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Book Review: The Total Money Makeover by Dave Ramsey

book review

Dave Ramsey is a best selling author of many popular self-help books about getting your finances together. He’s inspired many with his simple, no-hassle philosophies on how to manage money. He also has a radio talk show called the Dave Ramsey Show, that you can listen to anywhere you listen to podcasts. He even started his own company built on his financial philosophies called Financial Peace University. Dave Ramsey and his colleagues have loads of resources you can find helpful in your own personal money management journey. Whether you are managing a household or a small business, Dave Ramsey has the financial advice you need to be successful and smart with your funds.

Today we’re going to take a focused look into one of Dave Ramsey’s most prolific publications, The Total Money Makeover: A Proven Plan for Financial Fitness. You’ve heard of fitness journeys and makeovers that change your style into something fresh and new, but Dave Ramsey takes all that and puts a financial spin onto it. With Dave Ramsey’s baby step plan you can exercise your financial abilities in ways you never thought possible and finally get into shape where your wallet is concerned.

What Kind of Book is The Total Money Makeover?

book cover

The Total Money Makeover is written as a self-help book. It’s even been compared to popular self-help books like, Your Best Life Now and 7 Habits of Highly Effective People because of the reader-friendly way it is written. It’s an engaging book with lots of real-world examples and stories from real people who have actually gone through Dave Ramsey’s baby steps and seen results. These short anecdotal stories throughout the book help all of Dave Ramsey’s concepts make clear common sense.

The book also includes a lot of motivational help along with the tips and advice. One of the biggest factors that holds people back from taking full control over their finances is the proper motivation and encouragement to make necessary changes to their lifestyle. Dave Ramsey helps with that too, giving you the fresh outlook you need to understand your goal and the rewards you can gain.

Dave Ramsey is also a Christian, so his books often have a religious undertone. So you may find him referencing Bible verses every so often in this book, and tackling religious views and practices with regard to money as well.

What’s in the Book?

The Total Money Makeover is essentially a step-by-step guide for how to go about your own personal money makeover journey. These steps are based on Dave Ramsey’s key money philosophies. Dave Ramsey has strict beliefs about not ever using debt, loans, or credit cards. He believes that our society today is too dependent on credit and that true financial freedom only comes when you live a completely debt free life. So the first steps in his plan are all about helping you get out of debt, and then setting you up to never get into debt again.

Simple and straightforward advice.

Dave Ramsey’s book became so popular probably because of how easy it is to follow his clearly set plan. Each step is specific enough to leave no doubts about what exactly you need to do, making his plan one that anyone can follow and find success. It also helps that he is never vague about his advice, but rather he is extremely straightforward, open, and honest.

Dave Ramsey has no get-rich-quick schemes. He’s more about using honest work, responsibility, and common sense to reach your goals. So you won’t find any crazy secrets to financial stability and success in his book, you’ll just finally learn to implement the basics in a way that really works.

A change in perspective.

Another reason people enjoy Dave Ramsey’s teachings is because he doesn’t pretend that money is what brings happiness. He’s realistic and believes that money is a tool to create stability and contentment in our lives, not the secret solution to all our problems.

He eloquently tackles many mental barriers and misconceptions many of us have about money, and works to not only change your behavior with money, but your perspective about money as well. One thing he talks about a lot is getting over the need to “keep up with the Joneses.” Often in life we compare ourselves to others in unhealthy ways, and sometimes those comparisons can lead us to make poor financial decisions for superficial reasons. So, when you read the Total Money Makeover be prepared to gain a whole new outlook on the purpose of money, and break free from comparing yourself to others.

The Money Makeover Baby Steps:

The main event of this self-help read are the baby steps the reader can take to reach financial peace and freedom. You can read a more detailed article about each of the 7 baby steps that Dave Ramsey will go through in this book, but we’ll go over a quick outline of those steps here too.

Emergency Fund

The first step in Dave Ramsey’s 7 step plan is to basically get your financial life in order. The road to stability starts by setting up your finance in a certain way. This begins with setting up an emergency fund. You can start with at least $1,000 in your emergency fund but eventually you’ll want to work your way toward having at least 6 months’ worth of expenses in your emergency fund at all times.

Debts

Once you start getting your emergency fund in place, it’s time to focus all other monetary efforts toward annihilating all your debts. He goes into more detail about this in the book. For example, he suggests you start with your smallest debts first and work your way up to your larger ones. He also recommends you save paying off your mortgage for last. But eventually the idea is to throw everything you can at your debts until they are all completely wiped out.

Build Wealth

Now it’s time to build wealth and continue saving. Since Dave Ramsey argues you should pay for everything in cash, continually building up your financial stores is an important aspect of the Dave Ramsey lifestyle. You have to have enough in savings to cover all your costs completely with cash.

In the book Dave Ramsey goes into more detail about what savings you should prioritize. He advises that you first complete your 6 months’ worth emergency fund if you haven’t gotten there already. Then he suggests you work toward saving for retirement and (if you have kids or plan on having kids) your children’s college funds.

Things You Can Do Differently:

Dave Ramsey’s primary goal in all of this is to help people get out of crippling debt and stay out of it. But there are modifications you can make to his more rigorous financial plan.

You can choose how much you want in your emergency fund.

If you’re a college student then putting aside even $1,000 may be more difficult for you. But that’s ok! Just put aside what you can. Even just adding $5 to $10 a month into an emergency fund is better than having no emergency fund at all.

Likewise, if you’re more settled in life it might be easier for you to put even more than $1,000 aside into an emergency fund. It really doesn’t matter how you do it, what matters most is that you start accumulating that safety fund in order to be more prepared for surprise expenses in the future.

You can still use credit cards and loans.

Dave Ramsey may believe in using only cash to pay for things but there are advantages to using credit cards and installment loans. When used responsibly using credit can help boost your credit score and get you the things you need to have a comfortable life. Credit cards can also provide lots of perks outside of boosting credit scores. Some credit cards come with special points that can go toward paying for things like groceries and traveling. So long as you understand your limits and include loans and credit payments in your carefully calculated budget and financial plans, you’ll be just fine.

Should I Read This Book?

You may now be wondering whether you should give this book a read or not. You should definitely read this book if . . .

  • you are in debt
  • you have trouble managing your money or realizing where your money goes
  • you have trouble making a budget

If you are looking for a book with more specific details about financial topics (like investing, or small businesses) then you should check out Dave Ramsey’s other books that go more in depth on complex financial topics. The Total Money Makeover doesn’t expound upon these topics too much since it was written more as a beginners guide to Dave Ramsey’s financial baby steps.

