The 10 Steps To Live on Less

Frugal for Life recently wrote an article that she called "11 Simple Steps to Living on Less." The article was a very good, but brief explanation of some of the very simple things you can do to get your spending under control.

As she so elegantly stated, "Debt is outcome from living beyond our means and wanting it all now. But if you are serious about getting into the black and living a life that makes you happy, there are some simple ways to get back on track."
It is a message that I have said repeatedly on both of the personal finance blogs that I write.

1. Make A spending Plan..
This is the number one thing. You must spend every dollar, every cent on paper at the very beginning of every month. There can be no exceptions, you must do it. If you don't plan your "Fun" money around your monthly obligations, then you will be in a financial pinch when the late fees start adding up.
2. Pay Yourself...
One the things that most every financial expert agrees on is "pay yourself first." Savings should be a line on your budget as if it were another bill. Once your debts are paid off, move those funds to your savings line. This will allow you to save up for those big purchases. Save for your next car, so that you can pay cash for it. Don't forget to save for your retirement to. You don't want to spend your golden years working at the golden arches for failing to plan.
3. Examine every single purchase...
One thing we must do every time we make a purchase, no matter how big or small is ask ourselves, "do I really need it." If it is a big purchase, we must not only compare prices, but if we are married, we must talk it over with our spouses.
4. Follow every Cent...
It is important to know where every little cent goes that we spend. It is the little things that can really blow a budget. 60 cents for a candy bar or can of pop may not seem like a tot but they can really add up. Just buying 1 candy bar and 1 can of pop each day at work from the companies vending machine at 60 cents will cost $20. It isn't enough just to balance your checkbook, but to keep a spending diary of those little things you spend "pocket money" on.
5. Pay your bills when they come in...
What more can I say. Pay your bills on time and you will avoid the late fees. The best way to do this, and it is something that I need to improve myself, is to pay the bills when you get them. Don't let the bills set idle on your desk. Of course, this may mean getting the debts paid off, before you can actually be in a financial position to do this.
6. Cut your expenses...
Be honest with yourself. If you can't afford something, evaluate your need for it. Do you really need your cable or satellite TV? It doesn't matter how much you want it, if you can't afford it, you need to cut it out. The money you are spending on that service can be applied to your debts, so that you can become debt free sooner. The sooner you are debt free and can build your emergency fund, the sooner you can "enjoy your money" again. As long it is done within your budget.
7. Find free alternatives...
There are a number of things you can do or get for free. Instead of buying (or renting) books, videos/DVD's and music borrow them from the library. Instead of running out and buying a new piece of furniture, look on FreeCycle for whatever you may be looking for. I have given away a few things on the site, and I have received some bar stools by putting out a request on there.
8. Cut up your credit cards...
This is very important. Both John Cummuta and Dave Ramsey suggest this. If you think you are going to build wealth by using your credit card(s), then think again. Look at where you live, then look at the homes of the credit card companies. Multi-story buildings of glass and steel, pretty impressive, huh? Think you are going to have something that nice? Not if you keep giving them your hard earned money. Now look inside. See all that nice furniture. It's yours! They bought it with the money they stole from you.
9. Remain Focused...
To help you remain focused on getting debt free, make a goal. Write it down and post it on your mirror or refrigerator. Someplace you will see it every day, to remind yourself of why you are getting debt free.
10. Set priorities...
Finally, you must prioritize! If you really want to be debt free, you must live on less then you make. It doesn't matter if you make $19,000, $30,000, or $60,000 you must live on less then you make. You must decide what you really need and what you don't. Eliminate all nonessential bills.

Looking At Debt Consolidation

Debt consolidation is something that many Americans consider when they are in debt. However, it is not something to take lightly. Yes, a debt consolidation loan can help you, but only if you change your spending habits. If you get a loan to pay off your other debts, but keep spending like there is no tomorrow. You will soon find yourself in deeper debt then before you consolidated your debts. Don't think that will happen to you? Think about this, 78% of debt consolidators see their debts grow back to original levels after consolidating. That's not a minority, that is a majority.

If you are going to consolidate, ask yourself, do you really want to be debt free? Are you committed to whatever it takes to make it? If so you must cut up ALL of your credit cards. Then set down with a Debt consolidation expert and map out plan. In other words counseling is key here.

You are the only one that can eliminate your debts. If you are in debt and wonder if you are ever going to see your goals, take a look at the website linked in this post. There are a number of things you can do yourself to eliminate your debt. No one, that is honest, will tell you it's easy, in fact it is a lot of hard work and doing without some of the simple pleasures, like cable, movies or dinning out. But, in the end, you will be debt-free and can then enjoy the freedom that comes from being debt free.

Would you invest in Yourself?

The other day I was reading 1 Million and beyond, who was asking would you invest in You, Inc. The concept is similar to what Dave Ramsey when he asks, if you worked for You, would you fire you? I knew the answer for Dave Ramsey's question was a yes, but lets take a closer look at my financials and look at myself from the viewpoint of an investor.

