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Learn Credit ManagementMichael Killian (282)    Michael Killian    http://learncreditmanagement.com/ What Constitutes a Good Budget?Posted Tuesday, December 02, 2008 (355 days 9 hours ago.) Viewed 37 times. What makes up a good budget? What expenses should you include in the budget? What can you do about variable expenses in your budget? How can you personalize a budget? Where are you going? The key to a good budget or spending plan is knowing where you have been and where you want to go. Knowing where you have been is done by insuring you have written down where all you money has been going. You can find this information by categorizing and reviewing your last 6 months of check registers or other accounting methods you have been employing. If you have no such method in place, you have just uncovered your main budgeting problem which is the first item to be corrected. If on the other hand you use a check register or other means but have numerous general entries such as "cash" or "miscellaneous" or other unidentifiable labels, this too must be corrected. You MUST know where your money is going before you can divert it. I recommend carrying a small spiral notebook for at least 2 weeks (longer is far better) and recording every cash transaction. I have never had a client or student do this who has not come back to me amazed by what they had learned from this experience. Budget Labels Once you have a record of all your expenses for a decent period of time, the remainder of the budgeting process is relatively easy. The following labels can be used to guide you in listing what debts and expenses go where in organizing your finances. Nothing from the list below is written in concrete. So adjust the labels to suit your particular needs. Where an entry is variable, enter a monthly average based upon past history and expected futures. Here is a suggested list of budget items: Income: Your Income Spouse's Income Other Income Expenses: Fixed Expense Rent (not mortgage) Other Housing Child Care Child Support Alimony House insurance Car Insurance Medical/Dental Insurance Life Insurance Other Insurance Variable Expenses: Utilities Phone Cell Cable Internet Other Utility Transportation Food Clothing Medical Expense Personal Entertainment Savings Other Variable Expenses Secured Debt - Those bills/debts which have a tangible asset (Mortgage, Auto, etc) Un-secured Debt - Those debts which offer nothing tangible that can be taken from you for non-payment (credit cards, medical bills, etc.) Federal Guidelines For Household Budgets The following are recommended percentages for household expenses. They are offered by the federal government in bankruptcy counseling nationwide. They should be used only as guidelines. Housing 25% Transportation 15% Utilities 10% Food 10% Clothing 5% Medical 10% Personal 5% Other 5% Savings 10% _______________________ Readers will probably be interested to know Mike, the author of this article, also offers a free debt elimination mini-course via e-mail. 
Permalink Comments (0) Bad Checks Mean Bad BusinessPosted Sunday, May 25, 2008 (1 year 181 days ago.) Viewed 214 times. The Avalanche A bad check can cost you a $1500 fine in some states and bad checks are illegal in every state. So before your write a bad check, why take a gamble if you are not certain whether or not there are sufficient funds? We consumers consistently complain about bank errors, fees, interest rates and more. Credible reports indicate banks earn multi billions of dollars annually in bounced or bad check fees and most of this income is pure profit. But we as consumers have little right to complain because these same reports also indicate 450 million bad checks are written every year and each bad check costs the consumer $10-$30 per check. Logic suggests also that if one check bounces, it is likely that more will follow. At this stage a non-sufficient fund (NSF) bank fee avalanche begins with one check bouncing after the other. Each check is then returned to a very unhappy business owner whose trust you just might prefer to maintain. And if they redeposit your check without any action on your part, you get a second NSF fee. Check Verification If a retailer runs your check through Check Verification and it does not go through, you have a major problem. Either you have previously written bad checks or you may be a victim of fraud. In either case, vendors will probably refuse your check until corrected. The retailer should tell you how to get the report used to reject your check. However, smaller store sales clerks may not know. If this is the case, insure you ask the manager for the proper information to correct this problem as soon as possible. Once you can clearly identify who you are and offer your checking account number, check verification agencies can tell you over the phone of negative entries in your file. They can also tell you how to correct them. Some of the check verification agencies and phone numbers are:
Check Kiting If you ever mailed a check the day before you got paid, or written a check praying it does not clear before Monday, you have broken the law. The vernacular for such activity is "Check Kiting". The Office of the Comptroller of the Currency (OCC) says check kiting can be prosecuted since it is the "ability to gain access to deposited funds before they are collected from the institution on which they are drawn". The process of depositing a check in one bank account into a second bank account without the sufficient funds to cover it is a common theme. Prosecution is normally not pursued, unless criminal intent is detected. However since prosecution could occur, it may be wise to know your bank's check holding policy. Check Holding Policies Do you know what your bank's check holding policy is? If not you may want to find out because all banks and all checks are not equal. Each bank has specific amounts of time for holding different types of checks before the funds can be accessed. Two to five days is common. But whatever it is, you should find out. But you will have to ask as banks since banks are under no obligation to remind you. Bankrate.com Bankrate.com offers these helpful ideas: As a final thought, I always carry an additional $100 in my checking account that is not reflected in my balance. That way even if I am at zero, I really have $100.
