Tuesday, January 9, 2007

Planning your budget on a variable income.

To make a budget on a variable income, you should plan your budget according to the lowest monthly salary that you have received. For instance, if you usually make $3,000 a month, but every now and then you only make $2,500 a month, you should always make your budget for the 2500 month just so that you don't overplan your expenses for the month. If you do make your usual $3,000 a month, then you should sit down with your spouse and decide what you want to do with this money. You could take this money and continue building your emergency fund (see the Baby steps on the right side), get out of debt, or invest. Put this extra money in your budget for the next month. You need to make sure that you use this money wisely and you don't just blow it on some random junk.

Dave says get out of debt before investing.

A 27 year old man called in and was making 50k a year. He had no debt but his student loans. Should he pay off his student loans first before investing or invest at the same time?

Dave Ramsey's answer is simple. You should always get out of debt first. Then you will have the rest of your life to invest!

Friday, January 5, 2007

To buy the item on sale or not.

When you see an item on sale, do you automatically say to yourself, "Wow, this item is at a great price! It's such a great value at 70% off!" If you find yourself saying this, you may want to think about these guidelines first:

1.) Deciding if the item is something you want, or something you need. One of the things most people do when they see an item on sale is to buy it on impulse. This is one of the worst things that anyone can do. If you are a person who buys things on impulse, then you should try to stay away from the stores as much as possible, or bring along someone with you who is frugal. It may not be such of a big deal if the item is only $5. However, if the item is $500 and you find it on sale for %70 percent off, you will still need to pay $150 for it! Not such a great deal if you don't need the item, but just want it!

2.) Does this item fit in my budget? If you don't have any money left in your budget, you should just forget about this item as you don't have any money to buy it. Remember, your budget is there for a reason. If you overspend on what you had supplied in your budget, then you will do the same thing next month! Make a budget and stick to it!

3.) Why is this item discounted? This item could very well could be on sale because the store is just trying to get rid of it. However, I have seen several times where a shirt is on sale at a particular store for $20, however, at another store, this item retails for $20. Advertisers know that people tend to look at items on sale because "you get a better price." Because of this fact, retailers will intentionally place an item 50% off with a list price of $40 although the suggested retail price is only $20!

Next time you are out shopping and see that item on sale, think twice before you buy it. Ask yourself do I just want this item, or do I really need it and is it in my budget. If you can answer yes to both the second and third questions, then you can buy the item, otherwise, walk away and don't look back!

Thursday, January 4, 2007

How to ask for a pay raise

Do you feel you deserve a raise but don't know how to ask for one? Here's how to approach your supervisor appropriately and make your case without seeming overly demanding.


1. Know your company's policies. Are you supposed to have annual performance reviews to determine your salary? Do salaries advance according to a fixed schedule or rank? Who can make the decision (or ask for it to be made)? Read the employee handbook (and company intranet, if you have one), or better yet, talk to someone in Human Resources.
2. Know what you're worth. Find out the usual salary range for those who do what you do in your region or area. If possible, get numbers that take into account:

* Your job description
* Your responsibility, including any management tasks
* Your years of experience
* Your seniority in the company
* Your education
* Your location

3. Prepare a list of your accomplishments. You can memorize the list or present a written copy to your boss for his or her reference. If you choose to present a written copy, have somebody proofread it for you first.
4. Make your case. Pay particular attention to problems you have worked on, and how you helped solve them. Why are you worth more money to your employer? How have business operations and profits improved since and because you've been there?

* Did you complete or help to complete a tough project?
* Did you work extra hours or meet an urgent deadline?
* Did you take initiative?
* Did you go beyond the call of duty?
* Did you save the company time or money?
* Did you improve any systems or processes?
* Did you support or train others?

5. Set time aside. If you just walk up and ask for a raise, you'll seem unprepared, and, well, like you don't deserve one. You don't have to give too much advance notice. Just say when you walk in to work in the morning "Before you leave, I'd like to speak with you." If your boss is really busy or disorganized, you might want to make an appointment.


* You can negotiate for more than just pay. If appropriate, talk about benefits, titles, and modifications to your responsibilities, management, or assignments. Ask for a company car.
* Many companies subscribe to industry salary surveys. Ask that your boss consult that information when determining your new compensation, especially if you think your pay has lagged behind that of your peers. It will lend credence to your numbers, if they are well-researched.

