We all know that credit cards are hazardous to our financial health, but Americans are still using plastic just as much as ever.  Just how bad is our addiction to plastic?  According to a recent Cardhub study, Americans racked up a little over $18 million in credit card debt in the second quarter of 2011 alone!

That’s a lot of debt.  So, what gives?

As it turns out, many otherwise intelligent and well-meaning people have developed some pretty bad habits when it comes to credit cards.  We shop when we need an emotional pick-me-up.  We’re impulsive.  We’re competitive.  And when it comes to making smart credit card decisions, we often let our emotions and impulses take over.

Are you at risk?  Do you find yourself locked in a seemingly endless cycle of credit card use?  As it turns out, just a few bad decisions or spur-of-the-moment purchases can put you on the path to serious debt. Read on to learn more about the six deadly sins of credit card use:

Deadly Sin 1:  Competitive Spending

It’s easy to get caught up in a permanent game of keeping-up-with-the-Joneses in an effort to outdo your friends,  neighbors, co-workers, or family members.  It’s tempting to whip out the credit card to buy a bigger TV or a trendy designer handbag – but all you’re really doing is getting yourself deeper in debt.  Forget the Joneses.  If you can’t pay cash for it, don’t buy it. End of story.  Say “no” to aspirational or competitive spending.

Deadly Sin 2:  Falling Into the “Buy Now, Pay Later” Trap

Retailers know that deals like “zero percent interest” or “no payments for 18 months” are hard to pass up – especially when it comes to purchasing big-ticket items like appliances and furniture.  Those kinds of gimmicks appeal to our desire for instant gratification.  They sound like gret deals – until the interest-free period wears off, that is. Want true zero-interest deal?  Save up and pay cash.

Deadly Sin 3:  Excessive Bargain Hunting

Everybody likes a good deal, but some folks have trouble knowing where to draw the line – especially now that online bargain hunting via services like Groupon has become a kind of national pastime.  But the thing about a bargain is, it’s only a bargain if you were planning to buy it anyway.  And more importantly, it’s not a bargain if you can’t afford it. If you have to charge it, you don’t need it – no matter how great of a deal it is.

Deadly Sin 4:  Buying (Temporary) Happiness

If you’re the type to indulge in a little “retail therapy” after a hard day, you might be putting yourself at risk for serious debt.  I’m not saying that shopping can’t be fun from time to time, but you have to know where to draw the line.  Using your credit card to make a bunch of impulse purchases might cheer you up in the moment – but that mood won’t last when you get your monthly statement.  If you’re prone to overindulging at the mall, stay away when you don’t have cash.  Or, leave your credit cards (all of them!) at home and go window shopping instead.

Deadly Sin 5:  Getting Hooked on Getting Cash Back

You say you only use that credit card because it gives you cash back on your purchases?  Well, the problem with that is, you have to spend a lot to earn any serious money from cash-back credit card offers – most cards give you something like one dollar for every hundred bucks you spend.  In the long run, you’ll save (a lot) more money if you opt to pay cash instead of using a credit card.

Deadly Sin 6:  Misusing Balance Transfers

When used responsibly, a balance transfer can be a helpful way to avoid high interest rates and pay down debt.  But it’s easy to get stuck in an endless cycle of balance transfers, using one credit card to pay off another credit card, then another, and so on.  When you transfer a balance, you should pay that balance off as quickly as possible – and don’t use a balance transfer as an excuse to rack up new debt!

Are you guilty of any of these deadly (and costly) credit-card sins?  Are you an emotional or aspirational spender?  A balance-transfer junkie?  The good news is that once you know your weaknesses, you can start to make changes in how you spend money and use credit cards – and that’s the first step to breaking the bad habits associated with high-interest credit card debt.

Whatever the reason, if you want to pay down your debt in 2012, I’ve got a plan that can put you on the right track, no matter how much you owe.  Just follow these five steps and you’ll be on the path to a debt-free year.

Step 1:  Take Stock of Your Financial Situation

You can’t wipe out your debt until you know exactly what you’re dealing with. Once you know how much you owe and how much you can afford to pay every month, you’ll be able to come up with a long-term plan.

First, get all of your credit card bills together.  Look at how much you owe, and pay special attention to the interest rates on each card.  (Note:  you’ll want to concentrate on paying off the card with the highest interest first – but more on that later.)

Next, add up your monthly expenses – the “have-to” stuff, like your mortgage or rent, utilities, transportation, and grocery bills. Subtract your monthly expenses from your monthly income, and you’ll know how much money you have left over – this is the money you’ll be using to pay down your debt.

