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