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        • A detailed look into my January 2019 budget. Don't just blindly follow a budget. Understand the reasons behind your financial choices, and look at what your budget is telling you.

          January 2019 Budget Recap

          A detailed look into my December 2018 budget. Don't just blindly follow a budget. Understand the reasons behind your financial choices, and look at what your budget is telling you.

          December 2018 Budget Recap

          When thinking about your WHY, it should be something so important that it lights a fire under you. Your level of passion and dedication to your WHY should leave you feeling emotional.

          How to Close Out Your Budget Every Month

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        • My hope through this blog post, I can show you that MLM can be a legitimate source of supplemental income that has its perks over a more “traditional” career or your average side hustle.

          How MLM Has Changed My Life for the Better & How It Could for You Too

          Living on a budget is great. Unless, of course, it’s not. Because sometimes even living within your budget calls for more money than you’re bringing in.

          10 Legitimate Ways to Make Extra Income from Home

          Are you ready to save in the new year? Let's save more of our dollars by completing a different savings challenge for every month in 2019!

          12 Months = 12 Savings Challenges

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        • Does it feel like you just can’t get ahead when it comes to money? Even now that you’re earning more, there still seems to be nothing left over to help you get out of debt or save for the future? Your finances may be the victim of lifestyle inflation.

          Lifestyle Inflation: Getting What You Deserve

          A realistic view into my $400 per month meal plan! Get every recipe that I used in my January meal plan, my grocery lists, costs, and so much more! Read about how I am utilizing my Instant Pot to save time and money!

          January 2019 Budget Monthly Meal Plan

          Are you looking for ways to save money on your grocery budget? Try completing the Freezer Challenge, and start eating what you already have at home.

          Save Money Meal Planning: The Freezer Challenge

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        • How I paid off over $77,000 of debt in less than a year. During my financial journey, telling myself, "it's impossible" was never an option. You have to believe in yourself enough to strive for the unimaginable.

          My Debt Story – Accomplishing the Unimaginable

          Should you consolidate your debt? Before using a debt consolidation company, make sure you know all of your options. Getting out of debt is all about changing the behavior that got you into debt in the first place, that's where you should start.

          Should You Consolidate Your Debt?

          Refinancing your home can be a serious financial decision. Make sure you know about hidden fees, the interest rate, and other factors before making any decisions.

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        • When thinking about your WHY, it should be something so important that it lights a fire under you. Your level of passion and dedication to your WHY should leave you feeling emotional.

          How to Stay Motivated on Your Financial Journey

          Looking for a financial advisor that will meet all of your unique needs? Explore your options and find out what questions you need to be asking using The Budget Mom's complete guide!

