A Personal Finance Guide

Personal Debt Can You Afford More Debt?

When thinking about personal debt, most people think in terms of monthly payments. They will consider making a large purchase if the monthly payment seems affordable. Fifty dollars a month might not sound bad on the showroom floor, but even a small amount can have far reaching consequences if the debt overextends the debtor.

How about you? Can you afford any more debt? The answer may be as easy as a simple yes or no. More than 40% of debtors spend more than they have coming in. How is this possible? Many don’t even realize what they

are spending. They know they don’t have grocery money and that their bills aren’t getting paid on time.

However, many do not realize that they are steadily falling behind until it is too late. Before you will know if you can afford more debt, you need to know how much personal debt you have now. Take out all of your bills and add them up. Be sure to include utility bills, insurance payments, groceries, splurges, etc.

Write down everything that you spend and subtract it from your net income. If you spend more than 60% of your net income, you cannot afford more debt. If more than 38% of your monthly payments go to creditors, you cannot afford more debt. Another huge consideration to make is the economy.

The above numbers are ideal in an ideal economy. Special allowances should be made for the current state of affairs. Jobs are being lost every day. People who are able to keep their jobs are making less. Incomes are actually shrinking in many sectors. You need to be able to absorb this shrinkage if it happens to you. So, make some economical concessions.

Try to spend no more than 50% of your net income. Put the extra money into an easily accessible account. If you lose your income, you will have something to fall back on. You should also consider your individual circumstances. How slippery is your financial standing?

If there are talks of layoffs at work, you are not standing on solid ground. If your home needs major repairs, you should not be buying a new car. Be reasonable. Consider everything. One extra $50 payment every month could push you over the edge. Take a good look around you.

How is your life? Most of the time people finance wants instead of needs. If you want something, save up for it. If you really, really need it and your financial standing is good, finance it. Remember; keep the economy at the forefront of your personal debt decisions.

You have to consider more than your own actions before you accept more debt. You have to realize that there may be circumstances beyond your control that make it difficult for you to make ends meet.

You can learn all about how to build businesses, make money, get rid of debt and turn money worries into infinite sources of cash but its all a waste of time unless you get the real secrets of how to get it done. Get his famous introductory 20 FREE lessons eCourse about Making Money that over 179,000 people have studied and applied at: www.the-richest-man-in-babylon.com

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Your Financial Success is Just a Goal Away

Goals, with them you can scale mountains. Without them you can fall off a cliff. Having goals is important in all aspects of your life, especially in the area of your finances.

Many people want “to be rich” or want to avoid “worrying about money all the time.” Just imagine…”a life free of money concerns.” But what does “being rich” look like? Can worrying about money be healthy at times? Is “a life free of money concerns” 24-7 completely realistic? The answers to these questions will differ from person to person.

We all know of people who want to, but just can’t seem to afford to take that annual vacation, pay down that credit card or save for college tuition. There may be other factors involved, but the main factor is the absence of well constructed goals. Indeed, one of the keys to successful goal writing is constructing goals in a way that prompts action.

This paper will focus on SMART goals and the impact properly stated goals can have in helping someone achieve financial success. SMART goals are commonly used by human resources personnel when developing employee performance appraisals but can easily be adapted to a person’s financial life.

SMART is an acronym for Specific, Measurable, Attainable, Relevant and Time-based. Let’s look at each of these in turn.

Goals should be specific. In fact, many people never attain their goals because they are vaguely written. A vaguely stated task would be “Will keep track of money.” A clearer statement would be “Will write down every penny spent in a notebook for a period of four weeks.” This second goal clearly describes the behavior required to achieve the goal. For goals to be of any value, they must be clearly expressed and defined.

They should be measurable. You are held accountable when your progress can be measured. Instead of a goal to “Save some money from each paycheck for vacation,” A measurable goal would be “Will put $200 from each paycheck in a savings account entitled ‘vacation fund” every month for a period of 10 months.” A person can track this goal each pay period to measure progress and make any adjustments needed to attain that goal.