 

READ MORE

Check out some other helpful reviews about Dave Ramsey’s book, the Total Money Makeover:

Review: The Total Money Makeover

The Total Money Makeover Review

Goodreads


How to Budget with Dave Ramsey

dave ramsey budget

Table of Contents

Step 1: List Total Income
Step 2: List Total Expenses
Step 3: Plan Your Spending
Step 4: Keep a Record
Free Budgeting Worksheets

Everyone wants to have more power over their money and be at the mercy of strict finances less. What many people don’t realize is that the key to financial freedom is a strong budget. Budgeting gets a bad rap sometimes as being too time consuming, or by restricting your finances too much. But all you need is these 4 steps to make a budget, and once that’s done, you’ll find yourself getting out of debt, saving more, and becoming more financially free and comfortable in the long term.

Dave Ramsey has an article named, “Learn How to Budget” on his blog where he briefly outlines his simple 4 step process to creating a blog. So stop living in the monetary moment, and start living for the financial long term—it really is worth the 5 minutes it’ll take you to go through these 4 steps and create your own simple budget.

Step 1: List Total Income

total income

Dave Ramsey’s first step to creating a budget is, “Write Down Your Total Income.”

The very first step to creating any budget is to list all your sources of income and add them together to have a total income amount at the top of your budget. Dave Ramsey recommends that you use what he calls “take home pay” when adding up your total income. Take home pay refers to net income rather than gross income.

Net Income: Net income refers to your total income after taxes. It is sometimes called “take-home pay” because this is the amount that actually reaches your bank account after taxes get taken out.

Gross Income: Gross income refers to your total income before taxes.

You can find out your take home pay by finding the percentage of income tax for your state and subtracting that percentage from your monthly income.

Make sure you include all sources of income, including any second jobs, any freelancing, or side gigs.

Step 2: List Total Expenses

expenses

Dave Ramsey’s second step to creating a budget is to, “List Your Expenses.”

List all of the regular expenses you have every month. This includes anything and everything you’re your mortgage, utilities, rent, insurance, HOA fees, groceries, gas, subscriptions, clothing, debts, phone bills, etc.

One of the best ways to determine what all your regular expenses end up being is to look at your bank statement for the past month or couple of months and find the average amount you spend each month on everything.

Step 3: Plan Your Spending

spending

Dave Ramsey’s third step to creating a budget is to, “Subtract Expenses from Income to Equal Zero.”

The type of budget that Dave Ramsey suggests you make is called a zero-based budget. This is when your income minus your expenses equals zero. So every single dollar you make goes to some kind of category listed in your budget, not a single cent is unaccounted for. This is a good budget type because every single dollar you make has a purpose.

You do the most math in step 2 of Dave Ramsey’s budget plan. Divide up your monthly income into all your different expense categories until you reach zero. If, at the end of your budgeting calculations, you are above zero then you have funds that could still be going somewhere, like to the emergency fund. If you are below zero you have to reduce expenses somewhere so you don’t end up losing money each month.

Step 4: Keep a Record

record spending

Dave Ramsey’s fourth step to creating a budget is to, “Track Your Spending.”

Now you just have to keep track of all your transactions to make sure you stay in the budget guidelines you created for yourself in step 2 and 3. Figure out the best way for you to keep track of all of your transactions so that you can make sure you don’t go over in any of your budgeting categories.

There are a few ways you can keep track of your spending. You can use any number of budgeting apps, a detailed checkbook, another form of paper note taking, the cash envelope system, the cash wallet system, or prepaid debit cards.

Budget Apps

Dave Ramsey suggest you use the EveryDollar app as your budgeting app.

Checkbook

Using checks can make budgeting a lot easier. Every time you write a check a copy of the check gets written on the slip behind each individual check. By keeping these personal check receipts you can keep perfect track of all your transactions. You can also use the section in the back of your checkbook to jot down the details of all your spending.

If you want to learn more about the advantages of checks and how to balance a checkbook check out these helpful articles, “How to Write a Check” and “6 Advantages of Using Checks.”

Notebook

If you don’t want to use checks, you can still use a paper recording system to keep track of all your spending. You can find notebooks that are ready for this purpose on Amazon by searching budget workbook or expense tracker notebook.

Cash Envelope System

A cash envelope system is when you divide your cash up into different envelopes that are then assigned specific purposes. For example, you could have an envelope for bills, another for groceries, and another for gas. This way, you can only use those strict cash amounts to make purchases. The cash envelope system is a great option for those who have a lot of difficulty staying on budget and not overspending.

You can even purchase envelope systems on Amazon as well by searching cash envelope system where you’ll find envelopes and filing systems you can use to keep your cash organized.

Cash Wallet System

Another way to use the cash envelope system is to use a wallet with enough cash dividers for all your budgeting sections. These cash system wallets are helpful because you can keep all your cash organization neatly zipped up in one wallet. You can also use your wallet for your cards and checkbook as well.

Free Budgeting Worksheets

Tracking your spending in a way that works well for you might be the most taxing part of budgeting. But with these tips you can make recording expenses a breeze.

Some other things you can use to make budgeting even easier is one of Dave Ramsey’s budget forms. Any of these budget forms from Dave Ramsey’s website are free to use and can help you budget and plan.

Specifically his Monthly Cash Flow Plan can help you go through the steps and organize your funds according to Dave Ramsey’s easy money flow plan.

If you need a more simplified version of this budget form you can find it with Dave Ramsey’s Quick Start Budget.

 
Budgeting doesn’t have to be a colossal pain, and it doesn’t have to make your life sad and restricted. In fact, using a budget can be your key to long-term financial freedom.
 

READ MORE

Are you a college student in need of some budgeting help? Check out this article, “Budgeting for College Students 101.”

Read another article all about how to make budgeting easy, “Budgeting in 4 Easy Steps.”


Dave Ramsey’s 7 Baby Steps

dave ramsey baby steps

Are you trying to get out of debt? Do you want more financial stability and freedom? Are your finances one of the bigger stresses in your life right now? If any of these sentiments apply to you then Dave Ramsey’s 7 baby steps might be just what you need to cure your money blues.

Table of Contents

Step 1: Start an Emergency Fund
Step 2: Focus on Debts
Step 3: Complete Your Emergency Fund
Step 4: Save for Retirement
Step 5: Start a College Fund
Step 6: Pay Off Your House
Step 7: Build Wealth

Dave Ramsey is a guy who, through personal experience, was able to get out of debt and find financial peace of mind. He is now a financial expert with courses and books to help the everyday person get in control of their finances.

The best place to start when trying to regain control over your finances and achieve a full “money makeover” is to start with his 7 step plan. This plan has 7 baby steps that you follow to reach more financial stability and get to the point where you can start building wealth.

Step 1: Start an Emergency Fund

car maintenance

The first step in Dave Ramsey’s 7 step plan is, “Save $1,000 for Your Starter Emergency Fund.”

One of the main reasons people struggle with money is because necessary emergency expenses (like medical bills, car bills, or home repairs) come out of nowhere and drag you deeper and deeper into debt. But if you are preemptively prepared for these surprise expenses then they won’t take you off guard again.

