Some people hear the word “budget,” and they already feel constrained.  But, a budget is not meant to hurt you; it’s meant to help.  A budget merely helps you stay organized.  Think of it like a closet organizer. Sure it takes some time to set up and get used to.  But once it’s there, you no longer have to stress about a lost pair of shoes.  Everything is in place and easy for you to access.  You’d be surprised as to what a relief it can be to know exactly where your money goes.  Here are a few tips to help you set up your budget.

Know Your Income

Whether you work a salary or hourly job, you should know exactly how much you’re pulling in on a monthly basis.  Once you record your income from all sources, you know how much you’re working with per month.

Fixed Expenses

You’re going to have a set of fixed expenses every month—mortgage/rent, car payments, insurance, etc. These are costs that you can automatically deduct from your gross income in order to know exactly how much you have for living expenses.

Variable Expenses

These tend to be your day-to-day expenses which, naturally, can vary from month to month.  Use a 30-day trial period to record every penny you spend on things outside of your fixed expenses.  This should include groceries, clothing, entertainment, etc.

Analyze and Prioritize

After your trial period, take a look at your spending habits.  Of course, you need to pay your fixed expenses to stay out of debt.  But, after that, see what variable expenses are needed and which ones aren’t.  You probably need to make a few trips to the grocery store, but maybe you don’t need to buy a $5 cup of coffee every morning.  The main thing is to organize.  Once you’re organized you’ll find yourself with more change in your pocket and less stress.

If there’s an upside to today’s uncertain economic climate, it’s the fact that the recession has forced Americans to take a long, hard look at their spending and saving habits.  We’re getting savvier about the perils of debt and overspending.  We’re looking for innovative ways to save money and stretch our budgets.  After years of impulsive living, we’re trying to get back to living within our means.

On the surface, the idea of living within your means sounds pretty simple.  And, on the surface, it is:  Don’t spend more money than you make.  End of story.  Simple, right?

Well . . . sort of.  Credit cards have given us the ability to spend way more than we actually bring home.  We’ve amassed piles of stuff we don’t need, and we’ve racked up hefty balances – and ruined our credit ratings – in the process.

Dismal stuff, to be sure.  But the good news is, you can get back to keeping the money you make, instead of feeding the coffers of Mr. MasterCard and Mrs. Visa.  Here are five things you can do today to kick-start your very own bailout plan.

Five Steps to a Cash-Only Lifestyle

Just a few generations ago, people used cash – and not much else.  They bought what they could afford, and they saved up for the things that they couldn’t afford.  Somehow, they managed just fine.  And so can you.

Step1.  Make the commitment. This sounds silly, but the first step to living on cash is to make a firm decision.  It shouldn’t be an impulse.  Think about it, consider what sorts of sacrifices you’ll have to make.  And don’t leave the family out of the decision:  Going cash-only can mean some significant lifestyle changes – especially if you’ve been living a bit beyond your means.  Talk to your spouse and make sure that you’re both ready.

Step 2:  Hide your credit cards. I’m serious.  Lock them away in your filing cabinet or safe, or put them in the back of your sock drawer or in an ice block in your freezer.  Put ‘em anywhere you want – except your wallet.  It’s a lot easier to say no to a purchase that involves leaving the store, driving home, fishing your plastic out of the shoebox in the back of your closet, getting back in the car, and driving back to the store.

I guarantee that, 99 percent of the time, that splurge won’t seem worth the extra work.

And one more thing:  don’t cancel your credit cards.  Part of your credit score is based (among many other things) on the amount of credit that’s available to you.  In some cases, closing your account – and thereby lowering your available credit line – can hurt your credit score instead of helping it.  As long as you’re not using your cards to rack up more debt, they won’t hurt you.

Step 3:  Set a budget. If it’s been a while since you’ve lived on a budget, here’s a quick-and-easy guide to getting started:

1. Add up your total monthly income – your pay and your spouse’s pay, plus any income from rental properties, side businesses, investments, etc.
2. Add up your monthly fixed expenses – rent or mortgage payments, car payments, bills, etc.
3. Deduct that amount from your monthly income.
4. Add up your variable expenses – things like groceries, gas, and entertainment.  Remember to leave enough room for emergencies – flat tires, vet bills, and broken plumbing.
5. Deduct that amount from your monthly income.
6. Divide the leftover cash, 60/40.
7. Put the larger chunk into savings, and leave the rest of it for “fun money.”

That’s it!  You may have to play with the numbers a little (and find ways to cut back on some of your variable expenses).  But if you stick to your budget, you won’t have any reason to use your credit cards.

