Why live on a budget?

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      I think that article is really correct. I think that having my car

      break down on me (the morning of new years eve).. and realizing that

      already for towing and diagonistics I am past $130 dollars.. It is

      very important to have a budget that includes a category for

      emergencies. The only big question I would have.. is what percentage

      of a paycheck should go into that category?


      — In Budget101_@yahoogroups.com, “Liss” wrote:


      > Why live on a budget?

      > By Shelly K. Schwartz


      > 4 reasons to budget

      > 1. Help control debt

      > 2. Earn cheaper rates

      > 3. Improve relationships

      > 4. Save more money


      > If you’re like most Americans, your monthly income never goes far

      > enough. After shelling out for house payments and groceries, it


      > there’s little leftover for things that matter most to you —


      > dinners out, orchestra-row theater seats, a college savings plan


      > your kids.




      > Hate to break it to you, but it’s not your salary that’s to blame.

      > According to financial experts, it’s a pattern of poor spending

      > choices.


      > “When my clients sit down and really look at where their money is

      > going, oftentimes they are shocked to find it has nothing to do


      > what’s really important to them,” says Martin Siesta, a certified

      > financial planner for Compass Wealth Management in Maplewood,

      > N.J. “Five dollars a day on Starbucks, for example, is a big number

      > when you multiply it by 360. That takes away from things you may


      > been struggling to attain.”


      > Life’s little extras are well within reach for those who know how


      > budget.


      > By establishing reasonable spending limits and sticking to them,


      > average consumer can do far more with less — without sacrificing

      > daily conveniences, said Jim Tehan, a spokesman for the Myvesta

      > Foundation, a self-help consumer education Web site.


      > “Budgeting is all about controlling your finances instead of


      > your finances control you,” Tehan says. “That element of control is

      > going to save you money in the long run.”


      > Controlling debt

      > Financial mismanagement makes consumers more vulnerable to

      > overspending, which results in lower savings and higher credit card

      > debt.


      > Myvesta’s 2005 annual Credit Card Survey, reports the average

      > American carries $2,328 in credit card debt, spread out across 2.9

      > cards. With interest rates at or above 18 percent for most cards,

      > that gets expensive. For example, a $5,000 balance on a credit card

      > with 18 percent interest would cost you more than $8,000 to pay off

      > if you made only the minimum payments (4 percent).


      > “The amount of money you wind up spending just servicing debt


      > credit card interest could be extra money you could apply towards

      > something else,” Siesta says, adding that following a monthly


      > can help you both pay down existing debt and prevent impulse


      > to begin with.


      > Cheaper rates

      > Another upside to life on a budget is that it forces you to become

      > organized. That, in turn, helps you avoid late payment penalties


      > improves your credit score. Lenders use your credit score to

      > determine how much they should charge you for auto and mortgage

      > loans. It also can affect how much you pay for auto and homeowners

      > insurance.


      > Improve your relationship

      > A less obvious benefit of budgeting is the positive effect it can

      > have on relationships. According to Siesta, sitting down with your

      > significant other to discuss financial goals helps prevent money

      > disputes down the road. It also provides a rare opportunity to


      > your own spending philosophies. “Money is a huge source of stress


      > many couples,” he said. “The mere act of discussing your finances

      > with a spouse or significant other really does help create better

      > understanding and better relationships.”


      > Saving for the future

      > Finally, learning to live within your means can help you get ahead.

      > By allocating a portion of your monthly budget towards savings, you

      > can simultaneously build a retirement nest egg for your future and


      > financial safety net for short-term emergencies, in case you or


      > spouse lose a job or suddenly fall ill.


      > “Budgets create financial security, which gives you the ability to

      > withstand the financial surprises that life throws your way,” Tehan

      > said.


      > Budgets are all about financial freedom. Without a plan for saving

      > and spending, you’ll never make the most of your income — no


      > how much money you earn.


      > “Budgets are very empowering,” Siesta says.


      > “They don’t lead you away from something. They lead you toward your

      > financial goals.”

      > By Shelly K. Schwartz


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