Where does all the money go?
A friend recently asked me to look over her finances to help her figure out why she and her husband can't seem to live within their income. Because my friend is what most people in Utah would consider high income, I was intrigued. It took about five minutes to figure out the major problems for this family - the same problems that debt counselors say puts many Utah families at risk for financial disaster.
- My friend and her husband eat out a lot. They grab coffee on the go in the morning, the eat out at lunch and frequently eat out at dinner, without coupons. Frequent eating out can eat up a family's income. Set a monthly limit for restaurant meals and trips to Starbucks and stick with it. Keep an eye out for coupons that help stretch that budget.
- They each owe about $500 per month in car payments on their vehicles - that's $1,000 a month. Like many families, they automatically trade up to newer cars every couple of years and can't remember a time when they haven't had a car payment. Their loan balances exceed what their vehicles are worth. One of the keys to getting ahead financially is to get to a point where your vehicle is paid off. Too many families trade up to a newer car too soon and are forced to roll their old car payment into their new one. Think twice about buying that new car, especially if you owe more than your vehicle is worth.
- They carry credit card balances and pay only the minimum monthly payment. Ouch. You pay dearly on those credit card balances at double-digit interest rates.
After reviewing their expenses, I discovered if they cut back a lot of the luxuries - big and small -that they enjoy each month - new clothes, expensive gadgets, toys and restaurant food - they would stop spending more than their income and maybe even start saving some money.
Even if you're feeling overwhelmed with the idea of trying to improve your financial situation, try to start small. Every little bit helps. Try to make it fun. A lot of families succeed when they make saving a money a challenge!
- My friend and her husband eat out a lot. They grab coffee on the go in the morning, the eat out at lunch and frequently eat out at dinner, without coupons. Frequent eating out can eat up a family's income. Set a monthly limit for restaurant meals and trips to Starbucks and stick with it. Keep an eye out for coupons that help stretch that budget.
- They each owe about $500 per month in car payments on their vehicles - that's $1,000 a month. Like many families, they automatically trade up to newer cars every couple of years and can't remember a time when they haven't had a car payment. Their loan balances exceed what their vehicles are worth. One of the keys to getting ahead financially is to get to a point where your vehicle is paid off. Too many families trade up to a newer car too soon and are forced to roll their old car payment into their new one. Think twice about buying that new car, especially if you owe more than your vehicle is worth.
- They carry credit card balances and pay only the minimum monthly payment. Ouch. You pay dearly on those credit card balances at double-digit interest rates.
After reviewing their expenses, I discovered if they cut back a lot of the luxuries - big and small -that they enjoy each month - new clothes, expensive gadgets, toys and restaurant food - they would stop spending more than their income and maybe even start saving some money.
Even if you're feeling overwhelmed with the idea of trying to improve your financial situation, try to start small. Every little bit helps. Try to make it fun. A lot of families succeed when they make saving a money a challenge!
posted by Lesley Mitchell @ 7:00 AM |
3 Comments:
Dear editors, if you could replace the Crawler dude's box on the homepage with this colmun everyday, you would be doing the entire community a service.
This great adivce and helpful to people.
/agreed.
This was far more helpful and productive than reading Glen's colummn. Let's keep this one around!
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