Step 4:  Start saving. Seriously.  I can’t stress this enough.  Your budget (see Step 3) should include a pre-determined amount of money that you put into your savings account every month, without fail.  To make saving even easier, most banks offer some sort of automatic monthly transfer – you just tell the bank the date and the amount, and the money will move on its own.  Chances are, you won’ t notice it’s gone.

Step 5:  Go without. This may be a strange concept for folks who are used to the “buy now, pay later” mindset.  But learning to go without – or simply make do with what you have – will help you keep your finances in check.   Sure, it would be nice to have an ultra-modern kitchen, decked out in all the latest stainless-steel appliances and genuine granite countertops.  But if your white, circa-1995 refrigerator is humming away (and keeping things cold) like new, hang onto it.  Ditto for your countertops, your dishwasher, and your stove.

But if you absolutely must have that combination DVD player/flat screen TV/refrigerator/gaming system, save up for it first and pay cash.

Here’s to the new (cash-only) you!

However, if you are having a hard time deciding where to begin organizing and tracking your financial matters, try checking into a credit consulting agency. By consulting an agency you will be able to work with their debt experts and get help to figure out how you can consolidate your debt without a loan, and cut your monthly payments by twenty to fifty percent. These agencies like Debt Guru, can reduce your monthly interest rates and inevitably eliminate all of your debt.

There is no better time than the present to get rid of your debt and start getting your credit back on track! Get a free debt consultation quote today!

One of the best ways to get back on track to a good financial future is by going through a credit counseling program. Certified credit counseling experts will help you determine the best way to approach your financial situation and provide you the best options for managing your debt properly. You can fill out a free debt consultation quote form in minutes because no one wants to watch their bills grow larger each month. Improving your finances with DebtGuru will put you on the right track and keep you there.

Get a personal loan through credit unions

Credit unions may offer you a viable solution if you have good credit.  Unions typically can offer lower interest rates than banks.  Yet, it is necessary to make sure the union’s level of interest is not too high as compared to other options.  Even though their interest rates may be lower than those attached to your credit card, a credit union loan may have rates as high as 10% or more.

Take out a home equity loan

Home equity loans usually come with the benefit of lower interest rates.  In addition, home equity loans are tax deductible.  Many fixed-rate loans last for about fifteen years.  In addition to paying the principle and interest, those seeking such loans may also have to pay an origination fee; the cost for an appraisal; and, the cost of title insurance.

Get help from a credit counseling company

Debt consolidations can be sought through organized companies offering you immediate solutions along with a debt management plan, enabling you to stay on track with payments and allowing you to stay clear from debt in the future.  Search for available consolidated credit counseling agencies and see if you qualify for induction into their program.  In the most severe cases, such choices can help secure a person’s financial future, rather than continuously sinking into debt or having to declare bankruptcy.

Overdraft Fees

For most people, balancing a check book has become a lost art since the increased use of online banking.  However, a lot of times, transactions are held in a pending period for a day or two, and checks aren’t deducted until they’re cashed. So, what you may hope is a to-the-cent account statement, might not be entirely accurate.  And overdraft fees can be costly.  Bank of America for example, charges a $35 fee for each overdraft item over $5.  While they cap this fee at 10 purchases, that can still add up to a lot of money, causing more debt than you’re prepared to battle.

Security Breach

A debit card is kind of like a blank check.  If someone steals it, they have a direct link to your checking account.  And, unfortunately, if money is withdrawn from an outside source, you’ll typically be stuck with the tab.

Usage Fees

Certain stores and banks can charge fees when you use a card, but where you can really get hurt is at the ATM.  Using an ATM other than one from the bank your account is in can result in usage fees.  ATMs charge from 50 cents to $2.50 just to withdraw cash.  And, sometimes, the bank will charge you an additional fee, for using an outside ATM as well.

For practical reasons, carrying cash is your safest bet for knowing how much money you have.  However, everyone handles their finances differently.  Some people feel they can’t restrain their spending when they have cash readily accessible.  In that case, use whatever form of payment best suits you.  But, for those who use a debit card as if it’s cash, you’ll be much better off using the real thing.

-          Credit card companies prey on Americans because we often have a difficult time living in accord with our incomes or financial means.  Many people can benefit from following a budget.  Assess your total monthly income and then make a spreadsheet featuring your daily to weekly expenses.  You’ll easily see where and how you go over your limits.

