http://www.destroydebt.com/blogs/karenpayne.html Debt Discussions with Kapers www.destroydebt.com Tue, 21 Jul 2009 10:54:35 GMT webmaster@destroydebt.com webmaster@destroydebt.com http://www.destroydebt.com/blogs/karenpayne/2316-what-big-business-does-with-a-budget-that-most-households-dont.html http://www.destroydebt.com/blogs/karenpayne/2316-what-big-business-does-with-a-budget-that-most-households-dont.html Tue, 21 Jul 2009 10:54:35 GMT What key business tool is rarely used by households even though it would improve their financial position almost immediately? The budget review!   In business, an estimate is made of every aspect of the expected annual income and expenses for the coming year, to create a budget. These estimat... business tool is rarely used by households even though it would improve their financial position almost immediately? The budget review!

 

In business, an estimate is made of every aspect of the expected annual income and expenses for the coming year, to create a budget. These estimates are split up into various accounts for each month and recorded as either “Income or Revenue” and “Expenses or Costs” (the terminology may vary from country to country, but the principle is the same).

 

At a designated time, weekly, fortnightly or at the very least, monthly, the actual income and expenditure is compared with the budgeted figures, and the difference, if any, examined – to find out why, for example, the budget figure for vehicle running costs for the month of July was $8,000 and the actual cost was $11,000 – an increase of $3,000 in costs in just one month.

 

This kind of regular review allows businesses to identify trends such as:

§             A sudden drop in sales of a particular product line (not good)

§             A sharp rise in income from an unexpected source (could be good if it’s legal)

§             Expenses increasing in an area not expected to fluctuate (not good)

§             Major blow-outs in costs over a short period of time (never, ever good)

 

By monitoring these trends the business has the opportunity to:

§             maximise income opportunities e.g. heavily promoting a product line to increase sales or

§             take immediate action to cut costs in a trouble spot.

 

Without this regular budget comparison, in a short time the business could go from expecting a healthy profit, to having the bottom fall out of everything, with no time to take corrective action.

 

Yet this is the situation most households are in – many with no budget at all, and those with a budget not taking the time to review it, at least monthly, to identify opportunities for saving and areas where costs could be cut quickly and easily.

 

Every successful company has an annual budget and monitors actual income and expenditure against that budget. Rarely are there any surprises at the end of the year, and money is usually available to run the business, as well as for fun things like the Christmas party.

 

If you don’t have a budget, make one – now. If you do have a budget but don’t review it, shame on you. This is a must - and make any necessary adjustments immediately. After all, you do want money for your own Christmas party, don’t you?]]> http://www.destroydebt.com/blogs/karenpayne/310-forget-the-economy-get-your-life-back-under-control.html http://www.destroydebt.com/blogs/karenpayne/310-forget-the-economy-get-your-life-back-under-control.html Sun, 02 Nov 2008 11:57:04 GMT The nature of the current world-wide economic situation is alarming, and most of us have little or no control over how it continues to unfold.   It is of no comfort to younger people to know that this has happened before, and it will happen again, in some shape or form – that pendulum swi...
 

It is of no comfort to younger people to know that this has happened before, and it will happen again, in some shape or form – that pendulum swings are inherent in the capitalist system.  In my own working lifetime there have been at least 6 recessions, credit squeezes, market corrections or whatever name the economists give for situations where we fear for our jobs, our savings and our lifestyles.

 

And a couple of times I lost my job, so I know how frightening it feels to lose control over your financial situation.  But we must face our fears and control our emotions, to make the rational decisions that will be needed in the months ahead.

 

So, as an older person who has done 6 rounds with an unforgiving economy, I offer the following hints to take back some of that control.  To come out of this as a better person, you will need to manipulate you finances but you will also need some mental preparation for unexpected challenges.  These hints will help you.