So the very first thing you should do when getting your money in line is to get an emergency fund started. Save up an emergency fund in a separate bank account, until you have at least $1,000 in the account. This will be the start of the emergency fund that will keep sudden necessary expenses from plunging you into deep debts because you weren’t prepared.

Step 2: Focus on Debts

debts

The second step in Dave Ramsey’s plan is to “Pay Off All Debt (Except the House) Using the Debt Snowball.”

The snowball method that Dave Ramsey refers to here means that you start by paying off small debts first, and work your way up to the bigger debts. Debts can include paying off your car, credit card debts, and student loans.

First, make a giant list of all your debts, every single one, except for your mortgage if you have a house. Then, put your list of debts in order from the smallest debt amount to the largest. Then you go through knocking out each debt by eliminating the smallest debts first and working your way up to the largest debt last.

Step 3: Complete Your Emergency Fund

medical bills

The third step is to “Save 3 to 6 Months of Expenses in a Fully Funded Emergency Fund.”

Now that you’ve gotten all your debts out of the way, it’s time to finish your emergency fund. You can use the same money you were using to pay off debts each month and put it toward your emergency fund until it has enough to cover 3 to 6 months’ worth of expenses and bills. Then you’ll really be prepared for anything.

Reasons to Have an Emergency Fund

  1. If you lose your job.
  2. You won’t have to worry because you’ll have enough to last you 6 months. This will give you the time you’ll need to find a new job.

  3. If your car breaks down.
  4. You’ll be able to pay for the necessary repairs, the tow truck, or even for a new car in some cases.

  5. Medical bills.
  6. Don’t let your health and necessary medical bills keep you from staying afloat financially.

  7. Home repairs.
  8. If something happens to your home you’ll be able to fix the problem rather than living with it.

Having an emergency fund is THE key to keeping you out of debt in the future. After getting yourself out of debt, an emergency fund is what will keep you from getting back into debt in the future.

Step 4: Save for Retirement

retirement

The fourth step in the Dave Ramsey plan is to, “Invest 15% of Your Household Income in Retirement.”

After your debts are gone and your emergency fund is taken care of, it’s time to start seeing to other important savings like a 401K. Dave Ramsey recommends you take 15% of your gross monthly income and put it toward a retirement fund each month. To figure out how much you should be putting into your retirement fund each month, take your monthly income and multiply that number by 0.15.

Step 5: Start a College Fund

college funds

The fifth step to Dave Ramsey’s plan is to, “Save for Your Children’s College Fund.”

Avoiding student loan debts can be one of the biggest factors in staying out debt as a young adult. If you can pay for your kids college tuition then you’ll ensure their financial security in the future, as they’ll better be able to stay out debt. Dave Ramsey recommends using either a 529 college savings plans, or an education savings accounts (ESA). Talk to your bank or credit union about setting up these accounts for these specific purposes.

Step 6: Pay Off Your House

mortgage

The next to last step in this 7 step plan is to, “Pay Off Your Home Early.”

Put all the extra monthly income you have into your mortgage so you can finish paying it off early. After this step you will officially have no debts whatsoever! All of your earnings will go to you instead of getting drained away in large debts and payments.

Step 7: Build Wealth

wealth and legacy

Finally, it is time to, “Build Wealth and Give.”

Congratulations! Once you’ve reached the 7th step in Dave Ramsey’s Baby Steps, you can start focusing on building your wealth and leaving a legacy. Don’t forget to keep and maintain those financial safety nets like a healthy emergency fund, retirement account, savings account, and college funds.

Now you are officially in charge of your money rather than it being in charge of you.

Financial freedom is possible for you! Everyone can do it and Dave Ramsey’s 7 baby steps can help you get there. Dave Ramsey also has other resources that can help you implement this plan. You can participate in Dave Ramsey’s program, books, and podcasts.

You can take the actual course with Financial Peace University.

Dave Ramsey also has a free customized plan and assessment that you can do right now, in just 3 minutes!

Listen to the Dave Ramsey Show anywhere you listen to podcasts or radio.

 
Dave Ramsey’s 7 baby steps to financial freedom can help you with so many aspects of your life. They can help you decide when to buy a house or help you get situated for saving for a house. It’s a checklist program that can help you get rid of loans and debt (like student loans), or even help you get to where you can budget for a wedding.

Another way you can get some needed financial help is to take out an Installment Loan at Check City! Installment loans can help you stay on top of your bill payments and avoid late fees, which can really hurt your long-term financial goals.
 

READ MORE

Browse Dave Ramsey’s online store for more great financial resources to help you on your financial journey.

Read more helpful articles on the Dave Ramsey Blog

Learn more about the debt snowball, “How the Debt Snowball Method Works.”

Read Dave Ramsey’s full article on his 7 baby steps, “What Are the Baby Steps?

Stay out of debt through college by using these tips, “How to Stay Debt Free through Grad School.”


How to Write a Check

write checks

Not everyone uses checks on a frequent basis, so sometimes it helps to have a refresher on how to fill them out, just to make sure you get it right.

What is a Check?

Checks are a form of paper payment. They are a document that allows a bank to take money from the account of whoever wrote the check, to pay whoever is depositing the check.

Checks are a very useful financial resource. They come with their own unique properties and safety measures that make them a useful money tool to use more often.

How to Write a Check Out

check example
 

Listed below are all the different fields found on a check. You need to understand the purpose of each section in order to know how to fill each field out properly.

Field #1: Date

In the upper right hand corner you’ll find the date line. Usually you’ll just write the current date, but one of the great things about checks is that you can post-date it. This means you write a future date on the check to ensure it can only be deposited after the date you mark down.

So if you need to pay someone, but need them to wait until payday to deposit the check, you can still hand them the check now and just write a date after payday.

Field #2: Pay to the Order of

This line is where you write the name of who will be receiving the check. This might be the name of a person, or the name of a company or organization. For example, if you’re using a check to pay for groceries, then the name you’ll put here is the name of the grocery store.

Field #3: Dollar Box

In this box, you write the monetary amount of the check in numerals. So instead of writing “one hundred dollars” you write “100.00.”

Field #4: Dollars Line

Then there’s a line with the word “Dollars” at the end of it. Here is where you write the monetary amount of the check in words. So instead of writing “100.00” you write “one hundred and 0/100.”

Field #5: Memo Line

The memo is where you write a note about the check’s purpose. You can fill out this section for your own files, so that the check stub has what the check was used for written down. The memo section can also let the person receiving the check know what the check is meant to be used for.

You don’t have to fill out this section but it can be helpful to not forget why you wrote out the check in the first place.

Field #6: Signature Line

Here is where you sign the check.

Field #7: Numbers

The numbers at the bottom of the check are divided into 3 sections and show 3 different numbers. The first set of numbers is the routing number, the second set of numbers is the account number, and the final, shorter section of numbers is the check ID number for that individual check.

*Keep the check stub and use it for your files. The check stub is the thinner paper copy behind the check that gets written on as you write out the check. This gives you a hard copy of the check you wrote for your own checkbook.

