Getting out of debt and saving money are two important financial ideas that, really, go hand in hand. The fact of the matter is that, just by getting out of debt, you are already saving money. You are saving money in interest and fees, at the very least. Having said that, it is important that, in the process of getting out of debt, that you still make a point of saving money somewhere else.

The first thing you need to think about in terms of getting out of debt and saving money is to know how much it is that you have each month to spend on debt reduction and savings. Once you know how much that is, then you need to find out how much it is that you owe in debt, in terms of monthly obligations. What you will do is to rank your debt from highest to lowest, in terms of the interest rates on the debt. For example, a credit card with a 19% interest rate would rank higher than a 6% mortgage. In turn, that 6% mortgage would rank higher than a 4% student loan.

Once you know how much extra money you have, you should set aside half of it immediately for savings. Having money in savings will, among other things, help you from accruing extra debt in the long run. In addition, saving money will help you to earn some interest on your extra money, even if it is just a little bit. Then, you will take the other half of your extra money and use it towards getting out of debt. What you will do is to send that extra money to the debtor that has the highest interest rate, every month. Eventually, when that debt is paid off, you will want to pay off the next highest interest rate debt, and so on.

You may wish, after you have gotten out of all of your other debt and begun saving money, to consider leaving those lower-interest debts alone, such as student loans and mortgages, and paying just the minimum payments. In some cases, this may be the thing to do. You may wish to speak with a financial planner in that specific regard.

Paying Off Holiday Bills
The Dollar Stretcher
by Gary Foreman
gary@stretcher.com

Many people dread January. That’s when the bills come due for all the gifts and holiday partying. According to the National Retail Federation, Americans were expected to generate over $450 billion in retail sales during November and December, 2006.

Not surprisingly, much of the spending is done with plastic. CardWeb.com estimated that between credit, debit and store cards, shoppers will sign for $135 billion in goods and services for the holidays. The largest portion of that ($85 billion) will be on credit cards.

The results? A lot of people will be facing nasty credit card bills in January. Consumer Reports expects the average holiday credit bill will be $626. Depending on how big the balance is it may take until summer to pay if off. What’s a consumer to do?

Just as the smart shopper compared prices in November and December, the smart credit card user pays off the resulting bills as quickly as possible. The reason is simple. If their interest rate is 18% (a little high, but an not uncommon rate) the cost of that sweater for Aunt Polly goes up by 1.5% per month. So much for the big sale!

Some people may be fortunate and find one or two things that they can do to completely pay off their holiday bills. There are a few places that you might find hundreds of dollars of savings.

One such place is in your auto or homeowners’ insurance. It’s possible that you have the wrong coverage or by comparison shopping you can cut your premium significantly. Talk to your agent about your coverage. Then check with an independent insurance agent or comparison website to see if you’re getting the best rates.

Most of us will need to chip away at the credit card balance a little at a time. And some ideas will require a bit of sacrifice (never a popular idea).

One place to look for savings to put towards the bills are things that you get via subscription. Like the premium services from your cable company. Or your membership in a video rental club. Or other services that are automatically charged each month. Each one might only represent $10 or $15, but you only need to take action once to save money each and every month thereafter.

The biggest target for saving is in the food and grocery area. The reason is simple. We spend about 20% of our money on food. So we’re dealing with a large amount of spending. And we’re making decisions about buying food all the time. Whether it’s the weekly trip to buy groceries or the daily visit to the company cafeteria at lunch or break time, we make many small buying decisions that add up quickly.

Look first at your habits. Think of where you’re buying food each day. For some people it’s lunch out with the gang. Bringing in the previous night’s leftovers could save you $30 a week.

For others it’s the morning and afternoon break times that find you reaching into your pocket. Even a $1 cup of coffee or soda adds up if you do it two or three times a day.