Step 2:  Call Your Credit Card Companies

If you’ve fallen behind on your credit card payments, it’s a good idea to get in touch with your credit card company – lenders are almost always more willing to work with you if they see that you’re at least trying to do the right thing.  You don’t have to give them a laundry list of excuses about why you can’t afford your monthly payments; just explain that things are tight and ask if you can get your minimum payment reduced.

If you’re on top of your credit card payments, call your lender anyway – ask if you can get a lower interest rate.  It doesn’t hurt, and chances are good that they’ll say yes.  Even if the reduction is small, it’s better than nothing.

Step 3:  Research Balance Transfers

Many balance transfer offers give you anywhere from a few months to more than a year of an introductory zero-interest rate on the amount of your original transfer – and that could mean big savings if you’re able to pay off your transfer relatively quickly.  If you’ve got a card with a very high interest rate, a balance transfer may be worth looking into.

Keep in mind, though, that most lenders charge a balance transfer fee,which is usually around three to four percent.  Also worth noting:  To be eligible for a balance transfer, you need to have pretty good credit.  If you’ve got a less-than-stellar credit history, you might not qualify for a balance transfer.

Step 4:  Make a Payment Plan (and Stick to it!)

After you’ve done all of your research, negotiated lower payments or interest rates, and applied for balance transfers, you should have a pretty good idea of what you’re working with, debt-wise.  Now, you can start to prioritize and pay down your debt.

I recommend starting with the card with the highest interest rate.  Decide how much you can pay on that card each month – it should be more than the minimum payment.  Continue to pay the minimum payments on your other, lower-interest cards.  Once the card with the highest interest rate is paid off, focus on the card with the next-highest interest rate, and so on.

Step 5:  Be Wary of Settlement Offers

There are a lot of scammers out there, just waiting to take advantage of people who are feeling overwhelmed by credit card debt.  Many so-called “debt settlement companies” promise to negotiate for settlements or lower monthly payments are just looking for a way to profit from other people’s financial woes.  A good rule of thumb is, if something sounds too good to be true, it probably is.  Paying off debt is a bit like dieting:  There aren’t any shortcuts if you want lasting results.  It takes discipline and work.

So there you have it – a five-step plan to being debt-free.  Of course, if you want more guidance or if you feel so overwhelmed by your debt that you don’t know where to start, you can contact the experts.  Visit DebtGuru.com or call 800-259-0601 today to learn how we can help you pay down your debt.

Happy New Year from all of us at DebtGuru.com!

No worries.  This year, I’m kicking off the holiday season by sharing a few of my favorite shopping tips.  If you’re looking for ways to keep things frugal (and festive!) this year, consider a few of these:

Tip 1:  Cash in rewards points

This is one of the best ways to stretch your holiday shopping dollar.  After all, why spend money when you can cash in loyalty points, reward bucks, or gift cards?  Many popular stores – like Hallmark, Starbucks, and Best Buy, to name a few – have some sort of customer loyalty program.  You get a membership card, and for every dollar you spend, you earn points toward gift certificates or store credit.

Before you hit the mall this year, check and see if you’ve got any rewards coming your way.  A $10 or $20 gift card could help jumpstart your holiday shopping.

And speaking of gift cards . . .

Tip 2:  Use gift cards

Remember that gift card you got for your birthday last year?  The one from that store you never, ever visit?  The holidays are a perfect time to dust off any old gift cards you’ve got lying around.  If you’ve got unused cards, you can use them to buy presents for the people on your list.  Or they can make great gifts on their own — just make sure that there’s no personalized message on them first.

If you’ve got a few gift cards with leftover balances on them, use those, too.  A few dollars might not pay for a whole gift, but you could knock a few bucks off your purchase.

Tip 3:  Get thrifty

As in, “thrift store.”  No, really.  Thrift stores (or yard sales or flea markets) are perfect places to search for offbeat items for hard-to-buy-for folks on your shopping list, like your uncle who still watches VHS tapes or your niece who collects weird coffee mugs or 1980s toys.  Thrift stores aren’t just for kitsch, though.  You can find really nice things at thrift stores, too – like designer clothing with the tags still on or jewelry and accessories still in the original packaging.

Tip 4:  Swap with friends

It’s not new, but it’s new to you.  Swap parties aren’t just for the holiday season, but they can be a cost-conscious way to find great gifts.  Get some friends together and ask everyone to bring a gift or two.  Make some snacks, put on some festive music, and you’ve got your very own swap meet.  Swapping is ideal for items for younger kids, like books they’ve grown out of or DVDs they’ve seen a zillion times. Swap parties are also perfect opportunities to find homes for gifts you’ve received that just weren’t “you.”

