Self-help articles and educational publications from Myvesta US In today's world, it's easy to get caught up in the tangled web of work and family, television and Internet distractions. Pile on all those necessary errands we have to run, and paying bills can easily become just one more stressful and overwhelming task. As more and more tasks crowd into our lives, the easier it is to push items around and off our "to do" lists. Listen to anyone and the number one complaint is that we live in a world where we are constantly "on the go," barely able to find time to breathe much less relax.
We just don't want to deal with stressful things when we get home. We are tired, worn down and just don't have the wherewithal to put up with one more demanding chore. We just want to unwind, whether it's with a good book or a favorite television show, with our family at a quiet dinner or cheering on our favorite sports team over a microwave gourmet meal. We value our "down time" more with each passing year, as it becomes increasingly precious.
As integral a part of our lives as they are, bills remain one more thing to worry us. They turn our daily trip to the mailbox into a dreadful march, a pile of paper that we know just refuses to be ignored. Who doesn't breathe that little sigh of relief on the rare occasion we open the door to the mailbox and the only thing that's in there are magazines or junk mail? It's a feeling that there is just a little less stress to deal with in our day.
The drawback is that if we try to avoid that stress, the bills become even more of a problem. When we finally feel the crunch to get them in, the payments might be overdue. This can lead to late payments and marks on your credit report. Marks on your credit report directly affect your future finances since more and more companies look at credit scores and payment histories. Lending companies look at them to determine not just whether you will get that loan, but what interest rate you will get if you do. Credit card companies will look at them both to process applications and periodically reevaluate your interest rates, especially if your debt-to-income ratio is on the rise. Even employers are using credit reports in their background checks for prospective employees.
Once bills are paid late, it can be a downward spiral of catching up and falling out of synch with payment cycles. It is easy to fall behind more and more as the bills continue to come. Creditors expect payment by a certain time and they may charge late fees, which only add to your bill woes and make it even more difficult to get back to where you need to be. As things continue to snowball you may find yourself faced with collection calls, repossessions and law suits from your creditors.
Remember that you can't overlook the emotional effects that this stress will have on your life. Many people suffer from the symptoms of depression when it comes to their bills. As the collection calls continue and the late fees mount higher each month, there can be feelings of failure and despair. This just makes us want to hide even more so that we don't have to face those feelings. And as we continue to hide, the problems continue to mount.
With all of the possible life effects that late payments can have on your financial future, it is more important than ever to take control of your bills. Whether you're drowning in debt or living high on the hog, these simple rules will help you stay organized to avoid those monthly migraines when the mail arrives.
Most budgets fail not because budgeting is bad, but because your average budget is nothing more than a page of lies. Sounds harsh, not really. When most people sit down and decide that a budget is necessary, they take out a piece of paper and write down how they would like to spend their money. This wish list does not take into account their real financial life. It doesn't account for the pocket change and fun money that is spent on incidentals or even those regular expenses that were simply overlooked.
So here is a key to building a good budget, good data. You've got to know what your monthly financial reality is before you can start projecting the future.
2. Make and Follow a Budget That Actually Works
Do you know precisely what is in your bank account right now? Do you have to juggle payments to make sure that one check clears before you write another? Do you ever find yourself holding your breath and hoping that two checks don't hit at the same time?
The easy way to cure this stress is to make a budget plan for yourself that is not just for appearance. You need to be aware of what is coming in to your accounts as well as what is going out. Do you account for all of your expenses? Include going out to lunch when you are at the office. Oil changes and car care cost money, too. Are you budgeting for all of these as well?
The best thing to do at the start of the budgeting process is to track all of your expenses for thirty days, no matter how big or how small. Write down the amount each time you spend money on lunch during the work week, whether it's lunch altogether or buying a soda to go along with one you brought from home. You even need to account for buying a pack of gum or a candy bar. It may not be much, but it still costs you money. Track the amount of money you spend on gas, and see how much you spend in a typical month with all of the different places you need to drive.
