Day: February 6, 2011

Maintaining a household budget can be difficult for many people. That’s why a lot of us use credit cards to cover shortfalls.

For one thing, it takes real work to build a budget and it takes real work to consistently put the budget into action. Furthermore, people just plain don’t like to cut back on what floats their boat from golfing to eating out at restaurants, to buying two or three coffees a day.

Baby Steps

We’ve heard that with no pain, there’s no gain. So, it’s important to plan your budget correctly and think about it in a way that enables you to be successful. I know we can all be our own worst enemy at times, but that’s what the budget is for, to remind us and keep us on track. Be realistic and take baby steps in the beginning and financial success will happen.

Keeping your budget intact first requires everybody in your house to buy into the fact that there even IS a budget. No point in having you cut back while no one else does, is there? Kinda defeats the purpose of the exercise.

You have to break out all of your expenses, from the largest to the least significant and be absolutely as specific as possible. So, you shouldn’t put “house bills” on your budget list, but rather you should chunk that down into utility bills, cable and internet bills, necessities and toiletries and so on.

By the way, this chunking down holds true for every category, especially food, which should be broken down into categories such as groceries, dining out, kids lunches and snacks. If you’re a big coffee drinker, be sure to include a category for your daily coffee splurges or vending machine jaunts.

Breaking down your budget into very specific categories will provide a more accurate picture of where your money is really going, and, if you need to, where you can cut things out that won’t matter as much to you.

Setting Goals

Another important tip to keep your household budget working is that you first need to create some goals for why you are creating the budget. Are you falling short of your expenses and charging too much to your credit card? Are you trying to establish a fund for a vacation or for emergency expenses? Maybe you are trying to save up for a new TV, a new car or a home.
Whatever the reason is, if you establish the goals beforehand you’ll have much more motivation to stick to the plan over the long haul. Why? Because you know what the destination is…the goal you have set up for yourself.
It’s also important to create realistic strategies and expectations. If you set a household budget that’s too narrow it may be impossible to keep. This can lead to frustration as well as lapses in judgment and a failure to keep the budget in action consistently over a long period of time. Create realistic and achievable goals. You’ll feel much better knowing you achieved a modest goal than if you set an intense goal and failed to live up to.

You Can Have Some Fun Too

Finally, be sure to allow for some things that you enjoy or some indulgences, no matter how small. If you cut everything fun that you enjoy out of your budget, then you won’t have anything to look forward to or make it worthwhile.

If you love your Starbucks for example and go twice a day every day, don’t eliminate it completely from your plan. Instead, try to cut down to maybe three trips a week, or at least one a day and you’ll cherish the reward even more while saving a substantial amount of money.

There are many tips you can utilize to make your household budget hold up under pressure and last over the long haul. Think about your goals, break down your expenses, set realistic expectations and allow for some enjoyments and your success will improve greatly.

Consumer debt statistics don’t lie. After all, it’s just math right? However, debt is a huge and growing problem in today’s society in both the United States and in Canada.

Actually, it is a hole that most of us have dug for ourselves in almost any English speaking country. If you’re seriously straining yourself with trying to pay off your debt, the bottom line is – you are certainly not alone. For starters, let’s explore some consumer debt statistics for the United States.

A staggering 1 in 177 homes in the U.S. has received at least one foreclosure notice. A whopping 43% of American households live from paycheck-to-paycheck, and not surprisingly, they have less than $1,000 in assets. Senior citizens who used to be associated with saving and putting off what they didn’t need till a later day, have buckled hard under the weight of debt. It’s no fun working your whole life only to end up between a rock and a hard place. Between the years of 1992 and 2001, the average senior’s credit card balance rose a staggering 89%! Why is this? And who wants to be associated with that statistic anyways?

Only 3% of seniors are totally debt free and fully financially independent. Because of this, some seniors have to work well beyond their retirement years while others have to rely on friends and/or family for financial support.

The average credit card balance in households in the United States today is just under $10,000. If we link this back into the 43% living paycheck-to-paycheck, how is anybody supposed to get on top?

Next, let’s take a look at some consumer debt statistics for Canada. Nowadays, many Canadians are using their credit cards to cover their day-to-day household expenses. This has unfortunately made their national household debt a record breaking (for Canada anyways) $1.3 trillion. Thirty million people with all that debt…talk about spinning your wheels.

If we break this figure down, $900 billion of this comes from mortgages, while the other $400 billion comes from general consumer debt.

While there are some Canadians who are managing to save more, there are oodles more that are going deeper and deeper in debt every single day. Over the last decade, the household debt there has increased 5.5% annually. Way, way more than inflation, and I bet you more than the last raise you got at work too, that is, IF you got one.

The rising consumer debt statistics in Canada are said to be because of wage freezes, layoffs and a worsening recession. It’s been said that 85% of Canadian households still owe on one or more credit cards. Are you one of them?

What’s particularly worrisome is that 21% of Canadians say that they feel that their amount of debt is no longer manageable. One in ten Canadians polled say that they would not be able to handle it financially if an expense of $500.00 suddenly came up. A measley 500 bucks!