Past experiences: Why some old fashioned money tips make sense today

Plenty of discussions abound about money with a then and now nostalgia feel, specifically the difference between your parents or grandparents and how they managed their finances versus the modern day ability to do so.

Today’s budgeting and subsequent propensity to save is met with grim results. Despite having apps that center on budgeting and saving money, the average savings account is about $1,000, if there is one at all.

That isn’t exactly the best prognosis, so you’d think maybe you could learn a thing or two (or several) from generations past that maybe didn’t have $20,000 in credit card debt or spend money freely on things that they really don’t need.

Granted, the discussion is met with the same argument as to why you can’t compare two separate ages: everything “back then” cost less. That’s true, but wages weren’t nearly what they are today, either, even if you believe that today’s wage doesn’t match up to the price hikes we’ve seen on everything from groceries to insurance.

That said, your grandparents and even mom and dad did get more than a few things right, and if you take wages out of the equation, you can take from them a few tips and tricks on how to save money, the same way they did years ago.

The one that is most glaring, and that you probably remember when you were younger, is the lack of time you spent in a restaurant or drive thru window, and that’s because meal planning was a top priority. Aside from my grandmother taking me to a fast food place once a week as a “treat,” we’d always be eating at home, and that was both with my grandparents and parents. The focus was on grocery shopping, and making sure eating at home was done with regularity, including packed lunches and breakfast on some level.

Again, you can argue that families had one parent working and another staying home 30 or 40 years ago, but that doesn’t excuse a lack of budgeting for groceries and meal prepping on a weekend or one night per week for the entire week. It is done in small doses and those who have instituted that plan have found great success saving money.

Here’s another money saving move that we tend to overlook, and that’s not settling on price from one purchase to the next. A competitive marketplace is one that benefits you, the consumer, and your grandparents and parents had it right by not settling on price. Today, this includes anything from your car payment to which store you choose. Don’t just settle and opt for convenience when price matters, too.

Times have changed and in some ways for the better, but not if you’re ignoring just how good those “good, old” days were in relationship to saving money smarter.

Credit Guarded: Why some credit card decision are ill advised

So much about credit cards gets twisted and contorted to the point that you aren’t sure what to believe.

Furthermore, you end up making bad decisions just based on those comments, when really the reputation of credit and using credit cards needs a serious overhaul or a good public relations job for consumers and individuals alike to start truly understanding how to use them properly.

What we have now is a hodgepodge of tips that range anywhere from smart to silly and everything else you can think of in between.

Case in point: has anyone ever told you that you should use credit cards all the time and as much as you can to show you can pay them back on a regular monthly basis? How about the advice that suggests you should close unused credit cards right away, no questions asked?

Both of these are classic tall tales that should be modified and downright avoided when you really look at the repercussions that could come from doing this.

Let’s take a look at the first question, the one stating you should rack up high credit card bills and start paying on them so you can come off as a good financial solider who can pay bills on time.

This is downright dumb: your balances versus your actual credit limit make up your credit utilization and that needs to be low, so you shouldn’t be carrying a $5,000 credit card balance on a card with a $5,500 limit. Lower balances are always better, so if you want to show you can use a credit card and pay it off the right way, start with spending $50 on a shirt or $75 on a pair of jeans on a credit card and pay if off in full the very next month.

You’ll have no problem building credit like that, in small, manageable chunks first.

The second piece of “advice” regarding closing out unused or credit cards with zero balances also hurts you more than it helps.

Credit history and having a longer tale of the tape so to speak means that older, unused cards show just how long you’ve been able to manage credit effectively. The longer the credit history, the better, so closing old cards not only hurts in that regard but also tightens that aforementioned credit used versus available, too.

Credit cards can be used effectively so completing swearing them off isn’t the right call, but using them in a way that helps more than it hurts is advisable and, actually, quite feasible.

Ready and Willing: How to determine if you’re ready to retire

Determining if you’re ready to retire can be a big decision financially and making that assumption you’ll be secure enough to go without a steady income working and yet manage your money properly.

All of those moving parts creates a situation of self reflecting and questioning your current financial state, and if you’ve done all the right things, both little and big, to ensure that retirement is more than just something you wish and hope for but also can be made a reality.

Take for instance your budgeting and financial planning acumen from one month to the next. If you’ve consciously worked hard to manage debt and keep it down (and within means to have it all paid off before you retire) then you’ll well on your way to a quiet, much less worrisome retirement.

Debt is a financial burden you don’t really want to take into retirement unless you have a few dollars left on your home or a car that is a few months away from being paid off for good (and then kept, rather than buying a new one).

Budgeting isn’t just about making a little bit of a profit and living within your means, although that’s part of it, but also about your retirement planning and 401K, IRA or any other means you have of making money on a pretax basis work for you.

