Overspending? Here are 7 ways to help cut expenses

MANILA - A quick click on the "buy" button of an online sale, a purchase of a small knickknack, or one eat-out too many--these all add up. Unplanned purchases can be excused every once in a while, but if this becomes a habit, you could fall prey to one of the more common obstacles to financial freedom: overspending.

Unfortunately, overspending can wipe out your earnings, prevent you from building a savings pot, or worse, plunge you into debt. Managing this requires taking deliberate steps to curb your desire to buy unnecessary items and services. It also comes with the realization that it’s not just the big-ticket purchases that can lead you to overspend. Small, seemingly harmless everyday purchases can also add up.

To help you rein in excessive spending, here are seven easy steps:

1. Set a fixed budget. Have a set budget for just about everything--your daily food expenses, utility costs, entertainment, and everything else. If you know that you tend to spend a lot in restaurants, having this budget will nudge you to choose those outlets with friendlier price points. For all you know, the set meal at the office canteen may turn out to be just as filling as the lunch set at that café in the corner, at just half of the cost.

2. Create shopping lists when going to the grocery or the market. Having a shopping list not only saves you time as you go around the store, it also ensures that you will only buy the things that you need. If you find this is too restricting, classify your purchases as must-haves (like meal ingredients for the week) and nice-to-haves (sweet snacks). If after the cashier rings up your must-haves, you find that still have room to buy the nice-to-haves, add them to your purchases one by one until you reach your budget cap.

3. Keep a diary of your expenses. When you follow steps 1 and 2, step 3 will be a breeze. Jotting down your expenses will let you know exactly where you are spending more than you should. Who would have thought that your morning espresso habit costs you P2,600 a month? The simple act of recording your expenses can tip you off that you are already close to breaching your monthly budget. Already spent P4,000 for your hair treatment? Then maybe the shoe purchase can be postponed to next month.

4. Live within, if not beneath, your means. Examine your lifestyle and identify patterns that cause you to overspend. Are you upgrading your smartphone just because “everybody’s doing it”? Perhaps you’ve gotten used to taking vacations abroad when you were still living with your parents, and you’ve carried this on even when you’re living on a fresh graduate’s income. Be true to your spending capacity. Identify alternative activities or products that you can afford and enjoy at the same time.

5. Use credit cards to track your spending. Credit cards are a very useful tool. It can help you manage your monthly spending and when needed, take advantage of pocket-friendly payment terms. If you have set a budget for yourself, your credit card can help you track your purchases for the month, or bridge the gap for utilities that must be paid against your tight cash flow. However, remember that your credit card limit is not additional spending money on top of your cash - always make sure you can afford the purchases you make, and pay your bill before due and in full as much as you can.

6. Don’t succumb to emotional shopping. A lot of mindless shopping happens when people are emotional--too tired, stressed, even hungry. If you’re one of these people, you may find out that your emotional outbursts are also causing a hole in your pocket. Be mindful of your emotions so that whenever you feel angry or tense, you would steer clear of retail outlets and do something else--like exercise, meditation, or plain relaxing at home.

7. Stay away from sales. Don’t lead yourself to temptation. If you can’t resist buying needless stuff, take a break from window shopping in malls, retail outlets, and even online shopping sites. "Out of sight, out of mind" is very true when it comes to shopping. Instead, find other activities to keep yourself busy. Hang out with a friend, spend an afternoon watching television or playing with your nieces and nephews, or read a good book.

When you master cutting back on expenses, the next step of building up savings will be a walk in the park. Good luck!

source: www.abs-cbnnews.com

How to pay off debt in 7 smart ways

MANILA - Do you think you are carrying too much debt? If your bills are piling up, and you are also getting calls from creditors, you should be alarmed.

Having too much debt can be stressful. While overcoming your debt problem may not be easy, especially if you are relying on a limited income, it can be done. You will need discipline and sacrifice and we have charted a road map for you below.

Here are seven debt-defying steps to set you on your way to financial freedom:

1. Know how much debt you have. When you are struggling with too much debt, you may forget how much you really owe and the details of the debt you’ve accumulated. List down all your debt, the interest rates of each, and the minimum monthly payments required. This information is essential to help you make a workable debt strategy. It also allows you to better track the payments you have to make, and know your real debt situation—which may be much better or much worse than you realize it is.

2. Choose your debt pruning strategy. It is necessary to have a good and realistic battle plan that you can implement. First, identify which debt you should pay off first—the one with the highest interest rate or the one with the lowest balance (you will save more if you retire the debt that charges the highest interest rate.) What works for one person may not work for another, so weigh your options. Once you’ve decided, make additional payments on this debt until it is totally wiped out.

3. Find ways to make additional payments. Study your income and spending patterns to find where you can get the additional money that can go toward debt servicing. This might mean either cutting back on your usual expenses, or finding new sources of income. You’ll have to make some sacrifices—bring down your entertainment budget, eat at restaurants less often, or maybe even postpone that planned vacation. New income sources can come from taking on a part-time job or selling off some stuff you’re not using.