Each time you go out to the grocery store, track what you are spending. Even though something is a necessity, it still costs money. You have to be sure you know precisely what it's costing you. Take the time to look at your grocery bill and make sure that you're taking advantage of all the sale prices offered. Plan your trips carefully, map out each need so that you can stay within your ideal price range. Impulse shopping at the grocery store
is just as dangerous as impulse shopping anywhere else. In fact, a lot of people do not even realize that they fall off the budget wagon when they are there. Since it is so much easier to rationalize something as a necessity (even when you don't really need those extra desserts or pizza pies that are on sale), you can find your grocery bills skyrocketing. It is very important to make a list and stick to it when you are at the grocery store
, or you will find yourself in money trouble.
A lot of people buy small things at convenience stores on their way to work. They figure that the extra dollar or two for a doughnut and coffee in the morning doesn't really count against them. Guess what? It still costs you money. Even if you stop for a generic cup of coffee and a doughnut at your local deli, it will still cost you about two dollars for that little indulgence. Multiply that by five. That's ten dollars a week for which you didn't account, which would work out to forty dollars in an average month. Do you still think that stop for a quickie breakfast is something you can ignore?
As an important side note, remember that even if you are making a purchase on credit, you are still spending that money. The cash may still be in your bank account at that moment, but for all intents and purposes you have spent it and need to account for it as an expense. That money is still going to come out of your account when the credit card bill arrives.
Your goal is a balanced budget that will help you minimize costs, pay your bills and save money for the future. You will need to use plenty of tools in order to make your plan work. The first tool is your own hard work and dedication. The second tool is knowledge, of your own spending needs and habits. Every tool you use will make your task that much easier, and that much less frustrating.
After you construct your budget, the next step is to make sure that it works. As time goes on, a lot of people find that they overestimated one expense and underestimated another. More often than not, when first attempting to make a working budget, they figure that certain expenses are a lot lower than they actually are. Once they find out that they are spending more than they initially thought, they have to go back and work with the figures to make them right. That's okay. Nobody is going to make the figures perfect on the first try. It might take a couple of tries to make a budget that truly reflects your lifestyle.
If that's the case, then don't be afraid to adjust the budget to reflect the actual costs of your day-to-day living expenses. It cannot be stressed enough that you need to account for everything in your daily routine. The more detail you put into your plan, the more complete the picture is and the fewer surprises you will have along the way. If you are eating steaks for dinner but your ledger says you are paying for a can of beans, then your budget plan will do you no good. When you look at your accounts at the end of the month, you will have a hard time figuring out why you seem to be spending forty dollars more each week on food than you projected. A budget is a living document, meaning that it is a document meant to reflect how you truly live. Make a change if you need to make one. There is nothing worse than starting down the road, just to realize you've got the wrong map.
Conversely, you may need to change a part of your lifestyle that is costing you more than it should. You may find that you need to go out to fewer movies or go out to eat a little less. Maybe you do need to look at your situation and find a cheaper alternative to steak dinners. Maybe you would be better served by making pasta a few nights a week. Maybe you need to rely on groceries more than eating out. Even fast food, cheap as it is, is the type of expense you may need to cut back on to make your budget work. Just like anything else, it costs you money.
It feels great to have a detailed map to your destination laid out, but unless you follow it you are still going to get lost. Work with it and it will work for you.
As you are holding that prized piece of sale merchandise in your hand, ask yourself, "Do I need this?" There is a big difference between what you want and what you need.
There once was a man who believed that he needed a big-screen television. He worked hard and put in many hours at the office, and in his thoughts it was his right to come home to a big television that delivered a truly theatrical experience. He felt he needed that extra mile to get true relaxation. It never even crossed his, or his wife's, mind that perhaps they needed to take care of some other obligations first. And so they spent his hard-earned bonus check on that television, and soon started getting phone calls from creditors curious as to why they were not getting the payments they were promised.
Not to pass judgment, but wouldn't that money have been better served toward taking care of payments that needed to be made instead of toward a new television? As time went by, the mortgage payment, which was about the same cost as that of the big-screen television, fell behind. The mortgage company had been promised that payment long before the television came along. They did not care about his superior picture quality and sound, they wanted their money. That's pretty fair. After all, it was their money that paid for the house — he was just paying it back.