Tip 5:  Clip (or download) coupons

If you’re not usually a die-hard coupon clipper, the holidays are a perfect time to start.  Before you start shopping, it’s a good idea to search for coupons first.  Check the newspaper – especially the super-thick Sunday edition – for store circulars filled with coupons, rebates, or special “doorbuster” or “early bird” sales for shoppers visiting the store at a certain time. If you’re more of an online shopper, be sure to check for coupon codes and free shipping offers before you hit the virtual checkout.

Tip 6:  Consider “Black Friday” . . . carefully

The great thing about Black Friday is, you can get some seriously good deals on high-ticket items.  If you know that your family is getting, say, a new flat-screen LCD television this year, it might be worth getting up at 2 a.m. and fighting the insanity to save a couple hundred bucks on your purchase.

That said, there really is something insane about getting up at 2 a.m. and fighting mobs of other holiday shoppers.  Plus, all of the deep discounts on Black Friday make it really easy to overspend – unless you’ve got some serious willpower, you might come home with more than a TV set.  Remember: You’re not “saving” anything if you’re buying something you don’t need and didn’t budget for.

So, that’s it for now!  I hope these six holiday shopping tips help you make the most of your gift-giving budget this year.

Happy holidays!

And you know what?  That’s okay.  You don’t have to be any of those things to enjoy a secure financial future.  You don’t have to earn a six- or seven-figure salary to have a sizeable savings account.  In fact, what you do for a living (and how much you earn for doing it) has very little to do with your ability to build wealth.

At the end of the day, it doesn’t matter how much money you make or what you do for a living. In fact, you might be surprised to learn that your ability to build wealth can be predicted by five key life decisions:

Life Decision 1:  Getting Married

I’m sure you’ve heard the much-repeated fact that married people are much better off financially than their single counterparts – and it’s true, in most cases.  After all, it’s much easier to pay the bills when you’ve got two incomes instead of one.  Countless studies show that, in general, married people build more wealth – and build wealth faster – than single people of the same age and background.

So . . . if you want to build wealth, get married.  Sounds simple, right?

Before you go rushing down the aisle with just anyone, you should keep in mind that this fact only applies to successful marriages.  While a happy marriage can lead to all kinds of economic benefits, an unhappy one can be detrimental to your bank account.  Divorce is costly, and people who get divorced not only end up worse off financially than married people — they also end up worse off than people who never got married in the first place.  Marry the right person, for the right reasons, and you’ll reap the benefits.  Marry the wrong person for the wrong reasons, and, well, the only person who benefits is your divorce lawyer.

Life Decision 2:  Going to College

We all grew up hearing that a college education meant a secure future, a good job, marketable skills, and a solid place in America’s middle class.  But as more and more young people are graduating from college and struggling to find work, is a college education still the best choice?

In general, yes.  Even though the job market is tough for recent college grads, it’s even tougher for young people without a four-year degree.  College graduates may not enter the workforce and immediately land their dream job and an amazing salary . . . but according to the U.S. Census Bureau, college graduates usually make twice as much as much money as folks who didn’t go to college.  In the long run, people with college degrees build up more personal wealth – and some studies have even linked a college degree to a longer life span, greater self confidence, and better health!

The bottom line:  Will a degree mean more job opportunities?  Will the long-term benefits of a college education outweigh the rising costs of attending a four-year college or university?

In most cases, the answer is still going to be a resounding “yes.”

Life Decision 3:  Being Your Own Boss

It seems that, for every story we’ve heard about a self-made millionaire who built an empire selling cupcakes, pizzas, athletic shoes, or whatever else you can think of, there’s another story of someone who lost everything by starting their own business.

There’s something appealing about the idea of working for yourself:  You get to set your own schedule, you get to call the shots, and you don’t have to answer to anybody.  But those same things are what makes the idea intimidating – if the business fails, you lose more than just a job.

Most small business owners build considerably more wealth than folks who work for other people.  And even though you’ve probably heard the scary statistics about how many small businesses close up shop every year, they’re no scarier than statistics that show how many people get laid off or downsized from regular jobs.

My advice: If you dream of opening your own business, go for it – after you’ve done all of your research, of course.

Life Decision 4:  Building up Your Savings

The key to building wealth?  Saving money.

That sounds obvious, but when you consider how many people don’t have money in savings, I feel like I should mention it.  I’ve said it before, and I’ll say it again:  Pay yourself first.  Every paycheck.  No exceptions.  Pick an amount.  Make it $20.  Make it $200.  Just start saving.  You’ll probably be surprised at how quickly it builds up.

Do I need to say more?