          How to Find the Best Financial Advisor for Your Needs

          Being in debt while you are still working can be a nagging problem and even prevent you from saving for retirement. But carrying that debt into retirement can also be dangerous, and in some cases, even more so. When you are in retirement, you are working with a fixed income. The simple truth is, you can't afford to have a majority of your income eaten up by debt payments. To get the most out of your retirement, you need to make sure you have as much money as possible to fund the lifestyle you desire. Here are three types of debt you should work on eliminating before you retire. Read: How To Save For Retirement When You Are Self-Employed UNSECURED DEBT If you are living with a fixed retirement income, you might not be able to afford to make the extra payments on the money owed. If you are spending years in repayment, much of your fixed-income ends up going to high interest payments. Credit card debt can not only wreck your credit score, but it's also costly to pay off. For example, if you have a credit card with a $5,000 balance with 18% interest, it will take you roughly 84 months to pay it off. Not only that, but you will pay close to $4,320 in interest over that period. HOW TO PAY IT OFF It's best to come up with a plan to eliminate unsecured debt during your working years. An easy approach to paying off credit card debt is to list out your present debts, figure out which cards charge the most interest and pay those off first before moving on to the ones with less interest. Here is a list of articles that will help you come up with a plan to pay off credit card debt: Pay off Debt With the Debt Snowball Method How to Pay Down Debt Using the Avalanche Method How to Create a Plan to Pay Off Debt Taking advantage of balance transfers to eliminate debt faster might also be an option. You can transfer your total balance to a card with a lower interest rate than what you are currently paying to save time and money on interest payments. Read: Saving Money When You Have Debt – What You Need to Know STUDENT LOAN DEBT Student loans are often viewed as a "younger-aged" problem, but the truth is, more and more older Americans are finding themselves on the hook for educational loans. Not only is this debt they took out for themselves, but the major problem is when parents take out loans for their children's education. The process of being accepted for a Parent PLUS loan is minimal. There is only a basic credit check and no underwriting to determine whether the borrower has the income or ability to repay the loans. With emotions involved, it's easy to take on more than you can handle. You may not realize it, but in retirement, even a small amount can prove difficult to repay. Funding your child's education can be an emotional topic. I would love to help my son attend college without feeling financially stressed, but I won't sacrifice my own retirement to do so. Instead, I took another approach and started planning and saving early for his educational costs. Two weeks after my son was born, I opened a UTMA account. Throughout the year, I save my leftover change from my cash spending and invest it in his UTMA at the end of the year. I will save what I can during my working years, and I will help him as much as I can financially, but only to a limit that I can honestly afford. The truth is, helping my son pay for his education is important to me, but he also has more time than me to pay off his student loans. When I am a senior living on a fixed income, I will not be able to generate more money to repay these debts, and I can't replace the retirement savings that I take out for repayment. HOW TO PAY IT OFF When you are in a financial bind, there are different ways to you can repay your student loan debts that make it a little easier on your budget. For example, if you only have Direct Loans, there are Income-Driven repayment plans that allow you to make a monthly payments that is based on your income and family size. If you decide to use one of these options, you have to keep in mind that it will extend the period of time for your loan repayment. I recommend using these options if you are in a financial hard spot, but to make your time on these plan limited. If you can, I recommend sticking to the Standard Repayment Plan, which will pay of your student loans in the shortest amount of time while saving you the most money on interest. Read: Should You Consolidate Your Student Loans? MORTGAGE DEBT Many people who own homes or property take out 30-year mortgages in their early 30s and manage to pay off their loans by the time they retire. But what happens when you buy a home or property later in life? If you end up carrying mortgage debt into retirement, that will make what's already your greatest monthly expenses even more burdensome. Just like with people, the older a home becomes, the more money it costs to keep them "healthy." Dealing with a mortgage payment and the upkeeping costs of owning an older home during retirement can cause substantial income restrictions. If you work on getting rid of your mortgage payment before retirement, that's one significant bill you don't have to worry about. If you can pay off your mortgage before retirement, you can significantly decrease your housing costs, eliminate your biggest expense, and you can make your savings last much longer. If you can, try buying a home on the low-end of what you can afford and avoid refinancing your home, which usually extends your repayment period. HOW TO PAY IT OFF One way to tackle your mortgage debt is by making extra payments to your loan. Think of it this way, the more extra payments you make on your mortgage, the more each one of your regular payments goes straight to the principal balance. Try making an extra house payment every quarter or dividing your mortgage payment by 12 and add that amount to each monthly mortgage payment that you make. Just a word of caution. If you are thinking about making extra mortgage payments, make sure you talk to your mortgage company because they might charge prepayment penalties. When completing an extra mortgage payment, make sure it's getting applied to the principal balance of your loan and not next month's payment. It's critical to take steps to ensure you have an effective debt management strategy in place and to take early action steps to eliminate debt before you retire.

          3 Debts You Should Eliminate Before Retirement

How To Cut Expenses When You Have Financial Troubles

April 25, 2018
Cut Expenses

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If you want to reduce your expenses and save money, it's important to understand what your choices are, how to change your spending habits and the consequences of your decisions.

This is article four of Part One of the “Conquering Debt Series.” Read article three of Part One here.

If you want to cut your expenses, it is essential, above all, that you understand what your choices are, how you could change your spending habits and the consequences of your decisions.

