Tag Archives: bills

5 Things You’re Probably Wasting Money On Right Now

pouring a bucket of money into the toilet

stop wasting money.

Here are a few quick ways to catch money-pits, or easily fixable wastes of your hard-earned income. Have one I forgot? Add in the comments below!

1.Cable. Why are you spending money on cable when you can get Netflix for $8/mo? Or hulu? Or utilize the magic of the interwebs? You shouldn’t be watching much TV anyways.

2. Phone apps. There are thousands of free apps that do the job — those dollars add up quickly. Save for a small handful of truly useful paid apps, most are a waste.

3. Credit Card Interest. This one’s harder to stop, if you cannot pay off your entire balance right away. Work on paying off debt via the snowball effect — pay off everything you can towards the credit card with the highest interest rate until done, then put that money towards the next highest, etc.

4. Eating out for lunch. When you make a sandwich at home, the costs are minimal compared to buying a $5-10 meal for lunch, even for fast food. Spend a few minutes each night or in the morning to gather a balanced lunch and you’ll save money and your waistline.

5. Utilities. Are all the lights on in your house, the TV blaring with the radio and the heat turned up very high (or the AC blasting with the windows open?) Take a look around your house and see what you can do to minimize utility usage, and shave off money each month.

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Paying Your Bills on Time — Every Time!

Step One: What’s the Damage?

This is a lot easier with a budget (and if you don’t have one, why not make one now?), but go ahead and compile all of your bills as they come in. You can just stash each bill statement in a folder or in an area on a desk, or written out on a piece of paper, or on your computer. If you have a good idea of what the bill will be each month, you don’t even have to wait until you get your statements to do this step. If you’re splitting with roommates or a significant other, go ahead and write down the calculations for each person (Divide the total amount due by the number of people that are paying the bill equally, eg: 1000/4.)

Step Two: What’s Left?
Now that we know how much you owe each month, divide that by 4 to get how much your bills will cost each week.That’s how much you’ll put away each week to pay your bills. Discouraged? Depending on how much money you make each week, that’s how much you’ll have left over to pay for other variables (such as the debt repayments, excess groceries, gifts, hair cuts, etc.) plus savings. So if you make 200 per week, you’ll only have 40 left over for that. 300, you’ll have 140 left over.

Step Three: It’s Pay (everyone else) day!

Now every payday, immediately take your check or cash (after depositing) and use that money to pay your bills or put aside immediately in preparation to pay your bills. Prewrite your checks or schedule online payments so you don’t forget to pay them – and remember, don’t touch that money! One technique I use is the following:

  • Money set aside for bill payments go in checking account, which is used to pay bills online immediately on payday.
  • Money left over for other uses is kept in cash. Gas and grocery money can also go in an envelope so you know how much money to spend on gas or groceries for the week.
  • Any extra money goes over to my savings account. Try to save at minimum 10% of what you earn for emergencies.
Another Technique
Another method to paying your bills is to go on a purely weekly basis instead.
  • Every payday, check out what bills you have to pay for the week ahead. Let’s imagine you got paid $300 and your electric bill is coming up on Wednesday.
  • Immediately write a check or schedule the payment online to pay that bill.
  • Immediately minus that amount from your checkbook or other method of keeping track of how much money you have in your account, or keep the rest as cash.
  • Next payday, see what bill is coming up and repeat the process.
  • For large payments, such as mortgage or rent bills, you should use the weekly method by dividing the payment by 4 and keeping that amount saved where you won’t be tempted to spend it until the payment is due.
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Pay Yourself First Part II: How to Save Money and Keep a Budget

Save Money So in Pay Yourself First Part I we discussed how to make a budget. Now we’re getting to the juicy stuff, how to actually keep that budget and save money, which is the point of all budgets. If you haven’t read part one yet, go there now. It opens in a new window, so I’ll be waiting for you. It outlines how to make the budget which we’ll be working with today.

Let’s review before we continue, okay?

-you made a budget which outlines your income and your bills
-you included variables and their estimated monthly amounts, such as for gas or shopping
-you probably have little money left over

I’ll show you my budget, which will help in two major ways. First, it forces myself to make a budget, which is beneficial to myself, and second, it helps me illustrate to you what a budget looks like visually. Click on the thumbnail to view a screenshot image of a simple budget worksheet I made. You can mimic this style, too, by downloading the document and inputting your own information.

Since it is a table, you can add new rows and columns as you please. Note: in the variables section, I used three estimates of the three previous months to see my spending pattern, and then the far right column is the amount to stick to, or the budget amount. You can see that all the rows on the far right add up to my income total, which is $1,000.

The savings section is the one we’ll add in today. I broke my savings into two categories.