There are plenty of other stories of people who decide they saw the best sale on clothes, shoes or furniture, and they just could not wait. That new couch would have looked wonderful in the living room, but when they got caught up in the rush of the purchase they forgot that there were six bills waiting at home for them. Those six creditors didn't care how that couch looked; they wanted their money, which they had been promised. The utilities wouldn't be very understanding as to why they could promise to pay for the couch, but not the bill for their services.
It's easy to get caught up in the Madison Avenue blitz. That's what ad companies are paid to do; they are working hard to have you confuse want and need. It's how the company for which they advertise makes its money, so that they can continue to pay for such clever advertising. We are bombarded with advertising that practically commands us to keep up with the Joneses, whoever they are. Just remember that the people in those commercials didn't have to pay for the new satellite television system, new stereo system or new sofa set. They were just paid to show you how happy you should be if you own them.
Both your money and you will be best served by prioritizing your bills and purchases. Evaluate everything carefully and assess whether it is something you want or something you need. Buy the television if you can afford it. Upgrade your sound system if it won't risk your phone payment. But if your budget is telling you that you won't be able to pay for your groceries when you buy that new leather easy chair, then listen to the budget and wait until you have the money saved for it. Avoiding the impulse to purchase will also allow you time to assess whether what you are buying is truly a need or a want. You will find that things can be much more satisfying if you take care of your needs first and know that your wants won't break the bank.
4. Remember to Save — Anticipate the Unexpected Costs
Even more important than being prepared for a power outage is being prepared for the surprise expenses that occur. It's amazing that people think to have emergency reserves of water, batteries and food, but it does not occur to them to have emergency reserves of money. No matter what the amount, you should set aside money from every paycheck to build an emergency reserve that you can dip into for those unexpected costs that inevitably come your way.
This amount needs to be aside from what you might be setting into your 401(k), 403(b) or other savings plan. Those savings plans are for the future, not the present. People who borrow against their retirement plans now inevitably find themselves in a particularly worse situation in the future. You need to be able to rely on those funds in your golden years when you will not be drawing in the same kind of income to which you have been accustomed.
By now, everyone knows that Social Security just does not provide for the type of living that we would like to enjoy after we retire. Statistics show that if you want to live a comfortable life after retirement, you had better enact an independent savings plan as quickly as possible. This is why a budget is so important. By figuring out how to live within your means now, you can rest easier knowing that the future is more secure.
Let's get back to the present. There are any of a number of unexpected situations that end up costing us a pretty penny. If you do not take the time now to save for those moments you will find your well-laid budget plans derailed and you will be sent back to the drawing board when the slightest financial hurdle shows itself. Part of adequate planning is planning for everything that might happen, not just what we know will happen.
What if you tear your suit jacket and need to have it repaired? That is going to cost money. What if your computer needs to be repaired or replaced? In today's world, it's virtually impossible to exist without computer access. Yet things can and do go wrong with computers, and you will need to be able to pay to take care of it. What if you need new brakes or suspension work on the car? As they say, you cannot put a price tag on safety. Unfortunately, your mechanic can.
This is why it is so important to set aside extra money now. Even if it is only a little each week (or each paycheck), even that small amount can build into a big cushion to soften the unexpected blow. Decide on an amount and work it into your budget. Even if it is only five dollars a week, when your tire goes flat, you'll be glad you did it.
It is so easy to get overwhelmed today. Work is a constant source of stress in our lives. Traffic jams decrease our time at home and raise our blood pressure as highways turn into parking lots. We value whatever time we can get to decompress and be with our family, friends, or even just with ourselves. As soon as we have a moment, we want to escape our stressful world.
Unfortunately, the more you try to escape the worse you make it. As much as you may not want to do it, you have to pay bills. Putting it off is just going to make it worse and contribute to the greater stress you'll feel as you wonder if your payment is going to make it to the creditor or the utility on time. Whether it's your power company or your mortgage lender, they expect your payment by a certain date. It really is only fair. You knew the rules when you signed up.
