Money, personal finance, debt, budgeting…..all these terms have become much more important to people now that the world wide economic growth has taken such a hit. Many people are realizing they don’t know what they should know about personal finances, how to save, how to invest, how to budget. But there is a definite surge of interest in personal finance topics now that money is not coming quite so easily to people.

This post will discuss four topics:

  1. personal finance
  2. personal finance business
  3. personal finance investing
  4. personal finance budgeting

#1 – Personal Finance

talking about personal finance

Do you ever get tired of hearing about people who have their act together with their personal finances? Don’t you wish you could hear from someone who was in a personal finance hole and had to work hard to dig themselves out of the personal finance mess they put themselves into? I know that sometimes I really don’t want to hear how great someone is doing with their personal finance budget; I want to hear the other side of things. This is because stories about people who have made personal finance mistakes, yet found a way out of their personal finance mistakes gives me hope, it lets me know that I’m not the only one who has messed up.

I want to tell you about the personal finance mistakes I made and how I got out of the mess by unconventional methods.

Personal Finance Mistakes

As kids, we were never taught about personal finance or how to save money. Yes, my parents saved a lot of money, but we kids were never taught personal finance skills including how to save. I guess they just figured we would catch on to their personal finance skills by osmosis. Unfortunately, we came into adulthood just as credit cards became a big part of the personal finance scene. What I mean by that is credit card companies would give credit cards to absolutely anyone. Well, this was just great for me until the credit card bills came rolling in. It did not take long for me to get into a few thousand dollars worth of debt. While my personal finances were not horrible, they weren’t great at all.

Then I decided to go back to school so I had to take out a bunch of student loans. Well, I got my degree, but also left school with $16,000 worth of student loan debt. So by now, the debt was about $20,000 altogether. Still I did not learn my lesson; or rather I just did not want to deal with personal finance issues.

The reality of Personal Finance

The reality of my personal finance situation did not really hit me until my first job after getting my degree. No matter what I did, I was living paycheck to paycheck. Then I got married and thought ‘Oh good, another income and now we can get out of debt, our personal finance situation will be great!’ Well, that is not what happened. Neither one of us was any good at personal finance budgeting!!

The Important Decision

Finally one day, I just got sick of it all, I was tired of being in debt, tired of handling money poorly, tired of feeling guilty. So I just stopped buying things. I did not need to put myself on a budget to know that we were spending too much money on unnecessary things.

Once we both made the decision not to buy anything except food to eat and gas for our cars, it gave us an amazing feeling of freedom, probably because the guilt was gone. So for 18 months we did not go out for dinner, no fast foods, no books, nothing extra of anything. We really did do it! And we paid off all our debt.

Most people think that to get out of debt you need to make goals and put yourself on a budget. However, that type of personal finance system did not work for us. We already knew we were spending too much money and that we just had to stop spending money. That is what enabled us to pay off all my credit card debt and my student loans.

Once the debt was paid off we did get ourselves on a personal finance budget which is like the basic personal finance thing to do, but unlike most people, we did not make up the budget until we were out of debt. Which brings me to the next section of this post: personal finance budgeting.

#2 – Personal Finance Budgeting

personal finance budgeting

Budgeting is a scary word for a lot of people. But I have found it is only scary to those who do not have their own personal finance budgeting system set up; or perhaps they have a budget, but are not sticking to it properly.  Working within a personal finance budget successfully is very empowering because you are exercising your self control. Lack of self control will drain your confidence and you will be on a never ending cycle of living paycheck to paycheck. Isn’t it time to break out of this?

So when should you get yourself on a budget? Well, if you are not in debt, good for you! Start a budget now! I f you are in a lot of debt you should start a budget, but it will be much different than a budget used by people who are not in debt. Depending on your circumstances, you can do what we did and just stop spending anything except for the basic necessities for living like food, heat, and fuel for your car (but only if you must drive a car to work).  So here is how it works.

Budget for Debt Free People

You need to keep track of what you are spending and in what categories for one month. For example, your expense tracking sheet may look like this for the month:

Savings: $200.00
Food: $257.23
Gas: $157.68
Phone: $37.65
Electricity: $101.00
Eating out: $55.98
Clothing: $74.31
Kids piano lessons: $100.00
Allowance: $90.00
Charitable giving: $100.00
Garbage pickup: $25.00
Entertainment: $32.15
Hair cuts: $40.00
Parking: $50.00

Be as detailed as you can and be sure to keep track of everything. Do not change your spending habits at this point if you are NOT in debt. Once you have all your categories figured out you can set up a monthly budget. Look to see where you are spending too much and try to cut back in those categories.

If you are not saving, then you need to set up a savings category and add that to you monthly budget. You may find it helpful to put your monthly savings allotment into your savings account first thing every month so you know the money is being saved. Often people make the mistake of waiting until the end of the month to add to their savings and by then the money has run out. So pay yourself first and watch your savings grow.

Budget for People in Debt

If you are in debt, you will find your budget to be quite different from those who are not in debt. The main thing you need to concentrate on is getting out of debt as quickly as possible. Therefore your budget categories are going to look like this:

Food: $155.00
Gas: $125.00
Garbage pickup: $25.00
Electricity: $75.00
Phone: $35.00
Hair cuts: $25.00
Debt payment: $500.00

You may as well just get it in your head now that you are not going to have the “fun” you’ve been having in the past. But you are going to have the fun of getting your debt paid off quickly so you can move on with the rest of your life.

#3 – Personal Finance Investing, How to Invest with 20 Bucks

How to Invest $1000 Wisely

Did you know that you can actually start investing with as little as $20? I know, you thought investing was only for those with a lot of money saved up. But you can invest the small sum of $20 through DRPs or dividend reinvestment plans.  With DRPs or Drips, you do not need to work with a broker; you can buy stock directly from the companies that are offering the stock.

These stock plans are available from more than 1,000 major corporations. The fees are either nonexistent or very low so it is worth making the investment and for $20, how can you go wrong? Here is how they work.  With Drips you can buy more shares of stock with your dividends. You can also buy chunks of shares that are very expensive. So say Mobil Chemical is selling at $100 a share, in the Drip plan you can buy 1.25 shares of it for a total of $125, of course this is after you have built up your investment to cover the $125. As you can see, this is a great way of starting out and getting your feet into the investing game without have to put in a lot of money up front.

#4 – Personal Finance Business Software

Mac Personal Finance Software

Those of you who have your own small business may find it difficult to separate out your personal finances from your business finances. There is a good personal finance business software available to you that will deal with both these areas of finance. Quicken, by a company named Intuit is a very popular financial software that will help you deal with your personal finance issues as well as your business.

For example, with Quicken you will be able to:

In conclusion, I hope this post has given you some ideas that will help you feel more in control of your finances. I encourage you to get out of debt as quickly as possible by following the steps listed in the personal finance section. After you are out of debt, have a good personal finance budgeting system working and are in control of your personal finances, you will be able to plan for your future, maybe do some personal finance investing and overall feel more confident about yourself and your financial future.

 

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