A personal budget is necessary to keep finances in order. (Photo Credit: CC BY-ND/vanuk/Dreams Come True)

Making a personal budget is an essential element of being financially stable, yet 94 percent of Americans wish they were better at it, says the Financial Planning blog. Building a successful spending plan requires that all regular and semi-regular expenses are accounted for, yet people still tend to forget things that can sink a budget after the first couple of months. Here are a few critical points for every consumer to consider.

Budgeting for an emergency fund

Setting aside money for something that may never happen seems pointless to some consumers, but following the Boy Scout motto “be prepared” is a wise course of action. Certified Financial Planner Peggy Cabaniss of HC Financial Advisors suggests that having six months of living expenses (not gross income) socked away is a good idea, writes Banknote. Until that goal is reached, building the emergency fund should be a priority. Try having money transferred directly from your paycheck into an interest-bearing vehicle like a short-term bond, says Cabaniss. Don’t leave it in your checking account.

Saving for something big

After your emergency fund is complete, it’s time to start saving up for the big stuff. Whether it’s a vacation, car or down payment on a house, making a budget is necessary for big expenses. Separating the monthly allotment before it hits the checking account will help keep you disciplined. However, it is important to be realistic with your savings goals when planning for a big purchase. Don’t try to save more than you can handle by cutting essential expenses.

Remember recurring expenses

Make a mental checklist of all regular and semi-regular expenses, says CPA and CFA Barry Picker of accounting firm Picker & Auerbach.

“Invariably, something shows up that throws the budget into disarray,” he told Banknote.

Overestimating a personal budget is rare, but underestimating is common. Thus, review bank and credit card statements from the past year to see what you actually tend to spend in any one category. Using personal accounting software like Quicken or Microsoft Money can make this task easier. Common trouble areas when making a budget include utilities, lunch expenses, snacks, cell phone bills, insurance, auto repairs and clothing. If you’re buying clothes for young children, using resale outlets can free up a great deal of room in the budget.

Plan for the birthdays and holidays

Resorting to credit cards during gift-giving seasons is easy, but the financially smart consumer budgets cash ahead of time in order to save a great deal in the long run. Vice President of Public Relations Gail Cunningham from the National Foundation for Credit Counseling advises that consumers look at what they spent for Christmas and divide it by 10. That’s how much to put away each month through October.

Sources

Bankrate.com

Financial Planning

Microsoft Excel is your friend when making a budget

Creating a monthly budget can provide a realistic outlook of how well you can reach any financial obligation. (Photo: Thinkstock)

Your credit score is affected by many factors, including missed bill payments. In fact, missed payments can hurt you more than other bad financial moves. To prevent late bill payments, plan how you will spend your money carefully by creating a personal budget.

Protect your credit score

Your credit score follows you wherever you go. It is consulted for information about what type of a credit risk you are and helps lenders decide if they should give you a loan and what interest rate you qualify for. Keeping your credit score healthy should be a key concern as you plan how you can pay bills each month and meet your financial obligations.

Pay your bills on time with a simple budget

Lenders want to see that you pay your bills and that you pay them on time. To avoid coming up short of money when bills are due, make a budget.

Use an excel spreadsheet, computer budget software or just a piece of paper. Make several columns with the first listing the name of each bill. The next columns should list the due dates and amounts owed. Break each set of bills up according to paydays. Group the ones due on or before the next payday and total them up and make sure that total is less than what you’re earning on that payday. Remember that any money left over after the bills are paid may need to be applied to larger bills due later in the month, such as mortgage and tax payments. Completing a budget that includes all the bills and paychecks you earn will quickly show how well you can meet all your bill payments each and every month.

Don’t miss payments — how a payday loan can help

If situations arise that aren’t built into my budget, I know that not paying those bills is a bad decision. Maintaining my good credit is vital to my financial health, so during times of need, I have used a payday loan from an online payday loan company to help pay bills on time. I have found the application to be fast, simple and completely secure. I’ve had up to $1,500 deposited into my account in just hours of applying. I didn’t have to fax anything, my credit was not checked and the payday loan was not reported to the credit bureaus. My credit score was not affected and since I chose to pay back the loan using a short term installment loan, I was able to stretch out the effect it had on my budget. A payday loan allowed me to pay bills on time and stick to my budget.

