The current economic condition of the nation has tightened the purse threads and has put people on the path of frugal living. Hardening credit conditions and increasing interest rates have driven people to scrutinize their personal budget plans and reorganize their expenses to suit their income a little more efficiently. Although you may think that you have done the best job you can as far as preparing your personal budget plan is concerned, there are still loopholes and pitfalls with every plan which subtly unsettles all your money saving tactics. Most people are not aware of these financial sinkholes till they have spent a substantial sum of money unknowingly. Here is a list of such loopholes that you need to cover in order to fine tune your budget.

•    Decrease federal income tax withholdings – Maintaining a large federal income tax withholding means that you are looking for a fat tax rebate check. The idea might sound good on paper but in reality you are just giving away an interest free loan to the IRS. It doesn’t really make much financial sense. Pay your taxes proportionately and readjust the amount that is directly withheld from your paycheck. You should consult the HR department of your employer to make sure the filings and adjustments are performed correctly.

•    Readjust your auto and home insurance deductible – The moment you purchase an insurance policy and skip over the finer details, certain items like the deductible remains set at the default rate. The deductible is the amount that you will have to pay out of your own pocket once you make a claim and the difference between the balance and the total amount is paid by your insurance company. The lower the deductible, the more you will have to pay towards your monthly insurance premium. Set your deductible high and you will save money in the long run.

•    Avoid unnecessary transaction charges – Pay your own bills by yourself. Take the time to sit down, go through the bills and draw a check for each creditor instead of opting for electronic clearance or ACH. Your creditors will charge you extra for this little perk and at the end of the month you will have paid somewhere around $100 just on bank charges. Moreover, you will also rack up transaction charges for using an ATM to withdraw cash. The usual charge is around $1 to $3 per transaction. The best way to avoid this is by picking up sufficiently large chunks of money when you make your weekly visit to the bank. You can also write checks for an amount greater than your grocery and miscellaneous bills and have the balance returned to you at the checkout in cash.

•    Differentiate and organize your ‘needs’ and your ‘wants’ – Most people fail to recognize and differentiate between essentials and luxuries. Modern day consumerism is also partly to blame for the current condition wherein people spend more on cable TV than on food. Moreover, brand awareness has driven people to blindly believe in labels without even considering the fact that unbranded cheaper goods can be just as good as their branded and more expensive counterparts. The idea is to base you spending on what you need rather than on what you buy.

Locating and rotting out these financial ‘black holes’ from your personal budget will not only better your cash flow but also contribute towards your savings. The best idea is to review your finances from time to time and keep an eye open for expenditures which look heftier than they should be.

Check out the 5 financial tips for the 4th week of April 2012.

Tip no 1 – If you have settled a debt for less than the actual amount owed, remember to include a 1099c form when you file your taxes.

This tip will come useful whenever you settle your debts with the creditors/collection agency. In debt settlement, you’re able to come out of the debt ditch by paying less than the outstanding balance. For example: you debt amount is $20,000. You settle the debt at $10,000. This means you are saving $10,000. IRS will impose tax on this $10,000. Your creditors will send you a 1099C form before the tax season kick starts. Just fill out the form and when you file your income taxes. Be a responsible citizen of the country. Read the rest of this entry »

Weddings are one of the major events in a person’s life and as such people have grand plans for it. The problem is, the dream wedding might leave you deep in debt or at least put a very tight squeeze on your bank account. The statistics directly support the fact that weddings are one of the costliest affairs that you are likely to conduct over the course of your life. The average wedding budget has gone up from $15,208 in 1990 to $27,000 as of 2012. In the last couple of decades, the cost of conducting a wedding has gone up by 80% and is one of the major reasons why fewer people are opting for a social wedding these days.

The figures might be intimidating but your dream wedding doesn’t have to cost the Earth. All you need to do is prepare and be ready to make some smart financial moves to curb your costs and micromanage your expenditures. Your dream wedding is only a few steps from being a reality. Here are a few necessary things you must do to keep yourself from being buried under a mountain of bills.

• Set realistic expectations – You would primarily need to strike a balance between your ideas and the financial feasibility of executing them. Pursuing the dream of a perfect ‘white wedding’ can leave you broke. You need to differentiate between what is possible and what is excessively costly. The ice sculpture may seem to the perfect centrepiece for the reception area and the buffet table but it is simply too extravagant to be practical. Make a list of the things you want for your wedding and the things you need. Review the list and prioritize the items according to your budget.

• Build an itemized budget – The key element of successful financial planning for any purpose, be it a wedding or a house party, is building an itemized budget. You will need to assign a portion of your total funds to cover various necessary costs like décor, dresses, transportation, entertainment, food and drinks, etc. This will help your confine your costs within your spending capacity. If you plan on budgeting on the go, you will find the list and total cost keeps growing till you are over-budget by a significant amount.

• Work according to a check-list – Each and every wedding requires a ton of different things and as such most people lose track of what they need to do. A check-list would help you organize all the nitty gritty details of a wedding and prioritize them. A check-list will help you keep a track of the tasks you have delegated to various people, the payments that you would need to make to the vendors and caterers and also a list of invitees.

• Rent what you require – Everything, right from the lights and sound equipment for the wedding band to the carpeting and the silverware can be hired at affordable rates. Tuxedos and dresses can also be rented for the bridesmaid and the best man. Paper flowers, centrepieces and other decorative items can also be hired at fractional rates as compared to the cost of buying them. Moreover, you won’t have to pay to have everything sorted, cleared, moved and stored after the wedding is over.

Take your time to arrange your finances and take a long hard look at every item of expenditure before you decide to spend on them. Everything needs to be prioritized according to your budget and you must remember that extravagance needs to be replaced with financial prudence if you want to have that dream wedding hampering your financial security.

Check out the 5 financial tips for the 3rd week of April 2012.

Tip no 1 – Look before you leap into the trap of insurance scammers.

The demand for the insurance policies has increased a lot in the past few years. Everyone wants to protect his home, vehicle, health and life against various accidents through insurance policies. When you’re going to purchase an insurance policy, make sure you conduct a background check of the insurer. Find out if the insurer has the license to operate in your state. Check the insurer’s track record with BBB. If you don’t get proper information from the BBB, then you can contact state’s Department of Insurance. They can give you proper information about the insurer. Don’t fall into the trap of insurance scammers. Stay educated and protect your money. Read the rest of this entry »

Check out the 5 financial tips for the 2nd week of April 2012.

Tip no 1 – It’s high time you refinance your mortgages as the rates are still record low.

It seems that the housing market has not yet recovered from the after effects of sub-prime mortgage crisis. The mortgage rates are still very low. In fact, the interest rate on a 30 year fixed-rate mortgage is 3.92%. The rate on the 15 year fixed rate mortgage is 3.15%. So, if you’re paying 5% interest rate on your current mortgage, then you can easily refinance it with a new loan. This will enable you to save nearly1.08% on the interest. Start looking for a prospective lender and refinance your mortgage as soon as possible. Read the rest of this entry »