Thoughts on Debt

These days I think that everyone is becoming more conscious about how they are spending their money.  The companies who have the necessity items and have them for less are about the only one’s that are profiting, as a matter of fact, it seems that overall most companies are really hurting and reports show that we are not buying anything extra these days.  This includes items like clothing, jewelry, electronics and so forth.  We are instead, looking for new and better ways to hang on to our money, and miscellaneous spending is becoming a thing of the past.  There are some very simple ways to go about saving some money, and so here are just a few of the ways that cutting back a little can save you a lot in the long run:

1. Make coffee at home rather than buy it every day. You’ll save about $2 a day or $40 a month. This is $480 a year, and that can be money in the bank.  Depending on where you go, it could be a lot more. 

2. Bring in lunch from home instead of buying it. You’ll end up with at least $5 - $7 dollars a day in your pocket.  That is a $25 per week savings at least, and a savings of $1300 per year.  Now that would make a nice vacation don’t you think?

3. Stop getting delivery of magazines and newspapers at home. Most of the content is available online and you can read it everyday—for free!

4. Shop around for credit card interest rates and consolidate credit cards, if you keep a balance.

5. Use cash or debit cards instead of credit cards and incurring interest charges.  Not only will this save you more money on the interest charges, but you will also be more aware of what you are spending your money on, and how fast it goes.

6. Save your stamps and pay bills online, usually for free.  Most companies will allow you to make payments right on their web site, either using a check or debit card, and most banks offer online bill pay services for nothing as well.  This is a very convenient way to pay your bills, and you can also put them on automatic payment, which is great because this way your bills will get paid on time, without missing payments and accruing late charges.

These days every little bit of savings helps.  It is nice to see the gas prices come down, but who knows when they will go back up again and grocery prices are still high.  So be sure to keep a good handle on your spending the rough economic times are not gone yet.

On some level, I think that we are trying to fool ourselves, or at the very least the government is trying to fool us, about our current financial standing.  I think that the bail out package that just went through was really just a way for our government to save face through these tough financial times, this way when we really do hit rock bottom, they can say we tried.  I think that also George W. really wants to get out of office, before the American public realizes how bad our economic situation truly is due to this war that he has use wrapped in.  In any case, I think that it is time for all of us to come clean.  We need to face the facts that as individuals and as a nation, we have not been financially solid for quite some time.  The availability of credit has allowed all of us to live well above our means for a long time, when in essence we never should be spending more than we have.  If we had stuck to this type of plan, then all this financial nonsense would have little or no effect on us, however, ours is a society of wealth solely based on credit.  The more credit you can attain the wealthier you can become, even without much actual money.  It is interesting at best.

Now in addition to the lies we have been telling ourselves and the ones that our government has been spouting, I am now seeing television ads that are again trying to trick us into spending more money than we have to for things.  For instance, I just saw a commercial for Kentucky Fried Chicken last night, and they show a family who is considering buying their complete dinner for 4 people for $9.99.  They go to the grocery store to see if they can buy all the ingredients for making the same meal, and it will actually cost them more than it would to go to KFC, so they just go there instead.  Now listen up, they show these people starting out by buying a $3 bag of flour.  First, it does not take $3 worth of flour to make chicken, secondly, most of us already have flour in our houses, so that cost is over inflated.  Don’t be fooled people, for $9.99 you are getting the drumsticks, which if you are a smart shopper you can get for a song.  Then throw on some instant mashed potatoes, and even some dinner rolls or boxed mac & cheese, or even beans, you can definitely make this meal for about half the price of what they are making it for.  Don’t buy into this type of advertising, they are just trying to get you to spend the money.  Walmart and Food Lion are both trying to do the same thing also, and trying to convince you that buying their premade food is much cheaper than doing it yourself.  Don’t buy it.  Shop the sales, cook ahead, make a meal plan, but don’t give in to buying fast food or prepackaged meals, the ones you make yourself are still more economical and premaking and freezing your own food will save you a lot of money in the long run.  It is time we were honest with ourselves.  We know what we have to do, but are we all too lazy to do it?

Many people find themselves in hard financial times and are wondering what they can do to dig themselves out of the hole they are in.  Well, the key to it all is devising a budget and sticking to it.  Many of us believe that we are already living on a budget, however, unless your budget includes a savings, then it is really not a budget.  A budget is not scrimping and living paycheck to paycheck paying whatever bills you can each week, it is much more than that.  It is a financial plan, the foundation by which you determine how much you can afford to spend on the extras.  Built into your budget must be a savings plan that will allow you to put no less than 5% of your income aside for emergencies.  I personally prefer a two savings plan system, where you divide your savings into 2 separate accounts, one for true savings and one for savings for special things that you would like to do like a vacation, or for a special item you want like a new TV.  This is a good way to be able to reward your hard work saving and feel a benefit from it.  It will make you feel less deprived in the long run if you reap some benefit from the savings.

In order to create a budget your monthly income must exceed your monthly expenditures.  For instance, you can not budget your money if your monthly expenses are $3000 per month and your monthly income is $2400, this will not budget out.  If after writing down your expenditures for a month and your income, you find yourself in this boat then it is time to trim the fat off your regular monthly spending and if you still can’t get your expense low enough then it may be time to consider picking up an extra job.  The fact is that a budget is a plan by which you spend, and without one you are free falling into a life of poverty.

