Is there a Money Wasting Hole in your Budget?

The possibility that you have flaws or “holes” in your budget is actually quite high and, sort of like a leak under your sink that you don’t know is there until you start smelling the stink of rotting plywood, you probably haven’t even noticed them. But, just like that slow drip under the sink, these small holes in your budget can, over time, add up to quite a bit of wasted money.

The solution of course is to check your budget occasionally, search for “holes” that might be leaking money and plug them in immediately. Below you’ll find quite a few excellent tips that will help you to do just that, including resources and advice that will help you to get your budget in order and cut away and any unnecessary expenses that might be leaking money right under your nose without you noticing.

Budget hole: Carrying a balance on your credit card.

Carrying any type of balance on your credit card from one month to the next isn’t a good idea but, unfortunately, many people carry huge balances on their credit cards over months and even years. This can absolutely drain your money, lower your credit score and even cause you to pay higher interest rates on new loans. For example, if you have $2000 on your credit card and that card charges you and 18% interest rate, you’re wasting $360 every year solely on interest. That’s about the same amount as the car payment on a midsize luxury car! If you can plug this hole and pay your credit cards off quickly, you’ll potentially save thousands of dollars.

Budget hole: Ignoring generic and buying Brand Name products.

No matter what the product, from groceries to shoes and even prescription drugs, buying nationally known brand names will generally cost you between 10 to 30% more than their generic equivalents. That’s a lot of extra money to pay for the sake of having a brand name and the truth is that the extra cost is usually because of the high amount of money that brand is paying an advertising fees and packaging design. When it comes to prescription drugs the extra cost can be substantial. For example, the cholesterol drug Lipitor will cost you $154 for a 30 day supply but its generic version will cost you just over $70 or half as much. Buy generic and you’ll plug this hole quickly and easily.

Budget hole: Not paying bills on time.

Paying any bill late, including credit cards, utilities, car payments, the cable or cell phone bill and so forth, is one of the most common, and most detrimental, budget holes to be found today. Missing a credit card payment, for example, will cost you at least $25 in late fees and, if it’s the second time you’ve paid late within the last 6 months, will cost you even more. Late payments affect your credit score as well since they account for 35% of said score, carrying more weight than any other single factor. The easiest way to plug this hole is to have a system in place (any kind of system, as long as it works) to make sure that every bill, every month, is paid on time.

Budget hole: Purchasing insurance you don’t really need.

Here’s the thing; if you’re single or, for whatever reason, don’t have any dependents, you don’t need life insurance. Credit card insurance is practically unnecessary as well, especially if you pay your cards off every month and, unless you are extremely accident prone, paying for extra insurance on your rental car isn’t necessary either. When it comes to your mortgage, a regular term life insurance policy is much more comprehensive than most mortgage life insurance policies. The best way to plug this budget hole is to talk to an insurance specialist that you trust implicitly and determine exactly  what insurance, and how much, you need for your age and situation.

Budget hole: Spending more for gas and oil than necessary.

We’ve talked about this many times in our blogs on how to save money on fuel. The fact is, unless you have a very high-end sports or luxury car there is absolutely no need to purchase premium gasoline. Not only that but today’s new cars can go 5000 to 7000 miles between oil changes (and most have sensors that will tell you when it’s time to do so). When having your car’s oil changed, unless you live in an area of the country that is exposed to extreme heat or extreme cold for an extended period of time, you can usually get by on regular motor oil and avoid the “premium” oil that comes, of course, with a premium price.  Plug this hole simply and easily by using regular gas and regular oil in your regular car.

That’s it for today’s blog but, in the next few days, will have a second with even more budget holes that are leaking away your hard-earned dollars. We hope that you enjoy today’s blog and, if you have any questions or would like to leave us any comments, please do will get back to ASAP.

How to Manage Money in College

College is a fun time, as well as a time of opportunity. From learning, to living, to relationships, it provides the opportunity for young people to grow up and learn how to become functioning, healthy adults.

In addition to all those benefits of college, the school years can also teach a young adult how to save, manage and track their money and purchases while on campus. And for many people, it can be the first time that a budget and the realities of managing and saving money come into play. Here are a few money management tips.

Make A BudgetAnd Stick To It!

This is critical no matter what you do, or where you live as a college student. Regardless of the amount of money you may have, it’s important to understand what you are able to pay for, and what you need to be saving.

Make a budget that you can live with reasonably – food, clothing, entertainment, and beer – and pledge to stick to it! No unnecessary purchases allowed, though you can build in some fun money to your budget so you’re not all business.