You know the payment is expected and you have to make it, so why add to your stress by delaying the payment? Make the payment and send it in as soon as you can. As soon as you receive the bill is ideal. That way, you can at least know that your bills are in good standing and your credit rating will take no hits. As stressful as it might be to make the payment, it's nowhere near as stressful as damaging your good standing for any future purchases you might want to make.
When payments are late, creditors, even utility companies, have the right to charge you late fees. Some utilities charge a percentage of the outstanding balance. Some credit cards charge straightforward fees, but they will charge both a late payment fee and an outstanding balance fee. Once this happens, you may be classified as a risk and see your interest rates raise. If a utility payment is late enough, you may find yourself dealing with unpleasant collection calls and growing late charges. It's a downward spiral that your balances will rise as you fall farther behind.
Ask yourself why you are procrastinating and risking these types of penalties. In a lot of cases, people procrastinate not just because of the stress of making the payment but because they do not have a clear idea if they can afford it at that time. They are just waiting for the next paycheck to clear or are waiting to see if they can squeeze a few more miles out of their gas tank. If this is the case with you, then you need to take action quickly.
But if you are procrastinating because of the continual stress and distractions, keep in mind that there are ways to streamline payments. These options will help you to take just as much stress out of your life as making a complete and working budget.
You can have payments withdrawn automatically from your bank account. This will take the stress of writing a monthly check out of your life, and you will know that the payment will get there on time. It puts the responsibility back on the creditor to process everything in a timely fashion. However, even if you do this, it will still be important for you to monitor your statements and your checking account. As you have undoubtedly experienced first-hand, computers are just as capable of making mistakes as people are, and if you let a mistake go for too long you will face the same types of penalties and fees as if you had made the late payment yourself. That can all be avoided so long as you monitor your accounts.
Another option open to you is to contact your creditors and see if you can rearrange your due dates so that all of your payments fall within the same time of the month. There is no guarantee that a creditor will change a due date, but there is no penalty for asking.
Regardless of whether you take these extra measures to make payments easier, remember that procrastination is still your enemy. It only makes things worse and adds to your woes. If you are in a situation where you are juggling payments because you are having trouble making ends meet — then that is a whole other problem and one for which you should seek help.
6. Use Credit Sparingly
The credit card is a fine tool when used properly. It is a disastrous instrument if you're not careful. Many people make the choice to buy it now and think about paying for it later, only to find that when "later" comes, there is not enough money to pay for it all. Too many people have found out first-hand how the lifestyle they're living now will prove very costly in the future.
Don't live your life now by financing your future, when you have the ability to live within your means and save for a better life down the road. By extending yourself on credit you simply create a situation that will be increasingly difficult to escape. And as you look around at the compact discs, DVDs, figurines and other assorted things, you will realize that they are just that — things. Even that really cool "limited edition" commemorative trinket is just one more thing to place on the mantle.
It's really not that different than borrowing against a retirement plan. Each time you add to your credit balance, you are sacrificing more of your future paychecks. You are promising more and more of what you could be setting aside for a better vacation, better car or better retirement for that instant gratification of buying now and indulging a desire. While we all deserve to reward ourselves from time to time, credit makes it very easy to redefine "time to time" to "when we want."
Take a good, long look at that little plastic card. While it may be hard to visualize, it is a signed contract, your promise to repay, between you and a financial institution that they will let you borrow their money. If you do not pay it all back at once, you have made a further promise that you will pay back even more than you initially borrowed by paying back interest. Over time, as you add to the balance, you find yourself paying more interest on your borrowed money than the principal itself. It can then become many years before you are through with that obligation. It's a burden that more people have placed themselves into than is necessary, all in the name of maintaining an image and living a lifestyle that they can't really afford.
Credit should be used when you need to use it, and there are times when you do. Hotel and plane reservations require credit cards. Your car may break down and you need to have it towed. But when you decide to make that credit purchase, ask yourself if you are prepared to pay it off. If you are, how quickly? If you find yourself unable to plan for the extra expense, or unable to find room in your savings to pay for the purchase at all, maybe you need to wait until you can afford the room in your budget. You'll still be able to get that special thing, just not right now. And you won't be worried about how to pay for it later.