-          Many people are attracted to credit cards because of the ‘get now, pay later’ mentality.  It is very easy to reward yourself with something you desire when toting a credit card with a healthy limit.  Debt management gurus urge consumers to use credit to buy items that do not depreciate in value.  Such examples are homes, real estate, businesses, etc.  In short, these items are making you money, so the purchase itself is helping you repay the debt used to buy it initially.

-          Do you really make a conscious decision to save?  Many people have the intentions of saving, but find in retrospect that they have not done a very good job.  One of the best debt management solutions is to build an emergency fund.  This can be about three to six months worth of wages.  Such a nest egg will ensure you have funds that can be leveraged in an emergency rather than credit cards or other debt-creating entities.

-          Know when to get help.  Some people wait a long time before seeking debt management solutions because they are ashamed, think they can handle it themselves, etc.  If you were sick wouldn’t you go to a doctor?  Most would say yes because the doctor is the professional.  Debt management should be no different; let people with experience and the knowledge to improve your situation help you get out of your current, financial bind.

Thinking about refinancing your home? Interest rates are dropping and people across the country are looking for ways to make the most of their money.  While refinancing can help put a little extra cash in your pocket and give you a little more wiggle room in your monthly budget, it’s not a cure-all for every financial issue.

Refinancing your home is a big decision.  Is it right for you?

The truth is, there’s no perfect set of guidelines or one-size-fits-all rulebook when it comes to refinancing your home. But if you really want to make sure you’re doing the right thing (for the right reasons), you may want to ask yourself a few questions:

1. Why are you refinancing your home? This sounds like a no-brainer, but it’s not as straightforward as it sounds.  There are dozens of reasons homeowners consider refinancing, and some aren’t as solid as others.  If you’re refinancing your home to help pay for your teen’s college costs or to escape an adjustable-rate mortgage (ARM), you’re probably doing the right thing.  On the other hand, if you’re refinancing your home to pay off your massive amounts of credit card debt, well . . .

2.  Will refinancing help you – really help you – in the long run? If you’re refinancing your home because you’re drowning in credit card debt, first make sure that you’ve made the commitment to change your spending habits.

Refinancing in order to pay off credit card debt is not necessarily a “sound” reason to do a refinance. The biggest problem is that you are taking unsecured (credit card) debt and trading it for secured (mortgage) debt, ultimately that could cost you your home, if your finances got really ugly.  The other major problem with this is that most people who refinance their homes to pay off credit card debt don’t tend to learn anything about living within their means:  They end up owing more on their home, and they usually go right back to racking up credit card debt:  After just 18 to 24 months, many end up owing the same amount again on credit cards.

Don’t let your refinance turn into an excuse to spend more.

3.  How long will it take to break even? When you refinance, you are responsible for paying fees and closing costs associated with your new loan (for most homeowners, this comes out to be around $2,000).   Before you refinance, you should run a few numbers to determine your “break-even point” – that’s the amount of time it will take you to recoup what you paid out.

To find your break-even point, you simply divide your mortgage fees by the amount of money you’re saving each month.  So, if you saved, say $120 a month by refinancing your home, and you paid $3,000 in closing costs and other fees:

$3,000 (closing costs)/$120 (monthly savings) = 25

In this example, your break-even point is 25 months, or just over two years.

Of course, you should keep in mind that if you’re lengthening the terms of your loan, you may be doing more harm than good.  This can be an issue when people refinance in the hopes of lowering their monthly payments . . . but end up extending the life of their loan by another five years or so.  In cases like this, the interest costs you’ll end up paying probably aren’t worth it – especially if you intend to live in your home for the long haul.

4.  Is your credit (still) good? Or, more to the point, is it as good or better than it was when you got your original loan?  If you’ve hit some hard times, financially, your credit score may not be what it once was.  Before you try to refinance your home, consider your current credit:  Do you have any new debt?  Late payments or delinquencies?  If so, you may not be able to get a low enough interest rate to justify a refinance.  You may be better off with your current mortgage.

5.  Have you done your homework? Before you seriously consider refinancing your home, you should make sure you’re making an informed decision.  Shop around with several different lenders (of course, you should check with your current lender, too – most banks want to keep their customers) and read up on the costs and benefits of refinancing.  At the end of the day, you are the only person who can decide if refinancing is the right way to go.

Those in trouble are easy prey; people looking for debt consolidation companies are in a vulnerable position.  They may be in immediate trouble, searching for a way out of financial ruin, so they are more likely to be trusting of businesses that offer immediate solutions.  Some debt reduction services are not too far removed from the credit cards sharks who get consumers in poor financial situations in the first place.  The first thing to remember is to stay vigilant and selective; remember that solutions exist, but you must find the best one for you.

