A budget is the ideal way to free up resources so that they can be properly channeled into long term goals, and without a budget our finances would be like a rudderless ship floating in the ocean of life never reaching any port or destination.
Taking that New Year’s resolution appeared so easy, and now walking the talk has become so hard. But we feel that way purely because we are putting shackles on the insatiable urge to spend our money any way we like. It’s important to understand that personal finances can’t be organized without designing a good budget.
This is what you need to do to live your budget and dream the impossible:
Motivate yourself to set the right goals: It’s not easy to design a budget that you will stick to; you need motivation and a good dose of discipline. And more important, the goal can’t be too unrealistic or your rocket may never take off. But things become much brighter if you plan to reward yourself for sticking to budgetary discipline and realizing your goals. Whatever the nature or size of your goal – it could be a planned long overdue vacation to Hawaii or mustering money for your daughter’s college education – you have a better chance of succeeding if you can break the aggregate planned expenditure into smaller monthly amounts which make the goal look achievable.
Take a detailed inventory of every single expense that you handle: You have it all figured out what you pay as rent, taxes, mortgage, insurance and utilities every month, but when it comes to what goes out of your pocket when you drive, commute, shop and dine outdoors, suddenly things become fuzzier. If you were to list all those expenses you would be shocked to realize that there is a huge grey area of unaccounted (and uncontrolled) expenditure that has a big impact on your budget.
If accounting isn’t your strong point there is no need to despair – try the income and expenses accounting software on sites like Mint.com. Feed every income and expenses related figure that comes your way to maintain better control over your budget. The benefit of expense tracking is that nothing goes amiss and nothing is neglected to be incorporated in your monthly budget. Once you have a good idea about expenses you can frame a more realistic budget that fits in with your achievable goals.
You could save yourselves a great deal of heart ache and headache if you take care to devise an emergency savings account parallel to your budgeting effort. This takes care of everything that comes unannounced.
Building room to maneuver when expenses threaten to overturn the budget: Overspending is the arch enemy of the budgeting process because it strains existing resources and puts future planning in jeopardy. You may have the option of dipping into your emergency savings but that isn’t a healthy practice because you’ll be retarding you ability to handle emergencies. The best way to subdue or control the overspending urge is to accumulate enough savings to act as a buffer to take care of sudden spending “urges”. At the same time don’t hesitate to reward yourself when you get a raise or extra money comes your way that can be diverted to savings. After all, a budget is not meant to keep you stuck in mediocrity or poverty; it’s the means to a brighter future.
Commit to succeed, don’t plan to fail: any budgetary process can hope to succeed only if we allow ourselves to change with each situation. Carry out regular analyses of budgetary performance and budgeted goals to see for yourself where you are failing and how you are succeeding. This kind of periodical review is the life breath of any planning tool that you would use to strengthen personal finances. If for instance you show a weakness for your daily latte at an expensive café, try doing away with that expensive hobby and substituting the habit with a healthier beverage (green tea) or fruit juice till your budget balances out. If commuting by yourself is chewing a chunk out of your expenses try car pooling for a period. By changing our attitudes and by rectifying deviant spending patterns we breathe life into our budgets and stay on track to achieve our goals.
Most people must have experienced this difficulty – it is much easier to locate the ideal airline and the flight that closely follows your time schedule, but just try booking that flight and travel sites simply lead you up the garden path. You find yourself wasting ample time browsing innumerable web pages finishing the formalities for booking tickets without getting anywhere near your goal the funny thing is that you may end up spending a lot more money on non-essentials and so called freebies before you get to click the book-here icon. Ultimately, a flight booking becomes much more costly than what the airline or agency had advertised.
A case in point is baggage fees, the amount you pay for checking in your bags at airline counters. Unlike yesteryears people are travelling more and have been molly coddled with frequent flyer statuses and special privilege airline cards and travellers have learned fast how to circumvent baggage airline fees. This created a huge revenue loss to airlines and they promptly responded by charging for various miscellaneous services.
If you examine the matter closely you will realize that carry-on baggage fees, phone in for reservation fees, priority-boarding category fees, priority check in status fees, and change of reservation or cancellation fees are among a host of other charges that are gently chipping away at your budget. Even blankets and pillows and food and beverages have not been spared and seemingly innocuous service charges have been incorporated to inflate the final bill. Credit cards have the universal “convenience” charges incorporated in payments.