Your grocery shopping can yield big savings. For instance, a pricebook is an invaluable tool. It’s a simple listing of items that you purchase regularly (i.e. milk, bread, ground beef, etc) and the lowest price that you’ve paid for it recently. The most effective pricebooks include one sheet for each item. On the page is the store name, date and price that was low.

Taking the pricebook to the store allows the shopper to quickly identify real sales. That gives them the opportunity to stock-up on an item when the price is right. It’s common for people to report savings of 10% or more. And, that’s without changing the items that they buy. Just when and at what price they buy them.

Don’t forget the food that you purchase away from the grocery store. We’re spending nearly half of our food budget on meals that are prepared outside the home. Restaurants are an expensive place to buy your groceries. For most simple meals you can buy the ingredients for about 1/3 of the restaurant price.

One reason that we eat out so often is to save time. But there are other ways to feed your family without spending hours in the kitchen. Freezer meals can replace the drive-thru window and save you money.

Many recipes are well suited for freezing. It’s easy enough to prepare two meals at once. One for tonight’s dinner, the second for the freezer. If you do a search on “freezer meals” you’ll find quite a bit of info. Two of my favorite sources for information and recipes are Debi Taylor-Hough and Leanne Ely. Both are experts at making your freezer your best friend at dinnertime!

For most families it will take a combination to conquer the holiday bills. And some determination. The easiest thing to do is to just pay the monthly credit card minimum. But that’s the best way to pay the most for the holidays and go from Santa last year to Scrooge this year!
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Gary Foreman is a former financial planner and purchasing manager who currently edits The Dollar Stretcher.com website. You’ll find hundreds of articles to help you stretch your day and your dollar. Visit today!

Many families realize the importance of a home budget and religiously follow one. However, as children begin to get older and enter the teenage years many families wonder when its the right time to introduce the teens to the family budget. Some families want their kids to simply enjoy their childhood while others want to prepare them for the real world. There are also those parents who are struggling and could really use some help from a teenage childs income to the home budget. The following suggestions will help you determine what to do.

Money is Not an Issue
For those of you who are able to get by fine on your income then you probably dont want your child working to help out with bills. But, your child does need to learn how the real world works and how much it costs to live in it. So, education should start around 13 years of age. Give your children chores to do that earn a certain amount of money. This money is then used to cover a certain bill. For example, you have your daughter do the laundry on weekends and she earns $20 each time. She is also responsible for the cable bill, which costs $60 a month. After paying the cable bill she has $20 left.

Kids need to help out around the house and they also need to learn about the home budget. So, giving your kid a chore to do that earns a set amount of money can allow them to pay a family bill as well as make a little money on the side. Your child will learn that $60 is a lot to pay to watch TV and take interest in how hard it is to earn money while it is so easy to spend.

Money is an Issue
Some of you out there are having money problems and having a teenage child that works could really take a little bit of the strain off. For instance, your child works so he can pay for his own gas, food, and entertainment. He may even be able to save for college or a car. This is a great way to take some of the monetary responsibility off your back and let your child help out with the home budget. This could begin around age 15 or even 14 if your child is mature for his age.

Then, there are those families who simply cant make ends meet. Single mothers frequently fall into this category. If you really need additional income your child may be able to contribute to the home budget as early as 13 years of age. He will only be able to work weekends and limited hours due to his age and will earn minimum wage, but it might be enough to put food on the table. Each year your child will be able to work more.

Your Child
When trying to determine when your teenager should contribute to the home budget you need to take several things into consideration. How mature is your child and what abilities does he have? Do you want to teach him about money or do you him to actually make money? All of these answers will help you decide the right age for your child to enter the home budget.

Most people realize they need a home budget but very few actually have a good one. The reason why is because people just dont understand what should be included in their home budget and things get left out. When a home budget is not complete then it cant do a very good job of keeping you on top of your finances. So, the best advice is to have a complete home budget or dont have one at all. Good, you decided to go with the complete home budget option. Now all you need to know is what to include!

