Author Bio : Marc Brown is a financial writer, a Dad, and the frugal gatekeeper of his household. Frugality, Savings, personal finance, and managing the household budget have always come naturally to him, and it’s something he really enjoys writing about. You can reach him here: marcbrown2050@gmail.com 

A large number of people in America are experiencing financial crisis since the current economic depression. And in order to overcome their financial owes they usually take up debt relief programs. I often wonder why people are struggling with their finances recently. Usually these financially crippled people are not well versed with the concept of money management technique. Therefore, your prime task will be to eradicate debt and then embrace budgeting for securing your financial future. Credit management will not only restrain you from getting deep into debt but also prevent you from incurring it.

Here are some of the basic facts about budgeting that will save you from the trap of debt:

• Before you plan a budget make sure you have an objective in mind in order to achieve your target. If you have a preconceived goal then it will be easier to motivate yourself. So, according to your priority set your target wisely.
• Before planning your budget you need to analyze your financial state properly. Assessing your state will help in forming your budget. Get an estimation of your total income of a month as well as your expenses. You also need to prepare a list of your assets and debts.
• You need to have a steady source of income to make your budget really work. Make sure that your expenses do not exceed your income. But if your expenses are more than your income then you need to redesign your budget. Look for some extra cash flow if your current income does not suffice.
• An essential part of your budget will be to plan your finance strategically. If you want to liberate yourself from debt then ensure that the money is properly distributed among the creditors.
• You should always modify your budget plan according to your present financial situation. This will give you a fruitful result while managing your money.

Make your budget work and avoid failure:

• Budgeting is the stepping stone for financial independence but it is more important to stick to a budget plan. If you fail to follow a disciplined way to manage your money then you might mess up your financial situation. If you dissuade from your budget plan then your aspiration for a debt free life will be ruined sooner than you imagined.
• If you want to make a successful budget plan then you require the support of your family. While preparing the budget you need immense cooperation from your family members. Often financial crisis can be a cause for the rift within the family then budgeting will fail to solve your problem.

If you are more organized and disciplined while managing your money then you can easily wipe out your debt woes effortlessly. Therefore, keep the above points in mind and start budgeting to attain financial security.

I found the list over at balancemylife.ca and I must say that it’s a pretty darn good list. The bolded ones are methods which I try to save and I’m actually pretty proud of the fact that both myself and Liz do a lot of things now to save some money – is sure beats going and getting payday advances or using a credit card to build debt we don’t need.

Here’s the list:

• Pack a lunch each day you’re at work.
• Brew your own coffee at home. Dress it up with some homemade coffee cream.
• Use coupons for the things you need. Matching them with sale prices will get you the most savings
• Menu Plan, menu plan, menu plan! Not only time saving in the long run, but will save you big bucks if you’re only buying what you need for the week.
• Go grocery shopping with a list, always.
• Use your local library.
• Rent or borrow movies.
• Purchase clothing from a thrift store or garage sale.
• Pay off your credit card each month. It’s the interest that’ll kill you!
• Try to do your errands all at the same time. This will cut down on your gas expense!
• Use cash for the majority of your purchases. Spending is harder to do if you’re actually seeing cold hard cash leave your hands.
• Eat a meatless meal at least once a week
• Don’t pay a professional unless you have to. Need an oil change? Learn to do it yourself.
• Cook at home. Learn to make your favorite restaurant meals at home.
• Eat your groceries. You’re not saving money if you have to throw out your rotten produce at the end of the week.
• Walk whenever you can. Is work within walking distance? Stretch your legs.
• Entertain at home.
• Line dry your clothes whenever possible. And wash in cold water.

Check out balancemylife.ca for more great ideas and blogging.

The article breaks down the “getting the great deal” process into 3 factors:

1. Size of the purchase
2. Size of the discount
3. Recurring expenses

Obviously when you’re searching for a deal via coupons or something else, 50% off the latest $1.00 best natural acne treatment only adds up to $0.50 – however when you think of 10% off a purchase of say.. a car, well… now we’re talking some serious money.