While it may not be practical to avoid all these extra charges it will help you to book tickets that are cheaper even after including these charges. These are some of the viable money saving techniques adopted by seasoned flyers:
Is low fare booking what you visite site are looking for? — Ultimately it is up to each individual traveller whether he prefers low cost air travel without the frills or he desires a more comfortable travelling ambiance with some perks thrown in which makes the package more expensive in the final analysis. There are airlines that include everything in the listed price or which present options that you can check or ignore, and that is a great way of knowing and controlling the cost that you bear. But for all other airlines you have to make it a point to enquire and understand the full scope of airline charges before you venture to book your seat.
Make your packing as compact as possible — For the purpose of bypassing check in baggage charges people generally tend to pack the whole world into their cabin baggage seriously inconveniencing everybody and themselves. The smarter solution would be to package and ship bulky items cheaply to their destination well before you arrive, and hotels will be glad to hold your baggage for you on a confirmed room booking. Again, when it comes to packing try rolling up instead of folding clothes flat, pick and choose fewer clothes that mix and match better, pack smaller objects within larger containers and try to extract every inch of space from the baggage to avoid overflow.
Picking and choosing your seat without having to dole out extra cash — you may not know this but most airlines follow a definitive boarding policy and it pays to smartly find out what that policy is. The airline decides whether to fill seats from rear end forwards or maybe window seats first, then middle followed by aisle seats, or perhaps some other combination. The smarter option is to understand the policy and choose seats accordingly. It also pays to avoid checking in straightaway at the airport and instead to book your ticket online methods as online customers mostly get preference in seat allocation. There are several useful sites that can guide you in boarding procedures.
Airline credit cards can save you a ton of money if you travel frequently — if you use a particular airline for frequent travel it is safer to opt for a cobranded card that allows you facilities like priority in boarding, elevation to elite class, free check in for baggage and other conveniences connected to the hotels and restaurants partnered to that airline. You will make savings that are substantial considering the frequency of travelling and consistency of your final destination and choice of hotels. There are other cards that help you redeem cash and transfer points or miles.
Ultimately, making savings in airline fees is an art that requires a keen eye and ear for detail and the ability to comb the internet (wasting some time initially) for the best options that your money can buy.
You would be thinking OMG tax year is behind us, so why this article on taxes, but the reality is that you would be better prepared for filing your taxes this year if you started early and this is a good time to begin. So here goes!
Don’t get euphoric over tax refunds; curb payments instead
Getting a tax refund may be a joyous and welcome event but just think for a moment – “am I not getting back the money that I had no business parting with in the first place?” If your refund averages around $2,550 that’s a kind of heavy overpayment don’t you think?
Uncle Sam obliges you to pay your taxes, period, but he does not insist that you pay him a cent more than what is due. The better approach would be to take a copy of your latest tax return and use a pencil to key in the figures as they can be roughly estimated for the current year. Use the IRS Withholding calculator software and run your numbers through that to get a clearer picture of what you owe the government and pay only that amount.
Look at the overall withholding for the previous year and calculate whether your withholding amount is correctly calculated; you might be overpaying. In that case ask the HR guys to reduce the withholding this year. Repeat the same process with your state taxes.
If you get a windfall payment use it to boost retirement savings
Don’t rush to the nearest mall after landing your refund; plough that amount into a retirement savings plan like the 401k or IRA where you get tax benefits.
If you are employed you there are 401k and Roth IRA plans, the difference between the schemes being the way taxes are treated. Remember that in the traditional plan you are deferring taxation till after retirement by accumulating tax advantaged savings today. The Roth IRA is just the opposite – you agree to pay necessary taxes today while you build the fund and take away tax free withdrawals when you retire. Basically, people that are high income earners will opt for traditional plans that allow them to postpone paying their taxes in the present so that more money is available for current expenses.
Pumping money into healthcare plans
Combining a health insurance plan and a health savings account (HSA)
This is a viable option; the insurance plan you select should have low premiums but high deductibles and then you can use the HSA to save funds for meeting those deductibles and miscellaneous expenses. Remember that the HSA is beneficial as it brings down taxable income.
Using a Flexible Spending Account (FSA)
The FSA gives the same tax benefits as the HSA but there are restrictions like maximum annual contribution of $2,500 and only $500 being allowed be carried over, so one has to estimate in advance the amount that you need for healthcare treatment (a bit tricky no doubt).