All Expenditures
When people ask what they should include in their home budget the answer is always the sameall of their expenditures! How will you know how much money you spend each month if you dont include all expenditures? The answer is you cant so you must be very detailed and sit down and figure it out.

A basic home budget includes rent or mortgage, car payments, car maintenance, water, power, cable, Internet, groceries, credit cards, clothes, entertainment, insurance, savings, and extras. There are obviously some things missing from this list, but that is because everyones list is a little bit different. Once you include the big things that most people have then you can start adding the others. You might have a boat payment, for instance, or perhaps your child is involved in a specific hobby or sport that costs a lot each month. Whatever it is and wherever you spend it make sure you include it in your home budget.

Once you have a good overview of all of your monthly expenses you will need to total them up and subtract them from the total income available to pay them. You may have only one adult working in your family or you may have two. Just include the available income. Now, what is the difference? Does the paper say there is money leftover at the end of the month or not? Are you spending exactly what you make? Or are you spending more than you make?

The answers will help you determine exactly where you are and where you need to go. If you supposedly have money leftover make sure that you use that money to pay off bills, invest in an IRA, or something worthwhile. If you are spending exactly what you make you might consider cutting back a bit so you have some room to save for emergencies and retirement. And, if you are spending more than you make you really need to cut some of the extras out of your lifestyle so you can pay off bills and learn to live within your means.

Without a home budget you probably have a good idea of what you are making each month but are probably clueless as to what you are spending. If you sit down and write down all of your expenditures from the month, including all the colas at the convenience store and all of the fast food meals, then you will probably be shocked at the amount of money you are spending on frivolities.

For instance, if you eat lunch at a fast food restaurant every day during the work week then you spend a minimum of $30 per week, that is $120 a month. Simply taking your lunch will save you about $100 a month. This trick works well and you probably have some poor spending habits a home budget will help you get under control. Additionally, you will have left over money that can be used for the following things!

Savings
By developing a home budget you can start adding money to your savings account. All the money you save through the month because you are finally aware of your spending habits can go straight into savings. This might mean an early retirement or just a nice nest egg for you in case of an emergency situation.

Debt Free
A home budget is also wonderful because it will help you become debt free! Once you determine how much money you have left over after you pay the bills then you can start making higher monthly payments on your debts. This will allow you to pay them off quicker and finally become debt free! Once you are out of debt you will have lifted a burden from your shoulders that you never thought could happen.

Bigger Home
Some families need a bigger home, or simply want one, and by having a home budget you can accomplish this. You might think adding $200 on your monthly payment is impossible, but once you see where you are spending all your money each month you might think that a bigger home is worth the trade off of not having a fast food lunch every day.

Vacations
Vacations are a wonderful time for families to share and enjoy different parts of the world. However, lots of folks believe they simply cant afford to go on vacation. But, if you have a home budget you wont exceed a certain amount of spending every month which means in turn you will be saving money that could be used for an outstanding family vacation.

As you can see, a home budget can really help you get your finances in shape and help you save money that you didnt even realize you had! So, start a home budget today and start enjoying the benefits.

What are The Benefits of Having a Home Budget?

It would be nice to be independently wealthy or to win the lottery and never have money worries. However, for most people this simply is not the case. In fact, most of us make enough money to pay the bills and maybe even save a little but few of us actually can go through life without thinking twice about our purchases or keeping up with what we spend in contrast to what we make. So, how do people manage to afford their lifestyles? The answer is through a home budget. There are many benefits to a home budget that can actually allow you to live better than you did when you didnt have a budget. Check out some of the benefits and you will surely agree!

Benefit #1 Pay Your Bills Off
Having a home budget allows you to see where you spend your money each and every month. Then, you subtract what you spend from what you make and you have money leftover. In some cases you may not, but many people do. However, this money simply gets blown on fast food, coffee, and random splurges that really dont affect ones lifestyle but does affect how much money is leftover to pay off bills.