Having a plan financially could mean talking to an advisor or setting goals of knowing how much you’ll need to retire.

One element of retirement that could change your trajectory is having to make a financial investment, good or bad, that has taken a serious chunk of change out of your retirement pocket.

Take for instance if you’re paying for your son or daughter’s (or multiple kids in college) education. That is a huge financial burden as you eye retirement so doing that could have repercussions on if and when you can actually stop working. You also have to take into consideration financial chunks of change you’ve put forth for major repairs to your home or car, things that you had to dip into your retirement fund to take care of and borrow against your future retirement. While that decision undoubtedly was made as a last resort, you can’t ignore the fact that you can certainly pay it back but at what price as far as retirement goes?

Retirement should be an excitement, rewarding process, one that allows you to feel pride in a job well done for years and the chance to enjoy those “Golden Years” without having them tarnished due to poor financial planning and the decision to retire when you’re not really ready.

Payment Planned: How to pay off credit card debt and still budget

One of the great money mysteries abounds when you try to do two very important financial things at once, and yet can’t seem to think how it would even be remotely possible: save money budgeting and pay off credit debt.

For most, debt is a nuisance of epic proportions to the point that paying your creditors has turned more into a battle to just get the minimum payment in on time, much less make a dent in the total amount due.

But for those who have managed to pull this off, you’d be surprised that not only is it possible, but those who are adept at it have been able to pay down and ultimately eliminate their debt altogether.

This is more about making room in your budget by cutting expenses so you can allot more money toward your credit card debt and also adding to your income in some instances, too, so that not only can you save money but you also have extra to put toward debt.

Granted, the most obvious choice is adding to your income but that isn’t always feasible. The 40 or 50 hours you’re already working during the week hardly seems as though it can be added to, but you also might want to think outside of the box.

If you’re a teacher, tutor from home at night.

If you’re a writer, write from home on the side of the freelance variety.

If you work as a massage therapist, take clients at home or visit them with at their house provided you feel comfortable with that set up and charge accordingly.

Even if you don’t have a skill that lends itself to this, you might want to consider all avenues and income streams, such as selling things online at auction sites or just babysitting on a Friday night.

Even the smallest of incomes means that much more toward paying off debt, credit cards specifically.

The flip side of that discussion starts with cutting expenses but doing so in a way that takes legitimate chunks out of your budget. The more popular saving money, cost cutting measure has been ditching your vehicle for public transportation, big city or small. The rise of independent car services popping up left and right have made traveling to work more cost efficient than maintaining a vehicle and making a subsequent car payment.

If you’re going to get serious about debt and paying off your credit cards, you can take two approaches that are iron clad: make more or spend less, no matter what means might be necessary.

Getting Aggressive: How to manage and strangle your debt

Saving money hardly is a one dimensional as it sounds.

Sure, you can look at saving money as the simple act of putting aside what is leftover after you pay your bills and thus build a savings account, emergency fund, all the while thinking about retirement and how you’ll spend your golden years (either still working or managing money like a professional).

But saving money goes beyond just simple subtraction of expenses versus income and instead can center on another key contributor to your finances: debt, and more importantly, paying it off completely.

The real disappointing aspect of debt is the perception of it, so before you consider paying it off in full, how do you really see debt as a whole? Most view debt as a necessary evil and something that everyone has.

You could argue, however, that some individuals want nothing to do with debt whatsoever and work diligently and tirelessly to rid themselves of it or not have any at all. They do so not because they’re rich but because they live within their means and don’t overspend or buy impulse items.

Remember, if you use the 24 hour rule, chances are you won’t be spending on what you don’t need. The 24 hour rule says if want something leave it at the store or don’t add it to your cart until you wait 24 hours, and if you still want it after that “impulse” has run its course then so be it, but nine times out of 10, you’ll be glad you didn’t jump in head first but rather dipped your toe in the water first.

Managing debt is not only avoiding it altogether but coming up with a system to pay off what you owe. The same bet is to start small and work your way toward bigger balances, so that you have that feeling and sensation of actually paying off cards and lines of credit, then moving on to the larger ones and so on and so forth.

A good debt to income ratio leads to a better credit score and with a better score you’ll have the inside track on interest rates that can’t be beat, and for example, a 30 year mortgage with a few interest points knocked off because of your lack of debt and better than average or below average credit score gives you a rate that saves you thousands over the course of the loan.

If you don’t believe debt and doing right by it makes a difference, ask someone with a sub 600 credit score or who is spending 60 to 70 percent of their income on credit cards, and you’ll quickly see that debt isn’t an isolated financial responsibility or factor but rather affects your entire outlook as far as saving money goes.

Building Blocks: Don’t have any money saved, why worry?

If you’re like the majority of people, you don’t have very much money in a savings account or an emergency fund, just in case that rainy day becomes a reality.