Need a payday loan? Start your online application HERE!

Creating a personal budget to learn how you spend your money is a good way to get the most out of a payday loan. Flickr photo.

The best way to get the most out of short term credit is to create a personal budget. Nobody wants to be on a budget. But everybody has to be on one, no matter how much money they make. When short term cash advances or payday loans become part of your financial strategy, controlling spending with a budget is the best way to make sure the money being borrowed is used in the best way.

Why create a personal budget?

Creating a personal budget involves working with all the information available about your finances. It may sound elementary, but when you decide to get a payday loan, you have to know where your money is coming from, how much you have and where it all goes. One of the biggest reasons most people avoid budgeting is that they would rather not know how they really use their money.

Budget before you borrow money

Creating a personal budget isn’t as bad as it sounds. Most of the work is front-loaded at the beginning. Once your finances are dialed in, tracking income and expenses is pretty much automatic, if you stay on top of it. CNN reports that what may seem like drudgery gets spiced up by facing the reality of foolish spending habits. It’s better to learn what they are on your own. Most of the foolish spending is pretty common and fairly easy to eliminate.

Personal budget for debt reduction

To create a personal budget, get started by making a list of all of your regular monthly expenses, including what you spend on fun things like eating out, entertainment and hobbies. It’s very important to include minimum payments toward debts, including payment in full of personal payday loans at the end of their term. About.com says don’t forget to build in money for debt reduction. Use software like Quicken or Microsoft Money to make it easier. These personal-finance programs have the built-in budget-making tools that can create your budget for you.

Settle emergencies with instant money loans

Subtract expenses from earnings to see how much you can expect to have left at the end of the month. If your personal budget comes out on the negative side, go back over each expense, look for places to make cuts, and figure out where you are willing to make sacrifices to get out of debt. After taking care of emergencies with instant money loans, debt reduction should be your first priority. Then you can start saving money to meet your financial goals, like a nice vacation, retirement investments or an emergency fund.

Live by your personal budget

All the time you spend creating a personal budget will be wasted if you don’t put your budget to work. Try to live within your budget. See how it feels. At the end of that first month, look over your spending to see if it matches up to your budget. If things are still out of whack, consider small money loans while you figure out how you can work harder to control spending. You may have to rework your personal budget to be more realistic as far as how you actually spend your money. Then, crunch the numbers again until you’ve made it right.

Personal budget tips:

Here are some money-saving tips courtesy of freefinancialadvice.net:

• Do not use credit cards. If you must, pay them in full each month
• Consolidate your credit cards and student loans at a better rate
• Refinance your mortgage or car loan at a lower rate
• Use coupons to shop–try coupons.com for free local coupons
• Occasionally buy generic, or non-name brand merchandise
• Stop smoking
• Don’t try to compare yourself to your friends and neighbors

Not Creating a Budget

Besides planning to pay a few basic bills, a lot of people who struggle with debt do so because they don’t carefully plan their spending. Instead of creating a written itemization of how every dime of their income will be spent or saved, some people simply wing it. While a cash advance can help people out in a bind, everyone should create a personal budget in order to avoid creating debt.

Failing to Pay Yourself First

In crafting a personal budget, a person must remember to pay herself a predetermined amount of money out of each paycheck. To not do so creates a level of frustration of working without reward. It is not surprising that people who neglect paying themselves a percentage of their income end up ditching a personal budget not long after its creation due to a lack of personal satisfaction.

Not Having a Rainy Day Savings

Similar to paying one’s self is having a rainy day savings set aside. People who neglect to designate a percentage of their earnings to a savings account find themselves in a bind when an unforeseen expense or emergency arises. Although a loan till payday is available for these times of need, a rainy day savings account specifically designated for unexpected circumstances adds to a person’s feelings of comfort and security, not to mention such a savings protects people from falling too far into debt when these circumstances occur.