The average American has several thousand dollars of credit card debt. If you have a home budget you can determine how much extra money you can afford each month to spend on credit cards to pay them off. This will save you money in the long run because you avoid interest rates not to mention improve your credit and reduce your stress!

Benefit #2 Identify Where Your Money Goes
You have a monthly income of $2500 and your bills total $1900 each month. After paying all of your bills you should have $600 left over. This money could be invested in an IRA, a childs education fund, or even saved for a great vacation. But, at the end of the month you have none of that $600. So, where did it go? In order to find out you will need to evaluate your spending habits.

Are you eating out at lunch every day? If so, you are spending a minimum of $30 a week and maybe even $60. This would total $120- $240 a month. On your way to work in the morning do you always stop and buy a Starbucks coffee? If so, add another $20 a week to your spending which totals $80 a month. Now, evaluate if you buy a magazine every time you are at the supermarket checkout. If so, this probably runs you $20 a month or more.

Do you find yourself buying things simply because they are on sale? People who do this spend about an extra $100 a month on things they dont really need or necessarily want. As you can see, the money starts adding up quickly and before you know it you have spent $600 on coffee, fast food, magazines, and other frivolous things you dont really need or want. If you pack your lunch, only stop for coffee once a week, and actually subscribe to that magazine you are paying full price for at the grocery store then you will still have all the things you like, in moderation, and save about $500 a month.

That money may then be invested or help you pay off your car faster. It could be a big boost for a fun vacation or even help out when the holidays roll around. The point is when you have a home budget you can evaluate your spending, know where it goes, and where you can cut some corners. Most of the time lots of corners can be cut that dont really affect your lifestyle, but do affect your savings!

Do you live on a single income? If so you probably realize how difficult it is to get by. When two people are contributing to the bills it can still get sticky sometimes, but there is usually more room for extras. However, if you only have one income paying the bills it is much more difficult. And even more so if you have children. The moment the unexpected happens you can find yourself with an emergency and no money to pay for it. So, what can you do? The best option is to use a home budget to survive.

What is a Home Budget?
A home budget is an overview of your income and all of your monthly bills. You can easily see if you make enough to pay your monthly bills or if your bills outweigh your monthly income. When you are living on one income a home budget is imperative to ensure you survive and have a little bit saved in the case of an emergency situation like an illness or death.

Now, do you have money leftover after you pay your bills or not? If you do then you need to save every penny. Even consider cutting some of the extras out of your bills so that you can save even more. What will you do if you have the flu for a week and are out of work? How will you survive? It will be much easier if you have some savings set aside.

If you have no money leftover at the end of the month then you need to cut some expense from your budget. This might mean cable television or even selling your car in favor of public transportation so you dont have a monthly payment to make. Almost all of us can cut some things from our budget if we really sit down and try. It might hurt, but in the long run it is worthwhile.

Once you have created a home budget that allows you to pay your bills and save some money you need to figure out the best place for your money. A money market account is always good, but there are other options as well. Soon you will see that you are less stressed throughout the month because your bills are paid and you have some money set aside in case of an emergency. Go ahead and give it a try, you certainly cant lose anything!

Determining whether you should use a weekly or a monthly home budget requires you sitting down and doing a little thinking. First of all, when do you get paid? You may get paid weekly, bi-weekly, or even monthly. Now that you have that down evaluate your expenses. Do you have a lot of monthly expenditures or a few? Also, do you have control over when you make payments? All of these questions need to be addressed to determine which option is best for you.

Weekly Pay

If you get paid every week then a weekly budget will probably benefit you best. It is easier to manage and you know exactly how much you make each week and exactly how much you can spend. This makes paying bills and staying current a lot easier. If you get paid weekly and try to use a monthly budget by the end of the month you might find yourself short of money because you dipped into some of your funds that you should have saved for bills. So, people who get paid on a weekly basis should pay their bills on a weekly basis as well.