Hit Free Events For Food

One of the best parts of college is the free food. Pizza is everywhere! Hit up free on campus events for food instead of constantly buying food wherever you are, and save some money. In the process, you get to hang out with great people, and meet new friends.

Plus, when you join a few great organizations that offer all this free food at events, you can really help boost your resume and maybe even help make the difference in whether or not you get a job in the future!

Work In Your Free Time

If you’re able to do it, take on a part time job now. Whether it’s on campus, or off campus at a restaurant or company, it’s never too soon to start working and saving money as you go through college.

Take on a job that you can handle and make a little money now, so that when you graduate, you not only have some money to be flexible with, but you’ve also got valuable work experience that you can use right away.

Saving and managing money in college can be a true reality check. Whether it’s making sure that you aren’t overpaying on products and services or making sure that you’ll have enough in the bank when you graduate, it’s critical that you learn to manage money properly if only for the reason that it will build a great habit for your future as a responsible adult.

Ways to Make a Family Budget Work

Budgets are critical things that every family must undertake at some point. Regardless of income, families cannot spend above their means, lest they lose important items like homes, cars, and more. Once a family overspends, losing these items may affect them emotionally and psychologically, and harm a family for years to come. Setting up and figuring out your average family budget is critical to living a financially responsible lifestyle.

Because of that, it’s critical that budgets are used – and stuck to – in order to make a family work efficiently. Once you get the hang of it, though, you can learn to love the budget and still have fun for all the affordable stuff that matters.

Stick To It

The first tip is the most obvious; a budget doesn’t work if you don’t stick to it! Make sure that once you decide on a budget and specific rules, that it is something you can stick to and live with adequately. If you are unable to stick to a budget, well, what good is it anyways?

Commit to a budget that is realistic in your life style, and stick to that monthly budget by whatever means necessary, though it may mean forgoing some things like clothes, meals at restaurants, or entertainment ventures.

Have A Little Fun

Plan within your budget to let loose occasionally and have some fun. That is, create some areas of flex money that can be spent on fun things to get everyone together and relaxed, even though they may be living on a budget.

By creating a space to have some fun within the budget, you take away some of the stress and anxiety that comes from living on a fixed income and improve the outlook and attitudes of some of the younger family members living with the budget.

Get Everyone On Board

Before you decide on a budget that works for you personally, get the whole family together. Make sure that everyone – big, small, and everywhere in between – is on board with your proposal and understands the reasons behind getting the budget together in the first place.

Once everyone is on board, it becomes easier to create the budget and make sure that everyone is happy, aware of the rules and regulations, and agreeable to what is happening in the family.

Budgets are difficult to live with, but it’s not the end of the world. You can find a happy balance between budgeting your purchases, and having the family enjoy their free time, by sticking to a realistic, sensible budget. Make it carefully, consult everyone, and stick to it, and you’re there before you know it!

Why is Budgeting So Important?

Budgeting is allocating the income to cover the expenses. Creating a budget is not difficult. Some people have a difficult time following it. A budget is a financial plan that can help you solve some financial problems. But is budgeting really important? Do you really need a budget? Will it take away your financial freedom? There are many reasons why it is important. Let’s take a look at some of them.

Living on a budget will not take away your financial freedom. It will do exactly the opposite. If you are living paycheck-to-paycheck right now, you probably think that you cannot afford certain things. A budget allows you to reduce some costs and set money aside for other purchases. You can also put money into savings and stop turning to credit cards for emergencies.

A budget can help you get out of debt. By creating a realistic budget, you can allocate enough cash to pay it down faster. It will also help you to save money for future purchases to stay out of debt in the future.

Budgets help you control your spending by assigning a certain amount of money into each expense category. You may say that this is where it takes away your freedom. Not necessarily. You can budget for entertainment, hobbies, shopping, vacation and other things.

Budgeting helps you to cut costs. You’ll be able to eliminate certain unnecessary expenses and have more money to save for other important purchases. A budget helps you set your priorities instead of wasting your money. You can set and achieve financial goals, such as buying a car with cash, saving money for college or taking a dream vacation.

A budget helps you to live within your means. If you are a slave your credit card, you need to break that death grip. You cannot do it if you do not have enough money to pay for your expenses. Having a budget will allow you to set money aside for all your needs and live within your needs.

If you have a hard time keeping track of your bills and paying them on time, you really need a budget. When you set money aside for expenses, you will have the money to pay your bills when they come.