You will find a lot of advice about how to cut your expenses, but you need to keep in mind that this advice may be helpful, but it will not work for everyone. Reducing your costs is not easy. It takes a lot of hard work and commitment.

Work together with your family and make sure everyone in your household understands the situation so you can all work together to make it better.

Before I get into some options on how you can cut your expenses, I am going to ask you to put away the credit cards, at least for awhile. If you must need one, keep it only for emergencies.

Since everyone’s life is so drastically different, it would be impossible for me to list every way you can cut costs. I will present a few possibilities that you should consider. Regardless of what strategy you choose to pursue, you should always be realistic while also making a serious commitment to reducing your costs.

Here are some common, well-known ways to reduce your expenses:

1) Save money by spending less during the winter holidays. You know you will want to buy some gifts, but you first need to understand how much you have spent in the past to see if you have areas where you can save money in the future.

For example, can you work together with your family to come up with an agreement that you will only buy gifts for the children, or that you will limit the amount you spend on gifts to a certain amount per person?

  • Read: How to Lower Your Child’s Christmas Present Expectations

2) Food is another great example. If you are not budgeting correctly, you probably don’t realize how much money you are spending on food. You can save money on food in all kinds of ways:

  • Use coupons to save money on products you would typically buy.
  • Shop at different stores to get the best price.
  • Plan meals ahead of time, instead of waiting until you get to the grocery store.
  • Try not shop when you are hungry.
  • Shop without the kids if possible.
  • Skip the name brands and head for the generics.
  • Eat at home more.
  • Pack a lunch for school or work rather than eating out.
  • Make coffee at home or the office.

AVOID PRESSURE-RELATED SHOPPING

If you are once like I was, you might respond to anxiety or financial pressures by going shopping, buying items you really don’t need, or overspending.

Not only will this dig you further in the hole, but some types of spending for unnecessary items using cash advances on your credit card can also lead to problems if you later decide to pursue bankruptcy (an option I hope you never have to pursue). Running up your credit cards knowing that you can never pay them back will only lead to more problems.

The one thing that helped my uncontrollable spending was thinking about what influenced by decisions to shop and what I was buying.

It’s not uncommon for people to be affected by the views of their friends, family, neighbors, and others. We all know that advertising and marketing executives know how to play on your emotions when trying to get you to buy something.

Try to resist the urge to spend unnecessarily by pausing before you buy. This is known as creating a “cooling off period” or “time out” before you spend money.

In some cases, you spend too much not because you are going on a crazy shopping spree but because you are unable to figure out the true cost of your purchases. It can be tough to understand these costs, mainly if you are using credit to buy something (which is the reason I asked for you to put the credit cards away).

  • Read: I Stopped Trying to Be Perfect and My Budget Thanked Me for It

AVOID RENT-TO-OWN

When you use rent-to-own, you are supposedly renting a property for a period until you qualify for ownership. Mainly, if you can’t be eligible for credit, you have use of an item while it’s being purchased.

I want to yell it from the rooftops “DON’T USE RENT-TO-OWN!!”

There are two gigantic problems with rent-to-own deals.

First, it’s crazy expensive and is often much more than the cash price. Here is an example:

Let’s say you rent a 36-inch TV that has a $300 value. You pay $16 per week for 52 weeks. That’s $832. $16 a week doesn’t seem too bad, right? The value of the 36-inch TV was $300, but you are now paying interest which is 254% on an annual basis. That’s $532.

So to recap, your TV had a $300 value, but you just paid $1,364 ($16 a week plus interest). To make things even worse, you might have bought a USED TV that’s only worth $150!

Rent-to-Own deals are usually great for sellers but horrible for buyers. Be patient and save your money instead!Click To Tweet

The second problem with rent-to-own occurs when you can’t keep up with the payment arrangements. If you miss even one payment, the item can be repossessed. You lose the benefits of any payments you have made toward owning the property, which means the more you have paid, the more you have to lose.