How to Write a Check Amount

So how do you write numbers in words on a check? If you have any questions about how to write your specific amount you can take a look at the chart below. A printable number chart is also available by clicking here.

 
number word chart
 

Let’s quickly go over some frequently asked numbers to words questions:

How to spell 90: ninety

How to write a check for 1,000 dollars: In the Dollar box write, “1,000.00” and in the Dollars line write, “one thousand and 0/100.”

How to write a check for 1,500 dollars: In the Dollar box write, “1,500.00” and in the Dollars line write, “one thousand, five hundred and 0/100.”

How to write a check for 100 dollars: In the Dollar box write, “100.00” and in the Dollars line write, “one hundred and 0/100.”

How to write a check with cents

A lot of people have questions about how to write out cents for a check, but have no worries! This is the easiest part of the check because you can still write the cent amount out in numerals on the Dollars line:

After you write out the dollar amount in words, write “and” and then write the number of cents in numerals over 100. For example, if you want to write a check out for $100.50, you would write on the Dollar line, “one hundred and 50/100.”

How to Balance a Checkbook

checkbook
 

In the back of your checkbook there is a check registry—extra pages with a chart to record key information from each transaction. Whenever you write a check, keep the check stub. This will make it easier to fill out the check registry later.

Field #1: Write the date on the check in this column.

Field #2: In the description column write the same thing you would write on the “Pay to the Order of” and the memo line. This column helps you know who you paid and why.

Field #3: In the “Payment/Debit” column write down the amount you paid.

In the Deposit/Credit column record deposits to your own bank account. Keeping track of both payments from your account, and deposits made to your account, will help you keep track of how much is in your bank account at all times.

In the Balance column keep track of your total account balance, adding deposits to your account, and subtracting transactions you’ve paid.

Field #7: Write out the check ID number. It’s the last couple of numbers at the bottom of the check.

Common Questions About Checks

If you don’t use checks very often you probably have more than a few questions about checks and how they work.

What are the fees for cashing checks?

If you cash your check at Check City, then our fees are based on the type of check that is cashed. Our rates start as low as 1.99% for in-state payroll and government checks. That means for payroll and government checks it only cost about $2 per $100.

What information do you need to cash a check?

We have you fill out a quick application and you need a photo ID.

Do I have to wait for the check to clear to get all my cash?

No, once we have verified the check we give you all your money right then.

Is there a limit to the check amount?

No, as long as we can verify it, we can cash it.

When do you use a check?

You can use a check anytime check payments are permitted. If it is a personal transaction, you can always ask the recipient if they are ok with receiving their payment in the form of a check.

Where can I get checks?

You can get checks from almost any bank or credit union where you have an account.

How to write a check to yourself

Sometimes when you need to transfer your own money, you’ll need to write yourself a check to yourself. Writing a check to yourself is super simple. You just write your own name on the “Pay to the Order of” line.

 
Hopefully checks don’t feel as unfamiliar to you now as they did before reading this article. As you can see, checks are very simple to use, and easy to fill out correctly. You just have to know the purpose of each section on a check and you’re good to go!



READ MORE
Learn more about the benefits of checks, “6 Advantages of Using Checks.”

See how cashed checks can actually help your finances, “Cashed Checks Improve Your Financial Situation.”


Budgeting in 4 Easy Steps

budget
No matter your financial situation in life, everyone needs a budget. With a budget you can plan for needed expenses and prepare for the things you want. In fact, the most simple budget only needs a couple lists, a calculator, and some goals. Below are the the main points our post will go over to help you set up your budget:
 

 
Budgets are an important tool in anyone’s financial arsenal. Budgets can help you organize your needed expenses, like rent and bills, prepare for emergencies and get ready for whatever your future might hold. By knowing how to budget you can learn to stop living paycheck to paycheck and start building up your savings. it can help you save up for big expenses or future life events like a wedding, starting a family, buying a car or a house or moving to a new state.

Budgeting can also help you save for retirement, something else that even younger people just starting out on their own sometimes forget to think about but should. But most of all a it can grant you financial power and freedom and help you provide for your wants and needs. But for those just starting out on their own especially, it can be hard to know where to begin.

There are several key elements you’ll need to include in your budget. You need to think about all your necessary expenses and plan them out accordingly so you are aware of how much of your monthly income you need to spend each month no matter what. Then you’ll have to think about unnecessary expenses. This is where you have the most freedom to plan out the numbers and make adjustments.
budget-template

How to Budget

There are many ways to budget and there is a lot of advice out there in the financial spheres about how to do it. You can also choose to plan for certain events by making a specific wedding budget, or for major purchases like car payments. But if you’re making a simple budget for yourself, then the main thing you’ll want to decide first is whether you want to make a monthly or yearly budget. Most people like to create a yearly one to get a general big picture view of their financial goals and future plans. But, a monthly one is more helpful for everyday use. We’re going to try and condense all that down to the bare bones minimum of what every smart budget needs.

#1: List your monthly income

List out all your forms of income. This would include the paychecks from your job, but also any extra money you make from any of your side hustles. Here is also where you can decide whether you want to organize your finances for gross income or net income.

Gross income is simpler and easier to calculate. You just need to know how much you get paid and use that money for your calculations.

Net income isn’t as simple to figure out but there are advantages to using it. You figure out your net income by looking up what the income tax is in your state, and taking out that percentage from your gross income. Using net income instead of gross income is perhaps better because it more realistically reflects what you will actually receive from your paycheck.

#2: List your fixed expenses

After you have all your sources of income written down you’ll want to form another list for all your fixed expenses. Fixed expenses are the expenses you have each month that don’t fluctuate in amount. Everyone’s list is going to look different depending on what expenses do and don’t apply to you, but here is an example list of some fixed expenses:

  • Rent or Mortgage: A calculation you’ll want to do when looking at your housing expenses is to check that your total housing expenses aren’t over 28% of your monthly gross income.
  • Insurance
  • Debts: A calculation you’ll want to do when looking at your debts is to check that your total debts aren’t over 36% of your monthly gross income.
  • Loans
  • Student loans
  • Credit card payments
  • Streaming services like Netflix, Hulu, and Spotify
  • Phone bill
  • Medication you pay for each month
  • Child support
  • Education

After you’ve listed all your fixed expenses total the amount, subtract it from your monthly income, and that’s what you have left to spend on varied expenses . . .

#3: Set up your savings

Before we go into varied expenses though, let’s take a moment to think about your savings and retirement. Get a savings account if you don’t have one already, and set aside a portion of what’s left over after fixed expenses. Any amount you can afford to put away into a savings account each month will set you up for success in the long term, even if it’s only 5 to 10 dollars a month.

Aside from general savings and saving for retirement, you also want to set money aside in an emergency fund. It’s recommended that you have at least 3 months worth of your fixed expenses put away into an emergency fund at all times.