More important, a budget will take away your financial insecurities, because you will be able to put money aside for major purchases and emergencies.

Secrets to Creating a Budget

You have probably created a budget at least once in your lifetime. And you will probably say that it didn’t work. Do you know why it didn’t work? Most likely because it was a list of how you wanted things to be instead of the realistic picture of how things were.

First step is to track your expenses for at least a month by writing down your transactions and assigning them into different categories. You can also pull bank statements for the last two or three months to calculate the average spending in each category. This will allow you to create a more realistic budget.

Analyze your spending. You can see where the money is going and where you are overspending. You can reduce some expenses, but don’t be too conservative. If you drastically cut something—such as entertainment expenses—your budget will fail. Here is a secret: try to reduce the expenses gradually. If you buy a cup of coffee every morning before work, try to do it twice or three times a week instead of five.

Financial gurus usually say that 35 to 40 percent of your earnings are spent on your housing and the related expenses, such as utilities and home improvements. In reality, it’s more likely to be close to 50 percent for many consumers. You can set this money aside in a separate savings account.

About 10 percent should be deposited into a savings account for emergencies unless you have debts. In this case, put about 5 percent into savings and use the other 5 percent to pay off debts. It is important to have an emergency fund in case your vehicle breaks down and need some costly repairs or you need to replace home appliances.

Spread the remaining income among other categories. Be realistic when calculating the amounts. Another secret is to keep an allowance for yourself for miscellaneous spending. It doesn’t have to be a large amount, just enough to reward yourself once a week or so.

The budget is not set in stone and can be adjusted at any time. Review your budget every month for first three or four months and change the allocations to fit your needs. For example, during the holiday season, you may need a little extra money to spend on presents for your family and friends. You do so by cutting spending in certain categories, such as dining out or entertainment. This is another secret to keep your budget working is to review and adjust it regularly.

Letting Go of the Little Things

Debt is a tough nut to crack.  It often works like fat cells, while you are young it seems difficult to acquire, but as you get older it becomes nearly impossible to shed.  There is big money in the debt industry, consider collection companies, entire departments are created on behalf of debt collection at most companies.  We also have debt consolidation companies, but profit and non-profit alike, and believe me there are many of them.  Self help gurus are a dime a dozen, most have written literature on the “best way to reduce debt” though most accomplish it by simply selling their how-to books for a ton of cash!  Sometimes giving yourself the ability to pay down debt starts with a few disciplined steps.

I love my cable television, in fact, I love the additional sports package I subscribe to each month as well.  However, I’m not in debt, and if you are, then this is something you simply do not need.  While cable tv nice, it is a luxury that some people have to realize they cannot afford.  Try sticking with the local channels, there are still plenty of quality programs, and you can save more than just a few bucks on this. 

Do you have a Costco membership? Whether you do or not, several grocery retailers sell large quantities of coffee grounds on the cheap.  I love my dunkin donuts, but that doesn’t mean I need to go and buy a cup each day.  Instead I buy a large bag of it every few months and brew it at home, just as tasty and quite a bit less costly.

If you can walk to something then please do so.  Simply put, driving wastes gas, and adds wear-and-tear to your vehicle.  This will only cost you more in maintenance and upkeep in the long run.  The area I live in isn’t the most walkable, especially during the winter, but there are times I make an attempt to jog up to the store…saves on gas and keeps me fit!

Follow these steps and you will be on your way to saving at least a few bucks each month~!

The Dwindling Round Up: 10-17-12

Here at the Dwindling Round Up we discuss the weeks 5 best posts, in our humble opinion anyways.  With the plethora of finance sites to choose from this is no easy task.  The topics vary, however, the quality of writing does not.  Each article is well thought out, interesting in nature, and just a plain good ole read.


Buying and maintaining a car is a huge expense, and one that most us endure one time or another in our lives.  Making Sense of Cents tells us to buy and maintain our cars from a used dealership, stop by and see why.

When is the right time to have a baby, financially?  Ahhh yes, the age old question.  Work Save Live attempts to tackle that question in this article.  I have to say I’ve found myself asking this same question as of late.

Objective Wealth gives us some tips on how to manage a windfall!  Granted I may never experience one of these (no matter how many twinkly little stars I wish upon), but if I ever do then I will know exactly how to manage it all.

We all dream of financial freedom, but so few of us ever achieve it. See Debt Run provides us some shortcuts on how to get there.

Read up on Money Beagle’s shady bank story…there’s nothing worse than big bad companies who beat up on the little consumers…this bothers me to no end.