I also very much agree with the ‘recurring expenses’ trap. In fact I had someone come to my door the other day looking to sell security systems. Due to the large amount of break-ins around the Stratford area lately, it was very coincidental that the salesman came at the time he did. In fact, the RCMP showed up as he was at my house just to make sure he was legit. He was, and a very nice person – but I couldn’t justify the $39.99 contract for 3 years just to get the installation for free. I would also have had to put the sign out on my lawn for the duration which I wasn’t a big fan of. In total it would have cost me around $44.58 per month for the system or $1604 over the life of the contract. To me that’s a pretty big purchase to be put on the spot to buy “right now”.

While I do enjoy clipping coupons to save money on items that I buy regularly, I can see how it would be very easy to go overboard with this habit and start buying things just because you have a coupon (a stupid thing to do).

If interested, pop on over to the WiseBread blog and read the article. Great site.

The first thing I will say is that I had the right attitude I was determined that I was going to change my spending habits. I didn’t go into it thinking it was going to be done overnight, nor did I think that it was going to be easy. Some of the ideas that I tried didn’t work, while others I couldn’t believe I hadn’t thought of before.

Budget

I tried to budget all my money, it didn’t work. While I did use a budget to have a rough idea of where I stood and how much I was going to pay on my line of credit and credit cards, I didn’t stick to a budget. What I did do, was figure out where the hell my money was going, almost down to the penny. I also created a Google Calendar which displayed for me every day/month, etc when bills were due and how much they were. I posted about the benefits of Google Calendar before and I must say that it is extremely helpful in organizing my financial life.

Poker

While I don’t have the exact figures, I decided that on January 1st, 2010 I was going to give up playing “cash game” poker. What this means is that I would play tournaments if I wanted to and had the money to, but I wouldn’t play any cash games where you basically buy in for whatever (usually $80 or $100) and play with the money in front of me. One hand and this money could be all gone, and unfortunately until I paid off the money that I had already spent (my debt!), I was no longer willing to gamble in this format. This was the toughest habit to break as I used to play quite a bit.

Cut Bills

I examined every bill which came in and all the money that went out – and cut back or saved money where I could. This includes the $200 grocery challenge where myself and Liz budgeted $100 each to eat for the month. Not only do I think this was a great idea – but I also find that this was a very smart idea. We know now if we’re going over our limit and also try to eat the food that we’ve already purchased. This also meant no unnecessary purchases like eating out a lot (we used to eat out 2-3 times a week), no weight loss pills that we were trying to use to supplement exercise, like I say, not much unnecessary.

I also cut down on some monthly bills which I found useless – I was paying for an investment advice service which I never used … gone. I stopped buying coffee every morning and made my own. Those two things alone saved me $60 a month – that’s $720 a year!

Found Ways to Create Income

I would say the biggest reason that I was able to accelerate my debt payments the way I did was due to my new side business of photography. It has far exceeded what I could ever think it could have, it continues to grow and best of all – I love it. Not only did this provide extra income which almost exclusively went to paying off debt – it also kept me very busy as I now spend most evenings working on touching up most of the photos already taken.

Blogging also provides some additional income, however this amount generally covers my webhosting costs as well as donations I make to the PEIHS and Heavenly Creatures.

So unfortunately it wasn’t as easy as inheriting a big lump sum or anything exotic like that – but it certainly can be done. A lot of people wouldn’t bother writing about it and I’m sure there are a lot of people out there whom perhaps think I shouldn’t have wrote about it… but the thing is, this blog also helped me stay on track as well. I wanted to pay off my debts so bad I felt that if I went public about it via my blog, it would help me keep going as I would feel like a moron if I set out to do something publicly and failed due to not being disciplined enough

I would like to now show you a screenshot I’m very proud of:

No, in case you’re thinking it.. I do not have any other credit cards What you’re seeing is the result of some very disciplined spending and a lot of hard work. I’m going to have a few extra drinks this weekend in Mill River to celebrate it this weekend! I don’t think I ever mentioned exactly how much money I was in debt, but it was a VERY large amount of money.