Life Decision 5:  Buying a House

When it comes to personal finance, buying a house is a lot like getting married:  It’s a good decision, but only if you do it for the right reasons.  A home is a good investment if you can afford it.  Historically, homeowners have a greater net worth and more personal wealth than renters.

Of course, this only applies in situations where the homeowners aren’t in over their heads.  If you’re considering buying a home, ask yourself a few questions:  Do you have a down payment?  Can you afford the monthly mortgage payments?  Do you plan to stay put for several years in order to build equity?

If you answered “yes” to these questions, a house is a good idea.  If you answered “no” to any of them, you might want to keep renting for a few years.

But first things first.  Before you start reading, take this quick, 5-question quiz to find out how much you really know about credit card limits:

1.   When it comes to your credit score, which is more important?

A:  The amount of your credit limit
B:  The ratio of credit limit to credit use

2.   A high credit limit is bad for your credit score.

A:  True
B:  False

3.   Your credit limit = your spending limit

A:  True
B:  False

4.   If you pay your credit card on time every month, use credit responsibly, and pay down large balances, your credit limit will go up.

A:  True
B:  False

5.   There is no such thing as a “no-limit” credit card.

A:  True
B:  False

Okay, class.  Time’s up.  Let’s see how you scored.

Question 1:  When it comes to your credit score, which is more important?

The correct answer?  B.  The ratio of credit limit to credit use

That’s right.  When determining your credit score, credit reporting agencies don’t care whether your credit limit is $100 or $100,000.  They care about how much of your available credit is actually being used.  Think of it this way:  If you’ve got a balance of $99 on a card with a limit of $100,000, you look like a responsible user.  Even though you’ve got loads of available credit, you’re not out there charging up a storm.  But if that $99 balance is on a card with a $100 limit, you look like someone with a maxed-out credit card.

Question 2:  A high credit limit is bad for your credit score.

The correct answer? B.  False.

The truth is, there’s nothing inherently bad about a high credit limit.  A high credit limit usually means that you’ve demonstrated an ability to use credit wisely.  A high credit card limit is your credit card company’s way of recognizing that you’ve paid on time, you don’t consistently carry an astronomical balance, etc.  The real problems occur when you have a high credit card balance, which brings us to . . .

Question 3:  Your credit limit = Your spending limit

The correct answer? B. False.

I think one of the biggest problems with credit card debt comes from a fundamental misunderstanding of what a credit card limit actually is.  As we discussed in question 2, your credit limit is not what gets you into trouble.  Your spending gets you into trouble.  If you’re carrying a high credit card balance, your credit score will suffer.

Regardless of how you use your credit card, your balance should be much lower than your actual credit limit.  Personally, I recommend keeping a zero balance (proper use of a credit card means paying it off in full each month).  But if you do have a balance, try to keep it at no more than 30% of your limit.

Question 4:  If you pay your credit card on time every month, use credit responsibly, and pay down large balances, your credit limit will go up.

The correct answer?  B.  False.

There’s no guarantee that paying on time and keeping a small balance will have any bearing on your credit limit.  In fact, after years of extending too much credit to their customers, most credit card companies are dramatically reducing spending limits for cardholders, regardless of their payment history,

Question 5:  There is no such thing as a “no-limit” credit card.

The correct answer? A. True.

The concept of a credit card without a credit limit is really just a marketing ploy.  Every credit card has a limit.  Credit cards that are advertised as “no-limit” are really just credit cards with a flexible limit that varies based on factors like income, spending habits, and payment history.  Your limit on a “no-limit” card may go up if you’ve demonstrated responsible use.  And it may go down if you have a history of late payments and high balances.

Use Credit Wisely

The key to keeping your debt in check?  Responsibility.  Your credit limit isn’t a license to go on a shopping spree.  The real key to keeping your credit card debt in check (and keeping your credit score high) is responsibility.  Read the fine print.  Keep a low balance.  Pay on time.  Set your own limits.

If you’ve ever struggled with credit card debt, you’ve probably played the “what if” game.  As in, “What if I just stopped sending payments?”  Or, “What if I just ignore that collections letter?”

It’s a tempting game to play – especially if you’ve got lots of credit card debt and not a lot of money.  But it’s also a risky game:  If you’ve fallen a little behind on your credit card payments, you could be looking at nasty letters, phone calls, and an increased interest rate.  If you’ve fallen a lot behind, you could be going to court.

The thing about debt is, you can’t outrun it, and you can’t just ignore it until it goes away.  But the other thing about debt is, there are always options – no matter how many payments you’ve missed, you can do something about it.

