How Can You Budget?

Sun WongWhen one thinks of the income he earns and his expenses, then it is quite challenging to determine what goes where. Everyone has had times in their life when they have spent their entire income all at once without even thinking about it. It may sound fun, but it can be harmful in the long run. No one would like to get into debts or remain helpless in case of an emergency.

Smart budgeting can help you organize your finances by allocating a certain amount of your income to paying your bills and the rest to either spending it your way or saving. There are various budgeting methods, but this article talks about the 5 easiest ones.

1. The 50/30/20 Rule

debt consolidation  las vegasIn this simplified budgeting technique, you break down your income into three broad categories:

  • 50: No more than 50% of your pay should be spent on paying bills and other necessities.
  • 30: A minimum of 30% should be spent on luxuries such as entertainment and dining out.
  • 20: You should set aside 20% of your income for either savings or paying debts.

2. The Envelope System

This method is very simple to implement. All you need to do is calculate all your expenses, including bills, groceries, rent, and school fees. Subtract these expenses from your salary and put each payment in an envelope. Label each one of them and whenever you receive a paycheck, pay them from the cash present in each envelope.

It is a basic way to make sure you have enough money for all your expenses. The money that is left is all yours, and you can either spend or save that.

3. Digital Budgeting

There are many apps online that help manage household finances. Many apps are also free to use with a lot of budgeting tools.

Yodlee is an example of such an app. It allows users to set budget goals for their spending which it monitors and sends the users an email to notify them if they are close to their spending cap. This service also sends a status report at the end of each month.

4. Snowball Budget

Las Vegas debt consolidation programsThis technique is best suited for those who are struggling with debt and are in need of a payment system.

First of all, start with calculating how much money you owe on all your debts. When you have that amount, think how much money you will be allocating to monthly payments to get rid of the debt.

Once you have your budget in hand, start by paying your debt from the leftover money in your budget, beginning with the smallest to the largest debt.

5. Reverse Budgeting

debt-consolidation-las vegasThis technique focuses only on one thing, and that is establishing saving goals. Instead of calculating your expenditure, create saving goals.

As long as you achieve the goals you have set, it is your choice on how and where you spend. This method only emphasizes one thing, and that is accomplishing your saving target.

Categories: Finance

Money Saving Tips

debtSimply put, credit relief is taking one loan to finance several smaller loans. The term of the new credit card relief is often longer than that for the longest lasting debt consolidated. As a result, the credit card relief exerts lesser financial reassure since the new interest rate and periodical repayments end up being lower than with the many individual debts. Essentially, most typical credit relief arrangements are secured. Here are three points you ought to consider when deciding whether to enter into a secured debt consolidation arrangement to ensure the debt is indeed beneficial.

Consolidating unsecured debt through secured debt relief arrangements may not be a particularly good choice. Through this arrangement, you risk losing the item/resource pledged as security against the new loan in-case of default. Placing risk on property or whatever resource  used to secure the consolidation loan is only justifiable if the benefits of credit relief are substantially higher than the risk of defaulting on the credit consolidating and hence the risk of losing the security.

debt-reliefThe total interest on credit card relief may be higher than that due on the individual loans. As mentioned before, credit relief typically have much longer repayment terms than the loan with the longest lifespan among those consolidated. With an extended term, the total interest levied on the credit card consolidation loan may accumulates to a much higher value than the total interest due on the individual debt relief loans.

Finally, there are limits to what a debtor can do with the item/resources pledged as security for a debt relief. For instance, the item pledged cannot be liquidated by the owner until the loan is fully repaid.The need to sell, trade or simply transfer property ownership may always arise in the course of repaying the loan. The credit consolidation arrangement will effectively hinder such processes and hence temporarily  deny the owner some rights to the property.

Categories: Finance