Setting a budget is a time honored tradition, it’s like making a New Year’s resolution, in that the hardest part is sticking to it.  Everyone wants to get out of debt, but it’s not as easy as we all think.  There is no quick fix, no magic pill, and no hidden treasure chest in the back yard.  Take a look at your current spending habits to see where you can make changes to help you stick to your budget.  To make your budget a reality, set yourself limits that you know you can stick to and then come up with creative ideas on how to keep yourself in line.  Here are some suggestions:

1. Low-Cost Items:  Take a look at the low-cost items that you routinely use and see where you can save.  Maybe the toothbrush you buy at Target for $3.50 can be purchased at the dollar store for only $1.00.  Try replacing your daily latte with a cup of regular coffee mixed with hot cocoa, or opt 2 days a week to drink the free coffee at the office instead of going to the local latte shop.  Check out your liquid soap, it cost usually 3 times what a bar of soap costs and is used up quicker due to the packaging.  Using these simple ideas for the low cost items that you routinely purchase can save you $10 to $15 dollars a week which will add up to $520 to $780 a year.

2. Eating out:  Restaurants are a great way to treat yourself, but the dollars will add up quickly.  Eating out once a week at $12 dollars a lunch adds up to $624 a year.  If you eat out more than once a week you will double or triple that amount.  If you cannot give up eating out, then order a meal that can at least be divided and saved for a second lunch to feel like you are eating out twice a week. While out, try ordering water, rather than a costly beverage to keep your check lower.

3. Discount shopping:  While everyone loves designer labels and dressing well with today’s fashion, there are many ways to make your money last longer.  There are many discount stores that carry designer labels at a much reduced cost.  Most of these stores even do additional markdowns after the clothes have been on the racks for some time.  Purchasing out of season is also a great way to get discounted brand name clothes at reduced prices.  Buy a great sweater in May could save you up to 50% off the original price, put it in the closet until next fall and it will be just like new. (more…)

 If you are anything like me you have done two things this holiday season that may spell doom for you in 2008.  The first is you waited to the last minute to holiday shop and now have nothing but fruit cakes and Christmas Tree air fresheners to give to your loved ones as gifts this year (something they will certainly remember in 2008).  And second, you probably bought the offending fruit cakes and air fresheners on a credit card since you didn’t have the money to buy them in the first place.

According to a recent Associated Press analysis of credit card debt from October and November, the value of accounts at least 30 days late jumped 26% to $17.3 billion in October compared to a year earlier. And some of the nation’s biggest lenders report increases of 50% or more in the value of accounts that were at least 90 days delinquent when compared with the same period a year ago.

For most of us who relied on our favorite plastic shopping companion to fill out our Christmas lists this year that means record balances to look forward to in the New Year.  Record balances that due to mounting mortgage expenses, a weakening job market nationally and 2005 changes to the bankruptcy law (making it more difficult to eliminate consumer credit card debt), may make it almost impossible for consumers to keep on top of it in the months to come.

So what’s the average consumer with $1000’s in credit card debt to do in 2008?  Consider these five suggestions to get your debt under control in the New Year:

1. Stop Using the Cards - seems simple enough? Stop using the cards now and put a kibosh on accumulating more debt on top of the debt you couldn’t afford in the first place. Put the cards away, cut them up completely or make a promise to yourself that they will only be used again in the event of an emergency. And no, new shoes does not an emergency make.
2. Pay more then the minimum - Let’s say you are $5,000 in credit card debt with a 16% interest rate and a minimum monthly payment of $110. Did you know that just paying the minimum means it takes 25 years to pay off your debt and by the way, that $5000 debt ended up costing you $12,000 in total factoring in that extra $7,000 you just paid in interest. Yet DOUBLE your minimum payment to $210 and pay off the card in 28 months, saving you about $6,100 in interest. (more…)

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With holiday spending in full swing so is its evil stepsister, credit card spending.  Recent stats by the National Retail Federation show that the 2007 holiday season is off to a record start with recent “Black Friday” sales by US shoppers rising 8.3% to a record $10.3 billion.  Figures for the following “Cyber Monday” shopping holiday, the Monday following Thanksgiving, also showed a healthy increase with a new one-day record of over $700 million in total purchases.

Unfortunately, most of this record consumer spending was paid through the use of credit cards.  Most consumers don’t hesitate to place $300 in goods on a credit card but certainly would think twice if they were forced to purchase the same amount of goods solely with cash?  It is thus no surprise that the average credit card debt per US household was $9,659 at the end of 2006 and is expected to rise yet again in 2007 as it has every year since the early 1990’s.

What will this rampant spending mean for the New Year?  According to John Silva, chief economist for Wachovia, “(Consumers) will still be spending money (in 2007) but it will be on credit card interest and minimum payments, not on apparel or eating out.”  Silva actually believes that the US economy may be heading towards recession in 2007 and puts the odds of such an occurrence at about 30% — certainly high enough to make most in the financial industry more then a little bit nervous.