Debts
$400/month car payment ($10,900)
$75/month 2nd mortgage ($990)
$25/month credit card ($590)
$25/month Fingerhut ($1,000)
$??/month Black Gold Insulation ($180)
$0/month ($3,795)
-------------------
Total Monthly Debt $550 / Total Debt $17,455

Utilities
$80/month Electric
$80/month Gas
$70/month cell phone
$30/month Internet (cable)
$60/month Satellite TV
$30/month Water
$15.50/month Trash Service
----------------
Total Monthly Utilities: $351.50

$60/month Auto Fuel
$40/month Groceries

With a monthly income about (from various sources) $1000 (take home) I am to burdened with debt. Not enough cash flow. So if I was a business, I would be leery of investing in myself. I would be concerned that a business as financially burdened as myself, would file bankruptcy.

The simple fact is, I must cut my debt and increase my savings. A plan I have been addressing since March 2006. My current figures are to have the credit card, black gold and 2nd mortgage paid off before the second blog-aversary of this blog in March. A tall order considering my financials, I know, but I think with some gazelle intensity and a lot of fortitude it can be done. I am tired of being a prisoner to my debt and want to have the freedom to have some fun again. This time within a budget.

So what about you? What does your financials look like? Would you invest in You?

SPONSORED POST: Do You Collect Angels?

Are you someone who likes angels? There are thousands maybe millions of Americans that love to collect angel figurines and statues. Whether it be interior or outdoor decor, they can all look fantastic.
While, I am a Christian, I am not one those that am into collecting angels, but if you are, you might want to check out cherub figurines. The site provides several links to websites that sell figurines of both angels and cherubs.

So Says God...

Take what you want and pay for it, says God.

Credit Card's Walk All Over Consumers - Congress Steps In

As I listened to the radio this morning, I am once again hearing that Congress is taking on credit card companies. Credit Card companies have routinely raised interest rates without warning on their victims customers. I know, it has happened to me, as readers of this blog has read. Apparently, the credit card companies are involved in a practice of looking to see if you are late on any other of your debts. If so silently and automatically they raise your interest rates. Even if it is totally unrelated to their credit card.

Congress is renewing its scrutiny of the credit card industry, as some lawmakers denounce the practice of raising customers' interest rates when their credit scores decline, even if they make their card payments on time.

Industry critics say it's another example of abusive, confusing credit card practices that can push consumers deeper into debt.
- Associated Press

While Congress is considering legislation, they are hopeful the industry will do the right thing (LOL) and regulate itself.

Carl Levin, D-Mich., chairman of a Senate Homeland Security and Governmental Affairs subcommittee, is holding out the club of possible legislation to spur voluntary changes by the industry.

"Working people are being squeezed," Levin told reporters Monday. In a call for "good, strong legislation" to be enacted next year, Levin said that "these abuses need to be remedied. ... We have some real momentum for reform."

With Americans weighed down by some $900 billion in credit card debt — an average $2,200 per household — practices of the very profitable industry have been ripe for scrutiny by the Democrat-controlled Congress. They have also grabbed the attention of the Federal Reserve, which plans to require credit-card issuers to give customers at least 45 days' notice before raising interest rates and to provide clearer information on fees.

At a hearing Tuesday, Levin's subcommittee, which has been investigating the industry, planned to look at how credit-card issuers raise consumers' rates, to as high as 30 percent, when their so-called FICO credit scores decline — even if they've paid credit card bills regularly and promptly. In many cases, consumers have little notice of the increased rate, which are automatically triggered by declines in FICO scores for reasons left unexplained, the subcommittee found.

In some cases, just opening another account, such as a department store credit card, could trigger the downgrade in credit score.
- Associated Press

Do ya ever have any fun?

From time to time I get naysayers on one of the blogs that I write for saying something like,

Do ya ever have any fun?

They usually follow that up with something like,

but what about now. If you die tomorrow, you've missed out for over saving.

Of course Dave Ramsey says, if people don't make fun of you, then you must not be doing something right. I usually try to tell them you don't have to put yourself in the poorhouse to have fun. Still though, they come back to the "I want it and I want it NOW" statement that has put us all into debt. People we all must learn how to live within our means. There is a reason that this country has a negative savings rate for the first time since the great depression. It is because we are all spending and living off our credit cards rather then saving part of our money. If we had all listened to our grandparents and great-grandparents then we wouldn't be in this shape. Which in turns we could have money to budget for "fun."

But, because we didn't spend wisely, we now must tighten the reigns and for a time, not have all the fun, so that we can dig ourselves out of this mess. Everything, I discuss here is pretty common sense stuff that our grandparents and great-grandparents told us when we were kids. Of course like kids everywhere we thought we knew better and put ourselves in debt. I for one don't want to live a life in the prison of debt. Instead, I want to enjoy the freedom of being debt-free, and I will soon be there if I stick to my plan. Oh sure I have had a few set backs (because of my own stupidity) and I may have a few more before I am completely in a position to have a savings for most of my emergencies, but I will get there by the end of 2009 and in my hopes by the end of 2008.

With that, I would like all of you to think of fun things that can be done without an additional strain on the budget and share them here.

Awaiting to hear read all your comments as always.