  • One is for a specific goal that you’re working for financially, such as getting an apartment or paying off a loan. If you don’t need this, save all money into the emergency fund, which should be a savings account and relatively hard to take money from (such as not linked with your checking account).
  • The other is one everyone should have: emergency fund. It is recommended that everyone have 1-2 months of income saved at all times to guard against emergencies, like car repairs or injuries, or other necessities. It also protects when one loses a job or hours. Even if you can only put in $10-50 a month, do it. Over a year you can either have $120-600, or nothing.
So, how do you set aside money in your budget? You can do this two ways, depending on your priorities and situation.
  • You can fill your money with set expenses first, variables next, and savings last (whatever’s left over goes straight into savings.)
  • You can start with how much money you’d like to save each month, and take that away first. Then fill in the set expenses section, and divvy up whatever’s left into your variables.
Either way is up to you. You may also find another method that works better. If so, go right ahead – nothing is set in stone here. Your budget should work for you, and it should be simple and easy to read. I completely estimated my numbers so they end in zeros and fives. You can be more exact than me, or you can keep it simple. It really depends on your personality.
Now that we have set up a cool budget and a plan to save money, the obvious next step is to put that plan into action.
  • Follow your budget. See how it works in practice now, not just theory. Test out your numbers and see if you can live with the changes. It might be hard not to party 2 times a week for you at first, and you might have something huge pop up unexpectedly that takes up a large chunk of money. It’s okay. Budgets are meant to be flexible.
  • Try out your budget for at least a month, and reflect on how it worked for you.
  • If you need to make some changes, cross out the numbers and edit.
  • The point is to keep finding a plan that works without feeling like you need to survive on ramen noodles and beans.
  • When you have racked up a comfy amount in your savings or you have met your financial goal, make a new one. Living in a rental but really want to own? Start putting away for that down payment. When you start putting away money for things that matter, saving won’t feel like work. It will truly feel like you are paying yourself, especially when that savings gets you that cool digital SLR camera you’ve been saving up for 3 months.
  • If you ever have to dip into your emergency savings, remember to work on building it up as soon as you are back on your feet. You’ll never know what else may happen, so it’s safest to be prepared.
  • An easy method to get used to budgeting for different categories is to put the exact cash amount you decided in your budget into different envelopes marked with the category, such as “food” or “clothes.” When you run out, that’s it. Combine this with online bill paying, and you’ll keep your two different types of expenses separate  (the fixed from the variable) and avoid the urge to use bill-paying money for new shoes or what-have-you. Paying bills online, especially automatically, is a great way to avoid late fees!
I hope you learned something on my first two-part series! I hope to do many more series, maybe even a week-long one. Happy saving!
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Pay Yourself First: How to Create a Budget

BillsSince the age of 16 when I got my first minimum wage job as a line cook, I have been exchanging money for other things. Material things, like a cell phone, new American Eagle jeans, an iPod. Part of the fun (and point) of working those 20 plus hours per week was to do just that — sometimes I would go to the mall immediately after and end up spending the entire paycheck in one day. Now that I’m older I have (for the most part) controlled those impulses for instant gratification and new gadget toys, but those checks still disappear almost as fast as I get them. Now that I have entered adulthood (or young adulthood), most of my money is exchanged for recurring bills. Phone plans, cable, credit cards, car insurance, Netflix. Most of the time I barely end up with more than $10 by the time my next paycheck comes. How did I end up this way, and how can I get out?

The problem was that I did not have a plan. I had no inhibition about what to do with my money, or how to organize my bills properly. I also did not keep track of my money. Once I noticed this, I decided to write down my income versus bills and see precisely why I ended up in debt or close to it every month:

INCOME $1000 per month
restaurant job, 30 hrs per week: $250/wk (estimated. sometimes I work more, sometimes less.)

BILLS $920+
3 credit card payments  approx. $250+
car insurance $110
cell phone $60
gas approx. $100+
food approx. $300+
misc expenses (bars, liquor, shopping) $100+

Once you write everything down, it is easy to see where your money goes most of the time.

  • My bills, including variable expenses, only added up to $920 per month in theory, but I said before that I barely end up with more than $10 by each week’s end. Obviously there is a spending problem.
  • I notice that I do not allot set amounts for the variable items I’m spending money on (such as gas and food and going out), and therefore I end up overspending. I also need to figure out exactly what “misc” consists of. An easy way to do this is to put all your money on your debit card and then look at the online statements from your bank. They will list each transaction and most banks even categorize it for you automatically based on the store you bought it from, e.g., they can easily tell that Stop & Shop is a grocery store.
  • Some banking websites have even gone a step further and created pie charts and other visuals detailing your spending habits. Take advantage of these tools to see how you spend your money, and you will see what types of purchases are sucking money.

When you begin to set certain amounts for types of purchases, that becomes your budget.

  • First, write down set expenses that are the same per month, such as your rent or mortgage, utilities, car payment or insurance, or your cell phone (having the right plan can prevent monthly bill surprises for your phone bill). If you typically pay your credit card companies the same or similar amount each month, you can put that as a set expense, too. Don’t forget to include smaller payments, such as a gym membership or Netflix account.
  • Next, write down a detailed list of all the things you spend money on outside of these set bills. This list can include: clothes, groceries, eating out, bars/liquor, movies, cigarettes (or other vices), gas, even magazines. Keeping track of your habits with your debit card (or saving every receipt) will help you decide the right categories.
  • Add up the amount of your total monthly income (after taxes), and find the difference of that from the total of your set bills from the first bullet. This is the amount you have left for everything else, such as the items in the second bullet.
  • Divy up the amount you got into the categories you made based on previous activity and importance. Do you know you need a certain amount of gas every month for commuting? Write that number down next to the “gas” category. Have a severe habit of cigarettes that are nonnegotiable? Don’t forget to add in your vices. Going out to drinks or the club counts too (don’t forget parking fees and cover charges in addition to your drinks). Be strict here, you do not need to go out every weekend. Nor do you need to eat pizza three times per week. Keep writing down numbers to ensure each category has enough money for what you need or want for the month. But save some money. We’re not done yet. We have to add the most important part of a budget: paying yourself! 
Stay tuned for Part II: How to Save Money and Keep a Budget.
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