Here’s my handy guide to getting your debt back on track, whether you’re 30 days behind or six months into delinquency:

Put an End to the “What if” Game:  DebtGuru Can Help

If you’re feeling overwhelmed by credit card debt – huge balances, sky-high interest rates, or late payments – DebtGuru’s Debt Management program can help.  Our financial advisors can work with you to consolidate your debts, set a budget, and work out an affordable debt repayment plan.

Want to learn more about DebtGuru?  Visit us today for a free debt consolidation analysis or call us at 800-259-0601.

But frugal living isn’t just about going without.  It’s about getting creative and finding ways to live (comfortably) within your means.  It’s about finding good, wallet-friendly alternatives to the things you can’t or don’t want to live without.

Not sure where to get started?  Here are five cheap (or free!) alternatives to potentially costly day-to-day expenses:

Expense #1:  Minor car maintenance.

Okay, so you’re not a mechanic – but that doesn’t mean you should fork over half of your paycheck to your local auto repair shop.  You may not be able to rebuild your engine, but you can learn to change your car battery, replace your wiper blades, or change a burned-out brake light. You’ll probably pay less for the parts, and you won’t have to pay anyone for their time or labor.

Never changed a car battery or refilled windshield wiper fluid?  No worries.  Ask someone at your local auto parts shop, or look up how-to videos on the Internet.  You’ll probably be surprised by how easy most small repairs are.

Expense #2:  Cleaning products. 

There are literally hundreds of cleaning products out there:  Glass cleaner; countertop spray; furniture polish; foaming-action tub and tile cleaners; mops and dusters designed specifically for tile and hardwood floors.  There are products that claim to be better for the environment and products formulated to smell like flowers or cool ocean breezes.

Sure, flowers are nice. But common – and cheap – household products like vinegar and baking soda can do the job at a fraction of the cost. Mix vinegar with water and you’ve got an all-purpose cleaner that can clean almost anything in the house, from the countertops to the carpet.  Mix baking soda with a little water and you’ve got a super-tough stain remover.  Need a dust rag?  Repurpose a soft, old T-shirt.  Need something clingy to get pet hair off the hardwoods?  Repurpose an old fleece jacket or use a dryer sheet.  These homemade cleaners work just as well as the pricier store-bought versions – for a fraction of the price.

Expense #3:  DVDs, books, and video games. 

You’ve got a shelf stacked high with books you’ve already read and movies you’ve seen so many times that you know the dialogue by heart.  You’ve played through the latest “Call of Duty” on every difficulty level – twice.  You’re ready for something new, but you don’t want to blow your budget.  What do you do?

You swap with friends.  I’ve written about clothing swap parties before, but you can apply the same idea to almost anything you can think of, from juicy romance novels to first-person shooters.  Call a few friends and ask them to bring at least one movie, game, or book – then start trading.  It’s fun, it’s cheap, and it’s a great way to find a home for your unwanted items.

Expense 4:  A Haircut.

You’re tired of paying upwards of $50 for a haircut, and you’ve tried to trim your own hair – with less-than-positive results (ski hat in July, anyone?).  Even the strip-mall chains charge around $20 for a cut or a trim – and if your hair grows fast, that can add up pretty quickly.

Instead of heading to the mall for your next haircut, do a quick Google search for local cosmetology schools.  In many cases, you can get a decent haircut from a stylist-in-training for around $5 to $10.  The budding beauticians get to practice their craft, and you cut your hair care budget in half – it’s a win-win.

Expense 5:  Long distance phone calls.

Want to chat with your cousin in Ontario, your best friend in Seattle, and your grandmother in Miami – without paying hefty long distance fees?  Technology has made it possible to stay in touch on the cheap:  If you (and your cousin, grandma, or friend) have a reliable computer and a good Internet connection, you can chat it up on Skype.  And many cell phone carriers offer unlimited mobile-to-mobile calling, which can save money and cell phone minutes.

Want to go old-school?  Grab a pre-paid calling card – you can usually get more calling bang for your buck than you can with your phone company.

These few ideas are a great start to get you thinking in the “savings mode”.  Once you get started, you will be surprised how easy it is to come up with new ways to save.

Happy saving!

The grocery store can be a dangerous place:  There are shelves stocked high with chips and cookies (placed at eye level, of course); family-sized frozen meals and kid-friendly boxed lunches; and aisles full of tempting and (supposedly) thrifty offers like that buy-one-get-one-free sale on heat-and-eat chicken tenders.

If you’re trying to live frugally, these prepackaged convenience foods can wreak havoc on your budget.  Ask yourself: How often have you gone to the store for “just a few things” and ended up with a cartful of impulse purchases or so-called bargains?  That’s why I’m challenging my readers to try living on a grocery budget of $70 a week.  Sound impossible?  It’s not.  In fact, the average food stamp budget for a family of four is approximately $68.88 a week.