Goals need to be realistic or attainable. One should ask, “Is this a goal over which I have control?” For example, “To win the lottery in three years” is probably not realistic or even attainable in most cases.

Relevancy is another characteristic of an effective goal. Each statement should be related to the work at hand. It is good to have short-term, intermediate and long-term plans. Consequently one should work on the short-term goals first as they will be the building blocks for achieving the intermediate and long-term goals.

Finally, goals should be time-based. The person setting the goal should be able to track progress by specified target dates and predetermined timeframes. An example of this would be “Will save $6,000 to purchase a used car by taking $500 out of each paycheck and depositing it into a savings account for the next 12 months.” This goal clearly states the funds will be available after a year of saving.

Setting effective goals is both an art and a science. The whole process of developing goals can be a daunting task, at least initially. But having well-constructed goals is crucial to a person’s success. For those who feel overwhelmed by the process of writing goals there are resources available. One resource is a Money Coach. Money Coaches are trained to assist clients in writing solid financial goals and will also hold clients accountable for attaining the goals. As priorities shift or change, a Money Coach can help “reframe” the issues at hand and can help a client rework the goals.

Evidence suggests a person has a 95 percent chance of achieving goals if they are written down in a SMART manner and there is someone holding them accountable for attaining the goals. Wow! Your financial success truly is “just a goal away!”

Mitch Korolewicz, MBA is a Money Coach and a Professor of Finance at St. Gregory’s University. Known as the OK Money Coach, he has over 20 years experience helping people achieve their financial goals. For more information on the services he provides visit his website at http://www.okmoneycoach.com.

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How to Save Money During a Recession

A recession brings with it hard economic times. There is a sudden economic slowdown. Household incomes fall, making profits become difficult and there is a steep increase in the prices of almost everything. Saving money is difficult but not impossible during a recession. Small changes in lifestyle are all it takes to succeed in the process of how to save money during a recession.

The first step in saving money during a recession is making a budget. A recession is a time when tight financial control will help you make a saving despite the spiraling costs of goods and services. Making a prudent financial plan even if you need to go without a few luxuries will give you the necessary saving that will come in handy when unexpected emergencies occur. It is not only important to make a budget but to adhere to the budget strictly to have enough money to save at the end of the month.

Incorporating a saving fund in the monthly budget is the easiest way to save money during a recession. Putting away a fixed sum in a savings account and resisting the temptation to withdraw the money in the savings account is a simple and sensible way of saving money during a recession.

The internet is not only the biggest marketplace but also a big money saving convenience. Most utility providers and insurance companies give discounts to customers who pay their bills online because they help companies reduce paperwork and staffing costs. You can also shop online for discounted products and save the time and effort involved in going from shop to shop to find the cheapest discounts available. Online shopping helps you save on effort and gasoline.

Prepayment is another method of how to save money during a recession. Paying insurance premiums and utility payments annually will not only get you a big discount but also help you beat the increasing prices and reduce your monthly budgeting worries. Buying pre paid phone cards is another method of reducing monthly telephone costs.

You cannot do without making credit card payments in a increasingly automated world. You can save money during a recession by reducing the use of your credit card. Make credit card payments only when absolutely necessary. Settle as many bills as you can using cash. The pay later temptation of using the credit card for all payments will finally eat into your savings leaving you with little during an emergency.

The best way to save money during a recession is by shopping. Recession reduces incomes but it does not take away choices. Recession is the time to shop among the many choices available and choose the best option available before you spend. Look online for all the offers and packages offered by services and discounts on products offered by manufacturers. Clip or print discount coupons for well known brands of food. Redeem discount coupons to reduce expenditure during a recession.

The answers to the question how to save money during a recession are careful financial planning and making prudent spending choices.

High Interest Savings Accounts are one of the best ways to save money automatically. Read reviews on HSBC and other online banks on MoneyTipCentral.com.

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