Where is my money?

Sometimes it's easy to forget all the "leaks" in their tiny budget. Often people do not know how much they spend.

It is easy to think that not buy anything like it. You are not dining at the Ritz. You are not flying to Paris. Do not ride in a Mercedes-Benz. Where the hell is your money?

Let me ask you a few questions:

Are you more you paid $ 10 for a haircut? Pay to colored your hair or professional styles? Did you do your nails?

Did you buy a Starbucks coffee? Do you buy bottled water? Did you buy ice cream, cookies, soda and other junk?

Did you enter the room, if you have a chance? I'm not talking of a fine restaurant - I say that grabbed a burger or a burrito fast food or fast food restaurant.

Feeding places where you can go? Do you have a car that has bad gas mileage? As recently before you buy car insurance, compare the deals?

* Do you have a pet? Pay for vaccinations, food and veterinary care?

Make the most common ways that people spend money. These are all discretionary purchases.

None of these discretionary purchases are "bad" or "right". They are just options. If you want to spend money on these items, you have to cut other spending budget. The core of the budget gives priority: cutting expenses, which is less important, so you can room in the budget for expenses to make really important.

Alternatively, you can also pay with your time, more money. This will also give you more flexibility in your budget.

The conclusion is that, even if you fly to Paris or the Ritz, which makes getting to eat very much discretionary spending. That's perfect. There is nothing wrong with a little discretionary spending. But to afford it, you have a plan in place. Therefore, I recommend to create a budget. Here are some of the most popular types of budgets:

* I know that you do not like it the idea of having a pet as discretionary costs. I have a lot of concerns about this statement, the people who protest that their pets are part of your family. Likewise, I also hear from people who would like to have a cat or a dog, but I feel financially stable enough to afford for a pet do not mind.

Do not misunderstand me: I absolutely do not think you should give your pet. You will be happy and comfortable. But you must realize that there is an issue you have chosen, and make it possible to give up other luxuries.

You might find that you can afford, an animal or a nice car, but not both. Or maybe you need to work five hours per week to allow Fido. The budget is, in part, the practice of remaining aware that these obligations leads.

What is an unexpected expense?

Conventional wisdom says that the money should be reserved for "incidental expenses" in the emergency fund.

This is true. But what exactly is an unexpected expense?

Here it is:

This is not a recurring annual financial statements

Your property tax bill in the bill for car insurance, the annual premium of life insurance, the study of glasses and other costs once a year are not surprising. Instead, you get to fully pay the bills annually or semi-annually.

Budget, giving them a certain amount each week or month. If your property tax is $ 5200 a year, for example, set aside $ 1,000 per week. If your exam and glasses replacement lens costs $ 300 per year, I have $ 25 per month. These are not the kinds of issues that your emergency fund should be used.

It is not the occasional maintenance or repair

Is leaking from your roof? Your dishwasher breaks down? Need to pay a deductible of $ 1,000 health insurance?

Most people call these unexpected expenses. But some experts disagree personal finances.

"Medical bills, car expenses and costs of the house are not really unexpected - at least it should not be," says Liz Weston, personal finance columnist for MSN Money and author of the 10 commandments of money. "If you have a body, a car or a house, sooner or later, it is going to cost you."

What it means is that the budget should be an estimate of how much you spend on variables such as problems at home, including auto and health costs.

For example: A good rule of thumb is 1 percent of the cost of your home set aside each year for repairs and maintenance are set. If you live in a $ 250,000 home, for example, you need to save $ 2,500 per year or $ 208 per month.

You will not spend $ 2500 per year. Some years will be $ 100 or $ 200 to spend on basic maintenance, such as cleaning the gutters. But other years spent $ 7000 to replace the roof. The golden rule of 1 per cent is destined to a long-term annual average rate, and the budget for such expenses by allocating $ 208 per month on the background of "repair and maintenance" that you have.

Read more: Should I buy or rent a house?

The same is true for automotive and healthcare expense. You can choose to set aside $ 600 per year or $ 50 per month for car repairs. Some years will spend $ 0 Other years, you will have to pay more than $ 4,000 to replace the transmission. Annual budget "smooth" these vibrations.

Similarly, you need to put a little money aside each month to cover deductibles, co-payments, prescriptions and other medical expenses out of pocket. The lifting amount should be aligned with this of-pocket costs and maximum annual deductible on your health plan.

For example, say that your health plan has an annual deductible maximum annual $ 1,200 and $ 5,000 total out of pocket. If you are generally healthy and rarely visit the doctor, you can in a health savings account set aside $ 100 per month or $ 1,200 per year. If you think you need more frequent visits, the doctors could choose aside $ 416 per month or $ 5,000 per year (full year maximum out of pocket).

So what is really unexpected?

Your emergency fund should be for expenses that are not used to fall right as property taxes, optometry and auto insurance in the categories of projects "annually". Should also be used to pay bills that are outside the range of home care and repairs and car and invoices in the normal health effects.

Actual expenditures are hitting the result of unexpected events such as job loss or a large bill from the norm, health insurance is not cover.

Define your concept of "unexpected" bills to these events once-in-a-lifetime instead of the most common activities ,. Then adjust your budget accordingly.

What is a millionaire?

Definition:

We hear of "millionaires" constantly. The term often conjures up images of celebrities, athletes and business leaders: Kim Kardashian, Dennis Rodman and CEO of Pepsi, it is assumed, are all millionaires.

But what exactly defines a millionaire? The answer is not as easy as you think.

The technical definition of "millionaire" is a person (or couple) with a net worth of over $ 1 million USD. "Net worth" is that of the people, the less their debts property. Equity is a "what you own less what you owe."

Pronunciation mill-yon-air

Fault current spelling: Millionaire, millionair

Examples:

Let us assume that John Doe has the following advantages:

• House: $ 350,000
• Car: $ 10,000
• Bond funds: $ 600,000
• Income Fund: $ 80,000
• Investment funds: $ 100,000
• Resale value of the items in your house (washing machine, TV, furniture): $ 20,000
• Cash: $ 10,000
• Total assets: $ 1,170,000

Consider also the following obligations:

• Mortgage: $ 120,000
• Car Loan: $ 5,000
• Liabilities: $ 125,000

John is a millionaire? One school of thought argues yes. Another said no.

The site supports the "yes" is emphasized that the asset is $ 1,170,000 corresponds John, and total liabilities $ 125,000. This means that the total net worth (assets minus liabilities) is $ 1,045,000. By definition, makes him a millionaire, let's say that your net worth of more than $ 1,000,000.

The page that "no" is supported, that the value of your home, your car and personal belongings not (such as clothing, furniture and television) are counted. Finally, it is more likely than not to liquidate these assets or sell them for money. He has to live somewhere. He has to drive a car. He has to wear clothes, eat at a table, and sitting on a couch.

The "no" is that only cash consideration. These include mutual funds, equity funds and money. Some people may also add value to your retirement account; others do not, as these assets against bankruptcy filings protected. Anyway, is not a millionaire, once these things are left out of the equation.

Another school of thought would be to adjust the value of the house, John car and personal belongings. Yes, you have to live somewhere, but I did not need $ 350,000. They would "loan" him with a housing allowance, and you have excess capital.

In short, there is no agreement on whether a millionaire. But one thing is certain: John does not have much money in the bank. Bound most of his money in housing and investment. Just because it's (possibly) a millionaire does not mean you can spend rich as Kim Kardashian and other celebrities.

In other words, a million is not what it was.

Read more: How to Become a Millionaire

Read more: Most millionaires budget

How should I take my child to school?

You have the horror stories: Joe the student graduates $ 50,000 in debt. He can not find a job, and then had to tables in a restaurant while. $ 400 monthly payments on their student loans

Sally leaves the student's University of the State of $ 60,000 debt. You also can not find a job and file bankruptcy - only to find that student loans can not be discharged in bankruptcy. These horror stories are afraid for the future of their own children. What can be done?

Step one: Relax.

The horror stories you hear on TV are the stories of outliers. One third of the graduates of universities and colleges four years (, for which complete data last year year) without student debt at all, according to statistics in 2008, the project on student debt, a cited non-profit organization.

The remaining 67 percent of seniors who carry a debt load complete average debt of $ 23,200. It's very, very of $ 50,000 + horror stories you hear on the news.

And do not forget: student loans are usually loans at low interest rates are the interest is tax deductible. This is one of the best structures of the loan you can expect to receive.

Second step: evaluation.

Before sending high school to college, take a moment to when thinking about what will be your earning his degree.

The college graduate earns on average $ 1 million more than a non-college graduate over the duration of his life, but the data is so large it is probably useless. Connects electrical engineering students in the same class as the majors in sociology. She graduated from Harvard as other graduates will be mixed in the same category.

It is important to ask how much money you depending on your age and your choice of college earn less. In the next two sections we will look at both.

What is your age?

The middle class of 2009 college with a degree in mechanical engineering earns a base salary of $ 53.400, according to Forbes magazine.

It is spacious enough data - there is definitely a difference between, for example, civil engineers and biomedical engineers -., But at this stage it is difficult to predict which branch of the great junior engineer, which makes it easy to predict that you will join wants the Faculty of Engineering.