Nearly half of the population have zero dollars in a savings account, and instead live from paycheck to paycheck with a budget that it obviously broken. That simply means you’re making less than you spend or dead even with those two line items, meaning you aren’t able to save due to your higher end of living or the fact that you don’t recognize that your income isn’t what it needs to be.

But if you don’t have money saved, you shouldn’t worry.

Instead, you start thinking and planning accordingly, and that includes not only reworking your budget but being able to set a goal that is reasonable as far as how much money you want to save in, let’s say, one year.

There’s no reason you can’t have a few thousand dollars put aside in that time period, no matter how ludicrous you think that number or time frame sounds at the moment.

It may sound odd but a lot of individuals have found a means to save money that have little to do with eliminating expenses, although that should be priority number one. You can’t save what you don’t have, so anything that you aren’t using (obviously) or don’t need truthfully, you can eliminate with little or no hesitation.

Things like clothing (excessively buying, that is), cable television, cell phone plans, home security premiums or spa visits are just a few of the things that can be cut from your budget.

But what about doing a few other things that will help you save as well.

You can save money by meal prepping and being smarter with how you spend at the grocery store, thus eliminating the need to eat out at restaurants.

When you put together a budget, make sure you pay yourself at least 3 percent of what you make, at minimum. Also, if you get a raise on a yearly basis or any sort of bonus, make sure you lose it.

And by “lose it,” that simply means that you should forget it even existed and just put it in a savings account right away. Some who aren’t so adept at money managing want to immediately buying something or take a trip because the “earned” that money and want to do something fun with it.

Nothing is fun about having to borrow money or go into debt if your roof springs a leak or your car quits working, so that money is better served in reserve.

A few simple tricks will be the treat you need to save money and do so in a reasonable amount of time as long as planning and patience take hold of your financial decision making.

Hard Target: Why are you making easily avoidable money mistakes?

No one ever argued that saving money was easy. Most of us just make it much harder than it needs to be.

Why is saving money so difficult?

Let’s start first by figuring out the easy part. Money mistakes that are easily avoidable center on not following a spending plan, something you’ve carefully crafted to take into consideration your income and expense and understanding that living below your means in paramount.

If you stick to that simple formula, chances are you won’t have much in the way of money problems. Furthermore, that same formula is going to do something that most of us can’t do well: save money and have an emergency fund.

The Catch 22 of the emergency fund links with running up high balances on credit cards. Something major happens, and you use the credit card or borrow money because you don’t have any saved. The reason you don’t have any saved is because you either don’t have a plan or you have one and don’t follow it.

Saving and managing money is difficult because we make it that way, mostly due to a need to satiate our wants and forget about our needs as being part of that aforementioned plan.

Those “wants,” things we convince ourselves we need and then spend money we don’t have on them translates into elements of money mismanagement that is highly avoidable.

First and foremost, you are taking those wants and turning them into credit card debt, running up balances on high interest cards and thus never truly getting out of debt. The more alarming fact beyond the average of $20,000 owed per household of unsecured (credit card) debt is that most of it can’t be related back to a specific, tangible item but rather things like taking a vacation or worse yet paying bills with credit cards or using an advance to put a down payment on a car.

Money also becomes difficult when you don’t understand the value of what you buy, and when you should spend wisely, underspend and, at times, spend a little more based on quality.

Buying a car that is brand new is overspending when a used one is going to have a lower payment and still plenty of repair free miles on it. You shouldn’t skimp on certain things, but those are few and far between, such as investing in your 401K as much as you can (overspending, in some ways).

Smart money managers also know how not to lose money on things they don’t need, such as overpriced utilities like cable television, warranties on almost all products or spending too much on insurance for your car or losing hundreds of dollars of year on bank fees.

Saving money is never going to be universally considered

Spending Flee: Why saving money starts with skipping extraneous spending

Experts debate back and forth the main reason why the majority of individuals can’t save money and still somehow manage to rack up thousands and thousands of dollars in borrowed money, specifically credit card debt to the tune of $16,000 on average per household.

And plenty of shortcomings come to the forefront, such as the lack of a budget or trying to convince yourself that you don’t make enough money as the reason you’re not able to save.

The last point is one that has quite the ripple affect when you consider that income shouldn’t dictate a lack of savings if you, of course, budget properly and don’t do one thing that continues to plague those who are trying to set aside an emergency fund.

Spending money on things you don’t need.

The “want” versus “need” debate is one that runs roughshod over most people since the black and white discussion that it should be is mired in shades of gray. Not knowing the difference or, for that matter, not paying attention to those same difference is why we simply can’t save money. Buying what we don’t need and doing so in droves is sabotaging our savings accounts, or lack thereof.

