too much on lunches out? Cook at home and take the leftovers to work for your lunch -- even once or twice a week could help a lot. Consider how many days a week you go out to dinner? Try cooking several meals ahead on Sundays, which will make it easier to pop dinner into the oven or microwave when you are tempted to swing in that drive thru. Or make a double batch of baked chicken on Sunday and store the extra in the freezer. Reheat it and whip up some quick side dishes to keep the meal fresh for the family later in the week.

Take a Vacation at Home. Check out all the local websites for free events. You’ll rediscover your hometown and spend quality time with your family.

Drink at Home. Whether your beverage of choice is beer, wine or mixed drinks. It's much cheaper when consumed in the comfort of your own kitchen. Call some friends over, pick up a six-pack and hang out at the house and play cards. 

Reward Yourself. Reward yourself for your progress, but not with a financial treat. You can no longer afford to buy something shiny and new to make yourself feel better. For example, make your favorite meal, play soft music and spend the evening in a hot bath reading a good book - bought from the used books on amazon.com of course!