Especially something technical matic or strong - - if your child to specialize in something else will weigh this potential child will be starting salary. College graduates work in management salaries Retail is $ 27,900 start, reports Forbes.

What college choice?

The reputation of a college or university, especially heavy on the probability that a student find a job in your field and your starting salary. A graduate of Florida State University received an average starting salary of $ 38,500, according to the FSU site, while he was a student at the University of Illinois at Urbana - Champaign is an average starting salary of $ 51,500 profit.

Remember the Forbes list of the data students get starting salaries of $ 53,400? It is a great national average. $ 14,000 - a graduate of a school like MIT guide to get a starting salary of $ 67,270 a student.

How much should I borrow?

Consider the rule "starting salary" applies: borrow more than your expected starting salary.

Under this rule, you can justify a loan of up to $ 67,270 when your child goes in the School of Engineering at MIT when youth who are considering a degree in Humanities at Florida State, though, you should limit the loans in the amount of $ 38,500.

There is only one rule, not a rigid law. The rationale behind this concept is that the graduates of their student loans in 10 years, when applied to pay 10 percent of the gross starting salary for the loan.

Over time, the student will probably get better wages, they can accelerate the repayment of their student loans. But the new editions such as weddings and babies may require most of its increase.

Visit your child's school? Learning to travel without spending a fortune.

What is & quot; Compound Interest & quot; Media?

Definition:

Albert Einstein supposedly described compound interest as "the most powerful force in the universe." What is compound interest and how it can help grow your investments, retirement, or to become a millionaire?

Compound interest refers to the interest that generated the principal and interest.

"What?" Do not worry if it sounds like gibberish. Just stick with me for a second.

Suppose you deposit $ 100 in an investment account for retirement. The interest is payable at a rate of 10 percent per year. At the end of Year 1, you have $ 110.

You start the year 2 of $ 110 on your investment account $ - $ 100 principal, and $ 10 in interest. You have the full $ 110, main and end of year 2 interest invested throughout the year 2, your investment increases by another $ 11 for a total of $ 121.

Note that in a year you earned $ 10 interest, because the only money I had was the main thing. But in year 2 you earned $ 11 in interest, because you were the principal plus the interest for the first year. In other words, an additional $ 1 compound interest on interest.

You begin the year with $ 3,121 in your investment account. You earn 10 percent or $ 12.10. At the end of the year you have $ 133.10.

Notice how your payment has increased by 10 percent - $ 10 the first year, $ 11 the second year, $ 12.10 in the third year. That is because the decline in interest on previous interest.

The fourth year, your payment will observe 10 percent of the $ 13.31 (10 percent of $ 133.10, which means it will end the year with $ 146.41. Sure that you have won this time 46 dollars on your original investment of $ 100 is not bad!

What if you had not plowed his statements? In year 1, a yield of 10 percent is obtained. Keep the main thing, the original $ 100 invested, but you spend the extra $ 10 early in the second year, you have only $ 100 invested.

Do this every year - the original investment of $ 100, but the extra $ 10 at the end of the year 4, only $ 40, not $ 46.41 because it has not left the compound of interest.

"Big deal", you might think. "$ 6 is not much money."

True. But imagine, $ 10,000. At an interest rate of 10 percent compound at the end of your initial investment fourth year you will win $ 4,600 and $ 6 is now $ 600.

Better yet, imagine doing this with $ 100,000 would be. In a mixing ratio of 10 percent, you win $ 46,000!

Of course, most of the investments do not give constant returns of 10 percent - take this number only a simple example. Legend Warren Buffett predicted invested, that the stock market will give you a 7 percent yield to early and mid-21st century to learn to read this article as the yield effects, how long does it take for your money to double.

Also known as: compound interest, compound return, compounding annual growth rate

Examples:

You invest $ 50 interest rate of 10 percent. After a year you have $ 5, for a total of $ 55 in the second year, interest on your initial investment of $ 50 you earn (the "principal"), plus an additional $ 5 you won interest rate during the first year.

In other words, you earn $ 55 to 10 per cent, or $ 5.50, for a total of $ 60.50.

The "compound interest" is that the extra 50 cents, which is the interest that you have earned interest.

The compound of interest from more, your earnings will be even more dramatic (because the interest will).

What & # 8217; the difference between a ...

I recently received a great question from a reader I would share. The reader asks:

"I hate to pay overdraft fees ... (I) keep more money in my bank account, so that you do not have to pay for them. It is an emergency fund?"

Very good question. The reader asked if the cash cushion that holds your checking account against sanctions inadequate land can be protected as part of their emergency fund.

Short answer: no. Here is why.

What is an emergency fund?

One of the most important rules of personal finance is that you get an emergency fund.

Most of the emergency fund should cover the cost of living in a position to 3.6 months. If you have a stable job (like a job where your salary is highly dependent on commissions and bonuses, or if you are a business owner or independent, or if you work in an industry loss), you can raise money 6-9 months to cover living expenses.

This fund should be used to pay for these shock: loss of a job. A serious hospital bill. A big bill for one and one-year-old healthy dog's veterinarian.

In other words, an emergency fund used to cover unexpected costs. The fees that you can expect - such as car repair bills (all cars break down from time to time) - should be paid through a special fund for this purpose.

(Read more: If using on your emergency fund and several savings ?.)

What is a pad?

A pillow, by contract, is a balance in your savings account to protect against insufficient funds and overdraft charges penalties.

"What does this mean?"

Imagine exactly $ 1000 in your account.

On Monday, a check for $ 200 is written to pay your invoice with your credit card online for $ 400, and you use your debit card in the amount of $ 400 at the end of Monday, you have outstanding fees from your checking account to $ 1,000 deducted.

Suppose the credit card and the payment of invoices paid $ 400 $ 400 debit card at a time after Tuesday. On Wednesday, check your account and see that you still have $ 200 there.

You are a busy person with a lot of things in my head; They forget that you wrote a check for $ 200, which is still pending. They assume that the $ 200 your checking account is yours for the taking, if you withdraw $ 40 from an ATM.

Later that day someone tries to cash the check - but only a balance of $ 160, in other words you have sufficient funds. Rebounds tax and bank charges overdraft fees of $ 35.

How can you help? Keep a pad in your account. Some people keep a cushion that are as small as $ 100; others feel more secure when hidden $ 1,000 in your account. The less time you want to track your sales, should be plus the pocket.

(Read more: You track your expenses with different accounts)

This pillow is your starting point checks the account balance. Once your checking account with this mattress, you should mentally "short".

You are not technically open to the eyes of the bank; It checks do not bounce or be hit with penalties for lack of money. But if you dive once under the pillow, you should consider to maintain a balance of "zero" in his own mind.

Using the same example: Let's say your "cushion" is $ 300 What would have happened?

First - If you had $ 1,000 in your account, you will never make $ 1,000 payments on Monday. You want to mentally imagine that your bank account has only $ 700, because the other $ 300 inviolable pillow. You can not buy something with your debit card that day.

Secondly - if it go wrong payments of $ 1,000 Monday, you notice your error check your balance and see that $ 200 in your account. This activates an alarm in your head, because this amount is lower than the pillow. You withdraw money from an ATM. Instead, rushing to deposit money into your account as quickly as possible the reconstruction of the mattress.

The Bottom Line: A buffer is a small scale - to keep ($ 100 $ 1000) in your checking account to avoid overdrafts reasons. An emergency fund is a good balance held in a savings account to be help in the interest of the catastrophic situation such as loss of employment of trouble. They are different concepts; Your platform is not an emergency fund.

How can I track my spending habits?

Have you ever tried what you eat to lose weight by tracking everything? Sometimes, the results are surprising. You may not realize how many cookies you eat until you follow the data.

The budget is similar. You may not realize how much money you spend on coffee, restaurants or clothing, to follow the data.

Connect your eating habits in developing a clear idea of how many calories ingested, carbohydrates or fat grams daily. Also you track your spending habits, you can find out how much money you spend - it radically from the amount you think you might have been.

How long should I change my costs?

Many beginners spend between two weeks to a month to keep track of each transaction before creating a budget. Two to four weeks should, so that you can see enough information to their habits overnight.

After a budget, you need to keep track of your spending habits to see how "real" costs are aligned with the "ideal" you describe in your budget. This budget sheet can help you compare against their "ideal" your "real".

Help! I have trouble keeping track of everything.

The variety of payment methods today for your track expenses difficult. How can a person reasonably Track all kinds, credit card, debit card, check, direct debit and PayPal transaction?

Here are some tactics that you can try:

No. 1 :. Stop the agent, you have automatic electronic records of each credit card, debit card, check, direct debit and PayPal transaction. The only type of operations that are not automatically saved, is money.

If you buy the things with the money you save effort, manually save your cost. Instead, all you need to check electronic records one day a week - for example, every Saturday - and the entry of these files in a central location, such as a spreadsheet, a laptop, or one of these budget tables.

I have a responsibility, not significant, but: Some people spend more money when they slip out of plastic. You'll spend less when they have to of dollar bills, physical get rid of green. If you fall into this category, continue for things with money. No reason, in a situation where you have to pay more than likely set to spend otherwise.

That brings us to my next tactic ...