 

w     Be grateful for what you have.  It will keep you grounded to acknowledge that half the world’s population will never have the basic freedoms you enjoy and take for granted.

w     Accept that you may have to sell things you love, to keep other things you love even more.  In a worst-case scenario, what couldn’t you be without?  Make a serious list –“what I must have – what I can do without”.

w     Identify the 4 most important things in your life.  If you said “health, family, relationships and spirituality”, you’re already way ahead.  And notice that possessions didn’t rate.

w     Forget about the current situation and create a “vision” board – where do you want to be in 5 years time?  Get it up on a wall where you can see it every day – you living your dream.  Then spend 5 or 10 minutes in quiet contemplation, imagining you in the dream, as if it has already happened.

w     Look for something new and positive every day – it can be as simple as the smile of a child, or a beautiful sunset.  It will lift you above the economic gloom.

w     Watch your thoughts – they have the power of a runaway train!  Each time you find yourself thinking too long about the negative state of the economy, stop it!  Think about something fun, find something to laugh about, talk to someone who makes you smile.

 

If you work consistently and diligently on these techniques, you will find yourself gaining back some control over your situation – and if your circumstances take a nose-dive, recognise it is only temporary.  You will recover and rebuild, as a stronger person, but only if you treat it as a challenge, and not a disaster.

 ]]> http://www.destroydebt.com/blogs/karenpayne/301-6-ways-to-rein-in-spending.html http://www.destroydebt.com/blogs/karenpayne/301-6-ways-to-rein-in-spending.html Mon, 13 Oct 2008 03:55:24 GMT The experts are all recommending rapid debt reduction to soften the current economic crisis.  So here are my top 6 ways to rein in spending on luxury items, while still enjoying their benefits – well, sort of: No. 1 – Gym membership A quick look at family photos from the 50’s begged...
No. 1 – Gym membership

A quick look at family photos from the 50’s begged the question “how did they look so good without gyms?”.  Well, they exercised in other ways, with more physical work, both inside and outside of the home, and a lot more walking.  So I cancelled my gym membership and increased my exercise by

·                     Parking half a mile from work and walking the rest of the way.
·                     Taking the stairs instead of the elevator (see your doctor first if you 're on upper floors).
·                     Starting an exercise class in the lunch break

No. 2 – Cable subscription

Review your plan, and check out the competition.  See what you can do to reduce your subscription, so you are only paying for the channels you watch.  The pain will only be temporary.

No.3 – Lunches

If you buy your lunch every day, cut it back to 2 days a week.  Bring lunch from home and arrange “group lunches” with your work colleagues, where you each bring enough to share.  It’s fun trying different foods, and you will all save money.

No. 4 – Cell phones

Check your usage, look for a better plan and reduce your dependency.  Like lots of modern conveniences, it’s a habit.  Before cell phones, we weren’t at each other’s beck and call. Sometimes we waited until we got home to talk!  Trust me – I cut back for a week, and I didn’t shrivel up and lose interest in meaningful communication with my fellow humans.  And I am on target to save $130 by the end of the month.

No. 5 – Cosmetics

I love make-up, perfume and skin care products, and I use the more expensive brands.  I now pledge that as things need replacing, I will try cheaper ones.  Research shows that we pay more than necessary for cosmetics, because clever advertising of the expensive brands targets our emotions and vanity.  I’m giving it a shot, especially if it means reducing credit card spending.

No. 6 – Dining Out

Does McDonald’s count as a restaurant if you eat your Big Mac sitting down?  We are about to find out, as we abandon the higher-priced eating houses.  Restaurants will be for special occasions. And if there is food in the kitchen at home, that will be prepared and eaten first.  Everything else will be a last resort.

