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Thursday, February 20, 2014

Budgeting and Saving Money Without Suffering

Ask anyone with an ounce of sincerity and they will tell you the economy is in terrible shape.

Unemployment is still abnormally high with the 'official' 6.6% being as BS a figure as a government agency could conjure out of thin air..

Housing has not recovered in spite of all the lies the National Association of Realtors spews..

People are borrowing more money than ever before to survive -- Household debt increased 2.1%, or $241 billion, to $11.52 trillion, the biggest gain since the third quarter of 2007 and student loan debt is now at $1.08 Trillion
As a comparison, total credit card debt as of the same period was “only” $683 billion. At this rate, total student loans will be double the size of all credit card debt within 2-3 years.

Then add the fact the amount of heavily delinquent student loans has just hit a fresh record high of $124.3 billion, up from $121.5 billion in the prior quarter..

And well..  Things are not too rosy..

Now there's not too much we as individuals can do on a national level to fix these problems but we do possess the ability to control what we each spend and balance our checkbooks to make sure our monthly budgets aren't in the red..

The key is to really pay attention to what you're spending and for what, and ask 'Do I really need this as an essential or even a luxury?'

Here's a true example...

Yours truly was speaking with a family member last evening and the topic eventually went to cell phones and how peeved she was to keep paying out $48 monthly counting tax for a cell phone she didn't use all to often..

Yearly she was spending $576 just to have a phone with 450 daytime minutes, 5k weekend and meaningless rollover minutes that she never used..
So I asked how many cell minutes a month she used on her last billing statement?

She responded '45 minutes'

My eyes widened in disbelief..

I then directed her to go with a pay as you go phone instead and explained if she spent $100 on a competitor's plan, it would give 1000 anytime minutes with no contract and based on how few minutes she used, she'd still have 460 minutes by the next top off period.
She'd also be saving $476 on the first year alone..

That's a lot of money to be tossing away for nothing..  And all because she didn't realize there were other less expensive options out there based on her needs

Here's another example..

There was a time yours truly had cable TV and when adding up the local channels, the basic cable, the HBO and Cinemax package, the cable boxes, the HDTV package and all the other bells and whistles, I was spending $120/month
$120 x 12 months = $1,440 on television..

That was crazy!    And when factoring in I really only watched 4-5 channels with any consistency and maybe 2 hrs a day at most, paying that much was simply insane!

So one day a little over two years ago yours truly went cold turkey..  Called the cable company and cancelled everything, then purchased a digital HD antenna for my HDTV to get all the local channels in clear HD quality ($29.99 for the antenna)

And do I miss it?  Nope..

If I want movies, I go to the library.. rent for free... Or go to my local RedBox and rent for $1.20 daily...  Or subscribe to Netflix..

Currently I get free movies and TV shows from Amazon Prime which I joined for $79 mostly for the free shipping but as a bonus, if I really want to see 'Justified', 'Breaking Bad', 'Downton Abbey' or 'Duck Dynasty,' its there.. for free

And no commercials..

Now most can't do that.. just go cold turkey with cable like that..  But look at your bill and ask yourself are you watching what you're paying for and if you're spending say $75 a month, are you getting $75 of happiness?
Money is a precious commodity even when talking in terms of dollars and cents saved versus spent..

There are so many ways to save $$ here and there...

For instance, lets say a person gets their hair trimmed every 4 weeks at $20 counting tip that comes out annually to $260

Now if that same person waited just one more week between trims, over a course of 52 weeks, that person will be making 11 visits to the salon vs 13 and the savings equals $40...

$40 in the pocket annually for doing absolutely nothing but letting one's hair grow an extra 7 days between cuts!

Another example is eating out..

Let's say every weekend its a ritual that you and your special someone go out to dinner at a nice Olive Garden/Red Lobster type restaurant and both make the conscious choice to drink water with their your instead of the $2.95 soda..

Annually that little inconsequential action becomes a savings of approximately $312.
It feels good to save money especially when it requires really no sacrifice on your part...

You work hard for what you have so why toss any of it away needlessly?

Right now this nation is in a bad bind.. Our debts are increasing and our debtors are selling Treasuries as fast as they can.

Lately, do you know who are biggest foreign buyer of US debt has been?
The 'mighty' and 'powerful' nation of Belgium which is really a cover for the EU as sort of a quid pro quo for our Fed Reserve giving them three quarters of a trillion dollars last year to keep their banks afloat..

Its all a game.. like with the shells or like 3 card monty

And the only reason we haven't felt true pain as individuals is the interest rates are being kept artificially low as long as the Fed and Treasury can..

Right now In January 2014, according to the Treasury, the U.S. paid an average interest rate of only 1.998% on its marketable debt.
In January 2009, when Obama took office, the Treasury was paying an average interest rate of 3.116%; and, in January 2001, when President George W. Bush took office, the Treasury was paying an average interest rate of 6.620%.

That's how much the Fed has crushed interest (destroying savers in the process)..

The average interest rate on the U.S. government’s marketable debt is currently less than a third of what it was in 2001—when the U.S. had only $2,977,328,000,000 in marketable debt, or about 25% of the marketable debt it has now.

And so its important you begin to take stock of your fiscal situation.

See where you can cut and where you can save because when the interest rates can't be artificially smushed any more, you're going to need those saved pennies and dollars...