Not Recording Purchases

Most people carry a debit card. For some, this convenience has almost completely replaced the practice of carrying cash. Unfortunately, however, some people end up making major financial mistakes while using debit cards simply because they forget to record small purchases like a cup of coffee or a small item purchased on any given day.

It is not unusual for such purchases to cause a person’s account to be overdrawn and result in costly bank fees. To avoid this, a person can create room for these incidental purchases in a personal budget and either plan to carry cash to pay for them, purchase a gift card that will cover these purchases or just remember to write each one down and carefully balance one’s checkbook accordingly.

Plastic People

Perhaps the largest and the most frequent of all financial mistakes that people make is when individuals rely on credit cards to pay for daily needs. Even worse are individuals who use plastic to pay for items that they don’t need, but that they want anyway. This is also the fastest and easiest way to fall into serious debt, particularly if only the minimum balance is paid on credit card bills each month as interest payments and other fees continue to accrue. Experts agree that credit should only be used when absolutely necessary, as the cost of using plastic is simply too high to use on a daily basis.

While most people make costly financial mistakes once in a while, everyone can avoid making them with careful planning, budgeting, record keeping, and self-discipline. If a mistake is learned from and adds to a person’s financial education, it has value. If it is ignored and repeated, it is a complete loss for the one making the mistake and can seriously compromise one’s financial future.

1. Needs, not wants

Needs and wants are not the same thing. The first rule of sound financial planning is to learn the difference between these two. Spending that is based solely on a person’s needs and willingly sacrifices wants in order to achieve financial goals ultimately leads to success, as overspending is curtailed and debt is kept to a minimum.

2. Embrace the learning process

Planning a financial future is a process. Teaching aids are valuable, but there is no one book or product that will teach everything a person needs to know. Embrace financial planning as a process and learn as much as you can, whenever you can from wherever you can. Lessons leading to financial empowerment are everywhere and as soon as goals are met, new ones should be established, which makes financial planning a lifelong process.

3. Stick to your budget

Financial decisions made today affect one’s quality of life tomorrow. People who spend haphazardly or who do not adhere to a strict personal budget usually pay for this poor planning with bad credit and a lack of savings. While it is OK to get a loan till payday when in a temporary cash crunch, people who don’t seriously heed this advice find themselves constantly relying on personal loans and accruing credit card debt just to finance their daily needs.

4. Only use credit when necessary

Credit cards create debt. This doesn’t mean that they shouldn’t be used, but that they should be used very sparingly and only when absolutely necessary. A person has to realize that beyond the instant gratification of purchasing items they can’t afford to buy outright, each purchase made on a credit card is creating debt. When this golden rule is understood, people tend to use credit more sparingly and more wisely, which helps them move closer to a debt-free lifestyle.

5. Be careful creating debt

It is easier to get into debt than it is to get out of debt. While some people go into debt because of rising medical costs, divorce or some other life-altering circumstance, others go into debt simply because they have poor spending habits and even poorer impulse control. For these people, getting into debt can start out being fun as they finance exotic vacations, luxury cars and mortgage loans for homes in pricey neighborhoods.

However, when the time comes to pay for these decisions, many become overwhelmed with doing so. Often, they fall behind in these payments and find that they become trapped in an endless cycle of high interest rates, penalties, and creditor phone calls. This is why each decision to create debt must be assessed according to whether the decision is based upon a real need or a want.

The Importance of Financial Planning

People who desire control over their money and their credit rating follow the golden rules of financial planning because they know that these fundamentals pave the way for future stability. Individuals who do not realize their importance often find themselves fighting a whirlwind of debt and struggling just to make ends meet. Even so, it is never too late to begin practicing these rules and doing so, in tandem with acquiring other wealth education strategies, can go a long way to assist in debt recovery.

It's going to take some time, but it is definitely worthwhile.