If you can, try and stagger your monthly payments throughout the four different weeks. That way your weekly budget will be easier to manage and will stay about the same each week. For example, you may need your first two weeks income to pay the mortgage and then pay all the smaller bills the last two weeks. Whatever works for you is best.

Monthly Pay

If you receive your paycheck once a month then a monthly budget will work best for you. Do your best to schedule your bill payments on the same day or the day after you get paid. That way you can deposit the money in your account and simply have all the bill payments drafted. Doing this allows you to make all your payments on time and what you are leftover with is all you have to live on until the next paycheck. This keeps you from overspending or living beyond your means.

What Works For You

The above two suggestions are simply that and they tend to work for most people. However, you may find yourself in a different situation and a different type of home budget will work better for you. As long as you are keeping track of your expenditures and your income and paying attention to your budget then you should have no problems with your finances.

It is so easy to overextend yourself and spend more money than you actually have. In this world of credit cards and easy access we all feel as if we should have everything we want, even if we cant afford it. But, there are ways to have the things you want and need while keeping your finances on track. The answer is to have a home budget.

A home budget will allow you to determine your average months spending. You should sit down with your bills and average out how much you spend on electricity, water, garbage pick up, car payments, gas, food, entertainment, tuition, cable, and the like. Doing this will give you a pretty good idea of how much your monthly bills run. Of course, things like power and water may vary month to month, but generally not too much.

Once you do this you know exactly how much you are spending every month. Now, you compare this number to your income. Do you have money left over or are you left in the red? If you have money left over then you need to determine how you are going to invest it. If there is no money left over then you need to eliminate some of the extras so you can stay out of debt and maybe even save some money. Or, you need to find a higher paying job. There are just no two ways around it.

Now, for those of you who complete your home budget and have money leftover at the end of the month on paper but in reality there is never anything left you need to evaluate your spending habits. It is amazing how quickly fast food and other frivolities can add up and rob you of your hard earned money. You can determine quickly where the money is going and then eliminate or cut back on this spending. You will save money that can be invested and you wont even notice the difference.

If you happened to do the home budget and find that you are spending exactly what you make every month or overspending then you need to get some things in order. Do you really need that premium cable package? No. Do you need to eat out every single meal? No. Must you give your children everything they want? No! You need to pay off your bills and start saving money. Eliminate all of the extras and get your bills paid and some money saved. When you do this you will be on the road to financial freedom.

You dont have to spend everything you make and it is a much better plan to save as much as you can than spend it. So, simply create a home budget. Stick to it and within a months time you will see how much you saved and that the little changes can really make a big difference and help you get your finances back on track.

Starting a home budget is a great idea and it can really set you on the path to financial freedom. However, you just dont know where to start! Well, the following tips will walk you through the process of starting a home budget and allow you to see how easy it can be!

First, you need to sit down with all of your bills. This means all the monthly payments you are required to make each and every month. This will include credit card payments, car payments, mortgage payments, groceries, gas, power, water, cable, Internet, entertainment, and all the other bills you might have to pay. Now, add up the total amount. The total may vary from month to month a bit, but in general it will be about the same. Consider rounding up to the nearest ten dollars so you have a little cushion in place.

Now, evaluate your household income. How much money do you have coming in that covers those bills? You need to compare the two numbers and see where you stand. You may have plenty of money to pay the bills or not enough; regardless you will get a clear picture of your situation.

Next, begin evaluating how much money you spend on extras that you can cut out. Do you buy foods you dont need at the grocery store? Do you leave the lights on all the time? Do you feel like you must buy a Starbucks coffee every day? If this is the case then these are places where you can reduce your spending. Cut these expenses back and you will save money. You home budget will show you where excess money is being spent and you can begin cutting back on certain things. Doing this will really save you lots of money over the long haul.

Now that you have completed your home budget there is one important step left. Follow it! If you dont follow your home budget then there is no reason to have one. You want to get your finances under control and the best way to do that is to have a home budget. So, follow these tips and before long you will see that you are saving money and still enjoying life like always.