With this goal accomplished, I am now starting another goal. That goal is to set up an Emergency Fund. Obviously the pressure is off as I’m no longer paying interest on lines of credit or credit cards – but if something were to happen and I needed some money, I would be back in debt. To me that’s not a great idea. My plan is actually stolen from Gail’s book “Debt Free Forever”. I plan on saving up 6 months worth of my crucial “need to live” items – and I plan on having a checkbox system to accomplish this. For example: I need food during an emergency. I have proven that myself and Liz can live off of $200 worth of food a month (a lot less last month) – so I setup a list with 6 checkboxes. As I save up money (going to be putting it into a TFSA) – I will check off a box once I reach that plateau. So after I have $200 saved up, well I only have to do that 5 more times to cross the food box off the list. Now this may seem excessive, and I likely will stop perhaps at 4 months or even 3 – but the main idea is that it’s important to have an emergency fund setup that you can get money from fairly easily.

In the meantime, I plan on calling my bank and getting them to lower my credit limit on my line of credit to $2000 as well. If you recall I did this for my credit card where somehow my first (and only) credit card that I owned which started at a limit of $500 (student) had increased automatically to $16,000. I had them reduce that to $2000 a few months ago. The reasoning is two-fold. One, I don’t want to ever over the amount that I did ever again, and two – it helps the credit score if I ever did want to get a loan or something else of that nature. If you have a credit limit of $10,000 – when you apply for a loan, the see that 10,000 as money spent (even if you have no balance!).. reason being? Simple.. you could just as easily walk out of that loan application office and go get a cash advance for the full $10,000. I wonder if anyone has ever done that?

Unfortunately for me, I’m REALLY fighting the urge not to buy the iPad. I’ve already told you how much I love my iPhone and once I get some more free time on my hands I’d love to sit down and read some of the great magazines that I’ve downloaded and books in pdf format. Plus it’s REALLY cool Items like this don’t go on sale at all so I’d have to pony up the full $549 for the one I wanted.. *sigh*. Then of course there’s the fact that I bought this really kick ass computer at home which can run Mac software, Windows 7 and Windows XP all at the same time, but I only have one monitor! Time for an upgrade perhaps?? Maybe!! Buy.com has a great looking Samsung BX2440X LCD Monitor – 24″ – LED one on for $279.99 so I could get one of those eventually..

Ok ok, I have to stick to my guns.. if I want something, I’m going to have to save up for it.. end of story.

Recently my bank (RBC) introduced a finance tracker which allows you to categorize and see exactly where you’re spending your money. For kicks, I decided to see how much my pets are costing me (seeing that I just spent $20 on a dog nail trimmer AGAIN!) and the results were somewhat surprising.

I should also say that they are far from the first bank or financial services company that’s offering a personal finance tracker – the most well-known one out there mint.com has for a few years.. the problem is – it’s only available in the US as of right now, which is really sad as it’s a great service from what I understand. Canada has a number of them as well, but they fail in comparison.

Over the course of the last 3 months – I’ve spent over $400 on my pets. Vet Care accumulated $185 of that, Pet Food was $120, and Pet Insurance racked up $80, the nail trimmer I just bought was another $20.

I don’t even think that includes the big bag of dog food I purchased at the silent auction for a charity for $38.

Wow.. that’s a lot of money!! over $100 a month on the hounds! That’s not even counting the over 2K I spent on Hunters surgeries in January and February. It’ll be interesting to see if they keep my transactions prior to February now as they only usually kept the last 3 months or so. I sure hope they do.

They did a great job in designing the program, it takes usually a day or two for your transactions to appear in the program – but once there, you can quickly categorize them into the things that you purchased or other expenses. I do like to see the large amount paid on loans in my past month graph – it’s so nice to know I only have a few months left carrying that around.