# 2: Try the envelope system at the beginning of each week a series of envelopes filled with money .. dedicate each to a specific category of expenses, and record the amount in each envelope. For example, the envelopes can be labeled "Lunch $ 25," Essence "$ 75" and "Target or Wal-Mart $ 40" Because you can not perfectly predict, especially in the beginning, all expenses, keep "several" also.

At the end of the week, should the residual amount in each envelope. Lunch on, for example, traces of $ 5 gasoline can, the envelope can have $ 12 left. In white envelope / Wal-Mart could have been "in the budget" - you can use up to $ 10 About "Miscellaneous" in order to cover the hole in the casing of your goal.

This is an easy way to track your spending. You will be able to see their consumption habits of large classes, without having to go through the hassle of the details of each transaction. You will also be able to provide for things in cash, motivate, spend less than you pay it when you slide a plastic card were.

Read more: Getting your costs by pursuing multiple accounts

Of course, if you are a detail-oriented person, then you can always try, the final battle ...

No. 3 :. Keep earns a small notebook and pen in your purse or pocket, where every transaction is connected. You can also click the e-Notebook on your smartphone.

The advantage of this? Harder on every effort you think. Be aware of your spending habits more, if you make every transaction the transaction.

The downside? This is a problem. It is easy to relax. It is easy to forget. And there is no way to retroactively collect a day or two, if the record of the expenses of your mind.

Should I refinance? Or should I mean ...

You hear that mortgage rates are at historic lows, hovering near record levels of inflation. It's practically free money in the long run.

However, they committed to a fixed rate mortgage a few years ago, so pay 6 percent, while neighboring child pays 3.25 percent. If you refinance?

What is refinancing?

First, a background for the reader vocabulary, "refinancing" a mortgage to get a new mortgage. They "repeat-Finance" - a modified payment plan to pay back.

Pro for refinancing

Many people who have a mortgage to refinance fixed rate is motivated by the opportunity to engage a lower interest rate.

Small differences in the interest rate makes a big difference. Compare two 30-year mortgage of $ 240,000. An interest rate of 4.00 percent is raised, and the other is at an interest rate of 4.25 percent.

That does not sound like a big difference to sound, right? There is only one quarter of one percent, right? What difference would it make?

Compound small amounts in large numbers. At the end of 30 years, the owner of 4.25 percent on an additional $ 10,000 over the term of the loan in relation to the door of a mortgage from 4.00 percent to be paid.

Obviously the biggest advantage of refinancing is the way to reduce your interest rate, shaving thousands of full payment of the loan.

Refinancing

But every coin has two sides: the refinancing will launch the new clock on your mortgage, make your repayment back to the square table.

"Huh What does this mean?"

Here's how mortgages work: When you make a payment, a percentage of the payment goes to interest. The balance goes to your original principal.

The more that your payment for your capital is better used. Pay your principal amount, you can pay off the loan faster. (This is why we must ensure that all additional mortgage payments applied to principal).

When you start a new mortgage, most of your payment applied to interest. Only a small fraction of that goes to his head. At the end of the first year of their mortgage payments, you will see that there is hardly a dent on your principal balance.

The more you advance on your mortgage, your payments more for your capital. For its 25th year, the 30-year mortgage, almost all of your payments will be applied to your principal.

"It's fascinating, really. (Yawn). But how does this apply to refinance?"

When you refinance a mortgage, it is set back to a single year the clock. Most payments are interest, not the principal applied.

If you have your mortgage in the early years still, it's not a big deal. But if you are more on your mortgage, you need to run a spreadsheet to see if the lower interest rate justifies rewind clock.

(Read more: Should I buy or rent?)

Example no. 1

Let's say Joe has a $ 100,000 mortgage with an interest rate of 6 percent. Your monthly payment is $ 599.

At the end of Year 1, Joe paid $ 7,188 on your mortgage. Only $ 1299, the outstanding principal balance is paid. The residue was purified by Interest swallowed.

Only a year after his 30-year mortgage, Joe discovers that he can get a new loan at 5 percent. Joe refinance your old mortgage closing and start the clock. Pay $ 1000 closing costs for the new loan.

At 6 percent, Joe would have paid $ 109.871 in interest payments over the term of the loan (pay a total of $ 209.871 to $ 100,000 home).

By refinancing, Joe "loses" the interest that you paid for the first year of the loan $ 5889th Ouch.

But it's worth it. By opting for a mortgage of around 5 percent, now Joe will pay $ 95.483 in interest over the term of the loan, instead of $ 109,871. In other words, it allows their movement to save $ 14,387.

Example # 2

But suppose Joe was in the year 15 of his 30-year mortgage, when he discovered the ability to refinance.

He does not want a new 30-year commitment, so that refinancing a mortgage for 15 years. What happened?

Despite the task of low interest rates to 5 percent and accelerated payments on a mortgage to 15 years, Joe actually pays more interest in refinancing, as it did in the original scenario. In other words, it is a terrible thing refinancing for Joe, because it is too far into your mortgage.

The Bottom Line

Do not assume that refinancing is always a good or bad idea. Close the interest rates, loan terms and closing costs on a spreadsheet or refinancing calculator online to determine if the potential deal that would provide a sense for your particular situation.

In general, if you met in the early years of mortgage payments and you can interest rate of 0.75 percent or more, you should consider. The earlier in your mortgage refinance better.

They are a couple with two incomes? Living in a ...

Are you part of a couple with two incomes? If this is the case, is one of the easiest ways to make a budget is to create is live on the income of a person and include all others.

Say for example, you and your spouse to work outside the home. One of you earns $ 40,000 per year and the other earns $ 60,000 per year. At this point, you are used to live in a time of admission. Turbo charge your finances, you will want to wean them.

As your first goal should be that both live in the largest of two incomes. Instead of living on $ 100,000 a year combined, trying to live on $ 60,000 one year.

If you can achieve this, you need to increase their savings rates. You save $ 40,000 per year before taxes.

If you want to be more ambitious, try to live in the lower of the two incomes. If you get used to life of $ 60,000 per year, start saving more income and live in the smaller of the two. This will rapidly accelerate and their savings rate.

What can you do with the savings? There are many options:

• Accelerate your mortgage content. Few couples who have paid in full to use their mortgage in less than three to five years to live on the income of the spouse and all other income to pay the mortgage.
• A strong emergency fund. Aside 3 to 6 months (or 9 months!) For cost. Create special savings accounts for future home repairs and auto, health co-payments and deductibles, and holidays.
• Make a car payment for you. Could you set aside enough money to buy your next car in cash set.
• Max all your retirement accounts. Could aside up to $ 17,500 in a (qualified person) 401k and $ 5500 an IRA (QP) has in 2013 If you are 50 Plus, you can leave more.
• A baby born today in Max college savings fund for your child. Need to visit around 200,000 dollars in college in 18 years.
• Apart from a big jump. Apart enough savings so that you can start your own business or take some kind of great renown and business risk. Or to retire with 35 or 40 years!

The possibilities are endless substantially.

How to save a person's income?

Begin closely with considering your budget. This budget sheet will help you get a good look at exactly how much to save or expenses.

Understanding how you cut your costs in each category. Start winning with the categories to the greatest victory. Can you cut your mortgage - perhaps by reducing it to a smaller home? Can reduce driving live in a pedestrian-friendly place, thereby reducing gas money?

Reduce your spending in these categories will cost you the most impact, but do not forget the smaller categories. Give chips, soda and other unhealthy foods can significantly help reduce your grocery bills. Lower the thermostat and energy efficient upgrades in your home can reduce public services. A tenant or roommate of his room quickly can give you $ 500 will increase their savings rate per month (or more). (That's $ 6,000 per year!)

Living in the income of a person and save all others is one of the most effective ways to increase your savings and a financially free life ways to live.

Most millionaires budget

Guess what self-made millionaires in America have in common?

Most of them are budgets.

One of the first books I had to read personal finance The Millionaire Next Door. The authors Thomas Stanley and William Danko, are teachers who have dedicated their careers after studying the habits of self-made millionaires - defined as people who were millionaires, without the help of an inheritance.

Stanley and Danko found several similarities of millionaires, including shared:

• Millionaires live frugally.
• They drive cars.
• You buy (used) car instead of renting one.
• They live in the "house less" than they can afford, especially if they grow their wealth. Most of their neighbors are not millionaires.
• More than half never received even $ 1 as inheritance.
• Nearly half never received money for tuition their families.
• Nine of the 10 millionaires who have never received a dollar of property in a family business.
• Self-made millionaires are frugal husband. The authors say that a particularly compelling about a man considering his legacy, was his wife, that she officially millionaires history. The woman nods and returns to clip coupons.
• The millionaires own their own business. Some have a full-time secondary and companies, while other companies have full-time. (More information on the company can start on the page.) "The self-employed are less than 20 percent of the workers in America but do two thirds of the millionaires," says the book.
• They tend to have boring unglamorous business "," - the kind that would not make an interesting conversation, cocktail. The book says: "We are welding contractors, auctioneers, rice farmers, owners of Holiday Park, pest controllers, coin and stamp dealers, and paving contractors."
• The only area where they spend money, generously to the education of their children.

And of course, my favorite position:

Most of the budget of self-made millionaires and tracking every penny. You know how much they spend on food, gas, household and every other row by row.