This is a very important step, especially while you are maintaining a budget plan. Certain bills fluctuate from month to month. This makes it very important to watch your bills as they come to you. If a bill fluctuates, you need to be aware of it so that you can pay it accurately and allow for the possibility of a fluctuation later. You cannot budget well if you do not know the amount for which you are budgeting.
Cellular bills are notorious for fluctuating. There are countless stories from people about how they unwittingly went into a roaming zone and their cellular bills were ten and fifteen dollars higher than usual. Even more common are the stories from people about how they exceeded the minutes allotted in their calling plan and wound up paying outrageous by-the-minute charges.
There once was a military man on assignment in a foreign country who let his fellow soldiers use his cell phone to call home. They were all very homesick and did not want to wait in line to make a brief call to their parents, wives and children to let them know that they were alright. They all promised to pay him back for the use of the phone. He did not monitor their usage, and he did not consider the roaming charges of being in a foreign country.
Regardless of whether they paid him back, he was put in a truly bad position when the bill came. It was nearly three thousand dollars, and the cellular company was threatening to discontinue the service if they did not receive their payment by the beginning of the next payment cycle. He was stuck in a situation where he had to figure out who had made what calls and get the money in a hurry. It may be an extreme example, but the lesson is clear. You need to be as careful as possible in the handling and planning of paying your bills.
Ask yourself if it is time to examine what your cellular plan offers and assess whether you need a new plan or even a new carrier. There are a lot of services out there, each with different benefits tailored toward different lifestyles.
Would you buy the first car you saw on the lot? Or would you go from dealer to dealer, looking for the perfect model and price? Do not just grab the first offer that you find. There is inevitably a better one waiting for you. If the first one you found is the best, then you can always come back to it. Shopping around for the best deal is not just a good idea, it is the best way to start saving.
Another cost-cutting area that people let slip past them is their utilities. In many areas, telephone, electric and gas companies are all competing with each other for your business. All of these utilities want your business just as badly as any store, and if you do a little research you will be able to put yourself on a plan best suited to your lifestyle. They are trying to win your business so that they can make money, and they want to offer the best deal they can to get you to join.
With so many different telephone carriers available and so many calling plans to choose from, it's amazing how many people stay with a plan that just does not suit their needs. Just look at all of the advertisements on the television for different telephone services. About twenty years ago, you had one choice only. Now you have myriad local and long distance carriers. With the advent of cellular phones, these carriers are becoming even more active in pursuing and keeping their business. Look at your telephone bill. Does it offer a rate that benefits you? See if you would save money by switching carriers or consolidating service to one carrier. In a lot of areas of the country, there is expanded competition with electric companies. If you are in one of these areas, you have the opportunity to find if the rates you receive are best tailored to you.
The bottom line is that it is your money, and you get to decide how to make it work best for you. Leave no stone unturned when searching for ways to maximize your dollar.
8. Get On A Budget Plan With Your Utilities
There is no way to eliminate paying utilities outright. They are an expense that is just as necessary as groceries and clothes. After all, we need to have light and stay warm. Once we are sure we have the best carrier for our services, why not take the extra step and eliminate those monthly fluctuations altogether? Remember that the key to financial success is successful planning.
Spending plans are the best way to do this. They allow you to pay a consistent amount each month, making it not just easier to monitor but easier to pay. Since both of these factors are very helpful when you are trying to follow your own overall budget plan, it's an opportunity you should pursue.
Most utility companies have budget plans in place for consumers. They can then take the average of your consumption over a period of months and then allow you to pay that calculated amount each month. For example, an electric company examines your account to see your usage over a span of several months. They divide that amount by the number of months surveyed and that average is set as the amount for you to pay each month.
Contact your utility companies. Ask them what type of budget plans they can put in place for you. This takes a lot of guess work out of paying these bills, and will make that overall budget you worked out easier to follow. Wouldn't it be nice to know for sure what you are precisely going to pay for your electric bill next month? When the weather fluctuates and you increase your usage, it will be nice to know that your bill won't suddenly be twenty, thirty or fifty dollars higher than you expected.