Digit is a great app you can use to help you plan and organize all your savings.

#4: List and portion out your varied expenses

Everyone’s list of varied expenses is going to look differently depending on what expenses do and don’t apply to you. Varied expenses are any expenses that are going to fluctuate in amount each month, or are considered more like luxury expenses than needed ones.

Varied expenses are a big reason to do a budget in the first place so that your varied expenses each month don’t overtake your more important fixed expenses and your savings. Here are some examples of varied expenses you might need to consider:

  • Groceries
  • Eating out
  • Entertainment
  • Gas and transportation
  • Recreation
  • Clothes
  • College textbooks

Another way to figure out the reality of what you’re spending on varied expenses is to look at your transaction history for the month and see 1) How much in total you were spending on varied expenses that month, and 2) What those varied expenses were on. Do this for a couple months back to get a more realistic idea of what you are spending on varied expenses each month.

Organizing your varied expenses is where you have the most control over your budget. Whatever is left over after your fixed expenses and your monthly payments to your savings account is what you have to spend on all your other spending for the month.

Here is where you will list out what all those varied expenses might be and portion what you have left in the budget into them. Remember that you don’t necessarily want to portion out 100% of what’s left into these categories so that you can accumulate a comfortable cushion in not just your savings account but your checking account as well.

Budgeting Tips

Invest

Making investments is a great way to beef up your financial portfolio. There are probably a trillion ways to invest, but the idea behind investments is that you put money into something that will give you more money in return later. This is called compounding interest.
interest-rate
A helpful tip to remember when going into any investment is the rule of 72. This rule means that if you take 72 divided by the interest rate you’ll figure out the estimated number of years it will take for your interest to double your initial investment.

Personal Capital and Acorns are some of the most helpful investing apps you can use to step up your investment game.

Where should I put my budget?

Figuring out where to even put your budget can get complicated. You can use excel or make your own table in Word or Google Docs or any note taking program of your choice. There are also many free budget templates online that you can print out and use. Budget tools are all around if you take the time to look and decide on which ones best suit your needs.

Click here for a free budget worksheet from the Federal Trade Commission.

You can also use budgeting apps to keep track of all your bills, expenses, plans, and goals. Some of these apps even allow you to connect your budget to your financial accounts.

Control your spending

Sometimes it can be difficult to control your varied expenses throughout the month and track your spending. You can make controlling how much you spend each month easier by using a prepaid debit card. With a prepaid debit card you put money on it like a gift card to yourself almost. You can also use a similar method of spending control by just taking money out and only using that cash for your varied expenses each week.

PocketGuard is an app that can help you track your purchases.

Get a Side Gig

Getting an extra source of income can really come in handy. There are a million different kinds of side hustles any ambitious person these days can get into. You can babysit, drive for uber, or sell your own products. The possibilities are endless and it never hurts to have a little extra money each month.

Plan to Decrease Debts

Debt can be a real financial weight on your shoulders, but it can also be a necessary evil in order to get a house, get a car, get through college, and much more. Decreasing the amount of debts you owe can still help alleviate some of that weight and provide more financial comfort and peace of mind.

So it’s important to budget with paying down your debts in mind. You can pay down debts quicker by planning to spend more on that fixed/necessary expenses each month, by spending less on varied expenses, or by getting another job to provide more income to put into your debts each month.
 
Budgeting doesn’t have to be hard. All you really need is 4 lists and a calculator! Everyone should practice using a budget now so that you can control your finances instead of your finances controlling you.


READ MORE
Check out some of other Check City articles on budgeting:
Budgeting for Dummies
 
What is a Budget?
 
Budgeting Tips You May Not Have Thought of Before
 
3 Simple Tips to Building a Budget
 
Ways to Keep Track of Your Spending

How Much House Can I Afford?





Maybe you are a first-time home buyer and have no idea what you are doing, or maybe you’ve bought a home before, but this time you want to make sure you are being financially savvy in your decisions. Either way, there are so many things that go into buying a house that the overall process can be daunting. But by understanding how to budget for a home, and taking advantage of your local financial services, you can tackle the house-buying world and how it applies to you on an individual level.

The process for buying a house is not going to be the same for everyone. We all have different financial situations, incomes, salaries, bills, debts, expenses, and spending behaviors. We even all have different desires, wants, needs, and hobbies that go into how we spend our income and will therefore also affect our buying options when looking for a home. All of these variables should be carefully weighed and considered as you embark on your home-buying journey.

First let’s go over some key home-buying terms that you will want to be familiar with . . .

Definition of Key Terms

For an even bigger list of terms and definitions that you might need to know when buying a house, see the National Association of Home Builders’ (NAHB) Home Buyer’s Dictionary Page.

The Principal

The price of a home can also be referred to as the principal, especially by mortgage lenders. It refers to the base cost of the home, and does not include interest, fees, or closing costs. Many people use mortgages to pay for their home, meaning you’ll want to figure out how much mortgage you can afford when shopping home prices.

Down Payment

The down payment on a home is whatever the buyer can pay of the total price upfront. The less money put down in the beginning, the higher the interest rate on the mortgage will be, and the more the buyer will have to borrow from a lender. But the more you can put down in the beginning, the less you will have to borrow, and your interest rate will be lower as well. It is always advisable to pay as much for the house upfront as you can.

Homeowner’s Association Fees (HOA)

Some communities will be part of a Homeowner’s Association (HOA). Communities with an HOA are part of a planned community that often comes with communal benefits and amenities, like a pool, or snow ploughing. HOA’s also often come with certain rules for those who live in that community—rules about lawn upkeep and such—so make sure you understand the requirements and benefits of the HOA before committing to a house in their neighborhood.

Property Taxes

Owning a home and property will require you to pay property taxes each year. The percentage you pay in property taxes will depend on the location and value of your home. When looking in different locations for your home be sure to also look into what the property taxes are like in that area.

Mortgage

A mortgage is the loan and payment plan you go on with a lender to eventually pay off your home. Unless you can afford to pay the entire price of the home upfront (100% down payment), you’ll need to take out a mortgage with a lender to help eventually pay off your home through monthly mortgage payments instead of all at once.

Mortgages come with different time periods to pay back the loan. There are 15-year mortgages, 30-year mortgages, and a 5/1 Adjustable Rate Mortgage (ARM).