The authors say:

"Planning and control of consumption are important factors underlying the accumulation of wealth ... The use of a house without a budget is similar to operating a business without a plan, without direction and without direction."

Read more: Why should rich household, too.

What, why and how

Millonarios start with a "big picture" goal. Imagine how they expect to save themselves, to invest and build assets. Represent these main objectives, "which means" to reach them and "why" they want to achieve.

Tracking budgets and expenditures are millionaires "like." Check to see your output stream, whether the expenditure aligned with the objectives of large images.

Clip coupons, use cheap clothes and drink beer domestic. Or as academic authors said: "They often live in environments possess relative rarity."

You make budgets, tracking your money, and to understand how they cut costs so that they can invest more.

If this is not motivation to do a budget, do not know what is.

(Want to start your budget? Use these sheets to keep track of your spending.)

To leave S 7 Baby Steps ...; Dave Ramsey & # 039

Try to dig your way out of a mountain of debt? Popular financial expert Dave Ramsey, host of the nationally syndicated radio program, The Dave Ramsey Show, shows that you follow these seven "baby steps" that you pay the debt and build wealth.

Baby Step 1: Participate in a $ 1000 emergency fund

An emergency fund, which is also known as "emergency fund" is money set aside in case of great urgency. It is not an account that is tapped to go on vacation or buy a new vacuum.

Even if you have a huge credit card debt, Ramsey said, you first need to in an emergency fund set aside $ 1,000. Only then will the fight start your debt.

Read more: What is an emergency fund?

Baby Step 2: Pay off your debts

The second step is an important step that could take years - pay all debts except your mortgage. Ramsey defends a tactic called "debt snowball" in which up to the largest scales pay the debts in the order of the smallest, regardless of the interest rate equilibrium.

It is a controversial tactic. Most financial experts recommend "stacking the debt," the reward of a debt of about interest rates. More information about the snowball debt against debt pile.

Baby Step 3: Create an emergency fund of 3-6 months

Once you pay all your debts, create an emergency fund to 3-6 months to cover costs. To save borrow again, when faced with a serious crisis, such as the massive job loss or medical bills.

Baby Step 4: Save 15 percent of your income in retirement

Aside 15 percent of their total household income in retirement accounts such as a Roth IRA, 401k or other traditional. Do not worry if your employer does not offer a pension plan - you can add your own Individual Retirement Account or IRA.

Baby Step 5: Save for College

Then start saving for their own good college or university education of their children (or both!) With 529 plans and Education Savings Accounts Education Savings (ESA) is recommended as their savings vehicles.

Baby Step 6: pay the mortgage!

Now is the time to make every penny to pay off your mortgage faster. Why wait 30 years to complete the payment of real estate? You can aggressively pay principal and be completely debt free, including your home!

Baby Step 7: create wealth and give

Now that you save 15 percent for retirement, which is (including mortgage) debt free, and are willing to send their children to school, it's time to concentrate wealth creation (investments, entrepreneurship, etc.), and give alms.

Source: 7 Baby Steps Dave Ramsey

20 cheap and easy ways to update your home

If you've been in the same house for many years, or if you bought a fixer, it is natural that you renovate and improve your home you want.

However, improvements are expensive. A new set of kitchen cabinets cost thousands of dollars. New granite floors, toilets, bathrooms and wood costs thousands.

I am not willing to pay an amount of 5 digits for the cost of upgrading the house? Here are 20 cheap remodel to your home on a budget way.

# 1: Have you looking stainless steel appliances, without the astronomical price tag? Use Remove contact paper and stick with a stainless steel finish. The device will have a stainless steel front at a fraction of the price of the real deal.

# 2: Install the new switch plate covers - covers light switches and sockets. They each cost about $ 1 for a white primary care in major retail reforms and are easy to install. A new cover white, clean look much better than the previous reporting had yellowing. For additional momentum in the kitchen, try stainless steel lid. You can also search online for decorative and ceiling.

# 3: Change the doorknobs, handles and hinges. These finishing touches cheaper than making a big difference, and the installation is quick and easy.

# 4: Change your screens. It is a small detail that makes a big difference.

# 5: ". Spectrum of light" Make sure the bulbs is suitable for the area you want yellow bulbs, the soft / red onion want to emit living areas as you "hang" too. Blue beeping in the areas of "education" as your home office or library.

# 6: Install the new blinds or curtains on the windows. Wooden blinds two inches to your home an aesthetically pleasing than most vinyl blinds inches.

# 7: Installing moldings, baseboards, door trim and other accents finish to your home. Trim and moldings go a long way to make a house look updated.

# 8: Arrange the furniture. You do not necessarily need new furniture - simply new forms, and the reorganization of the River of Life, can work wonders.

# 9: Cover your furniture with a cover sheet or Internet. This is a new color and pattern to give, so it is new.

# 10: repainting the walls and / or change the wallpaper.

# 11: You can paint your ceiling a fresh new color. Some people are using soft, neutral colors to experiment on the walls and a bold color on the ceiling, like the white walls with a roof of bright yellow or beige walls with eggplant / purple roof.

# 12: Hang new photos or artwork on the walls. For an even more economical alternative, just change the course of your photos and art.

# 13: Hang several levels, even in places that are at the same height over (like a chimney). This increases the light through the house. If you hang two mirrors in the room, put them on opposite walls; this will give the impression of a larger space.

# 14: Change your kitchen and bath mat and mat. Switch to a new shower curtain.

# 15: Buy new pillows and pillow cases, or Sew on useless pieces of old clothing or fabric. You are good enough, do not have? Hunting cloth flea markets.

# 16: Get small decorative items such as mini-lanterns, artistic mountain and a new picture book. These are found more "finishing" that a space to give a modern touch.

No. 17:. Expose plants everywhere, both inside and outside. If you already have factories, but in pots in cheap plastic containers that can be upgraded to a beautiful ceramic pot.

# 18: Clean up your mess! This felt much more welcoming space.

# 19: Clean your furnace and air ducts and tuning. This is not an aesthetic upgrade, but it will make your home function more efficiently.

# 20: Lighting candles or incense or use air freshener. A new fragrance can help you enjoy the feeling of a cozy atmosphere.

Stacked or Snowball: Debt Yield Which method ...

There are two popular methods that people use to pay down debt. The traditional method is called "debt stacking", while the second mode is called "debt snowball" and is recommended by the popular financial expert Dave Ramsey. Let's take a look at the pros and cons of each.

Debt Stacking

The method of "debt accumulation" recommends that you ranked a list of all your debts by interest rate, highest to lowest. For example, you must:

• Mastercard $ - 2500-19 percent - the highest rate
• Visa $ - 7500-13 percent - the second installment
• Car loan $ - 4000-8 percent - the third interest
• Student Loans $ - 1.900 to 5 percent - the lowest rate

The method of "debt accumulation", shows that you make the minimum payment on all your loans. Then you have to take all your money to your MasterCard card to pay the highest interest rate to 19 percent.

Once you have removed debt by 19 percent, Visa balance sheet approach, which has the highest interest rate on the second 13 percent of your MasterCard.

You will have plenty of time to pay for the visa, because he has the highest level at $ 7,500. Stay with it. When you are finished, you can begin with lower interest concerns over the debt.

Advantages: This method saves more money in interest payments.

Disadvantages: It may take some time to a high residual guilt scratched your list. You feel frustrated after investing so much time and energy to get a loan without a mind experience "victory" through the list to pay.

Debt Snowball

After the snowball method, you should every penny pieces to repay the loan and the balance low, regardless of the interest rate.

If you used the snowball method, every time you order the above list as follows:

• Student Loan $ - 1.900 to 5 percent - the lowest balance
• Mastercard $ - 2500-19 percent - second lowest balance
• Car loan $ - 4000-8 percent - the third lowest balance
• Visa $ - 7500-13 percent - the highest balance

Want the minimum payment on all to make your loans. Then you can throw every penny of debt with the smallest balance, regardless of the fact that - in this case - it also has the lowest interest rates.

The idea behind this method is that the payment of the loan with the lowest balance will you go to the psychological sense of "victory" by the credit of the list. It is mental "victory", will motivate you to continue to save money and pay off debts.

Advantages: This method returns an immediate sense of victory.

Disadvantages: It's expensive. You will pay more in interest, with respect to the stacking method of debt.

Which method to use?

I is my personal finances ... well ... personally.

Payment of debt is a lot like dieting. Of course there are more "perfect" eating plans out there, but let's face it: Most people do not have to keep a perfect diet. The "best" diet is that you care.

Payment of debt is similar. Be honest, what a budget that fits your personality and keeps you motivated. You will pay more interest if you do not follow your plan for paying the debt.

6 things you never cut your budget

There are many ways you

To save money. You can stop at restaurants, buying new clothes, cut your cable TV or your Internet service.

But what points you should absolutely never cut your budget, no matter how little money you can just feel?

Here is a list of items that should never be cut, no matter how you feel broke. Make sure that you spend every last penny to pay for these costs, even if you take a second job to pay for it.

# 1: Health Insurance

Did you know that two thirds of all bankruptcies are directly medical expenses together? There is no limit to the amount of the hospital bills they can stretch.

If you have a car, destroying more money, you may lose the value of the car (without, of course, all medical costs along to the car accident.) This means that your problem is probably not more than $ 20,000.

