Simply Junior

Saving money can begin by taking little steps to control unnecessary spending. One of the problems that arises when attempting to control unnecessary spending is that we are not always aware of how much money we actually spend. There are a few things that can be done in order to get a handle on unnecessary spending in order to save money.

1. Set up a monthly budget

We have all been told this at one point in time or another – budget your money. In general, we all know the basic things that need to be in our budget – rent or mortgage, utilities, credit card payments, car payments, insurance payments, gas money, food expenses, clothing allowance, savings allowance and an entertainment or miscellaneous allowance are just some of the major budgeting areas.

When setting up a monthly budget, however, many of us simply are not as detailed as possible and at the end of the month we spend more money than our budget actually allows, usually in the form of credit card expense, which costs us more money in the long run with interest rates.

While some areas of our budget are already predetermined, other areas can be micro-managed. These areas include our food expenses and our entertainment and miscellaneous expenses. Many times we don’t realize just how much we spend on food or other expenses because we don’t take the time to save those receipts and calculate just how much we spend. This is a mistake because without doing so, we cannot see just how much we might be spending unnecessarily.

2. Get Rid of Unnecessary Spending

To get rid of unnecessary spending and start saving more money, take a month and collect the receipts for everything you spend money on, even if it’s as small as a candy bar. Create a spreadsheet that lists each item you spent money on, how much you spent and why you spent that money. Then go through and decide whether that expense was necessary or unnecessary.

Deciding what is necessary and unnecessary can be a difficult task. The way I go about making this decision is based on whether I can change some of my habitual spending in order to save money. For instance, looking back at how much money I spent on food, I realized that I had spent a total of $105 on breakfast last month. Why? Because rather than eat breakfast at home, I decided that it was easier to stop in at some drive-thru and pick up breakfast.

Had I made the same breakfast at home everyday, I would have saved approximately $65. This was just my savings on breakfast alone, when I did the same thing for lunch and dinner, I realized that by changing my habits I could have saved about $300 on my food expenses alone. When I applied the same calculations on my coffee drinking habits, which is not as great an expenditure for me as it is for others, I realized that I could save an additional $50 a month.

This technique may seem like a nickel and dime way to save money, but it adds up. Saving $350 a month just by little changes will end up saving $4200 over the course of the year.

While getting rid of unnecessary expenses takes a little time, effort and commitment to changing habits that contribute to increasing the amount of money you spend every month, the outcome is a saving a significant amount of money over time.

When it comes to saving money, every penny counts. So many people simply assume that small amounts of money aren’t worth the bother of saving. But little things add up.

Have you ever broken a large bill, such as a fifty, to only be surprised that it disappeared so quickly. Little amounts of money will just flow out of your hands. So it is logical to assume that little amounts can add up just as quickly.

However, you can’t just assume that spending and saving is equal. Saving $15 a week is not the same as spending $15 dollars a week. You have to factor in compounding interest on saving and borrowing.

Let’s look at $15 dollars a week in three different scenarios: spending, saving and borrowing.

When you spend $15 dollars a week in cash or from your checking account, you are spending $780 a year. That doesn’t seem like to much. After all, it is only a little over $2 a day. But over five years, that $15 adds up to $3900.

If you are able to save that $15 a week and put it aside in a savings account that earns 3% interest, you could end up with approximately $4,202. By saving your money, you made around $300 dollars.

This isn’t taking into account that there are much better saving options out there. After saving for a year, you could put the money over into a CD, starting a ladder of sorts. CDs usually have higher interest rates, yet are still a safe investment for your money. Remember that you may have to pay taxes on any interest your accounts make.

But if you borrow the money, say you find that you are short $15 dollars a week, or $65 a month, and you charge it on your credit card to make up for the shortcoming. Over five years at a 18% interest rate, you will end up with $6000 in credit card debt. That is $2000 more in debt that you could have saved.

With a little over a $2 a day investment, you can have a nice amount of money in five years. And remember that with compounding interest, the more time you give your money, the faster it will grow. Think about it.

I find that this is also a good option for kids to learn how to save for a large item. When your child is twelve, give them the option of saving $15 a week. They can work for you for this money or it can come from their allowance. Do the math and let them see that by saving this small amount of money, they can have enough for a car in five years. There are plenty of financial lessons to be learned around the purchase of a teen’s first car.