This article was obtained from

Tuesday, January 2, 2007

Debt Consolitdation

Are you in over your head in debt? Are you considering debt consolidation because you can't find yourself getting out of debt before you die? You may want to think twice before diving at the idea of consolidating your debt.

If you do get your debt consolidated, don't plan on trying to purchase a house for at least 7 years. The reason behind this is that you will be treated as if you filed a chapter 13 bankruptcy to the mortgage lenders!

Why do something that you could do yourself? All that the debt consolidators do is to call each of your creditors and 'consolidate' the amount of money you owe to them. That is, they call up your creditor, and negotiate an amount to settle your debt for. They can usually negotiate around 70 cents on the dollar.

Credit collectors are vicious. If the credit consolidation company doesn't completely settle everything (even though they told you that they did) with the credit company, the credit collector may come after you wanting even more money!

Debt consolidation only addresses the issue. If you let another company take control of your finances and consolidate your debt, you are only addressing the issue and not the symptom. Let's face it, the reason why you are where you are is because you have spent to much money. If you never learn how to control your spending habits now, then you may be in this exact same position again 2 years from now!

Steps to avoid using these companies.
1.) The first step that you MUST do is to make a budget. Making a budget is the single most important thing that anyone can do. If you were to ask a millionaire one of the key essentials that they took to building wealth, they would most likely tell you that they always make a budget, review it, and stick to it. Making a budget is very simple. You just take out a piece of paper every week (or however often you and your spouse decides) and write down that weeks expenses. You write down everything from food, gas, clothes, accessories, etc. on a piece of paper that you will use for that following week. If for some reason you go over the amount you specified for a specific section, then you will need to call a meeting with your spouse to discuss what spendings for that week can be reduced in another category. Remember, you are trying to get out of debt. Once you establish exactly how much you WILL spend each week, stick to it!

2.) If you are considering debt consolidation, then you are more than likely behind on some payments and your credit rating is probably not the best in the world. You should call up your creditors yourself and try to negotiate with them a price in which to settle (most creditors will take around 60-70 cents on the dollar). Most of the time, these creditors won't be so happy. If this is the case, be very blunt with them telling them your situation. If they become very rude, hang up and nag them again tomorrow (after all, they probably have harassed you a few times if your behind on your payments). Once they finally agree on a price in order to settle your debt, don't take their word for it. Ask them to send you proof of the settlement in writing. If they don't agree to this, nag them some more tomorrow. It should be noted that this will hurt your credit score. However, people will not treat this as a chapter 13 bankruptcy if you wish to buy a house within the next 7 years.

3.) Take some debt management courses and talk to others who have faced similar issues in the past. The best course that I know of is Dave Ramsey's Financial Peace University. This course will guide you through everything about how to handle and get out of debt and also how to build wealth during your life! I also HIGHLY suggest that you read Dave Ramsey's book entitled The Total Money Makeover. You can pick up a copy at amazon for about 20 dollars.

Having debt can be very stressful. However, if you have a plan and take control of your money, you WILL get out of debt. You need to take control of your money instead of letting your money control you!

Monday, January 1, 2007

Happy new year

Happy new year to everyone! I hope that this year will be a very prosperous year for everyone. I highly recommend that one of your main goals this year should be to try to get out of debt if you have any as this is the first step in building any type of debt. You never hear from millionaire's who use their credit cards just so they can get some 'point's. Why do you think those credit card companies invented the points system? They know that by offering you 'points', then you would spend more. So get with it, make your new years resolution to get out of debt!

Saturday, December 30, 2006

Did you know that the average millionaire drives a used car?

Unlike the belief that most millionaries drive fancy cars, most actually drive a paid for 2 year or older car! Yes, that's right. They don't care if they keep up with the Jone's or not. Most people don't even know that they have a lot of money. The average millionarie lives in an average neighborhood and drives an average car.

One of the reasons that they have built wealth is because they don't have a car payment. Just think about it for a second. The average car payment per month is 381 dollars. What if you could invest this amount of money instead of putting it towards a car payment. If you were to put this money each month into a mutual fund which averaged an annual return of 12% for 30 years (which is the long term average of most mutual funds over a 10 year or more period), that would equal $1,185,325! If you were to do that for 40 years, that would add up to $3,765,453! Yes, the math is correct... 3.7 million dollars!

To me, that's a HUGE price to pay for a car that goes down in value each year.