But hospital bills can easily stretch into the six-figure mark. If you have a serious illness or injury, medical expenses can vary in the millions. It is more common than you think.

If your employer does not offer health insurance, you can buy your own individual plan. If you think that the individual plans are too expensive, consider the cost of not having one., If you really are struggling to make payments, you choose a plan that has a high deductible.

After graduating from college, I bought a health insurance policy with a deductible of $ 5,000. Obviously I have never counted on this plan for a flu shot, contact lenses or other standard office visit. I knew if I got sick and had to go to the doctor, I pay the bills out of pocket.

But with my high deductible plan $ 5,000 that the comfort of knowing that my "problem" has had internationally. If I seriously ill or injured, the more money would pay would be $ 5,000. It would be fun to make these payments, but it would certainly be better need to pay up to $ 40,000 or more.

# 2: Home Insurance

After the cost of their health, the second largest bill that you never pay more for your home.

Maybe by fire, tornado, earthquake or other disaster - - Disaster your home is destroyed you happen to be on the hook to pay for the loss, unless you have home insurance. And if you think that the mortgage payments are hard now, wait until you pay two mortgages: one for the house in which you live, and for the house that was destroyed.

Many lenders and mortgage companies want to protect their assets, so they collect the insurance as part of your mortgage. In other words, if you pay your mortgage, you can now pay for insurance. But check your loan documents to make sure.

In addition to re-evaluate your insurance at least once a year to ensure that you have enough coverage. Has inadequate insurance is almost as bad as having none.

# 3: Auto Insurance

I know, I know I always talk about insurance. But that's because it's pretty damn important.

It is against the law to drive without at least a minimum level of mandatory car insurance in the state. It does not take much more for you little extra protection which will cost to pay for damage to your vehicle and the vehicle elsewhere. You must also include liability protection, which covers injury in an accident.

Remember, assault is a bill of health, and be the cost astronomical.

# 4: Debt restructuring

If you pay a high interest credit card debt, and 29 percent of the cost of APR credit card, it is difficult for you afford not to pay as soon as possible. Every month is a high interest loan to pay ever deeper into a hole.

However, if you have lower interest debt such as a mortgage or car loan at a reasonable price digit, you can not have so far to the urgency of this loan.

Before you rush to pay low interest rate that debt, you should focus on creating an emergency fund and retirement. This brings us to the next point ...

# 5: Your emergency fund

You will be amazed at the comfort of knowing that if you know that you are to have a salary for a few months to deal with any emergency that may arise.

If something unexpected happens, that would be needed earlier to break the credit - as burst pipes in your bathroom - you'll be able to pay the bills immediately, without going into debt.

Further to your emergency fund, the only time that you add to maximize your first 401 (k). This brings us to the next point ...

# 6: Your employer 401k match

If your boss matches your contributions to 401 (k), made the most of this opportunity. If you are a match of 50 cents for every dollar you invest, up to the first 6 percent actually wins 50 percent "guaranteed interest" 6 percent of your salary. This is important.

Once you have optimized your employer match, high interest focus on the construction of an emergency and the refund of the money debt. At the same time, make sure you do not skimp on their insurance plans. Insurance is the best protection against falling you further in debt.

How budget for a car if you & # 039; Again teenager

Even in adulthood - can buy a car a difficult thing to balance. But if you are a teenager, it is even more difficult.

They work a minimum wage job - part time while you are in school - and you know that a car costing thousands (plus insurance, gas and other car expenses). How can you budget for such a large expense?

Here are some tips:

Create a budget

First things first: you will never withdraw able to keep their savings for a car (or anything else in life), if you have a budget in place. Keeping track of your income and expenses can seem a little boring, but you know exactly where your money is going each month, especially now, when you have not much of it.

Set a spreadsheet program or budget allows you to record the amount of money you make and where it goes. (Some applications do this automatically for you if your credit card and bank details.) Account for all by the candy bars 99 cents, which led to the grocery store.

Then configure the games, how much you spend per month for each zone. Large areas should be included, food, entertainment and of course your car. (More information on the amount set aside for a moment.) Now you see where all this is happening, you can keep your spending on track and provide measures to ensure that meet their objectives categories.

Thoughts economical

As frugal is a habit that is to serve you well for the rest of your life, and save for a car is a good reason to start.

Another look at the budget that you have created, and try ways to reduce further. Instead of going to the mall or to the movies every weekend, you can less expensive ways to have fun, as can be found with friends for a movie night or position of a local park or on the beach regularly. When you meet for coffee, whipped cream imagination creating $ 4 each time to get you, or could do with a coffee at home and still have the same conversation with your friends?

You do not have much money coming in that time to do so, what you put as much as possible.

Buy Used

Besides the fact that the new cars are much more expensive, it may be difficult to finance a new car as a teenager, unless their parents sign for them together. (This is an option, but you're still paying more each month if you buy used.)

You are much better off in cash for a car. And that means that you have a used car ... probably buy a very used car.

Note that many people have stories less-than imagination "first car", and there's a reason for that. In this phase of your life, you do not really need a lot of options, such as a large sound system, leather seats and a rearview camera. You just need something safe and reliable that you get from point A to point B.

Browse the classified ads or search Craigslist to get an idea of how much car costs also used safely get (good condition 16 Camry with 170,000 miles is only $ 1500 by Kelley Blue Book) still works. Plan to save for this goal.

You're friends do not care that your "new" car has some miles on the clock, you had just won impressed that you have your own set of wheels.

In search of more lucrative work

One last tip: It is not necessary to take a minimum wage job, even if you are still a teenager. You can make your job at minimum wage as a backup to keep stable source of regular income. But in his spare time, looking for better paying gigs.

Some ideas:

• Tutors students in middle school math, science, English or a foreign language
• Keep children - many parents pay more than the minimum wage, especially if you take care of more children
• Mowing the lawn, leaves, shoveling snow
• Learn some carpentry or repair of basic skills and a job with a construction crew

Just because you is not a teenager, you have to earn only $ 7 or $ 8 per hour. If you want to increase your income by 12 - $ 15 per hour, and save more than you earn, you will be on the right way to pay for a car in no time.

What is an unexpected expense?

Conventional wisdom says that the money should be reserved for "incidental expenses" in the emergency fund.

This is true. But what exactly is an unexpected expense?

Here it is:

This is not a recurring annual financial statements

Your property tax bill in the bill for car insurance, the annual premium of life insurance, the study of glasses and other costs once a year are not surprising. Instead, you get to fully pay the bills annually or semi-annually.

Budget, giving them a certain amount each week or month. If your property tax is $ 5200 a year, for example, set aside $ 1,000 per week. If your exam and glasses replacement lens costs $ 300 per year, I have $ 25 per month. These are not the kinds of issues that your emergency fund should be used.

It is not the occasional maintenance or repair

Is leaking from your roof? Your dishwasher breaks down? Need to pay a deductible of $ 1,000 health insurance?

Most people call these unexpected expenses. But some experts disagree personal finances.

"Medical bills, car expenses and costs of the house are not really unexpected - at least it should not be," says Liz Weston, personal finance columnist for MSN Money and author of the 10 commandments of money. "If you have a body, a car or a house, sooner or later, it is going to cost you."

What it means is that the budget should be an estimate of how much you spend on variables such as problems at home, including auto and health costs.

For example: A good rule of thumb is 1 percent of the cost of your home set aside each year for repairs and maintenance are set. If you live in a $ 250,000 home, for example, you need to save $ 2,500 per year or $ 208 per month.

You will not spend $ 2500 per year. Some years will be $ 100 or $ 200 to spend on basic maintenance, such as cleaning the gutters. But other years spent $ 7000 to replace the roof. The golden rule of 1 per cent is destined to a long-term annual average rate, and the budget for such expenses by allocating $ 208 per month on the background of "repair and maintenance" that you have.

Read more: Should I buy or rent a house?

The same is true for automotive and healthcare expense. You can choose to set aside $ 600 per year or $ 50 per month for car repairs. Some years will spend $ 0 Other years, you will have to pay more than $ 4,000 to replace the transmission. Annual budget "smooth" these vibrations.

Similarly, you need to put a little money aside each month to cover deductibles, co-payments, prescriptions and other medical expenses out of pocket. The lifting amount should be aligned with this of-pocket costs and maximum annual deductible on your health plan.

For example, say that your health plan has an annual deductible maximum annual $ 1,200 and $ 5,000 total out of pocket. If you are generally healthy and rarely visit the doctor, you can in a health savings account set aside $ 100 per month or $ 1,200 per year. If you think you need more frequent visits, the doctors could choose aside $ 416 per month or $ 5,000 per year (full year maximum out of pocket).

So what is really unexpected?

Your emergency fund should be for expenses that are not used to fall right as property taxes, optometry and auto insurance in the categories of projects "annually". Should also be used to pay bills that are outside the range of home care and repairs and car and invoices in the normal health effects.

Actual expenditures are hitting the result of unexpected events such as job loss or a large bill from the norm, health insurance is not cover.

Define your concept of "unexpected" bills to these events once-in-a-lifetime instead of the most common activities ,. Then adjust your budget accordingly.

Don & # 039; t skimp on this expense!

