Money Tips

Credit card debt

Credit cards are no more a luxury, they are almost a necessity. So, you would imagine a lot of people going for credit cards. In fact, a lot of people posses more than one credit cards. So, the credit card industry is growing by leaps and bounds. However, the credit card industry and credit card holders are posed with a big problem called ‘Credit Card Debt’. In order to understand what ‘credit card debt’ actually means, we need to understand the workflow associated with the use of credit cards as such.

Credit cards, as the name suggests, are cards on which you can get credit i.e. make borrowings (your credit card debt). Your credit card is a representative of the credit account that you hold with the credit card supplier. Whatever payments you make using your credit card are actually your borrowings that contribute towards your credit card debt. Your total credit card debt is the total amount you owe credit card supplier. You must settle your credit card debt on a monthly basis. So, you receive a monthly statement or your credit card bill which shows your total credit card debt. You must pay off your credit card debt by the payment due date failing which you will incur late fee and interest charges. However, you have the option of making a partial (minimum) payment too, in which case you don’t incur late fee but just the interest charges on your credit card debt. If you don’t pay off your credit card debt in full, the interest charges too get added to it. So your credit card debt keeps on increasing, more so because the interest rates on credit card debt are generally higher than the interest rates on other kind of loans/borrowings. Further, the interest charges add on to your credit card debt each month to form the new balance or the new credit card debt amount. If you continue making partial payments (or no payments) the interest charges are calculated afresh on the new credit card debt. So you end up paying interest on the last month’s interest too. Thus your credit card debt accumulates rapidly and soon you find that what was once a relatively small credit card debt has ballooned into a big amount which you find almost impossible to pay. Moreover, if you don’t still control your spending habits, your credit card debt rises even faster. This is how the vicious circle of credit card debt works.

Encouraging Teenagers to manage their money is more challenging than ever before. Credit companies start hounding your teens as soon as they are legally able to. Many of us didn’t grow up with the high technology of today, so how do you make sure that your teenager uses banking technology to his or her advantage and where you can see what is going on?

Online Banking
My daughter is 14 years old. I want to teach her how to use internet banking responsibly. She likes to buy things online such as computer games or even buy and also earn money by selling things on Ebay. But I want to actually know what she is spending her money online. Now let’s not get silly here. I would give her cash to go and buy things down the shop and never know what she actually spent the money on.

I have set up two accounts for my daughter – one is an online high interest savings account from ING direct. The other is a local credit union account. I also set up an account with the crdit union as well as for my other children.

On the children’s bank accounts, each of them has their own login id and password and I am authorized to operate all of their accounts. My daughter’s account is linked up to PayPal, so she can pay for things online.

I get copied on Paypal emails so that I am aware of every time that money is moved to or from Paypal so I am able to stay involved in the process of teaching my children how to manage their money effectively.

Since the account is attached to a card my daughter can also withraw money from an Automatic Teller Machine. The local credit union doesn’t charge fees at all for teenagers accounts.

The second tool in my arsenal is the high interet no fee savings account. Half of my childrens allowances go into high interest no fee bank accounts. They can use that money to save up for a big item although we are encouraging them to put that money into investments once there is about $1,000 in the account.

How do we teach good money management principles?
I actually teach my children how to manage their money through game play. They played a popular adventure game for some time called Runescape. It is not a game about money but it has its own economy and I have taught my children how to work, to save and to trade to make money within the game.

Okay let’s get back to reality. By using internet banking the teenagers learn how to use cards, manage a budget and use all of the latest technology. With this method they discover how to be responsible for money management under your watchfull eye.

You could also download the transactions to a spreadsheet. It teaches them how to manage their money without going into debt. The days of checking accounts is coming to an end, with automated money management taking over in a big way.

Currently we have a web site that is in Beta : http://BillBaniser.com and for a limited tim you can use it for free.

The Pain Of Money

Are you always struggling until your next paycheck, then fine for a day or two before going back to the harsh reality of no money?

Just because the country in a complete mess with the deficit out of control, does this mean that your personal finances should be out of control too?

Dealing With Debt
Dealing with debt is not easy, if you have never budgeted before and you dont use technology effectively. Internet banking and automation can either work for you or against you. Typically the banks and credit providors will try and set up a situation that benefits them, not you. Not all banks are like that all the time and there are a few innovative products that can help.

Earning Interest on the Money You Spend
Most credit providors will set you up so that you pay interest on the money you spend but this is not the only way to arrange your finances. It is possible to earn interest on the money that you spend. Even though I dislike the expression ‘pay yourself first’ I would agree to ‘provision for yourself first’.