Small amounts can have a large impact on your personal finances. There are plenty of ways to find extra money to save. You can simply dump all of your dollar bills and change in a jar each night. You can use coupons and put the money saved in your jar. You can decide not to buy something you don’t need and put the money in your jar. Small amounts of money are worth the bother after all.

Today’s recession has had an impact on personal and business credit cards. Over the past 1-2 years many any people are receiving letters from their credit card lenders informing them of an increase in interest rates or a decrease in the credit limit.

Small business credit cards can be an additional source of financial income. They also help in keeping other lines of credit open. Using this type of credit card can ensure that suppliers are paid on time while giving the business an interest-free period (float) in order to obtain enough money to pay off the credit card debt. As the recession has begun to deepen, businesses have found that obtaining credit cards for their business has become much more difficult.

The worst thing a new business owner can do is to use their own personal credit card to finance their business purchases. This makes it very difficult to separate business and personal finances, but also makes the individual responsible for the debt of the business. Not a good thing!

Some businesses are using business even credit cards to pay their tax bill, which is tempting as it avoids any fines for late payment. There is however a fee for doing so. Usually, this fee is significantly lower than the penalty would be for not paying taxes on time.

There are still plenty of opportunities out there for small businesses who have good credit record to take advantage of their business’ credit cards. Even though lenders are stricter in their acceptance criteria than in previous years, you should not give up. Before applying for credit make sure that you meet all the requirements for acceptance. Every time your credit is check, the credit score goes down. As a result, only apply for cards when you feel confident that you will be accepted.

In order to be competitive, a number of lenders are now advertising so-called “no fee” mortgages. According to commercials from a number of mortgage companies, you can obtain a home loan where you only pay the loan’s interest; there are no additional costs at closing. Can you really save money by applying for a no fee mortgage?

As usual with this sort of advertising, the answer is “perhaps, or perhaps not.” A mortgage company isn’t going to simply drop charges that can amount to as much as 3%-5% of the amount borrowed. Any lender that simply did away with a source of revenue would quickly go out of business, as those fees contribute to their bottom line.

How do these mortgages work? The lender is going to charge you a higher rate of interest than a mortgage company that itemizes closing fees will. Their profit must originate somewhere; it’s going to come from charging you more to borrow the money. That’s not necessarily bad; it means that they are earning their money in a different way. The increased rate of interest may make the loan more attractive to buyers on the secondary market. The company may make some additional money by re-selling your mortgage to another company later.

What does this mean for you, the buyer? As with any loans or anything else that you might buy, you need to shop around before applying for a loan. The only way to tell who is providing a bargain is to compare the costs of all the lenders and crunch some numbers. Only when you examine everything, including how much in total you will pay over the life of the loan, will you be able to tell who is offering the lowest cost. Each lender is going to have different ways of making their profits; some will charge higher interest rates, others will add more fees at closing.

Is the promotion a financial scam? No, but it might be rather misleading. The companies, via their advertising, would like you to believe that you are paying less, as suggesting that there are no closing costs might lead you to believe that you are paying less money. You aren’t actually paying less money, but it makes for good advertising. Whenever you think about taking out a home loan, you should assess all of the estimates from all of the mortgage companies you talk to so that you might find the deal that best meets your needs. Clever consumers always know to be suspicious when a promotion seems too good to be true.

Firstly, you should know that the main reason why many consumers not able to reduce their debt is due to the high financial cost and final cost. Debt consolidation institutions understanding this problem, and they will work with your creditors to reduced or eliminated fees. However you should be careful with the companies which just want to take advantage from you.

Once the creditors and agencies reach agreement, the agency will merge or consolidate all payment into one loan payment. They do the payment process directly to the consolidation of services. The good news is because of lower interest rates, monthly payments reduced by 50%. I am sure this is what the lenders want.

Debt settlement institutions are different with consolidation services. Commonly a debt consolidation will make the consumers be responsible for paying back the full amount owed. On the other hand, this is a solution that will cancel some uncommon debt. For example, if someone has obtained $ 60,000 credit card debt, debt settlement can reduce the balance owed to $ 30,000.

Debt settlement is not intended to be extremely easy to fix credit problems, indeed. This strategy is likely to generate a credit score lower, and future lenders may be unwilling to extend credit lines.