Stating the Obvious and the Unclear

It’s obvious that if you don’t pay it off each month, every time you use your credit card, you’re going to spend more money for that item than the price you were charged. The additional amount you pay is interest. What’s not so clear is that…using cash wisely will actually save you money. I know you’re what you’re thinking, “you just said the same thing flip flopped”. Yes that is true, but let me ask you this: how many people actually look at it that way?

Not many.




Using a credit card is like throwing money out the window!

So, let’s ask the obvious question. Why do people use credit cards? Well that’s easy…because they don’t have the cash on hand. Here’s something not so obvious. If you don’t have the cash on hand and you’re tempted to use your credit card, have you ever thought…do I really need this? I mean really need it? Not “do I want it” or “is there a strong temptation”, the question is do I need it? Most of the time, the answer is NO!

So what’s my point? Establish a cash-based budget that is very disciplined and specific. In your plan specify how much will go towards required monthly expenses (bills, mortgage, groceries, gasoline for vehicles) and how much will go to discretionary spending (clothes, entertainment, snacks). For anything outside of that budget, or if you end up in a situation where you feel you must use your card. Think really hard about if you can live without it. (Please re-read that last sentence- it’s a doozy). If you can live without it, then DON’T buy it.

Spend Spends tip: The more purchases you pass up, the more money you save. In the end, you’ll end up with less junk and more cash.

Free Fast Food

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Hungry Yet! These word pictures are what get you HOOKED and craving fast food. Just think, commercial designers only have about ten seconds to capture your attention and their aim is to trigger cravings and desires. Using terms like, “mouth-watering”, “tasty”, “drizzle”, they reel you in immediately, but it doesn’t have to be that way.

They awe you with word pictures and the subconscious promise of an intense satisfaction. Many people fall for this every time. The #1 reason is they are not prepared for it. It’s like preying on the innocent. Even though you see and hear those commercials almost every day, most of us don’t turn on our defense mechanism and resist the temptations of instant gratification. Most fall victim to these intense desires.

In order to stop falling victim, you have to do three things:

1. Recognize
2. Resist
3. Reroute

Recognize that you will continuously be bombarded with these commercials on the radio and on television. Resist the temptations, establish mental discipline and don't fall into the rut of craving this food. It’s fattening and unhealthy. Reroute your thoughts, plans, and focus. Think about whatever task you initially had at hand, and focus your mind on completing that task. Good Luck Smart Spenders!

Budgeting Basics

Has anyone ever told you how much of your monthly paycheck should go to bills or mortgage? Do you have a firm understanding of how you should budget your money so that you stay on top financially rather than going under into deep debt?

Well, today I'm going to provide you the bare bones basics of budgeting. I encourage you to use this information as a guideline to measure your spending habits and establish a monthly budget for yourself if you don't already have one. This guidance is shared by many, but is only to be used as a reference. Please review your own financial situation and decide if this is a model you can transition to. If you have any questions or concerns, please seek expert advice. I disclaim any liability for any damages or loss which is incurred as a result of implementing these basics.

Now that the legal stuff is out of the way...Let's get on with it. Here's a standard suggestion of how you should balance your monthly income:

1. Housing - Mortgage, rent, utilities, insurance, taxes and home maintenance.

2. Transportation - Car payments, public transportation, auto insurance, maintenance, gas, parking, & license and registration fees.

3. Debt - Loans, credit cards, taxes and medical bills

4. Other - Everything else (incl food, clothing, childcare, etc.)

Here's the big question: How much are you saving each month? You should aim to save at least 10%.

On to the next one....Buying a house. Do you know how much is "affordable"? I don't mean how much the bank says you can borrow. While the half million dollar house may be beautiful and tempting, you don't want to find yourself in a foreclosure because you can keep up with the payments. Use this guideline: 28% of your gross monthly income (before taxes). So if your monthly income before taxes is $4000. Then you should only consider purchasing a house if your payments are 4000 * 0.28 or $1120/mth. So you're probably thinking, how much is that in regards to a house price. Well, I'm glad you asked:

At $1120/mth with a 6% fixed interest rate on a 30 year mortgage, total house cost equal $186,500. That means if you make $4000/mth gross income before taxes, you should only look at houses that are $186,500 and under.

Walmart Shopping

Walmart seems more like a bill collector than a grocery store: $300, $400, and sometimes even $800 a month contributed to Walmart or otherwise known as "Wally World".

I went to Walmart to buy toliet paper. By the time I left, I had $150 worth of stuff. Some stuff I needed like milk and eggs, and mostly stuff I didn't need like: Little Debbie snacks, a case of coke, a bottle of wine, Nacho Cheese Doritos and a 10lb bag of potatoes.

Then what happens? I gained weight from the junk food, the whole bag of potatoes went bad, and I realized I already had milk and eggs at home.

Sound Like You?

This is just one example of the many situations we find ourselves in that cause us to reduce our wealth and waste our money. The reasons we purchase impulsively is not by coincidence, wer're tricked by strategic marketing tactics.

1. One reason this blog was created was to teach you those tactics so you can beat the system, stop wasting money, and not be taken advantage of anymore.

2. The second reason this blog was created was to inform you of the "REAL" sales and discounts. For example, twice a year, Dillards has a GRREAT sale: 75% off the already 50% discounted price. Another is Macy's has a sale where most all women's clothes are $4. I will tell you about these sales, so you can gain the MAXIMUM benefit from the REAL DEALS.