4. Find lower interest rates. Check the interest rates you are paying on your debt. Consider taking out a lower-priced loan from other sources—possibly the bank, or even your office cooperative—to shave off the debt with the highest interest rate. Another option is to negotiate the interest rate with the lender, which you can do by writing a letter to your bank or lender. It won’t hurt to try.

5. Set realistic targets and deadlines. Let’s say you owe P100,000 on a salary of P25,000 a month. Don’t target paying off the P100,000 in four months—you can’t live on zero income and you will only set yourself up for failure. Study your needs and your cash flow to know what is realistic before you set a deadline. Giving yourself a deadline helps define your goal, which allows you to create a strategy and gives you motivation.

6. Don’t take on new debt when you’re managing existing debt. When you are struggling with debt, the worst thing you could do is to borrow some more. This will only push you deeper into the hole you’re in. Work with your creditor and explore other ways for you to manage your debt, as most of them will be more than happy to assist you. For example, they can convert your balance into a friendlier installment scheme that will make it easier for you to be up to date with your payments.

7. Reward yourself. Keep yourself motivated during this time by rewarding yourself once you’ve reached milestones—reaching the halfway mark, wiping out the largest debt, etc. After all, getting over your debt problem is a great achievement that is worth celebrating. It goes without saying, of course, that your choice of reward for yourself should not plunge you deeper into the debt hole. Try declaring a “do nothing” day or spending the day with a friend who makes you laugh the hardest, As the saying goes, the best things in life are free.

Conquering debt requires both a financial and a psychological strategy. Remember that short-term sacrifices could yield long-term benefits, and what can be a better reward than to gain financial independence and freedom from creditors? With discipline, commitment, and good planning, you can overcome your debt woes.

source: www.abs-cbnnews.com

Bring financial order to your life in 2015

MANILA, Philippines - Have you ever felt that you are always at the mercy of circumstances where money matters are involved? For instance, are you always running out of cash? Do you feel that your bills are always piling with no reprieve in sight?

Perhaps, it’s time to bring financial order into your life. Financial order, in a nutshell, means being prepared to face your financial obligations without getting stressed to the point of anxiety. Although money matters are not exactly the easiest to think about and may cause you a measure of stress, they should not overwhelm you completely.

Financial order is important. At the very least, it gives you peace of mind. It also keeps you out of trouble and helps you avoid unnecessary expenses and losses. For example, if you missed funding a check you issued by only one day, you could be paying as high as P2,500 in penalties. Same thing holds true for credit card bills.

Creating financial order in your life is possible, but it entails careful analysis of your financial standing, your consumption and spending patterns, and your personal goals. It is both a process and a goal. You have to continuously work to keep financial order in your life, and you should always aspire to achieve or keep it.

Here are some concrete ways to achieve financial order:

Keep records.

By keeping records, you will be able to keep an eye on your bills’ due dates which allows you to plan accordingly. Over the longer term, your records will allow you to monitor your spending and debt levels. There are programs available online to help you do this. If you prefer to keep records the old way, you can get a large envelope where you can file your receipts, bills, credit card and bank statements. It would be helpful to organize these regularly.

Manage expenses.

Are you going overboard with too many expenses? If you keep financial records, you will be able to pinpoint areas where you can cut back or where you can better manage your expenses. Look at areas where you may be incurring unnecessary expenses like paying for too many cable channels you hardly tune in to or gym memberships you hardly have time for.

Have a savings plan.

Once you are better able to manage expenses, you can have a savings plan. Commit to saving a fraction of your income and to add to this regularly. As much as possible, try to allocate funds for savings before you spend your regularly monthly earnings.

Pay debt.

Try to keep your debt level to a level that is comfortable. To know how much debt you currently have, calculate your monthly disposable income. This covers your take-home pay, bonuses, and all other income coming from other sources. Next, compute your monthly payments on all loans. Then, divide this amount by your monthly disposable income and multiply by 100. This will give you the percentage of your disposable income that goes into debt payment.

Protect your income.

One source of financial stress is the fear of leaving your family and loved ones vulnerable if you pass away. This is why it helps to take out a life insurance, especially if you have young children or if you are the breadwinner in your family. Insurance will also protect your assets. If you own a car, consider getting an automobile insurance. If you own property, home insurance is a worthwhile purchase.

Know your net worth.

This is an exercise that everybody should do, regardless of economic status. To know this, add up the value of all your assets (property, stocks, etc.) and income. Deduct the amount of your debt from this amount. The resulting number is your net worth. Note that this may change every year, depending on the value of your assets (e.g. share prices may change) and the amount you owe.

Once your finances are in order, you will be better able to forecast your fiscal activities, and you will be able to create realistic goals that will lead you, eventually, to financial freedom. It’s never too late to start – and 2015 is as good a year as any.

source: www.abs-cbnnews.com

How to set goals for a personal financial plan

MANILA, Philippines – The road to financial freedom begins in writing your own financial plan.

Salve Duplito, ANC’s resident financial advisor, said a simple financial plan has three important contents: goals and time frame, financial inventory and a financial road map.

“It’s like going on a financial road trip. You need to know where you want to go, what car you have and the gas level, and how you intend to go there,” she said on ANC's “On The Money.”