What I found interesting were the little things that added up like the pets that I mentioned above. I also categorized my food down to sobeys/shoppers/superstore, etc. I guess it doesn’t matter whether you’re buying dog food or you’re looking for Ferrari parts for your recently broken down car – it all costs money, and if you don’t keep track, the amounts over time can be staggering.

I know that I’ll be using this budget tracker over time to see where my money is really being spent, but I wanted to post this to let you know that pets can be expensive..

Remember these bad boys?

Whilst wondering through the many webs of the internet, I happened across a financial blogger named ‘Len’. I was instantly intrigued by his blog. He has a great following and a number of really different, interesting articles – the one which I wanted to point out to you (or few I should say) are the ones in which he does a blind taste test of common grocery items.

What a great idea! Let’s find out if that store brand KD matches up to the real stuff (it doesn’t btw.. nothing compares really – but that’s just my opinion, I’ll gladly pay the extra .10 for real KD). Other things however, shouldn’t make a difference, and that’s what Len has tried to find out.

The posts in which he does the blind taste tests are here; Experiment 1, Experiment 2, and Experiment 3.

Len obviously lives in the US where they have a grocery store named ‘Albertons’ (ironic we don’t have one of those in Alberton eh?) Anyhow, obviously the brand names would change – but it’s really interesting to note the results of these contests – in a LOT of cases, the store brand was just as good if not better than the ‘marked up’ name brand, and the money you save when you buy ‘compliments’ or ‘presidents choice’ brands here in Atlantic Canada could result in significant savings. Certainly some “food for thought”… boo on that pun!

The good fellow he is, Len also had a few great other posts I found interesting such as the Kids Blind Taste Test of Cereals as well as Five Crazy Ideas That Resulted in Million Dollar Paydays (gotta love that eh?).

So if you use RSS, I highly suggest you subscribe to his feed here, or simply head on over and browse his homepage and interesting articles at http://lenpenzo.com/.

My first update was back in June 2009 and at that time I told myself that I was 12.07 months from being out of debt (keep in mind this is line of credit and credit cards – obviously not mortgage). As with most things, there are obstacles along the way – and with my budget there certainly were some obstacles (Hunters surgeries being two fairly large ones!).

My next update was in July 2009 and at that time I was 9.85 months from being out of debt. Pretty darn good,I can’t quite remember what I was able to do to decrease the amount of debt as quickly in a month – but obviously I had a very inexpensive month.

In September of 2009 I posted another debt repayment update and although I didn’t post how many months were left on my debt, I did post that I had paid off over $3700 of my debt. It’s funny how you accumulate debt by buying things that you want or need to have or purchase, but it’s always such a pain in the neck trying to pay it off eh? In September I had 7.5 months or so left – so I was right on track.

Then came January 2010, which was my last update I’ve posted on my debt repayment. At that time I had paid off $6118 of debt which (at the current pay-off schedule) left me with 6.18 months left to try to get myself out of debt. This was after one of Hunters surgeries (he needed two) and the reason that I mention this is that each surgery was well over $1000 to perform.

This bring me to my update today.. I will call this the May 2010 update since it really doesn’t include June yet.

I am absolutely elated to report that I have paid off almost 82% of my debt since I started almost last year to the day!

Yes, you read that right – Now having said that, I did have a few ‘extra’ payments in there on my debt which I hadn’t originally put in the budget – namely my tax refund which I posted about.

I am so close to being out of consumer or “bad debt” that it’s starting to get exciting. According to my budget schedule – I’m 2 months from getting rid of it. Wow.. what a year!

I can’t wait to write up a wrap up post on how long it took me, how I did it, what changed, what I’m going to do now, etc.. All I know is that whatever the hell I’m doing – it seems like it’s working.

Hmm… honestly, I guess it all depends on the day. Today, for example I was on my way to work and I shared a four-way stop with a brand new Cadillac CTS driven by an elderly lady of about 80 years old I’d venture to guess. I didn’t really ‘judge’ her (as she was actually one of the few drivers that didn’t make an idiotic mistake on while we drove up the one way Fitzroy Street), but I did start to wonder how the transaction must have transpired that got her into that $75K vehicle (I’m guessing).