  • For a 15-year mortgage your payments are going to go up more and more each year and your payments are going to be higher in general. But you’ll pay less interest overall and pay off your mortgage quicker.
  • A 30-year mortgage is going to allow for smaller payments, but in the long run you will pay more in interest, and it will take longer for you to pay off your mortgage.
  • A 5/1 adjustable rate mortgage is another kind of 30-year mortgage, but your interest rate stays the same for the first five years of the loan. After that initial five years, your interest becomes subject to whatever market changes there are for interest rates.
Homeowner’s Insurance

Homeowner’s insurance is insurance for your home. It can protect you when disasters, natural or otherwise, affect your house. It can even cover some of the costs for damages caused by natural disasters or crime. It can also protect your possessions in these same scenarios and help you to replace whatever was lost or stolen. It is not illegal to not have homeowner’s insurance, but many lenders will require it. There are two kinds of homeowner’s insurance:

  • Cash-value coverage will help cover the costs of damages when they occur, but won’t usually be enough to rebuild your home should you need to.
  • Replacement-cost coverage is insurance that will cover the total cost of your house if you should ever need to rebuild it due to disasters. Most advisers will recommend you get this kind of homeowner’s insurance since it covers more.
Private Mortgage Insurance (PMI)

PMI stands for Private Mortgage Insurance. It is a form of insurance that lenders use to reduce their risks when a borrower can’t afford a down payment of at least 20 percent. Your lender will require a PMI when they are lending you more than 80% of your home’s total value. PMI is also a very costly form of insurance, but there are ways to get rid of it later by refinancing.

Interest Rate

Interest rate is a percentage of money added to your loan as payment to the lenders for borrowing a home loan from them. The interest rate you get on your mortgage will be determined based on your credit history and score. Usually the interest rate will be included in your monthly mortgage payments.

Credit History

Your credit history comes from your credit report and shows your history of paying debts and bills. It is meant to show how often you are on time or late in payments and your overall level of responsibility with your finances. Your credit history and score are what lenders will look at when deciding the interest rate they will put on your mortgage.

Credit Score

Your credit score differs from your credit history in that it is an overall score calculated from your credit history to show how much of a credit risk you are for the lenders. Instead of looking at an entire credit report or history, lenders can simply look at this score to get a quick, overall idea of your credit’s well-being.

Gross Income

Gross income refers to your total income before taxes.

Net Income

Net income refers to your total income after taxes. It is also referred to as “take-home pay.”

Understanding Mortgages

When applying for a mortgage, there are four main factors listed below that lenders will consider and that will influence the kind of mortgage and interest rate you can get:

  • Your income
  • Demands on your income, like debts, monthly bills, loans, and other expenses
  • Your credit history
  • Your credit score
Types of Mortgage Lenders

There are also five general categories of lenders that you can get your mortgage from, and each one comes with its own pros and cons.

  • Federal government agency lenders
    • Federal Housing Administration (FHA)
    • US Department of Agriculture (USDA): These mortgages can be for homes in more rural areas. The USDA can also be used to rebuild and rehabilitate old properties that qualify.
    • Department of Veterans Affairs (VA): These mortgages are for veterans. You can even use them to make your home more accessible.
  • State government lenders
  • Nonprofit lenders
  • Local lenders, banks, and credit unions
  • Larger banks and lenders

The 5 Steps of Buying a Home

Step 1: Look at Your Credit Score

When starting the house hunt many people like to begin with the fun part by getting on Zillow and browsing for the perfect home. But you can’t figure out how much house you can afford on Zillow. If you are serious about buying a home, then you should look at your credit score before you start looking for a home. While looking at your credit score you will want to keep your eye out for the following:

  • See where your credit score is at—how good or bad it is.
  • Check your credit report for any errors and have them corrected.
    • Get on this now because if you need to correct your credit report, the changes will take some time, even months, to correct.
  • Look for ways you can better your credit score.
    • Figure out the reasons your credit score is lower than you want and develop plans to fix those issues or habits.
    • Paying down your general debt will also help your credit score.
Step 2: Do Calculations and Budgeting

The big question most people want to know when looking for a home is how much can I afford? There are many methods for figuring out your own budget for buying a home. Which method you choose will depend on what feels most comfortable for you. But in general, financial advisers will tell you to spend 2.5 to 5 times your annual salary on a home. Again, it is ultimately up to you where you decide to land in this range.
Method One: Based on Your Savings
People are generally advised to pay at least a 20% down payment. In order to figure out the amount of house you can afford based on what you have saved for a down payment, use the following equation:

Method Two: Based on Your Annual Income
If you want a quick estimate of the amount you can afford for a house, below is an easy calculation you can do based on your annual income.

Method Three: the 28/36 Rule
The 28/36 rule is a recommendation that your budget has no more than a 28% front-end ratio and a 36% back-end ratio. Lenders will look at both these ratios to decide your mortgage loan, so it is important to understand where you stand according to this ratio because this is how most lenders will decide what you can afford to borrow from them. When budgeting for a home, you can use this ratio to see if you meet these requirements and to see how financially ready you are to buy a home.

  • Front-end refers to your total housing payments (PITI) to income ratio.
  • Your total housing payments is not just referring to the Principal, but also the Interest, Taxes, and Insurance (hence, PITI). This front-end ratio means that you should not spend more than 28% of your monthly gross income on your total monthly mortgage payments.

  • Back-end refers to your total debt to income ratio (DTI).
  • This back-end ratio means that you should not spend more than 36% of your monthly gross income on debts. Debts include credit card payments, child support, auto loans, student loans, and any other debts you may have.

Dave Ramsey’s Advice

Dave Ramsey has influenced and guided a lot of people in their financial affairs with his knowledge. Below is some of his basic advice for buying a home:

  • Pay a 100% down payment in cash when you can.
  • Choose a 15-year mortgage over a 30-year mortgage.
  • Keep your mortgage payments (plus insurance and taxes) no more than 25% of your take-home pay (net income).
    So unlike the 28/36 rule, Dave Ramsey advises that your front-end ratio be no more than 25%, instead of 28 percent. He also advises that you use this percentage on your net income, or take-home pay, rather than your gross income, because this will better reflect the money actually going to your account after taxes.
What to Remember When Budgeting:

The Mortgage:
Just because a lender qualifies you for a certain amount that does not mean you should use it all. How much mortgage you can qualify for is very different from how much mortgage you should use. The maximum loan amount that your lender is willing to let you borrow, does not reflect your personal budget and what you actually want to be paying each month. This is why being able to do your own budgeting and calculations is important because then you can see and decide for yourself how much you are willing to borrow.
The Down Payment:
When preparing to buy a home, what you really want to be doing is preparing for the down payment. The higher a down payment you can afford the better.

Your down payment should be at least 20% of the total price of the house. But, you can find loans that accommodate lower down payments if that’s what you require:

  • Fannie Mae, Freddie Mac, the Federal Housing Administration, the USDA, and the Department of Veterans Affairs are just a few options for low down payment mortgages.

Other Costs and Fees Associated with Buying a Home:

  • Closing costs and fees. Some examples of what may be included in the closing costs are appraisal fees, loan fees, attorney fees, and house inspection fees. Closing costs and fees will vary and depend on local tax laws and the cost of your home. If you want to estimate how much your closing costs might be, they generally range between 2 and 5% of the cost of your home.
  • Taxes, insurance, and HOA fees for certain neighborhoods.
  • Home maintenance, upgrades, and repairs: Homes need regular maintenance, remodeling, normal upkeep over the years, and repairs when emergencies and damages suddenly occur.
  • You’ll need to potentially buy appliances, furniture, and decorations.
  • You’ll be responsible for paying all your utilities, which can include, heat, electricity, water, sewage, trash removal, cable television, and telephone services.