Duplito said the most crucial part of writing a financial plan is setting the goals.

But before doing this, Duplito said you should first build a value-based system to determine the importance of money to you.

“Financial planning is not just about the money, it is about finding the money that will allow you to enjoy the things you want most out of life,” she said.

Duplito suggested listing down tangible financial goals that allow you to fulfill your values and set deadlines for these goals.

She advised having a "values conversation" with your partner to determine what in life you value most.

If, for example, the answer to the question "What is important about money to you?" is security, the next question is, "What is important about security to you?", and so on.

When the goals are set, bring out all your financial documents from insurance to mortgage and list them down in a worksheet.

Duplito said for the number crunching part, it is best to consult an expert financial planner who can help in cash flow planning, investment planning and tax planning.

source: www.abs-cbnnews.com

Time to Spring Clean Your Finances

Spring is almost here. So if you engage in an annual spring cleaning ritual, make sure you take the time to get your financial house in order, too. Here are six things you should do to tidy up your finances.

Clear out your flexible spending account. By clear out I mean use whatever 2012 money is left if your employer gives you until March 15 to use last year's funds. If there's any money left over in your account after that deadline, you'll lose it. See Last-Minute Ideas to Beat the Flexible Spending Account Deadline for tips to help you use your FSA funds.



Eliminate overwithholding of income tax. If you received a hefty tax refund -- the average check last year was about $3,000 -- consider adjusting your tax withholding so that you get the money when you earn it. Sure, it feels great to get a big check you can use to pay down debt, fund a vacation or add to a retirement account. But it means you’re handing over too much money to Uncle Sam – money you could use each month to pay bills, buy groceries, invest in stocks or whatever. Use our Tax Withholding Calculator to see how much you can add to your paycheck by adjusting your withholding.

Ditch unnecessary tax documents. After you complete your tax return, take some time to clean out your files. See Which Tax Records to Keep and Which to Toss for specific guidance. In general, hold on to all of your tax documentation at least three years beyond the filing due date. To reduce piles of paperwork even further, consider creating a digital archive of your tax records.



Freshen up your insurance coverage. While you're digging through old documents, pull out your insurance policies to review your coverage. See 10 Reasons Your Insurance May Need a Checkup to find out whether you need to update your policies.

Tidy your credit report. If you haven't checked your credit history lately, find time to do it. A recent study by the Federal Trade Commission found that one in four consumers had errors on their credit reports that might affect their credit scores, and, in turn, hurt their ability to borrow money or get new credit. See Why You Should check Your Credit Reports Each Year and visit Annualcreditreport.com to get a free copy of your credit report from each of the three credit bureaus -- Equifax, Experian and TransUnion.

Unclutter your home. By cleaning out the closets, attic or basement in your house, you might be able to improve your financial situation. See Clear Your Clutter to Reap Financial Benefits to find out how you can put more cash in your pocket or take advantage of tax breaks by getting rid of things you don't need.

After you've made these moves, see our Spring Home Maintenance Checklist for 18 steps you should take to save money on energy bills this summer and ward off big-ticket repairs.

source:  kiplinger.com

Review: Nine Steps to Financial Freedom By Suze Orman

When it comes to personal finance, there are few experts out there that are as popular as Suze Orman. She has helped thousands of people get their finances under control through her efforts on her radio show and through her books. Her no-nonsense, common sense approach appeals to many and gives people that kick in the rear that they sometimes need to get things done. We are fans of her previous books and were excited to give this one a read to see how it stacks up to the competition.

This was an interesting read, and shows how Orman has come full circle in her life. When she first started out, she was determined to be rich, and felt that money was more important than life. This colored her viewpoint and although she became hugely successful, she quickly found that she wasn’t happy. While many of us have that drive to make as much money as possible, there are few that consider the fact that it may make us miserable.

In order to help others learn from her mistakes, Orman put together a very solid book on personal finance that combines actual financial advice with a more spiritual aspect. This may help many people find that balance that they so desperately need. The advice, as usual, is very sound, and it’s hard to go wrong when you’re dealing with Orman. Whether you agree with her strategies or not, she is certainly someone that is well worth listening to.

The book is divided into nine steps, each one addressing common problems and offering sound solutions. You’ll be reading about how Orman first came to love money and the event that inspired her to build her empire. You’ll also be learning how to respect money without worshipping it, and the importance of trusting yourself to make investments, and to handle your own finances.

Step Seven, entitled Being Open to Receive All That You Are Meant To Have is a profound treatise on money and should be read more than once. We also got quite a lot out of Step Eight, which discusses the ebb and flow of your finances and how to handle every stage that comes your way. The last step covers true wealth and once again, this is a profound section in the book that goes well beyond simple money management, offering tips that can be applied to every aspect of your life.

We recommend this book to those struggling with their finances, as well as to those that may already be successful, but not happy. Money can’t buy everything, as we all know, and this book should help many find that right perspective that will help them become successful in many arenas in life. It’s a great book for those just starting out, as well as for those that are already retired. This is a fascinating read, and one that should be pondered carefully and revisited often.

article source: richcreditdebtloan.com