Keeping your life in balance will allow you the peace and harmony that you seek from life.  Having enough money to pay the bills with a little left over will allow you to sleep better at night without worry.  Take the time to work out your budget and you will see how easy it is to keep your finances under control.

We are all feeling very helpless against the powers that be that are pulling our purse strings these days.  There are things that we need to do to take back some of the power from these piggies.  I am not saying that there has not been a cost increase in the production and delivery of the foods we love.  I am however saying that the price of gas has been backing off a little, but a block of cheese, 16oz of mozzerella cheese has risen about $3.00 a block, this is double its price only 3 months ago.  I can assure you that the cost to produce this block of cheese has not gone up $3.00 and therefore we need to be careful not to let these companies take advantage of us.  We need to take some proactive steps to stand up for ourselves here.  After all, you better believe that the price of cheese will come down after pound after pound goes bad on the store shelf.  Yes, it will mean compromising a little, but it is worth it to take a stand.  We can do something about it, we still have the power of the dollar and if we start exercising that power, we can make a difference.

It is time to move from debt to debt free and the best way to do this is to live like it was the 1900’s all over again.  Grow your own food, cook it, can it, freeze it.  That is right, we can bake bread, we can go to bed when the sun goes down and we can live without a credit card.  You may not eat what you want, watch what you want or go where you want, but you can actually live much, much more frugally than you have been.  I know this sounds like the extreme, but the truth is just like any other lifestyle change there is a period of adaptation, and it will feel a little odd for a while, but we can make the changes necessary for survival and we must or we won’t make it.

Well, we have already arrived at the time and place that we should have been saving for all these years, and here we sit with costs of everyday items rising daily and without a savings it seems near impossible to pay the bills much less save some money.  I am here to tell you it is completely possible to save money, but it does take work and a conscious mindset towards savings.

The first thing that you must commit to is that the money that you save on this and that must be put aside.  You can not take that money and spend it on extras, extras are out.  All the money that you save must be put away for a later need.

1.  Find a bank with interest and little or no fees, and don’t keep too many accounts open this can cost you more.  I have recently found that credit unions offer many more benefits from banks without losing a step.  My local credit union charges less in fees and also supplies me with more interest than any account I have seen of late.  This is savings + interest and is worth looking into.  Also there are banks that offer incentive programs with either cash back or one’s that will match your savings money or something.  Looking into your options is just one way to put a few extra dollars in your pocket.

2. If you often use credit cards, stop.  Consolidate your cards and pay them down or off.  I know this sounds like spending money, but it will save you a lot in costly interest and fees and leave you with less debt which is always good.  Shop around for the best rates you can find, these companies want your business and have the ability to offer you some really great deals.

3. Use coupons for everything.  There are coupons for oil changes, department store discounts, and restaurants and fast food.  Be sure to clip and save all coupons in an organized fashion.  These can really add up especially when they can be combined with sales and discount items.

4. Change all the bulbs in your home to energy saving bulbs.  Especially in the winter this savings will really add up.  Don’t pay retail for your bulbs, go online and find a deal.  You can get 13W bulbs for about $1.50 each so shop around.  This is a big savings over the $4.00 per bulb that they are going for at Walmart.

5. Find more energy efficient ways to heat and cool your home.  Wood is an excellent source of heat and if you have a fireplace on your house it can serve as a good source of supplemental heat.

6. Walk instead of driving.  If you are going somewhere local you can save on fuel costs and get some exercise.  As long as the weather is good take the kids or the dog.  Good bonding time as well.

7. Don’t over mow the yard.  With the cost of fuel being so high, allow the grass to be a little bit longer, and when you cut it, cut it really short to stretch out the time between mows.

You can find other money saving tips on the Consumer Federation of America website.  Just be sure to calculate out your savings and put that money aside.  You will be glad you did, it will add up.

For the past 30 years American’s on average saved about 7% of their salaries. In 2006, the average savings was at -1% and now in 2008 the average American saves about .5% of their annual income. There are several thoughts on the reasons for this trend.

Some people think that it is because the Boomers and Generation X just overspend, however looking more closely at the trend there was a huge increase in family income between 1947 and 1973, sometimes even doubling which left Boomers with a huge amount of disposable income. Now with the rising inflation rate and the lack of savings everyone needs to be concerned. This trend could hit hard.

In the years of the great depression, people knew how to make the most out of every dollar. To conserve and to save was the norm and the better you could do it, the better your family would make out. When these people hit the above time frame, they made a killing. Most went from having a very low income and stretching every dime to making a lot of money, and they kept many of their frugal ways while doing that. They continued to live modestly and put aside plenty of money for savings and investing and they have done well for themselves. Future generations have not learned the value of frugal living due to the fact that entered the world during a time of abundance and there has always been plenty of “stuff” for them, so they do not have the values of saving and conserving that their ancestors exhibited, and therefore as we enter this difficult economic time, no one is really prepared for it financially. They have just been living day to day, knowing that tomorrow will bring more money, but now with the financial slow down, it is truly time to take the examples from our forefathers and put ourselves into a save and conserve mode, and when and if the economy improves, we should still live modestly and continue to save for our futures.

This time of financial difficulty can prove to be a learning experience for us all. Live modestly, conserve where you can, and save every dime that you have available to you. Times are tough but the tough people will see this through.