Provision First, Spend Later
If you went back fifty years or so, a home budget might comprise a row of jars (or envelopes) and in each jar money would be set aside for the future. What happened in the electronic age? We all ended up with one bank account and six credit cards. Banks started charging fees to keep money in each account and so we all tried to keep our banking costs to a minimum. Most people lost the art of provisioning.

Spreadsheet Budget Planner
Here is a link to download a spreadsheet bases budget planner. Alternatively, you can logon to a website for free and create budget planner there too.

With iPhones and Windows Mobile phones these days, it is quite practical to load a spreaddsheet onto your phone with your regular grocery list. The advantage of this is that you know how much groceries will cost before you leave home, within a few dollars. This is a powerful technique to stay within budget. If your phone cant do this, print off your grocery list before you go shopping.

For a comprehensive e-book on budgeting visit http://financialfreedomonyourcurrentincome.com/

Where does all that money go each month? Struggling until your next paycheck? Everyone wants to know the answer but dealing with debt is an issue that no one wants to tackle.

There is an answer: create a personal budget. For some, you might as well be strapping the handcuffs on them. A personal budget is tedious at the outset, but once it is in place, you’ll be glad you did it.

Basic Budgeting Tips

There are five basic budgeting steps that you need to follow. So let’s go through those now. Let’s start with the basics. Don’t worry, you can download a free budget worksheet here as a ready to print form.

Monthly CashFlow
A basic budgeting worksheet needs to have a listing of all the money coming into the house on a monthly basis. Your monthly income includes salaries from work, child support, alimony, income from real estate investments, and pensions. All of these sources make up your monthly income that can be used towards household expenses.

Add your total monthly income up. This is the amount you have to start with. You probably can’t believe you have that much money coming into the household when you open your wallet at the end of the month and nothing but moths fly out.

Get Out Of Debt.

What are the expenses that you pay each month? This includes mortgages, utility bills, other loan payments, child support, alimony, credit card payments, child care, entertainment bills, car insurance, and car payments. If the price of these bills stays the same each month your budget will be easier to figure out.

Money also needs to be allocated for variable expenses. Clothing, food, gas, medical co-pays, and entertainment fall in this group. This type of entertainment includes going to the movies, a play, or out to dinner. Monthly cable television bills would go in with the recurring bills.

Add up all of the recurring debt and subtract that from your income. The remainder will create monthly allowances for the variable expenses. People who send money to their savings account each month can record that amount as an expense. If you are having trouble saving, this is the perfect time to allocate an amount for that purpose.

Money Makeover
Keep a log such as a check register, or use finance software aids in tracking where the money goes. One way that money disappears is through the ATM machine. It is easy, convenient, and the number one way to ruin your budgeting efforts.

Creating a household budget is a family affair. Parents don’t have to go it alone. Let everyone in the house contribute to the final product. After all, each person will be governed by it in some way. Children can benefit from the financial habits that they see you implement in your daily life.

Budgets are not quick fixes. Just like any other habit it will take time to become second nature. Before it is all said and done, you may find that you have to change the original budget several times until it fits your lifestyle. An ideal budget should allow wiggle room but provide structure to keep to your goals.

It is essential that you do not spend more than you earn. There might be breif periods of sickness, holidays or unemployment where this is the case and you must provision for these things in advance.

Money Saving Tips
You might think that the best way to save money is to be a frugal family, scrimp and save but in my experience this is not the case. Once of the most effective things to do is to provision for things in advance. Let’s say, for example that you spend $1,000 on christmas, put away $20 per week into a high interest, no fee bank account. Set up seperate accounts for car registration and insurance expense, and so on.

Using Technology To Budget
There are two approaches to budgeting using a computer. One is by using an online service such as http://billbanisher.com and another is to download free budgeting tools that run on your computer such as http://debtarrester.com

Printable Budget
Download this home budget worksheet, print it off and fill it in.
Alternatively download this spreadsheet.

Earning More Income
Sometimes the best solution is to earn more income. Before rushing off and doing overtime for your current employer, do some research. Could you earn more money by acuiring a certificate. It may be a short course or even something as simple as a ticket to operate certain machinery. Look at the cost of these courses and the first year’s projected additional income. Other forms of income might be internet marketing, network marketing, merchandising, stock trading, real-estate and so on.

Need More Help:
Do you want guaranteed results from your budgeting? Michelle Smith has an eBook ‘Financial Freedom On Your Current Income’ She guarantees that you will start to see the benefits of her system within 8 weeks of starting, or your money back. Full details of the offer at http://FinancialFreedomOnYourCurrentIncome.com

Budgeting Videos

Have a look at some budgeting videos at http://www.youtube.com/michellemoneycoach