Permalink Comments (0) Cashless Society ...What is Wrong With It?Posted Sunday, March 02, 2008 (1 year 265 days ago.) Viewed 1,119 times. Have you seen the commercial showing the entire world of people, flowers and animals merrily skipping about until one person writes a check for their purchase? The whole world comes to a dead stop waiting for the consumer to write out a check. The audacity of the consumer to actually slow things down by writing a check. How shocking! That use to be me as I stood in line with my debit card in hand. Then I saw that commercial and something within me snapped. I realized we are becoming an automated cashless society. So now I sing praise to the poor soul slowing things down as he/she uses a check. And I sing even great praise to those paying with cash. Why? Years ago we paid for things with greenback almost exclusively. There is a certain degree of pain when a greenback gets broken to lower denominations or worse yet leaves your hands entirely. Checks often times replaced cash and the pain is a whole lot less but we as a society have had it ingrained within us that there had to be cash in the bank to cover the check. But then strange phenomena occurred in the 80's. It was the inundation of the credit card - you didn't need any money in the bank at all. It was completely painless until the statement came. And for those rare individuals who balked at the idea of credit cards, there was the debit card. It works just like a check only it is more distant than a check and the most amazing part is, it looks just like a credit card. Imagine that! The point of the dry humor above is this. With each step away from cash and towards plastic, the associated emotional pain of handing over money becomes less and less. Like Scarlet in Gone With The Wind, we can "think about it tomorrow." But most importantly we not only tend to loose sight of the greenback, but of the greenback's value as well. This may be all well and good for the advertisers and merchandisers, but not necessarily for the consumer when the bills come due and he/she has not a clue how this struggling debt came about. Many would have you believe that increased spending is good for the economy. That maybe true for political economists. And if so, do we ever do a good job. But what is even better for the economy is increase savings and we as consumers have never done a worse job. Bankruptcies continue to increase which cannot be good for the consumer or merchandiser. Prices continue to rise and we are so grateful with an increased minimum wage but price increase precedes increase wages- not sometimes but always! The national debt gets bigger and bigger and consumer net worth gets smaller and smaller. Consider this. If more consumers slowed down enough to realize the pain of forking over hard earned income, perhaps there would be more savings and less debt. Who knows, we might even teach some politicians the same thing and get our national debt under better control. Somehow as a society we need to come to grips with the fact that the credit card has absolutely no power. It cannot purchase the smallest item. The only power of the credit card is the money that is behind the card. In other words if you can't afford to pay for it in cash you can't afford it. Just as the check was nothing more than an IOU, the credit card is also. By postponing paying off a credit card you are selling your future dollar as well as any interest that dollar could earn for you. Re-read the above sentence. It is the heart and soul of the problem with a cashless society. By eliminating any emotional cost of spending our dollars we are not only saying goodbye to our future wealth but also saying goodbye to any accumulated wealth we might have earned form those dollars being set aside in savings and investment. I am not saying never buy anything. What I am saying is we need to stop for a moment and realize we have two choices. We can make this purchase or we can take that same money and get it working for us. Your future and that of the family will be based on countless decisions as to whether you want not only this item now but whether you are willing to sacrifice the interest this money could be earning for you. When we paid in greenback the decision was much easier because there was emotional pain with passing over hard earned money. With plastic, the emotion is much less removed and that's just how the merchandiser wants it. But what do you and your family want? Do you want the item in front of you by using your card and paying for it with the stolen future wealth? Or do you want the secured wealth itself for your family's future? Readers will probably be interested to know Mike, the author of this article, also offers a free debt elimination mini-course via e-mail. You can enroll at Debt Free In 7.5 Years .
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