Consider buying a house
It’s a no brainer that renting is a stress free option for Americans but buying a house brings the twin benefits of asset accretion and tax savings. Remember that for homes mortgage interest and property taxes are both deductible. Grab a copy of your IRS Schedule “A” sheet and do the calculations to find out whether your cash flow is impacted unfavourably compared to renting. This will help you decide whether it is more affordable to rent a home or to buy one.
An emergency fund is useful webblog for meeting retirement blues
Retirement will be full of anticipate and unexpected expenses. Stop thinking of your retirement fund as the emergency fund in your life; you need another fund that will stand by you when things get messy. Early withdrawals from retirement plans that violate rules will result in the imposition of stiff penalties. At that moment when you grab retirement money unthinkingly for urgent needs the situation could become financially tricky unless you have back up funds to push you through.
Grab the 529 plan to save taxes on education savings
If you are aiming to push your child through college you can’t do without a 529 plan. In some states they allow you to take deductions on your education oriented savings and a few others offer tax credits.
As you may have surmised there are myriad ways in which an intelligent and conscientious person can promote savings and secure his future while managing his taxes brilliantly. From now on, whatever you do you will be reassured knowing you have made an informed choice.
Firstly, let us see how Business Auto Tax works
You’re liable as it’s classed as a Gain In Kind to pay tax, if you drive a Business Auto.
The rules are somewhat distinct if the only private use is always to go between residence and work because you shouldn’t be responsible for tax, if you drive an organization van.
How much Firm Auto Tax will you need to pay?
There are numerous stuff that influence how much Firm Auto Tax you pay. Moreover, you use some of it for private journey and if your company gives you fuel, you’ll additionally be responsible for Gain In Type tax on this particular Automobile Fuel Advantage.
Additional Info on Benefit & Business Auto Tax In Kind
To allow you to work out how much Automobile Fuel and Firm Auto Tax Tax you must pay, why not check out the ‘Business Auto Tax Calculator’ supplied by Customs & HM Revenue. Additionally, there’s an Authorities web site all about ‘Business Automobiles’ which supplies guidance and valuable tips for companies and both workers. It describes the rules about National and Tax Insurance regarding business automobile fuel and Business Automobiles. If you are considering finding out how you might be affected by future changes, take a peek at the Authorities’s ‘Upcoming Changes To Automobile Gain’ website.
Naturally, there’s an easy method to prevent paying Firm Auto Tax wholly, and it is not prohibited! If your company offers you the option of having either a Business Auto or a Business Auto Allowance, you could select the cash option, rent or buy your own vehicle, and maintain a sum back out of your company for company mileage (now at an Authorities establish speed of 40p per mile). You might like to take a look at the sister post to this one, called ‘Business Auto Or Business Auto Allowance – Which Should I Select?’, which describes disadvantages and the gains of each choice.
Dealers use the lure of lower-monthly payments to entice customers to sign for long term loans, with provisions stretching for five years or more, making the payments even lower. You will find substantial repair prices: higher mpg, transcending the recommended limit, and two grabs with such long contracts.
With guarantees just covering three years, and leases billing on average 10 to 20 cents a mile for any additional mile over the agreed sum in the contract, you leave yourself wear and wide open for substantial prices for excessive mileage and tear.
Fool 2: Inexpensive 2-3% APR rate in your lease
The dealer isn’t quoting the interest rate you’ll be paying in your lease; he is preferably providing you with the lease cash variable. Significant in discovering your payment and whilst similar to an interest rate, a more precise rate is computed by multiplying the cash variable by 24. For example a “inexpensive” 3% cash variable is 24 X 0.003 = 7.2%. This offers you an improved awareness of what your yearly interest rate in your lease contract is.
Trick 3: Worry-free early lease conclusion
Vendors understand consumer driving needs change before their lease finishes, and they might like to have the choice of getting from a lease obligation sometime down the road. Truth of the issue is, you’re essentially saddled with monthly payments for the rest of the lease period and there’s little-option of getting out early, when you sign for a lease. Lease contracts carry substantial monetary fees for either defaulting on monthly payments or terminating the lease before compared to the scheduled period.
To prevent being on the receiving end of such tried and true antics, train yourself about rending. Get down to the nitty gritty and comprehend what the rending terms used by dealers mean. Crunch the amounts along with him and comprehend how they arrived at the payment amount. Do Not sign anything until you have comprehended your amounts and all the terms substantially those of the dealer. Don’t allow the dealer force you into signing; you’re the one to discover whether the understanding is best for you.