Secondly, it is beneficial to evaluate several companies offering a debt management program.  Consider the following tips when approaching debt reduction services for the first time:

-          Don’t let them pressure you into engaging in a plan or make guarantees without researching your specific situation.

-          Research the company and their offered services.

-          Review all literature relating to the agreement.  Search for hidden or unwanted fees.

-          As the program begins, be sure that your creditors are getting paid on time and the logistics of the agreement are maintained as planned.

-         Check to see if potential debt management providers are listed with the BBB.  A company you are considering working with should have an “A+” rating.

In addition, some companies may not have poor intentions, yet do not completely offer their services without a catch.  The following are particular ways some debt consolidation companies may incur funds from their clients:

-          Charge a portion of the total debt

-          Charge a portion of the amount saved using their services

-          Charge sign-up fees

-          Charge monthly fees for being enrolled in debt reduction services

The good news is that there are existing debt solutions out there, but it is highly important to be selective in working with a potential debt consolidation companies.

Read the following tips to facilitate credit card debt relief.

The first step to getting out of a poor financial situation is to stop making your position worse.  Stop using your credit cards; leave your remaining available credit for emergencies only.  Observe the reality of credit cards; they have advantages and disadvantages and when abused, the disadvantages outweigh the benefits.  Begin a discipline focused on using credit cards conservatively in order to avoid future needs to search for credit card debt solutions.

Next, you need to think about ways to eliminate your debt.  This may mean rolling over your debt from multiple cards over to one with a lower interest rate if possible.  Often, credit card companies will offer college students low interest rates to get them to sign up.  Be careful to read the fine print on your low-interest cards; you may have high penalty rates to pay if your monthly payment is late or missed entirely.

Begin to modify your spending behavior.  Rather than accumulate more debt by buying, focus on suspending buying habits and start saving money in order to curb your debt.  Have you been paying the minimum payment on your cards?  Many people only pay the minimum due in order to keep more money in their pockets, yet such logic facilitates the potential to get into financial trouble.  Pay more than the minimum due whenever possible to lower your debt.

Get outside help.  Many college students worsen their situation by not seeking help or guidance.  Credit card debt solutions are available online through debt consolidation companies.  Such companies can counsel you on the best practices regarding utilizing your present funds in order to rid yourself of debt.  Don’t wait until the amount of debt rises, seek credit card debt relief.

If you are paying your mortgage late, debt consolidation can help. Job losses and financial woes have touched many wallets nationwide, causing late payments on debts from credit cards to student loan payments. Young homeowners need to make their mortgage payments now more than ever. Debt Consolidation from DebtGuru.com can provide credit debt relief by lowering interest and payments as well as consolidating your unsecured debt payments into one monthly payment so you can focus on paying off your home in a timely fashion.

To date, the Home Affordability Modification Program has helped 300,000 homeowners reduce their mortgage payments to affordable levels. But that is a drop in a very distressing bucket. An estimated 4 million U.S. homeowners are in danger of foreclosure this year.

Don’t wait for the government. You can reduce the sting of the 15th by consolidating your other debts, organizing your payments, accessing credit counseling tools and making a payment plan so that you can make your mortgage your main priority. The 15th will always be the worst day of the month. Don’t make the rest of your calendar sting as well.

Are you making bad decisions?

To begin, let’s make sure you are not making unwise decisions when it comes to credit cards.  Consider the following warnings:

- Having more than two credit cards

- Only paying minimum balances

-  You modify other bill payments to make minimum credit card payments

-  You charge items you can regularly pay for with cash (gas, snacks, etc)

-  You take out cash advances on your credit card to pay for other bills

If you do any of the above actions, then you may be on your way to a difficult financial position.  If you modify your behavior now, you may be able to avoid needing credit counseling.

There are a number of actions you can take to avoiding getting into trouble.  Consider the following.

Most people who seek credit card counseling find it hard to turn down a credit card offer.  Don’t commit to any new cards.  When you get a new offer in the mail – throw it away.

Avoid shopping at all costs.  This is easier said than done, but if you are quickly raising your credit bills then you are on your way to credit and debt counseling.  You must demonstrate discipline in regards to making new purchases.

In supplement to the above tip, cancel any recurring catalogs, which are sent to your home.  They will only serve as a reminder to shop.  Receiving regular invitations to spend is not a good way to keep away from a debt management program.