There are many ways to save money. You can stop at restaurants, buying new clothes, cut your cable TV or your Internet service.

But what points you should absolutely never cut your budget, no matter how little money you can just feel?

Here is a list of items that should never be cut, no matter how you feel broke. Make sure that you spend every last penny to pay for these costs, even if you take a second job to pay for it.

# 1: Health Insurance

Did you know that two thirds of all bankruptcies are directly medical expenses together? There is no limit to the amount of the hospital bills they can stretch.

If you have a car, destroying more money, you may lose the value of the car (without, of course, all medical costs along to the car accident.) This means that your problem is probably not more than $ 20,000.

But hospital bills can easily stretch into the six-figure mark. If you have a serious illness or injury, medical expenses can vary in the millions. It is more common than you think.

If your employer does not offer health insurance, you can buy your own individual plan. If you think that the individual plans are too expensive, consider the cost of not having one., If you really are struggling to make payments, you choose a plan that has a high deductible.

After graduating from college, I bought a health insurance policy with a deductible of $ 5,000. Obviously I have never counted on this plan for a flu shot, contact lenses or other standard office visit. I knew if I got sick and had to go to the doctor, I pay the bills out of pocket.

But with my high deductible plan $ 5,000 that the comfort of knowing that my "problem" has had internationally. If I seriously ill or injured, the more money would pay would be $ 5,000. It would be fun to make these payments, but it would certainly be better need to pay up to $ 40,000 or more.

# 2: Home Insurance

After the cost of their health, the second largest bill that you never pay more for your home.

Maybe by fire, tornado, earthquake or other disaster - - Disaster your home is destroyed you happen to be on the hook to pay for the loss, unless you have home insurance. And if you think that the mortgage payments are hard now, wait until you pay two mortgages: one for the house in which you live, and for the house that was destroyed.

Many lenders and mortgage companies want to protect their assets, so they collect the insurance as part of your mortgage. In other words, if you pay your mortgage, you can now pay for insurance. But check your loan documents to make sure.

In addition to re-evaluate your insurance at least once a year to ensure that you have enough coverage. Has inadequate insurance is almost as bad as having none.

# 3: Auto Insurance

I know, I know I always talk about insurance. But that's because it's pretty damn important.

It is against the law to drive without at least a minimum level of mandatory car insurance in the state. It does not take much more for you little extra protection which will cost to pay for damage to your vehicle and the vehicle elsewhere. You must also include liability protection, which covers injury in an accident.

Remember, assault is a bill of health, and be the cost astronomical.

# 4: Debt restructuring

If you pay a high interest credit card debt, and 29 percent of the cost of APR credit card, it is difficult for you afford not to pay as soon as possible. Every month is a high interest loan to pay ever deeper into a hole.

However, if you have lower interest debt such as a mortgage or car loan at a reasonable price digit, you can not have so far to the urgency of this loan.

Before you rush to pay low interest rate that debt, you should focus on creating an emergency fund and retirement. This brings us to the next point ...

# 5: Your emergency fund

You will be amazed at the comfort of knowing that if you know that you are to have a salary for a few months to deal with any emergency that may arise.

If something unexpected happens, that would be needed earlier to break the credit - as burst pipes in your bathroom - you'll be able to pay the bills immediately, without going into debt.

Further to your emergency fund, the only time that you add to maximize your first 401 (k). This brings us to the next point ...

# 6: Your employer 401k match

If your boss matches your contributions to 401 (k), made the most of this opportunity. If you are a match of 50 cents for every dollar you invest, up to the first 6 percent actually wins 50 percent "guaranteed interest" 6 percent of your salary. This is important.

Once you have optimized your employer match, high interest focus on the construction of an emergency and the refund of the money debt. At the same time, make sure you do not skimp on their insurance plans. Insurance is the best protection against falling you further in debt.

How can I budget with irregular income?

How can the budget if your income is irregular?

Say you are an independent contractor, or you are independent from the other. You do not get regular checks every two weeks. Instead, get the payment random irregular intervals.

A few months make twice what you did last month. Other months, to make half of what you did last month. How the hell can a budget with all this randomness to keep in your life?

Here are some tips to help you budget, despite its irregular income.

Step one: Look through the records of his last two years of income. What is the money you have made in a given month? What is the less money you made in a given month? And what is the average?

For now we will focus on less if you have made in a given month.

Step two: Use these sheets to a system based on the minimum that you can arise in a month in the last biennium budget.

What was the least that he has done, you can assume that the majority will be in the future a little more than that each month. But you have your budget all you have done to support keep a safety margin.

Perform all of your expenses - including fixed and variable costs - and see if you can make it fit into your budget, based on the minimum you won in a month. If you can not, then start a list of your expenses for the most important to least important.

This worksheet will help you go through your needs. The needs are by definition the most important items on your list. Include food, housing, electricity, water and other things that you could not live without reasonable.

Discretionary items, on the other hand, spending less on your list. These are the prices that is cut when you try to fit your budget your income will be.

Step Three: Create a plan for your money "excesses." Remember, you are on the minimum they have acquired in the last two years, the budget is based. If the other 23 months are signs, you will earn more money in most of the time.

Create a plan of what you now with that extra money to do. Otherwise there is a risk of blowing through you.

Would you like to save money to buy your next car with cash? Want to open savings funds for the education of their children? Do you want a large retirement account that the money to pay the debt to create or set?

Determine your goals and put all their excess money to her.

Step Four: When the check comes, divided according to their budget categories.

Let's say you created a budget in five categories. You have decided that you are willing to put their money on housing, 15% profit on debt spending 35%, saving 10%, 15% for transport and 25% on everything else.

If you get a check from a customer, immediately share the check in the appropriate categories (after the first cancellation of the corresponding income tax). You can even cash the check and the money in envelopes, so you use an envelope budgeting strategy.

Parts of each check that is the case, you can ensure that your budget is with their ideals percent Aligned. In other words, you will not risk it, 50% of the money for discretionary items, and there is not enough food.

Step Five: Create a large cash cushion.

If you have a fixed income "cash cushion" is your best friend.

By maintaining a balance of several thousand dollars on your account, you have the flexibility to deal with months, when customers pay slowly.

A bankroll is different from an emergency fund. The pad is only there to make sure that you pay all your bills while waiting for sporadic and irregular incomes are in your mailbox. However, the emergency fund is a separate account that can not be touched, the worst case unless developed.

Three things you should never cut from his ...

We often speak of many things that have to reduce their budget: Fast Food, manicure and pedicure, restaurants, buying clothes, going to concerts, the hair getting professionally dyed at a salon.

The list of possible cuts is growing again and again. We have a lot on discretionary items.

But take a moment to look in the other direction. What are some things that you never have to cut your budget?

1 healthy diet.

Not rich in refined carbohydrates, all contracts, money to go on a diet to save on your purchases. A balanced diet is essential for health. Cut fruit and vegetables from the diet will ultimately lead to higher costs for health care on the road. It is a form of budget short face.

If you want your reduce grocery bill from junk food, cookies, chips, soda, and other discretionary items first cut. If that's not enough, look for coupons, buy products only in the season and stored for sale. But not completely eliminate fresh produce. On healthy eating skimp to save a few dollars. The long-term effects on the body, it is just not worth it.

2, while the doctor orders.

If your doctor tells you to fill or use some sort of over-the-counter drugs a recipe, you hear your doctor's instructions. A patient who is not in the interest of saving will not fail to meet a few dollars.

Health is a priority. Of course you can reduce other expenditures to order find room in your budget, requirements to your doctor.

3 Hygiene.

If you had a new case of pink eye, take your mascara.

Yes, I understand that a tube of mascara can cost from $ 10 to $ 20, but your budget does not cut so that makes you more susceptible to infections.

Good hygiene is worth spending money on - even if you try to pay the debt.

It can damage your health by corners on hygiene. This is an area of your budget should not be cut.

That is, you can always look for bargains. It is okay to buy toilet paper. It is more than just jumping on sale on toilet paper completely.

4 Tips to retire at the age of 40 and more

They are men or the age of your 40?

Are you baffled by the amount of money you need to retire?

You know how much money you need to retire, but overwhelmed by the idea of saving so much money?

If you answered "Yes" to any of these questions, check out these four tips retirement at the age of 40 and older people. The first trick will help you determine how much money you need for retirement, while the rest to find the tips that will help you to earn way more money.

# 1: How much money do I need to retire?

Blades much money in retirement as you can. If you start saving for retirement in their twenties, says the rule is that you only get to save 10 to 12 percent of the net wage. If you are just starting out in their forties, the general rule is that you need to increase their savings rate from 15 to 20 percent.

Does your intimidating? Then try this: instead should save on the percentage of net pay, decide how much money you spend per year in retirement. Multiplied to determine with 25, how much you need to save.

At $ 40,000 per year to live in retirement, for example, millions of $ 40,000 x 25 = $ 1 will have in your retirement portfolio. (Read this article for a detailed explanation of how we calculate it.)

$ 1 million may be a lot, but remember: you do not need to $ 1 million in his 9-5 job earn only GROW 1 million for their investments.

The most important factor to achieve this is a long-term horizon. The longer your money invested in a pension fund, the more it will grow. In fact, with a strategy of aggressive saving, you can create a portfolio of $ 1 million to provide only 17 to 20 years. (Read this article to learn how to be a millionaire.)

