I'm 22 and am just out of school. I've never had a very good control over my finances and would like any tips to help with budgeting, lowering spending habits, easy ways to keep track of spending habits, etc. I don't want to have to pay for any of it though. Sorry, if you are going to send me to some site that will say "here we'll show you how for $30 a month" I don't want to hear from you. I want to know how to get myself out of debt so when i start paying college loans in june i'll have a better grip on covering my expenses and being able to save up so i can move out of my parents' house. Thanks, in advance. First know how much you owe (other than student loan). What are the interest rates on those debts (credit card, auto loan, personal loan, computer loan, and etc.? and find out what is your credit score? More than 700? If so, there would be better way (quicker) for you to get out of debt along with good budgeting skills. If you do have more than 700 credit score than I will expand my answer.
After you gather all those info, make a list of monthly required payments from the highest interest rates as top priorty. Now list your rent, ultities, phone bills, internet and cable, and estimate your gasoline and grocery expenses (Be realistic and keep it minimum). Also don't forget those auto insurance that is due every 6 months or a year. Break down the monthly cost and add it to the monthly living expenses total. Now add a little fun money (try 2% of your after tax income) to the MONTHLY total. I suggest only 2 percent, because you are trying to get out of debts, so don't set the fun money too high. We need to focus on PAYING OFF DEBTS, and STOP CHARGING on credit cards.
So now take your after tax monthly income minus all debt payments (minimum required), minus monthly living expenses, and fun money. Now do you still have any more money left? If so, apply to the highest INTEREST RATE loan. Repeat the step untill you pay off the FIRST highest interest rate loan, then move on to the next highest interest rate loan.
If your amount comes out negative after the subtractions of all payments and living expenses. You have to review your spending habits and see what you spend the most. Dining out? Beers? Now is time to cut your expenses and try to bring this number up to a positive number, so you can pay off your debt.
As for me keeping myself spending money is, after the direct deposit of my pay check went into my accounts, I already subtract all the payments (plus the additional payment to the highest loan), living expenses, and the fun money. Because after that I already know those money are already committed. As the due dates of each payments and rents come up, I just write the checks (now I am pretty sure I have money to pay them as I already mentally subtracted them when I got pay). Well, I hope this little trick would help you too. You can even list the check numbers for each payments in the order of the due dates, it can also remind you that your payment is due. For example, if one of my credit card is due on the 8th, and the rent is due on the 15th, I would write down on the check registry that due amount for credit card and the date as 1st (need to mail it early before due date), and the rent can just be the 13th or the 14th (depends on how you pay your rent, if is a walk to the rental office, then the 14th should be fine). Always have a habit of paying a little earlier. Good Luck!!! Dave Ramsey has a good site for getting started. You don't have to join (you can't post, but you can read) and you can learn a lot even if you don't buy his book. If I can learn anyone can.
to avoid credit cards and debt with them, don't have one. that's easy enough. :)
get on a written budget, a spending plan... you need to plan and tell your money what to do every month... the goal is to increase your income and saving as you reduce spending (bills)... get rid of stupid stuff like cell phones... things you can live without.
save first... before doing anything else...
visit daveramsey (dot com) and search for budgeting forms and baby steps There is a great book titled "Personal Finance For Dummies." Written with humor and easy to read - it covers the basics of money management, budgets and investing. You don't need to pay anyone to help you. You just need to make a common sense plan that works for, and then commit to sticking to it for, say, six weeks...if after six weeks you can't stand it, then change it...but if you find you suddenly have more money in the bank than you thought, that's usually enough to get you to go for another six weeks...and so on!
Take the amount of cash you typically have available each "pay period", and "pre-spend" it, ie decide where it's going to go... include about 10-20% that's going to "savings", and DON'T spend it on anything else. Good instincts - avoid anyone that offers big money for little to no work. Nothing in life is that easy, so think twice about any offer that seems too good to be true.
Yes, you CAN take control of your finances. A little dedication and self-control can transform your financial situation, if you're willing to stick to it.
You might not be able to avoid some expense to get your finances under control, but investing in a few simple computer programs or books can pay for themselves in the long run. Borrowing from the library or hinting friends/family for gifts are effective ways to get the tools you need for free.
First of all, get a computer with a simple finance program, like Quicken or Money. These programs can do so much for you, if you put your information in.
Get down to your local library tonight and start checking out personal finance books - they can be wonderfully empowering and inspiring, and most are written in simple, easy-to-understand terms.
Some good, easy reads:
-The Complete Idiot's Guide to Personal Finance in your 20s and 30s
-The Complete Idiot's Guide to Managing Your Money
-鈥淪mart Women Finish Rich鈥?or 鈥淭he Automatic Millionaire鈥? by David Bach
-any Suze Orman books
Look at your expenses from the past year and create a budget that realistically reflects how you spend. Then see what you can cut out, and focus on long-term goals. Make debt repayment a top priority, since the interest will play havoc with your finances as long as you have the debt. Starting today, never spend more than you make - use your credit card only if you are 100% sure you will pay off the entire amount every month. Track all your spending, in a computer program or even just scribbling down the amount in a handwritten budget list.
You can do it. Just stick to it and remind yourself of the goal. Theresa pretty much said it all in that long answer bellow. Go to the library and start reading!!
I use MS Money, it works great for me. The only thing I wanted to add on is when you're at the library start reading about investing as well because saving on it's own is not enough.
Best of luck! Hi
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Thanks Karol Slim. |
