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Living on a Budget - 5 Easy Steps

With gas prices looming $5 per gallon, unemployment at an all time rates, the national foreclosure levels at an absurdly increased rate and food prices driving the market, more families are looking for ways to save money and budget just to stay above water. It may be time for Dick and Jane to sit down and scrutinize how their paychecks are being spent.

With gas prices nearing $5 per gallon, unemployment at an all time high, the national foreclosure rate at an absurdly increased rate and food prices driving the market, more families are looking for ways to save money and budget just to stay afloat. It may be time for Dick and Jane to sit down and scrutinize how their paychecks are being spent.

Did you know that the U.S. savings rate is the lowest on record?

Or that over 40% of U.S. families are spending more than they make?

Does it shock you that some 36 million households-- that's one out of every 73-- filed for bankruptcy in 2003?

Did you know that the average credit card purchase ends up costing 112% more than if cash were used?

So what is the remedy for the hundreds of thousands of families living paycheck to paycheck just to make the minimum payment on their credit cards?

1. Create a budget: Analyze exactly what expenditures are being made. (i.e. rent, phone bill, utilities, groceries, etc.) The first step is knowing what goes in and out of your household each month. Amazingly, the majority of individuals NEVER sit down and total up the exact amounts that are being spent out of their hard earned income. Hence the saying, "easy come, easy go

2. Eliminate unnecessary expenses. One great way to eliminate a large portion of expenses is in groceries... for example: buy a bag of rice instead of the box of instant rice.The 10 minute difference definitely out-weighs the $4.00 mark-up. Avoid buying "convenient foods", "to go packs" and the like. Also, if you're not used to grocery shopping, this is the time to start; no more eating out!

Also, take a lesson from mom and dad, brown bag lunches can save you literally hundreds of dollars throughout the year versus ordering out or running down the street to the local fast food joint, besides you can eat much healthier.

3. With crude oil estimated to hit $180/ barrel, one of the biggest ways to save in society today would be to car pool with co-workers to go to work, with other parents to pick up the kids, or any other time you can.

4. Next, only spend what you can afford to avoid paying high interest rates and pay them off in full each month.Credit cards are important to establish a credible credit rating, but paying off the total balance each month can end up saving you literally thousands throughout ones lifetime. A $1,000 charge on an average credit card will take almost 22 years to pay and will cost more than $2,300 in interest ($3,300 TOTAL) - if only the 2% minimum payments are being made. Imagine $30,000 in charges!!! If you are over $8,000 in debt, a debt settlement company can reduce that amount by up to $.60 per dollar owe, although during the initial phases of any credit program your credit score will take an initial hit. I recommend this as the fastest and least impacting program for individuals that qualify.

5.Have your creditors work for you.If able, have your billing cycle changed so all of your bills come when you know you will have the money for them each month to help you keep a closer eye on your spending. Notify them if you are going to be behind, BEFORE YOU ARE BEHIND, surprisingly, they can be rather accommodating. However, be wary of "universal default laws" which I discussed in my article titled Predatory Lending and Credit Cards.

Be wise with your spending and avoid predatory lending at all costs. Be conscious of your spending and most importantly ask plenty of questionsHealth Fitness Articles, you will be surprised at how many resources are available.

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ABOUT THE AUTHOR


Jamie hribal is a senior debt counselor for a private firm. Helping individuals and families with financial hardships or facing foreclosure which benefit from debt settlement and mortgage modification. For more information please visit http://www.mydebt101.com/



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