It's not set in stone for the rest of your time on that utility, though. Plans will range three, six or twelve months, depending on the company. Typically, they will re-evaluate your usage as the seasons change and adjust the payment accordingly. Regardless, this periodic re-evaluation of your average still takes the monthly guess work out of these bills. At least you know that the amount you pay will be consistent for that time period. The fewer surprises there are, the less stress there will be in your life.
You can even take the added step of going onto a budget plan with a utility and then setting up your checking account to be automatically charged each month. This way you do not need to worry about payment fluctuations or the payment arriving in time for the due dates; monitoring your bill becomes that much easier.
This is a step that almost everyone overlooks. It would be interesting to see how many cases of insomnia could be solved if people would remember to breathe deeply, assess their situation and take a moment to calm themselves. Money is not only an important part of our lives to handle, it can be an overwhelming part as well.
If you find yourself feeling swamped, and that pile of bills is just raising your heart rate, it's okay to get up and walk away for a few minutes. You have the power to take control of your situation, and once you exercise that control you can exercise control over your levels of stress. Find something to calm you down. Staying calm is the key to handling your bills effectively. Nobody ever benefited from raising their blood pressure or grinding their teeth. You need to allow yourself the ability to compose yourself and see things from a different perspective. A clear mind is a lot more able to handle problems than a frustrated one.
This doesn't mean that you need to learn guided meditation, although it doesn't hurt to. Maybe you can take a moment to yourself and read an article from the newspaper or a few pages from a book. Maybe pouring yourself a glass of water or milk and taking a minute to yourself will help. If the weather is nice and clear, you can take a brisk walk outside. Removing physical boundaries can often relieve an emotional burden. Maybe going to the gym to release that pent-up frustration is the key. Whatever you decide, these brief little breaks can make a world of difference.
You may even want to consider structuring your time around paying your bills. Make them a priority and set a specific time each week when you work with them. Then you can budget your time as well as your money, and when you are set within the bounds of your new routine you will be able to feel much better. A routine is your friend when you are paying bills. It minimizes surprises and gives you control.
You need to be careful, though. It's far too easy to let your little break turn into an evening hiding in your favorite television program or just surfing the Internet. When you decide to take a break, set a limit for yourself that it will be just that, a short break. If it helps, set a time limit; some people will even use the little alarm on their wristwatch so that they know when break time is over.
10. Don't Be Afraid to Change, And Seek Help if You Need It.
As helpful as all of these steps are, it is still easy to feel overwhelmed. As mentioned earlier, it's very rare for a budget plan to be perfect on the first pass. The figures may need to be updated, and you will find yourself revisiting your budget to account for those changes. But most importantly, you need to be open to the idea of changing your habits as well.
Change is still a difficult thing, as much as we accept that it is a part of life. We are faced with it every day but sometimes we try to fight it. When it comes to money and lifestyle, we have to make changes when they need to happen. This cannot be stressed enough. Just as you would change your diet if you had problems with your heart, you need to keep your financial diet as healthy as possible. If you find yourself in a situation with your finances where you just cannot make ends meet, then you need to accept that a change needs to happen. You need to examine your lifestyle closely and find those areas where a change needs to occur.
This is the area with which most people find they have difficulty, because it can involve sacrifice. Sometimes the sacrifices are small, such as giving up a few stops for snacks each week. Sometimes the sacrifices need to be much larger and are a nothing short of a lifestyle change. Maybe you need to take lunch to work on several days of the week and turn going out to lunch as a once-a-week or once-in-a-while event. The money you can save just with that cost-cutting measure may free up an opportunity to set aside extra savings or pay down a credit card debt more quickly.
It may be difficult to find those areas of change. As the old saying goes, the closer you are to a situation, the harder it is to see it accurately. You need to be able to look at it objectively, and when it comes to money that's a terribly hard thing to do. With all of the stress that bills can cause, it's easy to get caught up in the emotional side of your finances. There is no shame in admitting you need help. We all need help sometimes, whether it is someone to provide a different perspective or help carrying a load.