Personal Finance

We live in Houston. It’s hot here in the fall, survivable in the winter, and it’s hot in the spring, but it is really terrible in the summer! I’m talking about 100 degrees almost every day with high humidity and hardly any breeze. So when June came along, our electricity bill doubled.We knew if we wanted to stick to our budget, then we needed to save money on electricity somehow. A bill like that every month could bankrupt us.

Air Conditioning

Many people may not realize it, but the air conditioning in your home uses more electricity than anything else. If you don’t believe me, turn off the AC and go outside to see how fast the electricity meter is moving. Then turn it on and notice the difference. It makes a huge difference. Because of this fact, many people have concluded that it’s best to turn off the AC when you leave the house and only run it when you are home. But the truth is, that makes your AC struggle even harder to get the house back to a comfortable temperature when you get home. It’s a simple principle. It takes more force to start a rock moving than it does to keep it moving. So turning off the AC is not really a good idea. So what can you do?

Be reasonable. I found that often times, even in the heat of summer, my wife and I would be curled up on the couch watching a movie and cover up with a blanket. How useless is that. A good rule is to pick a temperature and leave the thermostat there always. Never move it. This takes discipline, but it’s worth it in the long run. I read a study that declared 78 degrees F is the optimum static temperature for a home. If you can discipline yourself to leave the thermostat at 78 rain or shine, then you should see a noticeable drop in your electric bill.

Lights and Fans

It is also very important to leave lights off when they are not necessary. I live in a modest home, so during the day I find that I can literally go without turning on a single light. Could you too save money on electricity by taking up some practical habits such as this? Maybe try turning the computer and the TV off when they are not being used.

Another area that is hazy to some is that of fans. Some feel that leaving ceiling fans running in a room will help the AC and use less electricity, but that is not the case. Fans do not lower the temperature of a room. They only help by circulating air. The thermostat can’t feel the breeze that the fan gives it, so it won’t tell the AC to stop running. By leaving fans on while no one is in the room, you are wasting electricity and money. However, using a small fan to circulate air will make the 78 degrees much more comfortable, so if you aren’t comfy you should consider switching on the fan before you decide to turn on the AC.

Home Improvement

Sometimes, home improvement is necessary to save money on electricity. If your AC unit is old, then it is likely very inefficient and should be replaced. This may be rather costly, but think of the money you could be saving and the value a new AC unit adds to your house. Another money saver that can add value to the house is hard floors. Tile, slate, or hard wood floors can help keep the house much cooler than carpet. Again, they are usually more costly than carpet, but the value and saleability added to your home should offset that quite nicely.

By putting some of these tips into practice, my wife and I have saved  money on electricity. If you try some of them, then you will benefit as well.

After mounting up a lot of debt and fighting to make my credit card payments, I began to think of ways  I could stop building debt and start getting out of debt. I started looking for ways to ease the stress. Clearly, just thinking about getting out of debt not get the job done. Here’s how many have accomplished their goal of getting out of debt.

The easiest way to begin is to figure how much money you bring home each month. Then take a look at your bank statements over the last few months and write down a list of bills. Get the following info from each debt:

- Interest rate

- Payments left

- Total amount owed

-Monthly payments

Add up your total debt. This number can be very alarming and overwhelming. Don’t get disheartened. just focus on the light at the end of the tunnel.

Then add up all your monthly payments to find out how much you owe each month.

Add this number to your monthly household expenses and you will get the actual amount you owe each month.

Subtract your total monthly debt from your monthly income to get the amount you can apply toward paying extra on debts each month.

Remembering that some entertainment and recreation are necesarry, you should be able to come to an amount you wish to put toward debt settlement every month. Stick to that number. Include it in your financial budget, and make sure you do it consistantly. The key to getting out of debt is to be disciplined. Just remember the relief that comes with being debt free, ad hold on to that motivation.

A large part of planning for the future financially depends on you learning how to save money in your daily life. There are several principals to keep in mind when making purchases of any size.

Most importantly is that if you don’t ask for something, there is know way you are going to get it. So when you walk into a store expecting to pay whatever they want for whatever you are after, you will pay whatever they want. It doesn’t hurt to try to deal with sales people, and it’s an important practice if you are ever going to save money. This was a hard learned lesson for me. I paid too much for everything I bought, until my frugal wife trained me to understand what I mentioned above.

It is important to realize that sales people will do whatever they can to get your business. I know because I’m a sales person for a manufacturing company. If it is within the sales person’s power they will sell you something. The only things you have to do is make sure they know what you want and what you are willing to pay for it. If something is priced at $100, and you offer them $75, the worst case scenario is that they say no. More than likely they will try to deal with you. Even if you are willing to pay the $100 for it, maintain your resolve to save money. And ALWAYS be able to walk out the door if they don’t meet your offer. If they let you walk out the door, then you know for sure that they can’t do any better. They will offer anything they can to keep you in the store and sell you something right then. They don’t care about tomorrow or next week. The only thing they care about is right here and right now.

Each person can learn how to save money in their lives. Just apply this advice and you can’t lose.

Once you have an established budget and have started saving regularly, you can start looking into other retirement investments. Fortunately there are several different investments that are designed to encourage you to plan for your own retirement. Specifically I am talking about an individual retirement account.