Your Other Financial Goals:
Buying a home is a big financial goal and dream in life, but you probably have other financial hopes and dreams as well. Don’t forget to factor these in as you budget and look for a home. Some of these other goals may include general savings, saving for retirement, buying a new car, raising children, paying for their college, starting a business, vacations, trips, and any other hobbies, interests, or personal endeavors that may also require a place in your budget.
Know Yourself:
It is important to understand the kind of spender you are. This is another reason doing your own budget for your future house is a good idea, because then you can thoroughly be aware of your spending habits and therefore be more realistic when it comes to budgeting in a mortgage as well.

But you also need to be mindful of how you handle debt. For some people, being in a certain amount of debt can be stressful, while others don’t mind it so much. Be aware of whether having a larger mortgage on your hands is going to bother you or negatively impact your internal well-being. This will also factor into what you decide to do financially about budgeting for a mortgage.

You can also hire a personal financer to look over all these factors for you and take a more personal, detailed look into all of the many costs involved for you individually. Hiring a professional may be wise if you do not have the time or patience to look into these variables yourself. It is less wise to rely solely on a lender’s analysis because they will only look at income and credit history, and not consider your personal, bigger picture.

Step 3: Find Your Agent

Buyer’s Agent
A buyer’s agent is the kind of agent you want to be working with directly because they are meant to work with the buyer (you) and will thus work to get you the best price you can get.
Seller’s Agent
This is not who you want to be working with directly because they will be trying to get the best price for the seller. Though usually the buyer and seller agents will mediate offers and agreements and work alongside each other in that way.

Now it’s time for the fun part—the home search! After you’ve done all your budgeting and have all your ducks in a neat, planned-out row, you can begin to search for the home that fits your wants, needs, and budget!

Remember all the budgeting calculations you did above when you are filtering in your price range. It’s recommended to select a price range 10% above and below your calculations as a cushion when you are searching.

What to look for in location:

  • A healthy economy: low unemployment rates and good incomes
  • A good real estate market: look at whether the homes in the neighborhood are selling well, meaning they sell close to or above their asking price.
  • A healthy community: look for a range of ages in the residents and families nearby.
  • A good school district: even if you don’t have children, being in a good school district will help your home retain its value and make selling your home easier should you need to sell later down the road.
Step 5: Enter Your Contract and Close the Deal!

Once you’ve made your choice you can work with your agent to make an offer to the sellers. If all goes through, your agent will draw up the papers and officialize a closing date, which is usually 45 to 60 days after the offer was accepted by the sellers.

When entering into a housing contract you will first want to make sure you have the following common contingencies in your agreement. This means that your contract relies on these personal requirements being met first:

  • obtaining a mortgage
  • getting a home inspection

Buying a home is a big deal and naturally you want to be as knowledgeable and savvy about the basics as possible. By applying these basic rules you will know how to buy a home in the smartest way possible.


READ MORE
Visit the Department of Housing and Urban Development (HUD) for seminars and counseling about buying a home.


Visit the HUD’s common questions page for even more answers to your home-buying questions.


Use an online “How Much House Can I Afford” calculator to plug in your numbers and quickly see how much house you can afford.


Listen to NPR episodes about home-buying to learn more about the home-buying world.


FEATURE IMAGE BY BRENO ASSIS

Working Your Way to the Excel Big Leagues

thursday

If you’re a little behind the times, tackling your budgeting and finances through online sites, tools, and apps, might be a little intimidating.

There are some great sources out there like Quicken, You Need a Budget, Mint.com, etc., but if you aren’t ready to trust your finances with your budding computer skills, there is an alternate way to get started: Microsoft Excel.

The Beauty of the Basics

If you think it’s time to move from paper to electronic budgeting, Excel could be a great transitional tool for you. If you aren’t familiar with Excel, it is Microsoft’s spreadsheet program. It is perfect for budgeting, because it can be used to do math, formulas, tables, charts, and graphs, all tailored to your personal needs and preferences.
The great thing about excel is that it is a step up from paper to electric, but is still very simple, clean, and clear. It’s almost like having your old paper checkbook, except it does the math for you.

But perhaps most importantly, you won’t risk messing up real money like you might on an online program if you make a mistake. There is no button you can push that will wipe out your funds, sign you up for unwanted services, or enable hackers to access your accounts.

*But remember – most online programs are very safe. You won’t risk the aforementioned tragedies using trusted online software and services. But if you are worried regardless, Excel is a great electronic stepping stone for you.

Using Excel

Although with a little tinkering around you can figure out how to use Excel’s basic functions without help, there’s no harm in asking a more tech-savvy friend or relative to set up some nice budgeting tools for you.

In Excel, there are endless possibilities to the styles and methods you can choose to use for your budgeting and finances. For example, you can create weekly or monthly tables, basically identical to your checkbook. Add a mathematical formula to the table, and it will do the math for you.

You can set up different tables or tabs (like pages) devoted to certain accounts, categories of spending, specific credit cards, and so on. You can even link information from each table to one consolidated place to track your overall financial situation.

If you are an Excel beginner, you may need some help setting up these tables and functions. But if you do know your way around Excel, don’t be afraid to experiment around with different systems of budgeting and work out a unique system that works for you!

Additional Perks

Even beyond convenience and clarity, using Excel for your budgeting/finances comes with some extra perks:

  • It’s free
  • It’s a great way to keep reliable financial records
  • Some banks allow you to download financial statements directly to Excel
  • It’s customizable to your personal preferences/style/use

Stepping Stone

If you try Excel and enjoy that style of budgeting, great! But if you’d like an even easier or more sophisticated and direct style of banking, Excel will act as an excellent stepping stone to online programs.
Still stuck on paper? Take the first step to electronic budgeting with your very own Excel spreadsheet!

Before You Use the Mint App

thursday

News about the Mint app has been buzzing for quite some time now, and though it is an extremely popular finance app, there are still plenty of people who haven’t jumped on the bandwagon yet. This scoop into the inner workings of the Mint app should help you make a smart decision to ensure that your finances are in qualified hands.

What Is It?

The first thing you need to know is, of course, what Mint even is. Is it an app that locates the nearest mint chocolate chip ice cream? Not so much.

In fact, Mint is an app that brings all of your financial accounts into one place—this makes it easy for you to track your income and spending, even if you are working from several banks and other financial institutions.
The most exciting part? It’s completely free. You can simply download it from your device’s app store, or access your account online and then you’ll have access to your finances on the go at no cost.

It will even allow you to create a budget, track your spending, and set and meet goals. Not Bad, huh?

