With all the recent articles and blogs promoting online money management services, I ask the question; is it necessary to track your spending continuously? My answer is no; however, many will disagree.
Money management in my mind is parallel to diet & fitness. When dieting, one could sit down with their food diary and write down every morsel of food they consumed. As well, calculate their daily caloric in take, but that may require a substantial amount of time. Furthermore, the efforts attributed to tracking their diet to date may take away from focusing on their goals today.
There are only so many hours in the day, how can it be utilized effectively?
Home equity loans are aggressively advertised all over, all the time. Lending companies empower homeowners to believe they are sitting in their own personal bank vault where they can draw money from at any time. However, there doesn't seem to be enough useful information readily available, for individuals considering a home equity loan, to review before they sign.
There are several factors to consider when applying for a Home Equity Loan, but if the amount borrowed is not going to generate a rate of return greater than the cost of borrowing then you should not get a Home Equity Loan.
How do you know if a Home Equity Loan is right for you?
In Part 1 I wrote, if you were presented with an opportunity to have a blank check handed to you, to cover your financial needs for the rest of your life, would you know the amount to write on that check?
It is an interesting question because it helps greatly in the planning process to assess what is truly needed for an individual(s) to be satisfied for the rest of their life. If they knew what their number was, they would know how much they would need to save, invest, generate, or even gamble (for those who believe in the lottery). As well, this also assumes that the individual is pleased with their current lifestyle and would not require much more than what they have.
I recommend the budget templates in the Free Spreadsheet Tools page if you have not been able to calculate your monthly income needs. After multiply by 12 (amount needed per year) and the number of years you expect to live (to ensure you do not run out of money calculate your life expectancy to the age of 90).
If you were offered a blank check would you know what your number is?
The only stipulation would be that you can not write an amount that is greater than your current needs. If you had to write an amount that would represent your financial needs for the rest of your life would you know what that number is?
If you are unable to answer this question, it is time to seriously consider creating a budget or revisiting a previous budget plan. At Adviser Assistant we have the tools to help you create a plan with our Free Spreadsheet Tools and interactive products in our new storefront Spreadsheet Deli.
We welcome suggestions and comments to better our site to help our visitors make wise financial decisions.
Savings comes in many shapes and sizes; however, some people may not have the right steps in place to be successful with their savings plan. To truly optimize a savings plan one must eliminate their consumer debt before reaping the benefits of compound interest in their savings account(s).
What does debt have to do with savings?
Consumer debt on average carries a heavier interest rate than most savings accounts pay out. By allocating money to a savings account while carrying substantial consumer debt is counterproductive. Therefore, it is crucial to eliminate your consumer debt as soon as possible and reduce the risk of acquiring consumer debt in the future.
Not the most popular topic; however, the rewards of being proactive with your debt management can be lucrative. The debt calculator embedded below illustrates the long-term effects of consumer credit. The Adviser Assistant Debt Calculator allows a user to determine how long it will take to pay their debts on a set payment. Or the amount they will need to pay down their debt each month to reach their goals. It is available on the 'Free Spreadsheet Tools' page:
In today's world everything is fast paced, automated, and convenient. It should be no surprise to anyone why many people fall into consumer debt at alarming rates; furthermore, how many people end up with consumer debt, as well not know how and when they got there.
Anywhere you go, financing is readily available for all your consumer needs from purchasing a furnace down to buying movie tickets on a charge card. Lenders will usually give "gifts" for you just by signing up with their services. It is very easy to overlook ones current financial obligations when taking on additional debt.
How does an individual protect them self from falling into debt?
Rafael Reis, Director of Operations of Reis Financial Solutions Inc brings his numerous years of money management and management accounting experience to this site. In his personal life he loves to travel, and compete in extreme sports as well as train in amateur boxing.