Your best option to avoid impulse buying of products or services is to truly think long and hard about what you’re actually buying and determine if you really need it. And while you argue that you already do that, you might want to revisit that subject.

The 24 hour rule is the most proven method: you consider the purchase, and decide at the moment not to buy then determine after that time span if you still want or need it after you’ve given yourself time to think it over. Most of the time, you end up not going back to claim what would eventually be described as something you truly don’t need.

Questioning the purchase is paramount.

And of course having a budget is key, but have you ever considered writing down how much you spend. One of the drawbacks of the convenience that are credit cards is that they don’t really allow you to see at the moment what you’re spending. Sure, the receipt can do that, too, but in the span of a week, write down everything you spend money on, the old fashioned way with pen and paper and tally up the total. That figure might be enough to deter you or at least give the buy a second thought.

Saving money starts with planning and part of that is making sure you’re not spending frivolously and without thought of the much bigger financial picture.

Alarm Clocked: How to get out of debt and being yet another statistic

The statistics regarding debt range anywhere from shocking to sad and everything else in between.

Then again, do we have anyone else to blame but ourselves for the mess we’re in?

Sure, you can argue that the cost of living hasn’t improved, food costs are high and everything else we spend money on has inflated and yet salaries have been stagnant, at best.

While all of that is true, you still should be alarmed about $15,000 (the average amount of debt per person), and $50,000 (the average amount of school debt per household). Those two numbers alone suggest that you are about $65,000 in debt on unsecured items, things that aren’t cars or homes that you can’t trace back to at a moment’s notice.

But despite the numbers being less than enviable, you don’t have to become another statistics, as cliche as that sounds. The truth is getting out of debt is more about changing your perception on how you look at money, learning to budget properly, live without for a little while and simply pay closer attention to income versus expenses.

The irony about those numbers is that while they’re discouraging, they don’t have to define how you are with money. They can be there, but yet still be accounted for and subsequently handed just by your day to day decision making.

For example, if you have $15,000 in debt, your game plan should be two things: patience and persistency. You should start with debt that has the highest interest rate and then pay it off more so than the others. You also can consider consolidation but only in order to shorten the time you pay on the loan or lower the interest rate by combining higher ones per line of credit.

Debt is something you just don’t pay and then forget about, but rather you should be constantly thinking about, pondering or wondering how you can be better at it, starting with stopping the use of credit cards altogether. Whether your rip them up, shred them or freeze them, you have to remind yourself that you days of charging are done.

And the argument that income isn’t keeping up with cost of living, well that is partially true. While the cost of goods rises each year, and your income might not keep pace, that simply means the onus falls on you to change how you budget. The truth is your income might not be keeping up with your wants more than anything else but admitting that can be tough.

Debt is what it is: you owe someone else money. But paying off your debt can be viewed as business as usual and as a means to an end. Those who see it as crushing numbers and all hope lost won’t have much luck whatsoever in paying it off completely.

Savings Can: How saving starts with below means mentality

Do you know how much the average person has in their savings account?

The statistics look bad. No, let’s just say they’re terrible.

The answer to that question is startling and stunning: about 40 percent have no savings account whatsoever. About 80 percent have about a thousand dollars or less.

So that begs the question: where is all of our money?
Look around your house, your driveway and you might get your answer. Living beyond what your means or even just at your means tends to lead to the biggest reason why we don’t save money.

We’re simply too busy spending it to think of that.

And then, you have the kind of success stories that you marvel at, the ones that are written in big bold headlines that leave you thinking “why can’t that be me?” when you hear about a couple that buys a $150,000 house with cash or a 25 year old that has managed to work a modestly paying job and save a half a million dollars and set to retire by the time he reaches 35, at the latest.

How exactly are all of these things possible?
There really is no magic theory in regard to what makes money tick for these people and why they’re so far removed from the aforementioned statistic about money saved, or lack thereof.

They simply live below their means.

Just because you make $70,000 per year doesn’t mean you should spend $80,000 on your expenses or even butt up against that 70K mark. The truth is those who have money saved and don’t worry about money are able to save it because they’ll take a $70,000 year paying job and live off $30,000 of it quite comfortably because they make decisions that allow them to work, have a car, house and other amenities but focusing primarily on having money leftover as the most important piece to that puzzle.

How do they do it?

Simple. They don’t buy used or pay full price. They’ll take a $15,000 vehicle instead of buying a new one for $40,000. They are approved for a home at $250,000 and instead buy one for a third of that price and have a mortgage that allows them to do two things: have money leftover and add to the home through renovations with money that comes out of their own pocket versus expensive loans.

For most, we equate spending to happiness and that just isn’t the case. Those types of purchases, services or items that you don’t need don’t create the kind of smile you’d have it you went without those and instead had the peace of mind that your money is exactly where you want it to be: saved.