Planning is Key

So, you have $70 and an empty refrigerator.  But wait – before you dash off to the nearest grocery store, you should know what you’re going to buy, how much of it you’re going to buy, and – maybe most importantly – what you’re going to do with it when you get it home.

First, you’ll need to make a list of everything you’ll need to create a week’s worth of healthy meals.  Buy things you like, and buy things that can create multiple meals.  Plan on using leftovers – they make great lunches. I suggest splitting your budget 3 ways:

• Protein ($20). Buy reasonably priced items that you can use in a variety of ways.   For example, if you buy a whole chicken, you can roast it for dinner one day and use the leftovers in pasta or a salad the next day.  You can even use the inedible and/or less appetizing parts (bones, innards, neck, etc.) to create homemade chicken stock.  Ground beef, eggs, and canned tuna are good choices, too.
• Produce ($30). Buy fruits and vegetables that are in-season – they’re much cheaper.  And avoid buying expensive items packaged for convenience like sliced mushrooms or prepackaged salad kits.  Canned or frozen veggies are okay, too – but again, keep things basic.  Buy the can of peeled whole tomatoes, but avoid the can of peeled whole tomatoes with garlic, onions, and Italian seasonings.
• Bread, cereals, rice, and pasta ($20). The great thing about this category is that many of the items can be used for more than one meal – for example, a bag of rice will probably last you a week or more; ditto for a large box of, say, elbow macaroni or spaghetti.  Buy a jar of peanut butter and a loaf of wheat bread, and you’ve got a go-to lunch option.  Beans and rice can make a great side dish or a main meal.

Of course, you can play around with these numbers a little; if you’d like to spend an extra $5 on meat or $10 on a bottle of good olive oil, that’s fine – but you should deduct that amount from your produce or carb budget.

Be a Savvy Shopper

If you’re going to make it out of the store without going over your $70 budget, you’ll need more than a grocery list.  You’ll need to plan your route, from the produce department to the meat counter.  You’ll need to scan your newspaper for the best prices.  You’ll need to prepare yourself for store displays overflowing with tempting deals on stuff you don’t need.

In short, you’ll need to be prepared. Here are a few ways you can plan a budget-friendly shopping experience:

• Compare prices. Chances are, you get weekly grocery ads in the mail or the newspaper.  Read them.  Find out which store is running a sale on ground beef or a double- or triple-coupon event.  But also keep in mind that if you go to one store for, say, $5 T-bones, it may be a bad idea to buy your milk and eggs there, too.  Stores often run specials on a few items to get you into the store, knowing that you’ll end up buying your regular groceries there too.  So, they mark up the milk and eggs just enough to make your T-bone savings insubstantial.  Pick your sale(s), shop them, then go to another store that offers low prices on non-sale items.
• Combine coupons with sales. When you clip coupons, don’t run out and use them right away.  Wait for a sale on the item, then combine the coupon with the sale for the deepest savings.   This can take some work to keep track of, so you can also consider subscribing to a service that matches up coupons with local sales, such as thegrocerygame.com.
• Don’t take the kids. Your six-year-old wants a giant box of rainbow-colored cereal because there’s a cheap plastic toy inside.  Your 12-year-old wants a week’s worth of expensive (and unhealthy) make-your-own-taco lunch kits because that’s what all of his friends are eating.  Avoid  food-related showdowns, meltdowns, and power struggles: Leave the kids at home, if possible.
• Shop the perimeter. Most savvy, health-conscious shoppers know that the outer rim of the grocery store is the place to find healthy, wallet-friendly fare. The inner aisles of grocery stores are lined with prepared, packaged, and expensive products.  Stick to the outside – that’s where they keep the fruits, veggies, and fresh meat.
• Spice it up. Spices and herbs are a great way to add variety to your weekly menu without breaking the bank.  A dash of curry powder, a handful of fresh basil or cilantro, or a couple of bay leaves will add tons of flavor to your meals.

Frugal and Healthy

The best thing about trying this budget is that it puts an emphasis on fresh, seasonal food instead of super-processed premade stuff.  A lot of folks believe that if you want to eat on a budget, you have to eat junk or subsist on items from fast-food dollar menus.

But if you do a little planning – and if you’re willing to spend some time in the kitchen – you don’t have to choose between your health and your wallet.

Well, not exactly. The truth is, anyone can be good with money.  Any skill – from fixing a leaky faucet to baking the perfect cake – gets better with practice.  Same goes for money:  The people who are really great at saving and budgeting have simply developed good money habits.

Want to become a money maven?  Start developing these five good money habits now – pretty soon, they’ll become second nature.