I then read an article today at one of my favorite sites “The Financial Blogger” whom wrote and asked “Do Big Cars Equal Big Money?”. The article was great, but one part of it actually struck a cord and got me to write what you’re reading. The following article:

…people severely question the choice yet they don’t really have an issue with couples who blow $3,000 – $4,000 each winter for a week down south every year. They don’t talk about the guy who renovated his kitchen and sunk $25,000 on it, including granite counters. And they certainly won’t argue with the $5,000 home theatre system with a giant screen during the Superbowl!

How true! So I decided to take the $3000 that many people likely spend on vacations in the run of a year and upgrade my car to see what I could be driving.. I’ll do this with the help of leasebusters.com which can give me a good estimate as to what people are generally leasing cars for. (This is just for a quick reference, I realize pricing is different for purchases, etc.).

I currently pay $375 for my Vibe per month, if we take that $3000 and instead put that towards a car – that’s a new budget of $250 more a month or $625.

The Results:

2009 Mercedes-Benz C-Class 230 4Matic Sport/Premium package $454.29	2008 BMW 3 Series 323i w/Sport & Premium Package $548.00
2005 Jaguar X-TYPE VDP AWD $660.74	2007 Lexus IS 250 Premium Luxury package $595.49
2008 Lexus ES 350 $680.00	2008 BMW Z4 3.0 si Premium, Comfort, Sport and Premium Sound Packages $684.37

Yeah I’m not making this up – click on any of the links above for the details on the offers. So all you folks whom crave the yearly trip or two and spend $3000 (or more!) on vacations – the alternatives for some is to not go on vacations but have a really nice ride like this. I suppose the amount of gas and the amount of increase of car insurance, ha, and life insurance rates would go up quite a bit as well.

Now I’m sure that a lot of folks get the opportunity to do both (nice cars and nice vacations)– but for those of us whom don’t, I guess I shouldn’t judge the little old lady anymore when she drives around in her brand new Cadillac – perhaps she just doesn’t spend the extra money going to Florida or Cuba for the all week drinking binges

Don’t get me wrong, I’m not complaining and all of these things I really enjoy – so what’s to complain about eh? I just wish I had more time in the day

Grocery Update

Saturday was a beautiful day for a wedding

Well we pretty much spent our last $25 today – but now I have a great feeling that we’re going to be good to go until the end of the month not going over at all! This is pretty great considering almost 1/2 our budget was blown during a trip to Costco to get a huge amount of frozen chicken breasts and pork.

I can’t get over how many people follow the $200 grocery challenge – I get people asking me all the time how I’m doing it and letting me know if they’re doing something similar. I encourage you to leave a comment to let me know if this is something you’re doing or trying. It’s working for us so far, that’s for sure!

Actually, speaking of additional people – my roommate has decided that he wants in on this challenge! He’s going to pool an extra $100 in the mix and we’re going to make sure there’s enough food for lunches, breakfasts, and all that for June! Personally I think the extra money will make it easier.. we’ll see.

Air Miles

I should also let you know that I took Wendy’s comment to heart the other day when I said I got paid for shopping at Sobeys (she had asked me if I donated any of the Hunts tomato paste to charity.. in which I hadn’t)… so I went back today and bought another 30 cans. $17.70 later and I’m happy to report that I will be dropping off those 30 cans… I don’t see why everyone with Air Miles doesn’t do this.. it’s free.. and it helps out the Food Bank.. Hell, if I were the food bank – I’d be asking for a shipment of this stuff!

Dog Treat Giveaway

I’m also a few days behind in the Dog Treat Giveaway.. but I’m happy to report that it’s going to happen tonight.. I think.. I just have to do more thinking on how I want to draw the name, it’ll happen soon.. I promise!

Ok that’s it for me.. hockey in an hour and half, then the draw, then back to touching up pictures.. all before trying to get to bed at a decent hour…. man I hope the day flies by tomorrow as quick as today did!!