In part one of this series on getting rid of credit card debt, we discussed both drastic and practical ways of approaching financial recovery. Now that you have considered those first steps, it is time to figure out what to do next in order to embrace debt-free living. The following suggestions are certainly not easy, but those who are now in full debt recovery will tell you that they are certainly worthwhile.

Get on the phone and discuss your credit card debt

Now that you’ve created a snapshot of your debt, go down your list and call each credit card company. If you are late on a payment to them, explain why and give them a date by which you can send a payment. Even if it is a small payment, be honest about when you can send it in and then do exactly that.

If you do not have frequent late payments or are not behind in your bill, and if your FICO score is decent, call each credit card company and try to negotiate a better interest rate than the one that you currently have. One way of doing this is to single out one of your cards with a more affordable rate and call the companies with higher rates to inform them that you are considering sticking primarily with the one with the lower rate. Or, another way of approaching this is to research companies offering better rates and tell the credit card companies with higher rates that you are considering changing to one of those cards because of the rate difference. If a lower rate is not immediately offered, don’t be afraid to ask them to lower it. The worst thing that can happen is that they can say no and, compared to the high interest rates that you’re paying, that shouldn’t be nearly as frightening.

If the credit card company refuses to lower your interest rate, consider moving your debt to a card with a more comfortable rate and, after doing so, you may consider canceling the high rate card.

The road to debt recovery begins with a single month

After cutting your credit cards and/or negotiating a lower interest rate, look at your monthly personal budget and very carefully calculate the largest possible payment you can make on all of your balances each month. Next, add ten dollars to the minimum payment requirement offered by each credit card company. Now, add up all of the minimum payments, plus the ten dollars that you added in the previous step. If the minimum amount that the credit card company allows you to pay is lower than the maximum amount that you can afford to pay each month, go ahead and subtract the lower amount from the higher. The remaining sum is what you should consider applying to the card that is charging the highest interest rate.

After the high interest rate card is paid off, you may consider canceling that card, but don’t stop there. Now it is time to go back to the beginning and repeat the entire repayment process all over again by focusing on the card with the next highest interest rate. Do not lower the amount that your calculations permitted you to pay before the first highest card was paid off, however. Instead, continue to designate this exact same amount out of your personal budget for paying off credit card debt until it is all gone. Continue to repeat this entire process of paying your credit card debt off by assassinating the highest interest rate cards first and working your way down until you are left with cards that have affordable rates and you are debt free.

Carefully consider emergency cash options

Once you are debt free, if you ever find yourself in need of a cash advance, before turning to a credit card, carefully weigh that option against that of a loan till payday or an installment loan from a personal loan company. Always know your options, study them closely and select the one with the lowest repayment terms for your personal budget.

Making a hard decision is the first easy step to a debt-free life

It takes some sacrifice and a lot of discipline, but you really can get rid of credit-card debt for good. Relax. Breathe. Others have done it and you can too. Paying off credit-card debt can seem overwhelming when you look at your statements each month and realize that you’re not even putting a dent in it. You may have tried getting personal loans, applying for extra cash till payday, or even working a second job, but you still feel like you’re drowning in debt.

It isn’t easy to break the credit-card spending cycle but it is, in fact, completely possible. You first have to believe that financial recovery can be achieved and then you have to make the commitment to work hard at it.

Simple (but not-so-easy) steps to financial freedom

Cut up your cards. If you’re ever going to get your credit-card debt under control, you must stop adding to it. There’s no room for negotiation on this one: Cut up your credit cards. This can feel like a drastic action, but if you’re serious about getting out of debt, you cannot use credit cards.

Consider other emergency-cash options. If the thought of not having any credit cards is too much for you to handle at first, choose one card to keep for emergency use only. Store that card in a safe place or give it to someone you trust, but don’t carry it in your purse or wallet. If the card has a high credit-limit, consider asking the credit-card company to lower it. Remember, when you’re in need of emergency cash, a credit card is not your only way out. You can get a short-term loan or an installment loan online even if you have bad credit, without the risk of over-spending.