Good Money Habit #1:  Pay attention to details

Do you know what you spent on groceries last week?  Down to the penny?  Do you know how much you saved by opting for the store-brand vanilla soymilk instead of the national brand?  Do you know how much you spend on gas every week?  Or how much you could save if you brown-bagged your lunch instead of buying snacks from the office vending machine?

People who “get” money track all of their spending, every cent of it – and they’re always looking for new ways to save.  These are the people who clip coupons and do heavy-duty comparison shopping before any purchase.  They read the fine print on their bills and bank statements – and they aren’t afraid to challenge fees that don’t make sense.

Bottom line:  You should know precisely where every cent of your money is going.  And you should always be on the lookout for ways to keep more of your hard-earned cash in your wallet.

One thing to keep in mind, though: “frugal” doesn’t mean “cheap,” which brings us to . . .

Good Money Habit #2:  Buy for quality, not price

You need a pair of dress shoes for work, and you’ve got two choices:  a $20 pair from your local discount superstore or a $100 pair from a department store.  Which should you choose?

On the surface, this might sound like an easy one:  After all, you’re looking at a pretty steep price difference.  If price alone was the deciding factor, the $20 shoes would be the clear winner.

But if you look closer, things aren’t as black-and-white: The $100 shoes are made of real leather, and they’ll last for years if you take care of them.  The $20 shoes are made of . . . well, you’re not sure what they’re made of, really – and even with the best care they’ll probably only last a few months before they start to fall apart and look . . . cheap.  In the long run, it’ll cost you just as much – if not more – to buy and replace several pairs of cheap shoes than if you’d just shelled out the extra money for one good pair.

Frugal people understand that, in the long term, the cheapest option isn’t always the most cost-effective option.

Good Money Habit #3:  Buy for price, not prestige

It’s one thing to spend a little more to get a higher quality product.  It’s another thing to spend astronomical amounts of money just to prove that you can spend astronomical amounts of money.

Financially savvy folks know that there are more important things than keeping up with the Joneses – or impressing the Joneses with your shiny new $100,000 SUV and your wall-sized LCD TV.  I’m not saying you can’t buy a television or a car.  But keep things realistic, and avoid extravagant.  Don’t buy a 70-inch television when a 32-inch would do just as well, and don’t go into debt just to follow a fashion trend.

At the end of the day, it’s not about the car in your driveway or the logo on your handbag.  Live within – or below – your means.  Don’t let peer pressure get in the way of your financial security.

Good Money Habit #4:  Learn to wait

When it comes to money, patience is truly a virtue.  Retailers and credit card lenders have made it ridiculously (read:  dangerously) easy to buy now and pay later.

And you do pay.  And pay.  And pay.

Here’s my advice:  If you want something, save up for it.  It’s that simple.  Want a new TV?  Need a new set of tires?  Have your eye on some new living room furniture?  Start saving.  That’s right.  Saving.  Put away $20 or $50 from every paycheck until you’ve got the money to pay cash.  No credit cards.  No convenient in-store financing or easy payments of $XX per month.

Good Money Habit #5:  Pay yourself first

I know, I know – you’ve heard this phrase a million times.  But it’s true.  And it’s a very good money habit.  If you want to start building a secure financial future, you have to get in the habit of saving money.  Choose a set amount — $20, $50, $100; whatever you can afford – and put that amount in savings every time you get paid.  Do this before you pay bills or buy groceries or send in your student loan payment.  If you don’t think you’ll remember, set up an automatic bank transfer.

Like I said, being “good” with money isn’t a natural-born skill.  These money habits aren’t highly complicated, and they don’t require any special knowledge.  The first step to managing your money like a pro is to develop good habits. Eventually, these savings-savvy behaviors – like paying yourself first and saying “no” to credit card debt – will seem like second nature.

Happy saving!

You’ve probably heard at least one financial guru or TV-news talking head discussing the need for an emergency fund.  Some say you need $5,000 in the bank.  Some say $3,000 is plenty.  Many (I fall into this group) say the amount varies from person to person.  The logic is, by socking away some extra cash, you’ll be prepared if disaster hits.

It’s good advice.  But it’s not quite enough.  If you really want to survive in tough financial times, you’ll need more than extra cash.  You’ll need to know how to make that money last. You’ll need to know where you can cut costs.

Bottom line:  The real key to surviving a financial disaster is adaptability.  Would you know what to do if you or your spouse were suddenly laid off?  Or if an emergency medical expense or a surprise income tax bill wiped out your savings?