Why? In short, the more money you invest, the more you benefit from compound interest take. Passes after time, is compound interest, you can double or triple your money. Read this article for a more detailed explanation of how compound interest works.

# 2: Look for sources of current income

If your current job does not pay enough to save you $ 1500 - $ 2000 per month or more, you may want to consider finding ways to make more money on the side.

Small amounts make a big impact. If you win an additional $ 100 per week - maybe cut through the grass, child care, counseling, teaching or self-employment - and you can also cut an additional $ 100 per week from their buying habits, you earn an additional $ 10,400 per year.

(You can possibilities, find tailored for your budget to $ 100 per week? Use these worksheets budget to see where all your money is going.)

# 3: Find the source of future income

In addition to winning more, spend less and build your portfolio million, you can also use other sources of retirement income.

I know that a pensioner whose house is fully depreciated; is free from mortgage. He rented the house to tenants. Use part of the rental income to pay their rent to a better place, and saw the rest of the rental income to supplement his small pension and social security.

His case is extreme, since most people are not willing to leave their homes. However, could a modified version, rented part of your home like the basement or cottage in the law.

This is just one example of the many ways you can earn more money while you are retired. You can also give lessons, access, manage a daycare, or work as a nanny.

# 4: Delay Retirement

If you are in your 40s, you still have enough to build a portfolio of $ 1 million times. You are at least 20 years, run until the date of resignation.

But what if you are in your 50s or 60s and you realize that you drastically have enough funds your retirement portfolio? Next work.

Unless your boss or his forces retiring health, stay as long as possible in the workforce. Each additional year in the labor market is more money to save for retirement, and investments have more time to develop.

4 ways to reduce your mortgage Home

It is the account mortgage feels like crashing? Do you want to reduce the monthly payment? Here are four ways you can do.

Mortgage Refinancing

If you refinance? The answer depends on two factors: the age of your loan and the difference between current interest rates and the new potential.

Amortized home loan, which means that you pay special attention to the beginning of the loan amount and more towards the end of the term. Accordingly, the interest rate is higher near the beginning of a period. The interest rate is lower impact towards the end of the term, provided that payments are mostly principal.

Translation: the last mortgage, the stronger the argument that you should consider refinancing.

But the clock refinancing repayment is reconciled and devours few thousand in closing costs, so that a small difference between the old and the new interest rate - for example, 0.25 percent - could not be justified. Run a table to see if refinancing is right for you, if the difference in interest rates is 0.5 to 1 percent or more.

Read more: Should I refinance? Or should I use my existing mortgage?

Post PMI

Pay private mortgage insurance or PMI? If you bought your home with a down payment of less than 20 percent, you can PMI, which could pay added hundreds or thousands of your mortgage each year.

There is good news, though: you will not be stuck paying PMI forever. First pay enough mortgage that you have gained 20 percent equity in the house. (You can also earn equity faster if the value of your home increases - but, of course, you have no control over).

Then contact your lender to find out more about the process of giving up their PMI. Lenders do not automatically reduce the PMI - you need to apply. Many lenders send an expert to determine the value of the house before the lender makes sure that you have 20 percent.

Read more: Having the cost of a home

Based on more

Suffering heavy monthly payments that come with 15 or 20-year mortgage? Expand to cut down on your monthly payment your mortgage in a conventional 30-year term. The bad news: The rate hike. The good news is you can still have the opportunity to make further payments on the mortgage, as you have to pay a loan of 15-20 years. These additional payments will help the loan faster without massive payments if, for example, there is an emergency that leaves you redeem shy for a month or two.

Read more: Should I buy or rent?

It challenges the tax assessment

This is a way to reduce your monthly household rare: the fight against the tax assessment.

A conventional mortgage payment is the payment of principal and interest payments, and "pound", which is a monthly payment to the lender puts your property taxes and homeowners insurance.

If you do not your tax bill on the property, the county can put a lien on your house. The government will take precedence over the rights of lien creditors.

Accordingly, the lender of the property tax collected each month, in order to protect its interests at home. This payment will be deposited to the account of annual property tax due.

This property tax is based on the evaluation of the amount of home and country is a tax on the value of the city.

Many of these estimates are too high, especially in the wake of the housing crisis, which reduced the value of the houses. Property prices Sometimes estimates are too high, when the area was reclassified, the new zoning has caused to fall, and prices have not fallen into account in the assessment.

Owners may protest the assessment by filing a complaint with the district or a hearing with the State Board of Equalization demand. If the claim is, owner accepted taxes down, which means that your monthly mortgage payment from.

(Note: A "review" differs from one district a tax bill for a private company to make an assessment, usually for lending and the purchase of the company .. "review".)

Read more: Mortgage payments disease? Pay your home sooner!

Jean Chatzky discusses the budget, retirement, ...

I recently spoke with one of my favorite financial expert Jean Chatzky, who shared their thoughts on paper and pencil budgets, planning for retirement and staying out of debt.

If you surf channel, while getting ready for work in the morning, you can Chatzky on the NBC Today Show, have noticed distributes financial advice for the average family.

Not a morning person? Do not worry, night owls can catch his new show, Fundraising with Jean Chatzky, Tuesday at 20:00 clock on RLTV. Chatzky is live align calls from viewers to call in their performance.

But before she takes over the night air, she picked up the phone to share your thoughts with me in the Budgeting retired and live in one of the most expensive cities in the USA.

Q: You have dispensed through good times and bad personal financial advice. What changes have you seen in the public interest in personal finances for decades?

We are always interested in rising markets. (Laughs).

Our interest in personal finances has increased due to our responsibilities have increased. 401k (savings accounts for retirement) have been invented 20 years ago ... With this, people have had to be more responsible for their own age. I think we understand that we can discuss more, and we must take care of ourselves.

F: You are going to start fundraising on RLTV, and I understand that television is geared to viewers who are 50 What sparked your interest to achieve in the public?

I'm 47 and I feel like there's an audience that I went, and my mother is gone, and my friends are a part.

Q: The public has 50 heavy financial worries: Han attracted tremendous changes in the portfolio of properties and actions that aim to reduce at a point in life where they begin their risks. What is the best way for the average American 50 or 60 years continuing to grow a wealth while maintaining a moderate risk exposure?

I think we all need to remember ... how long term is long term really. People over 80 should have some contact with the equity markets.

That remains true that our life expectancy continues to rise. We have plenty of life left when we. Either 50 or 60, and we want to invest in a way that is conscious,

Q: Standard financial advice says you should start saving for retirement when you are in your twenties. What if you did? What if you are 40 or 50, and say, "Oops!" What now?

There is a large population of student debt at the time, a large population of people in their twenties who do not, how they can save themselves.

Of course it is better if you start when you are young, but if you start when you are older, you have to be more aggressive in the recording. You can choose a little less great to live in their 40s and 50s, so that you can contact.

Although the markets are largely beyond our control, there are other things we can control. We need as a way to save us to the control of the things that we focus on in order.

Q: Some retirees practice "geographic arbitrage" - the act of moving to a place with a cost of living to stretch their dollars could be internal, such as moving from New York to Nebraska, or it could be international. the distance in Panama. What do you think?

There is really nothing new. I remember writing articles, what Forbes (early 1990). This was done for a long time.

I like people who do not have a mortgage in retirement. If you simply by you somewhere that you think this is fun and exciting, then do it.

But if you look hard in New York worked for years and now want the city that you worked so hard to enjoy, I think you can do it too. There are ways that costs no matter where you are cut off.

(Read more: Learn to take a vacation with the budget Manhattan.)

Q: Now for the million dollar question: Do you have to believe in the household?

There are many ways to do this. Some people practice the budget in their heads. Some people practice budgeting, paying attention to the balance of their bank accounts.

I do not want to people that they have a budget document and pencil to tell. At the end of the day people need less than you earn to spend. No matter what the rest of the money falls into bucket, you will not fail it.

Jean Chatzky ask a question? Call 1-855-550 it-RLTV (7588) show. It will take place on Tuesday at 20:00 clock on RLTV live calls.

Tested 11 rules for creating long-term assets

Get a solid financial foundation requires you to focus on the most important elements of your money - savings and investments. But that's easier said than done.

What are the main tasks that you should focus on? Consider these eleven rules of wealth creation:

No. 1 :. Keep at least three months of expenses in a savings account, this is only a starting point. If you are self-employed, work on commission, or work in a volatile industry or position, double or even triple the baseline. Many financial planners believe it is a good idea, six to nine months have stashed away by their normal cost.

# 2: Multiply your cost by 25 This is what you need in retirement. To $ 40,000 to spend a year in retirement, you have $ 1 million saved. Better start working!

No. 3 :. Save at least 10 percent of their salary begins as early as possible if the power of compound interest is the greatest. So we reach the mark of $ 1 million - for compound interest (the money earned your money) on life a long time.

# 4: Use your company 401k match - or do not pick up all your hard-earned wages.

No. 5 :. Open a savings account for your children's college, it's never too early, even if the child is still in diapers.

# 6: Set to prevent the maximum contribution to your Roth IRA future taxes on your contributions, including the tax on capital gains ..