Don’t be too quick to close accounts. Don’t be too quick to close your credit cards before you’ve paid them off. Many people have made the mistake of closing their accounts when they cut up their cards, without understanding the negative effects this action would have on their credit ratings. For one thing, closing an account stops the clock on that part of your credit history. If you’ve had credit cards for a long time and have made the payments as required, that history can have a positive impact on your credit rating. Closing an account can also negatively affect your debt-to-credit ratio, which can have a direct affect on your credit score. So cut up your cards, but do some research and ask around before you cancel any accounts.

Be honest with yourself. Take an honest look at your credit-card statements and tally up what you owe. This is scary for people who purposely avoid looking at the bottom line because of the stress it causes. Ironically, however, not knowing what you actually owe can be the most stressful part of all. Make a list of your account balances and make a note of the interest rate on each. List the balances in descending order of interest rates, so that the account with the highest interest rate is at the top of the list. Next to each entry, write down the minimum required monthly payment. Finally, note the name and phone number of each credit card company.

Make a realistic personal budget. Once you’ve decided to get serious about credit-card debt recovery, have cut up your cards and taken an honest look at what you owe, take some time to make a realistic personal budget setting forth your monthly income and expenses. Look at what’s left after deducting the essentials – rent or mortgage, car payment, utilities, food, etc., — and decide how much of your disposable monthly income you can devote to paying off your credit-card debt.

What’s next?

Read part two of this series for suggestions about what to do next. There, you’ll find advice about negotiating with credit card companies and getting rid of account balances with high interest rates. If you exercise some willpower and resolve and take these suggestions seriously, you really can find your way to a debt-free life, once and for all.

Looking for a payday loan or similar short period loan to help your personal budget during a crisis? (Photo: flickr.com)

A payday loan is a financial arrangement that allows a person to borrow a sum of money over a short period of time so that it is possible to overcome a shortfall in the personal budget until the next payday. It is usually unsecured and the lender will approve the loan provided that person has a regular monthly income and a checking or savings account.

This is an ideal way to overcome unexpected expenses that crop up from time to time. It is also helpful in avoiding such situations as bouncing checks and the penalty fees associated with it. Once a lender approves a payday loan, they transfer the funds electronically to the borrower’s checking account or the savings account within a matter of hours. So, as you can see, a payday loan is a fast and easy way to overcome unexpected expenses.

Requirements to Receive a Payday Loan

Very few requirements are necessary before a lender approves a person for a payday loan. It is now easier than ever to secure a short term loan such as this and it is extremely convenient, as it can all be done online with minimum hassle.

1. Read and complete the lender’s online form. This will ask for relevant information from the borrower in order to make an assessment. Accurate answers will greatly expedite the process.
2. The lender will contact the borrower over the phone or via E-mail so as to verify the details supplied by the borrower. Some lenders require certain other documents of support to be faxed to them. But on the whole, many lenders do not require the borrower to do this.
3. Once these details and documents are in place, the lender will deposit the money in the account of the borrower electronically. This is safe and easy, and is the best way to get the money you need in a hurry.

Qualifying for a Payday Loan

Qualifying for a payday loan is not difficult if you meet the following minimum requirements that are generally stipulated by the lender. They are:

• Be currently employed with a regular monthly income
• Have an income that is at least above $1,000 per month
• Be a citizen of USA over the age of 18 years with a checking account or a savings account

Security of the Personal Info You Give

The lenders who provide payday loans employ many security measures in order to safeguard the personal information provided at the time of obtaining the loan. All sensitive information that is passed between the lender and the provider is often done over secure lines with personal usernames and passwords for added security. Industry-strength encryption is used for online forms submitted so that data cannot easily be intercepted.

Privacy Policies and Other Terms

Many lenders have privacy policies and terms of service that guide the release of any information that the borrower has supplied him with. This is a document that has to be read carefully by the borrower before committing to a payday loan.

After all these details are dealt with, it takes only a matter of a few hours to obtain a payday loan that will ensure that you will come out of a financial crisis with ease.

Get a Payday Loan HERE!