Don’t panic!  Here are six ways you can disaster-proof your family’s finances:

1. Know what you need. Make a list of the things you absolutely must spend money on each month. This list should include things like rent or mortgage payments, credit card payments, utilities, gas, and very basic groceries.  This is – at the very least – what you’d need to have each month to get by.
2. Decide what you can live without. Take another look at your monthly expenses, and decide which ones you could cut if you needed to free up some extra cash.  You might be surprised at how much you’d gain per month if you gave up some of your non-essential services like cable TV, online gaming, takeout meals, and gym memberships.
3. Stock your pantry. Choose healthy items with long shelf lives, like pasta, rice, spaghetti sauce, and tuna.  Opt for frozen fruits and veggies.  And while I normally caution against buying in bulk, this is one situation where it’s not a bad idea – a supersized jar of peanut butter is a cost-effective way to feed the whole family if you’re in a dire financial situation.  A good way to build up your family’s food bank is to buy a few extras every time you go grocery shopping.  Look for sales and take advantage of coupons – and go generic whenever possible (in most cases, the store brand is every bit as good).
4. Find alternatives. If you need to, say, cut off your high-speed Internet service, you should know where to go for free wi-fi (many fast food joints and cafes will let you linger with your laptop if you buy a cup of coffee, and most libraries offer free Internet access).  Find out how much money you’d save if you took the bus to work — and know the route you’d take to get there.
5. Earn some extra money. A financial cushion can soften the blow of a financial hardship.  Help build up your emergency fund by finding some extra sources of income.  Sell stuff on eBay.  Get a part-time job.  Walk dogs, babysit, or run errands for your neighbors.  Are you good at taking photos, writing, or fixing things?  Consider selling your services as a freelancer.
6. Don’t use your credit card(s). It’s super-tempting to break out the plastic in tough times, but it’s critical that you resist the urge to charge your day-to-day living expenses.  If you’re already paying a credit card bill, focus on paying it off.  If you don’t have any credit card debt, consider yourself lucky – keep it that way.

And one more tip:  Plan ahead.  Financial woes are stressful – the more you plan, the less you’ll have to worry about if you find yourself in a financial emergency.  Set aside a few hours and figure out your family’s plan:  How much money will you need per month?  What services or expenses can you do without?  How can you bring in some extra cash if necessary?

In some cases, though, credit cards make sense.  For example, some folks charge big-ticket items like large appliances to earn reward points, get cash back, or earn airline miles.  Others like to keep their cards active by making – and paying off – one purchase per month.  There’s nothing really wrong with either of these strategies if you’ve got the cash to pay your credit card balance off – in full – every month.

When used responsibly, there’s nothing wrong with credit cards.  But the key word is “responsibly.”  Pay your balance in full at the end of the billing cycles.  Treat your credit cards like cash – meaning, if you don’t have the money, don’t spend it.

And if you really want to make sure you don’t end up with mounds of high-interest debt, steer clear of these types of high-risk purchases and activities:

1.    Gambling. Somebody’s gotta win, right?  Sure.  And if you’re using plastic to hit the casinos or play online Texas Hold’em, guess who’s taking home the jackpot?  Your credit card company.  Remember: gambling is just that – gambling.  There’s no guarantee that you’ll win any money.  The odds are better that you’ll just walk away a little deeper in debt.

2.    Tuition. There’s only one thing worse than graduating college with thousands of dollars’ worth of student loan debt.  Graduating college with thousands of dollars’ worth of credit card debt is much, much worse.  Instead, look into grants (you don’t have to pay them back) and apply for scholarships.  If you still can’t swing it, ask a family member for a loan or apply for financial aid – the interest will be lower.

3.    Cosmetic surgery. Cosmetic procedures are costly, and they’re not medically necessary.  That means there’s no good excuse for using your credit card to pay for a face lift or tummy tuck.  Besides, worrying about high-interest credit card debt causes frown lines.

4.    Event planning. Your dream wedding isn’t worth a credit nightmare.  Neither is your 25th wedding anniversary, your daughter’s sixteenth birthday, or your son’s high school graduation bash.  It’s tempting to go all out when planning a special celebration – but it’s not worth going into thousands of dollars in debt.  Set a budget.  Pay cash.  And remember that it’s the thought – not the price tag – that counts.

5.    Taxes. Tax time is fast approaching, and if you end up owing Uncle Sam this year, it may be tempting to use your credit card as a quick fix.  Resist that temptation – you’ll be glad you did. Pay cash, or – if you’re a little short on funds – set up a payment plan.  The IRS’ interest rates are much more reasonable than your credit card’s rates.

Bottom line: Use credit wisely.  Don’t charge things you can’t afford.  Don’t buy things you don’t need.  If you stick to these simple guidelines, you’ll find yourself on the path to financial freedom and a debt-free future.  Happy saving!