What does this mean for you the consumer?  Add in the continued price of $90 oil,  the slide of the home housing market, an increase in the price of milk and the constant slide of the price of the US dollar abroad, and you get a continued difficulty for the average American both home and abroad in 2008.

We all want to give the best we can to our loved ones during the holiday season but doing so at the risk of your future financial sanity, may not be the best way for you to approach your holiday shopping this year.

Remember!  If you feel hesitate buying that purchase with cash, maybe you shouldn’t be buying it in the first place.  Your 2008 credit card bill may just thank you.

The holiday shopping season is here and with it, its inevitable companion, debt!  Who doesn’t overspend during the holidays?  Does it make it any better if that overspending is to the benefit of another?  We tell ourselves that it’s okay if our spending during the holidays is a little “out of control” if the end-result is a happy child, friend or family member AND we didn’t spend it on ourselves.  But is this really healthy?

According to the National Retail Federation, the average consumer spent a record $347.44 per person during the recent 2007 Black Friday holiday shopping event.  This is a marked increase of 4.8% over last year.  Add to that fact that the average family of four here in the US spends between $4000-6000 during the Christmas season and you can see how debt can accumulate quite rapidly during the old holiday season.

So what can you do?  How do you give your loved ones that “Christmas to remember” without getting yourself into knee-deep debt in the New Year?  Consider these 6 tips to debt proof your life this holiday season and start your holiday season out on a solvent foot.

1.  Cut your spending:  Seems simple enough.  If you spent $2000 last year, try to spend $1000 this year.  Not that easy to do though is it.  Mom and dad must have that new top of the line juicer and who is going to buy little Johnny that PS3 if not you?  Don’t consider eliminating the purchases all together, but if you can’t find a great comparison shopping deal on the items you’re looking for, then maybe something similar and cheaper may be the way to go.  Buy mom and dad a mid-range juicer and get little Johnny a Nintendo Wii - it’s cheaper and the better system anyway.

2.  Get organized:  So how many presents do you really need?  If you’re anything like me, I tend to always be surprised with unexpected gifts that need buying on a regular basis. Uncle Larry and his 4 kids are going to be visiting this year, no kidding?  Learn from my mistakes.  Make that list and check it twice - cut some people if you have to.  Plan a budget and stick to it and find out now who is coming and what needs to be bought if anything.  As for Larry and his 4 kids, consider a fruit cake or a popcorn variety mix can.  That will work well within your budget.

3.  Give an experience:  Thing outside the box this holiday season. Give your loved ones the gift of time.  Be creative and watch your holiday expenses plummet.  Give mom and dad a weekend of your undivided attention (or if they are like my parents, offer to disappear for a week altogether).  Take little Johnny to the zoo or plan a family holiday outing to the bowling alley.  Get creative and slice your expenses in half and reduce your gift giving stress at the same time. (more…)

Your credit score is an important part of your financial future.  If there have been blotches on your credit score in the past, you may want to start working on fixing them before they become stains.  Take advantage of the Fair Credit Reporting Act (FCRA) to get a copy of your credit report (free!) so that you can see what your current credit situation is.  Once you know your credit situation you can determine how to best fix it.  Not sure how much your current credit cards are really costing you? Make sure you check out our free credit card payment calculator to get an idea, then take the below steps to heart.

The following 5 steps will help you fix your credit - try them today:

1. Pay Your Bills on Time:  Paying your bills on time for even 1 month can raise your credit score by a number of points.  Paying your bills on time for 12 concurrent months will raise it quite a bit higher.  Putting together a written calendar or an on-line calendar can help you remember what days each bill is due.  Some online banking systems will even allow you to set up reminds for when your bills are due, take advantage of these if you have trouble keeping track of the dates.  Writing yourself reminds or setting up auto bill pay on your bank account or credit cards will also help, make sure that you will have enough balance in the account before the auto bill pay goes into affect so that you do not rack up unexpected fees for bounced checks or lack of funds.
2. Keep Your Credit Cards in Check:  The offer of 20% off at a local store to sign up for their credit card may be hurting your credit score.  Opening these accounts to get the discount and then closing them does not always help, closed accounts stay on your credit report for a number of months and may affect your credit score.  If you do use credit cards, manage them wisely.  Having low balances will incur less fees, and will make you look more responsible. On the other hand, maxing out your credit cards can lower your score and make you look like more of a risk.
3. Don’t rely on Bankruptcy: While bankruptcy will wipe away some debt, it does not wipe it all away and can actually cost you quite a bit to file.  Filing for bankruptcy can cost you anywhere from $300-$1000, consider how much debt you will actually be wiping out before you file.  Also, filing will be a bad hit on your credit score and in some cases can drop your score a few hundred points. Bankruptcy’s can be reported in some states on your credit report for up to 10 years, so think about your future as well as your current position before you file.  Some lenders will not even touch applicants that have a bankruptcy on their file. (more…)

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