Also known as an IRA, the individual retirement account comes in many variations. There is not one specific IRA that is best for everyone’s circumstances, so it is important that you understand all the pros and cons of each account.

One of the most well known variations of the traditional individual retirement account, is the Roth IRA account. To give you an idea of the differences between these accounts, let us take a look at the two mentioned.

The two accounts are similar in that they both offer perks for the investors for the purpose of encouraging them to invest in their retirement. This is meant to ease the strain on the social security system. The traditional IRA is tax deductible. This means that all contributions to the account can be written off of your income when filing your taxes. So you can save money now on taxes by contributing to this account. The Roth IRA is not tax deductible. Most would consider this a negative, but it really isn’t for some. The fact that you deduct your IRA contributions from your income means that you have to pay taxes on the fund when you withdraw at retirement. However, the Roth IRA will have already been taxed at time of contribution and doesn’t need to be taxed at withdrawal. Taking into account that there are maximum contribution limits on both accounts, if you put $3000 into a traditional IRA and the same amount into a Roth IRA, the Roth will have a greater actual return.

Clearly everyone needs to decide on an individual basis which account is right for them.

After planning a financial budget, the next step is to choose a savings account. Be sure to do plenty of research and ask plenty of questions before making the decision. Different financial institutions have different types of savings accounts that offer different interest rates, different fees, and different benefits.

One very important factor in choosing a savings account is the interest rate. It is best to get a fixed interest rate rather than variable so that you can project your return with more accuracy. But this is not the sole deciding factor.

Often times banks will offer perks or benefits to customers that carry a checking and a savings account with the same bank. Basically the idea is that if you have the 2 accounts with them, then you are more than likely giving them more money to invest. So the more money you put in, the more money the bank can make with your investment.

You want to make sure that the the bank is a strong institution. Remember that you will be entrusting them with your future. The older the bank, the more you can trust their staying power. That is not to say they will never go under, but it definitely lowers the odds.

It will help you to project your savings based on your current budget system. Assuming you make the same income for the next 20 years, project your savings for the different accounts you are interested in to see in 5, 10, and 20 years how much you will accrue. The bankers you speak to should be able to help you with this. This way you can see a very accurate representation of the benefits of one savings account over the other.

Be sure to talk with multiple financial institutions before you choose which savings account is right for you. It may seem like a lot of work, but remember that this is your future.

Once someone has the desire for retirement planning instilled in them, they usually com up against a second barrier. It is difficult to manage your income and spending in a way that leaves an excess to throw into savings. The absolute key is actually simple. Learn to budget the right way. How?

An incredibly powerful financial budgeting tool is already on most people’s PC. It is Microsoft Excel. If you do not have Microsoft Office, you can download Open Office for free which has many of the same functions as Excel. Learn just a few basic functions on one of these tools and you have your start.

The first step in a good budget is to subtract all your regular expenses from your income. These expenses would include expenses such as rent/mortgage, any car notes and insurance, approximated gas and grocery bills, and any other recurring expense. It is very helpful to break this out by pay period. For example: if you get paid on the 1st and the 15th, you have two pay periods. You should form your budget around those two periods, and all income and expenses should be applied in their proper pay period. By doing this, you will be able to better arrange your bill payment so that you aren’t scratching thebottom of your bank account before your next check comes in. If you see that you are streched too thin during one of your pay periods, you should talk to your lenders and utility companies to see about moving your due date. Usually they will work with you if you explain that by doing this you will be in a better position to pay your bills on time.

After you subtract all recurring bills, you should have a reasonable excess. If you don’t then you are definitely living outside your means. If this is the case, you need to cut expenses that aren’t necesarry. Eating out is a huge one that people spend a ton of money on and don’t even realize how much it hurts their pocket book. That is at least until the end of the month when you have nothing in the bank and you are left wondering where your money went. So cut that first. You can’t get out of a restaurant for under $20 with a spouse, and if I had kids, then I would go out to eat about once a year. You can have a much nicer dinner at home by investing in a cook book, and you won’t spend but a fraction of the alternative.

What you do with the excess money after you pay your bills and subtract expenses is really the important part. It’s what makes all the difference. Remembering that entertainment is a necesity, you should also realize that it is a dish best served in moderation. Each person can choose for themselves, but I would feel irresponsible if I spent more on recreation each month than I put into savings. So choose a nummber that you are comfortable with and have that amount automatically drafted into your savings account on the same day you get paid. This step is crucial. It removes the money from your checking account before you have time to justify wasting it on something else. This way you can garantee that it is done every month and you have one less thing to worry abobut for that month.

That’s all you need to get started. Give financial budgeting it’s porper prioriy as a crucial part of planningg for your future.

The first hurdle that many people face when planning for their future is the desire. Young people can’t seem to put priority on retirement planning largely because it is too far away from them to worry about. And even older ones don’t usually put the needed priority on saving. So what do you need to do to get the right mind set to start really saving and not find yourself in the poor house?

First understand the long term effects of not planning. You not only stand to be broke and working until you die, but you will also put a huge strain on loved ones later. If you can’t attain financial independence by the time you retire, you will be relying on your loved ones to take care of you and your spouse. No one would want to do this if they can do something about it.

So think about the burden you could be laying on loved ones if you don’t take steps to start planning now. It really is never to early to start saving, and you will definitely be proud when you finally reach retirement and financial independence.