# 7: more than 28-33 percent of your income needs in your household all costs associated with the home, such as insurance, property taxes, roof replacement, pruning, mowing and include Do not spend Carpet steam cleaning .. If you have never owned a home before probably greatly underestimated the amount of the cost of care at home.

# 8: Refinancing your home - but only if they interest rate be cleaned at least 1 percent of their mortgage.

# 9: The number 120 minus your age ... is equal to the percentage of your portfolio should be put into stock funds, according to the popular rule of thumb. Keep the rest of your portfolio should be in bonds. (Is this too aggressive or risky for your taste, then your age in bonds remaining inventory - .. So if you are 30, keep 30 percent in bonds This is a more conservative alternative)

# 10: Avoid investments you do not understand, for obvious reasons. If someone is making with beautiful words and big promises to be careful. It is best, with proven methods that will enrich their future slowly something that you want to stay not very familiar with the play.

# 11: Avoid funds with managerial responsibilities: The highest tax you have to pay is to 1 percent, but seek funds as the lowest fees can find you. Vanguard, Fidelity and Schwab, known among other things for their index funds and low-cost ETFs commission free.

Book Review: Millionaire Teacher

Do you think that an English teacher in the school can become a millionaire?

Andrew Hallam did. It is a teacher who was a self-made millionaire by age 38, and he says he can be one - even if you make a modest salary.

Hallam is the author of Millionaire Teacher: The Nine Rules of Wealth, you should have learned in school, it is a book with the title itself is a Professor Hallam sent the millionaire, and he also, by his writings, which teaches people to be millionaires ..

What are the nine rules of wealth?

Rule 1: to share, to be rich

Many people spend because they want to appear wealthy. They drive luxury cars, which are often financed or leased. They wear expensive handbags, designer clothes dress and a holiday out of 5 stars.

This can make them feel rich, but will not help you get rich. Indeed, the opposite effect.

When Hallam was about 20, he made his own mussels eat free proteins. He lived with roommates and often to get house-sat for holidaymakers to free income. Never turn off the heat. "I walked around the house wearing layers of shirts and sweaters, while snow accumulated outside," he said.

Sound like a millionaire in the making? Of course!

Rule 2: Use the biggest allies of the investment you have.

Legendary investor Warren Buffet bought his first share at age 11 and joke that he started too late.

This joke underscores the importance of time. Timing is important when it comes to building a portfolio of millions of dollars, because every year you can get worse or develop. And compound interest is the best ally of the investment.

Suppose you invest in the interest rate of 10 percent $ 50. After a year, you earn $ 5 interest for a total of $ 55.

At the beginning of the second year he invested $ 55 - the original $ 50 plus $ 5 more than they earned in interest. You earn 10 percent of this investment of $ 55, which corresponds to $ 5.50

Note that in a year, you earn $ 5 interest. But in the second year, you get $ 5.50 interest. The "compound interest" is that the extra 50 cents, which is the interest that you have earned interest.

The longer you let the interest compound itself, the most dramatic gains. Therefore, compound interest is your greatest ally in the investment.

Rule 3: small percentages greatest hits package.

When you invest in a mutual fund actively managed, it is likely to pay higher rates. Active fund higher fees require "relationship" (a fancy word for "cool"), the passively managed index funds. Some 12B1 also charge fees, transaction costs, distribution costs and a variety of other charges.

These rates may seem small, but they pack a big punch. Keep yourself. Against low-cost funds, such as index funds or Exchange Traded Funds market without high commissions

Rule 4: defeat the enemy in the mirror.

Quick question: would you rather pay full price for a pair of jeans, or get a discount of 20 percent for the exact same pair of jeans?

This is a simple question. Assuming all things are equal (sold in the same location eg jeans and has the same right of return, etc.) you prefer to buy at a discount.

So why not do the same when it comes to buying of shares?

That is the hard truth: If the stock market falls, people tend to buy less. In fact, they tend to sell. If the market goes up, people tend to buy more. You "buy high and sell it cheap" - the opposite of what they should do.

It is a natural human tendency. Also, you have to fight.

Rule 5: Make a lot of money with a superior portfolio.

Brussels sprouts are good for you. But when the only food you eat, you are found lacking protein, calcium and many other vitamins and minerals in other foods.

We need a balanced diet, and we need a balanced portfolio. It is recommended to diversify your money in a national fund in the stock market, an index fund shares fund international and domestic fixed income in the short term. It's easy - you only need to run three funds.

Keep your age in bonds and the remainder in shares, he said. At 30, in the USA, for example, 30 percent of the United States would hold government bonds and short-term, well split 70 percent of the shares between American actions and international equities. Then again compensate each year to maintain the same proportion as the markets develop.

Rule 6: Example of a ticket "Around the World" for indexing.

Much of the financial information, write here at About.com is, especially for the people in the United States

Retirement vehicles such as 401 (k) and Roth IRA plans, tax planning and social security benefits, after all, an important part of the budget. And these elements are specific to the USA Other countries have different laws, plans and investment instruments.

But if you live in Canada, Singapore or Australia, you will love this chapter in the book of Hallam. It shows how people around the world can create index funds.

Rule 7: Inside the Playbook a looter Peek.

In this chapter the tactics Hallam be a selling point used that directors use when they try to convince you to keep your money in actively managed funds rather than passive funds. It's arguments, the runners do lists - and it hits everyone. It also shows how brokers have a strong financial incentive to get you to buy into a higher fee funds.

Rule 8: Avoid the temptation.

In 1998 came to-be-true investment-too-well-a friend with Hallam, a company that paid a whopping 54 percent. Hallam was questionable, but saw his friend to pick up this interest for a period of five years. In 2003, convinced Hallam, so who invested $ 7,000 in the company and some of his friends joined him. The company later proved to be a Ponzi scheme, and investors lost everything.

Do not let money be tempted simply says Hallam. Stick to index funds.

Rule 9: The solution of 10 percent of the stock selection - if you really can not help you.

What should you do if you really, really invest in individual stocks? Limit to consider your risk by more than 10 percent of your portfolio and many actions.

More information about the book on the website of Andrew AndrewHallam.com

Disclaimer: A review copy was provided by the publisher.

Retirement plan on the basis of life, no ...

There is a golden rule that you should budget a certain percentage of their income in retirement says. Many experts say that sets you apart from 10 to 15 percent of their income adjusted for their golden years.

But it is a theory of competition, should you budget for retirement based on the lifestyle you plan, no income you are currently earning, enjoy.

To illustrate this idea, represent four possible pairs.

Adam and Alison are retired. None of them generate income. You will receive money from their pensions, their 401 (k) withdrawals and Social Security. Their houses and cars are fully paid and are debt free. You just live. Most nights we eat dinner at home and take advantage of low-cost activities such as gardening, knitting, playing with his grandchildren and the dog for a walk.

Bob and Barb are also eliminated. None of them generate income, and to get as Adam and Alison the money from their pensions and 401 (k). Their houses and cars are also reimbursed and are debt free. However, living in great retirement. You eat dinner at the restaurant. You like sailing, golf and tennis. You own a second home near the beach, and traveling abroad.

Carl and Cathy retired from his day job, but two of them still work. They did not have the income - they have enough money to live comfortably on the basis of its economy - but they want to work. It gives them satisfaction and purpose, and if they do not work, they tend to be bored and depressed. Carl is going to write a novel while Cathy has an online business. Receive additional income from your job, supplement their retirement, but are so busy working - to enjoy - not to spend the time. Take more money than they know how to use.

Derek and Debbie set up passive income streams when they were younger. Now home rental income, royalties, dividends and interest has enough to comfortably retire. However, retirement is responsible for the management of these sources of income. They are often conducted by teams of accountants, property managers and repair hands to keep their investments afloat.

What is the common feature of these four stories? Ideal Retirement everyone is different.

Some people are content to live a simple, quiet life. Some want to enjoy travel in the world, expensive hobby, enjoy good wine, renovate your house and try new activities.

Some people are forced to work because they can not afford to pay their bills, but others choose to work for the joy and satisfaction, even if they have an income.

Traditional formula prescribed pension advice: save 10 percent or 12 percent or 15 percent of current income for retirement.

But this rule is general advice not take into account the type of retirement you hope to have. Adam and Alison are pleased to live simply. You are cooking with your own meals, your own house clean and happy playing with his grandchildren.

If you live as a couple, you do not necessarily need to budget 15 percent of their after-tax income in retirement, unless you start later in life saving, to want to leave a legacy to their children, or wish that a solid plug in an emergency.

A partner like Bob and Barb, on the other hand want to play the excitement of the trip to Italy, Golf, take art classes and travel to a seaside villa. If you want to live like this you can pair up to budget for more than 15 percent have retired.

And if passive income streams, as Derek and Debbie is configured, you may not need the maximum contribution 401k per year.

What is another golden rule?

Calculate how much you want to spend a year in retirement. Multiply that by 25, which is the amount that should have saved in your retirement account.

In other words, from your savings goal for retirement costs, not your income.

(Why multiplied by 25? Read the explanation.)

Remember: this is only a general rule. Personal Finance is - well - the staff and the amount needed in retirement will depend on a number of factors, including your debt ratio, your family, your health, your life expectancy, tax obligations, needs safely, and other considerations.