Setting Financial Goals

One of the best features of Mint is the goal setting potential. With Mint, you can look at all of your finances and set long and short term goals. And because all of your finances can be viewed in one app, you don’t have to go through all the hassle of checking each of your bank accounts individually.

With Mint you can track your progress as often as you would like, and receive monthly emails that let you know how you are doing. If that’s not enough, it will also give you advice on how to reach your goals more quickly. In conjunction with a financial adviser, Mint can truly help you change your financial situation.

As you start meeting your goals, you will begin to feel the benefits and gain the confidence to set and meet even more killer goals.

Will Your Financial Information Stay Secure?

At this point you may be getting excited, and perhaps you are also wondering if it is too good to be true. Not to worry, your funds and financial information are secure with Mint. They use the same level of security as banks, so your information is completely protected.

And, in fact, Mint is a tool specifically for viewing financial information, it doesn’t allow access to your funds. That means if someone stumble upon your open Mint app, they won’t be able to touch your assets.

In addition, Mint gives you extra security by informing you of unusual charges or changes in your finances, so you can stay on top of your finances at a glance. Now, that’s security.

Taking Action

Alright, so now you know the details and it’s time to take action. Make viewing your finances as simple and effective as possible and consider downloading Mint today. With the help of this app and other financial resources, you can see a huge improvement, so take action today!

The Secret to Good Credit, Be a Responsible Consumer

If you are trying to figure out how you are going to fix your credit score yourself, don’t get too worried, it is possible. You can easily fix your credit score yourself if you understand the importance of the different contributing factors to your credit score.

The best way to fix your credit score yourself is to stay out of credit problems. By keeping your credit score high in the first place, you can be sure that you do not have to scramble and struggle to get your credit score back to a healthy number.

Plan Ahead on Purchases

First, you should be sure that you know how you are going to pay your bills on time. When you take on a new expense, you
should make sure that you have adequate funds to cover the expense and you should understand exactly how you are going to make your payments. Creating a payment schedule and doing what you can to make your payments automatic is a great way to ensure that you are going to make your payments on time and make them in full.

Any time that you are going to take on a new expense, you should sit down and figure out if you can afford it or not. Getting into this habit early is a great way to ensure that you are able to stay in control of your finances throughout the rest of your life. Creating a budget that you know you are going to be able to stick to is an awesome tool to make sure that you are always living within your means.

Don’t Miss Loan Payments

When you miss payments, it reflects heavily on your credit score. If your credit score takes hits on a regular basis from late payments then it will make it harder for you to get short term loans and long term loans in the future. Make sure that you stay current with all of your bills. If you have not been current in the past, it is important that you get current as soon as possible. By getting current, you can be sure that you are not going to have late payments that will drag your credit score down.

If you have a credit card, you should be sure that you understand how you are going to use your credit card wisely. Your credit card can be a great tool to establish a quality credit score but you have to make sure that you are using your credit card wisely. It is important that you take the time that you need to pay off any debt that you have on your credit cards and keep your balance on your credit cards as low as possible.

By keeping your balance on your credit cards low, you can be sure that you are able to demonstrate your responsible spending habits. Creditor companies like to see that you do not max out your credit card on a consistent basis. If you do use all of the credit line on your card, it is important that you understand how you are going to pay it off quickly. Pay off your credit line quickly and you can be sure that your high balance is not going to negatively affect your credit score.

Applying For Credit, Can Hurt Your Credit!

Applying for a variety of new credit accounts in a short amount of time can hurt your credit score. You should do what you can to slowly build your credit and let time work in your favor as you are working on building your credit score.

Checking your own credit report is encouraged and will not negatively affect your score. Some people get afraid to request their score but checking your score is a great way to ensure that you are going to be able to track your progress and do what you need to do to get your credit score where it needs to be. Checking your score on a consistent basis and tracking your progress may give you the encouragement that you need to keep working.

Stick With It

Finally, make sure you stick with the good habits that you establish. Throughout the time that you are working on improving or repairing your credit score you should understand that the habits that you are forming will be beneficial to maintain throughout the rest of your life. Just because your credit score improves you should not forget the new habits that you have formed.

Develop a process by which you know you will be able to keep your credit score high. Take the time that you need to find a system that works with you and then do what it takes to make sure that the system is going to work for you for many years to come.

Staying Within Your Budget Successfully

When you know that you are going to be strapped down with a tight budget, it is important that you are focused on creating a budget that is actually going to work for you. Having a budget that does not accomplish your financial goals is pointless but if you are not wise about giving yourself some wiggle room in the budget it can get extremely frustrating.

While you are working on your budget, it is important that you understand where you can cut costs somewhat painlessly. When you find ways to minimize the money you are spending and you do not really notice that you are no longer spending that money, you may save a lot of money when all is said and done.

You Have to Start Somewhere

Start by figuring out where all of your money is going. Although this may sound silly, it is important that you understand where your money is going on a daily basis. Keep a record of all of all of the money that you spend to ensure that you know exactly what you are spending your money on. Keep an accurate record of what you are spending for a short period of time and then use that record to go back through and assess your spending.

Needs vs. Wants

When you are assessing your spending, you should be sure that you can take the time to figure out what is necessary and what is not necessary. Depending on your financial goal, you may find that you have a lot of money left over after the essentials or you may find that you do not have a lot of spare money. Regardless of what you find after watching your spending, you will want to look through your records and see where you can save money.

There are many different ways that you can choose to save money when you are living on a strict budget. Don’t be afraid to make some drastic changes in your lifestyle to ensure that you are able to meet the goals that you have set for your budget. You may want to start by assessing where you spend your money for food and drinks.

When you are spending money on food and drinks outside of the grocery store, you may find that you are spending a lot of extra money. Grocery shopping rather than eating out on a consistent basis will end up saving you money in the long run. When you do your grocery shopping, you should be sure that you are looking for sales and good deals. You may even want to look into a local farmers market option. When you shop at a farmer’s market you can be sure that you are getting fresh produce and often it is much less expensive than shopping at the grocery store.

Take the time that you need to find the grocery store that will provide you with the best option. You should also understand how important it is to minimize the money that you are spending on snacks. When you are out and about, you should be well aware that small charges charged on a consistent basis will start to add up quickly. Pack your own snacks or take time to purchase your drinks in bulk and bring them from home.

Plan Ahead

If you know that you are going to need to make a big purchase in the future, it is important that you take the time that you need to look through your options and secure something that fits within your budget. There are a lot of people that end up spending too much money because they do not take enough time to do research.

When you do your own research, you may be able to find a better deal on a large purchase. Don’t be afraid to take the time that you need to ensure that you are getting the best deal for your money. With the internet, you can be sure that you are able to do a lot of research without even leaving your home.

Being on a tight budget can feel restrictive. As you create your budget and stick to your plan, you may find that you have a lot more financial freedom than you did in the past. You will be able to pay off debt in a timely manner and use your money for the things that you know you are going to need.

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