The best way to buy furniture, appliances, or electronics is by saving your money and pay cash. Sell something you don’t need to buy something you do. Shop for the best possible cash price and the best possible interest rate.

Check to see if the store has a layaway policy that might work for you. There are laws in most states that require the seller to give you information in any layaway agreement about the items you are purchasing, the cash price and down payment, the period during which the offer will be held open, and any other relevant information.

  • Read: My Worst Money Mistakes – The Money Drainers You Need To Avoid

REAL ESTATE TAX REDUCTIONS

If you own a home, many communities have a variety of real estate tax abatements, deferrals, and hardship repayment plans. Most reductions are for older homeowners, and many have a deferral process for people facing financial hardship. Less than half of those eligible take advantage of available real estate tax reductions.

UTILITY CONSERVATION MEASURES

You might be paying too much if you pay for your own utilities. Look into utility conservation assistance programs. These can lower your utility costs by one-half to one-third.

REDUCE YOUR TELEPHONE EXPENSES

Look into group plans if more than one person in your family has telephone service. You may also want to change your local billing method or comparison-shop among competing companies for long-distance services. The types of calls you make and how you use your phone can significantly affect what kind of plan works best for you.

  • Read: 4 Little-Known Ways to Cut Expenses When You’re in Debt

RE-EVALUATE YOUR HOMEOWNER’S INSURANCE NEEDS

Homeowner’s insurance is an area where a lot of people overspend. If your property value has decreased, or if you are insuring for an amount which includes the cost of the land your home is on, you are paying too much for your homeowner’s insurance. Consider eliminating unnecessary coverages or applying for special rate programs (such as reductions for using a smoke detector).

CANCEL UNNECESSARY PRIVATE MORTGAGE INSURANCE

Private mortgage insurance (PMI) is usually required if the down payment on the loan you used to purchase your house was less than 20% of the sale price. The insurance is used to protect the lender if you default on the loan.

Once you have more than 20% equity in your property, there is no longer any need for the PMI, and it should be canceled.

A 1998 law requires automatic cancellation of your PMI policy when you first owe less than 78% of the original value of the property. This applies to loans made after July 1, 1999. Make sure to check with your lender about canceling your PMI if you qualify.

  • Read: A Simple Way To Reduce Your Mortgage Payments

PUBLIC TRANSPORTATION VERSUS DRIVING

There is no doubt that owning a car can be very expensive. Between car payments, gas, repairs, and insurance, owning a car in some communities can be as expensive as a home. If you can get by without a vehicle temporarily or permanently, you may find that you can save hundreds of dollars a month. If you have two cars, consider whether your family can get by with just one.

Are there other ways your family has cut costs? Help other readers learn about new ideas on how to reduce expenses by telling me about them in the comments below!

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kumiko Ehrmantraut

kumiko Ehrmantraut

A little about me: I love helping women take charge of their financial lives. As an Accredited Financial Counselor, I love teaching about money management and realistic budgeting. Away from the computer, you can usually find me behind a camera lens or coloring with my 4-year-old son.Want to share your financial journey with me? Tag @thebudgetmom on Instagram or give me a shout-out on Facebook. I WANNA SEE IT!
kumiko Ehrmantraut
kumiko Ehrmantraut

kumiko Ehrmantraut

kumiko Ehrmantraut

Latest posts by kumiko Ehrmantraut (see all)

  • Lifestyle Inflation: Getting What You Deserve - February 15, 2019

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Filed Under: Cut Expenses, SAVE MORE Tagged With: CONQUERING DEBT SERIES, CUT COSTS, PAY OFF DEBT, SAVE MONEY

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  1. Saving Money When You Have Debt - What You Need to Know | The Budget Mom says:
    May 2, 2018 at 12:01 am

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About Kumiko Ehrmantraut

Hello, I'm Kumiko, but everyone just calls me Miko. Welcome to my blog, The Budget Mom. I am an Accredited Financial Counselor® , and mom to a rambunctious 5-year-old boy. Come along with me as I strive to live a life I love on a budget that I can afford. Read more about me.

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