Take heart, everyone.  If you just do a couple of these things, you will be saving money you could use for debt reduction.  And let’s not panic and rein in our spending too much.  Our whole monetary system, world-wide, is built on confidence and responsible spending.  The currency needs to be circulating and not hidden in shoe boxes under bed.]]> http://www.destroydebt.com/blogs/karenpayne/299-if-you-want-my-advice-about-debt-consolidation.html http://www.destroydebt.com/blogs/karenpayne/299-if-you-want-my-advice-about-debt-consolidation.html Thu, 09 Oct 2008 03:50:15 GMT There is no doubt that debt consolidation gives you breathing space.  Having all your debt packaged into one loan, and spread over a longer period of time, reduces your regular payments and frees up your cash.  You breathe a sigh of relief and vow you'll never get into the same situation a...
But the availability of easy credit, and the constant bombardment of advertising overwhelms your sensible financial brain, and before you know it, you’re back where you were before.

This has already happened to one friend of mine, and another is on the way to creating the same scenario.  I mentioned this situation briefly in a recent forum post, but I’d like to expand on it here, to alert you to the number one reason that causes debt consolidation to fail.

Don’t get me wrong. Debt consolidation can work if you combine it with one essential element – a change in habit.

Sounds easy, doesn’t it?  What habit, anyway? Oh, of course – my habit of buying things I don’t need with money I don’t have.  Sure – easy – no problem.

Well, if it’s so easy, why is one friend now paying off a mortgage that is larger than the current market value of her home?  And why is another friend on a spending spree using the credit she freed up with debt consolidation?

They haven’t changed their habit of spending more than they earn.  They haven’t coupled the debt consolidation exercise with some behaviour modification strategies to help them understand the emotional triggers that cause them to overspend.

Because I care about them, I have offered them the following advice:

§    Put a long-term financial plan into place.  If you don’t feel you have the skills to do it yourself, get a professional.  Some banks and other financial institutions will offer this service free if you have accounts with them.

§    Do a monthly budget and stick to it.

§    Reduce luxury items from weekly indulgences to infrequent treats (after all, you still need to have some fun!).

§    Set some goals for holidays, outings and special purposes, and find inventive ways to fund them that don’t involve filling out a credit application form.

§    Use affirmations and visualization techniques to re-program your subconscious mind.  There are many self-help books on the market that will walk you through this process, but again, if you don’t think you can go it alone, see a professional.  This will cost money initially, but can bring whole-of-life changes if you practice the techniques.

They don’t have to be misers to be financially independent.  But they do have to change their mindset, or their willpower will become won’tpower when that item they absolutely must have appears on the radar.

And that applies to you, too!  If debt consolidation is a viable way out for you, then do it.  But do these other things too – life is much more enjoyable when you are not constantly worrying about debt.



 ]]> http://www.destroydebt.com/blogs/karenpayne/296-a-bazaar-way-to-earn-holiday-cash.html http://www.destroydebt.com/blogs/karenpayne/296-a-bazaar-way-to-earn-holiday-cash.html Thu, 02 Oct 2008 02:08:19 GMT My 2 daughters, after producing between them 5 beautiful grandchildren, decided there was no room in their homes for the baby furniture, car seats, tiny shoes hardly worn, elfin-sized clothing and all the other paraphernalia that goes with the arrival of children.  They also decided t...
After stumbling over these items for over 12 months, moving them to clean house, shifting them from here to there to gain access to my closets, it was time for action.  And then I saw the sign - Baby Bazaar - "sell your unwanted furniture and clothing - birth to 6 years old" it said.  The answer to my prayers - I made the arrangements and at 6am one Saturday morning, my husband loaded everything into our trailer and set me up at the Bazaar.  In true entrepreneurial style, I had priced everything (after much research), made impressive signs, created a display stand and even remembered to bring lots of small change for the large bills I was undoubtedly going to be changing, as my goods were snapped up by eager buyers.  Then I saw the professional baby bazaar Moms.

Within 5 minutes I knew I was totally outclassed, so I sat opposite them for the next 4 hours, watching in fascination as these two young women beat the retailing crap out of me.  This was a slick operation.  They unpacked three times as much stuff as I had, and had it all set up in 10 minutes, including 2 large and complicated prams, dozens of toys, not new but in excellent condition, and still in their original boxes, 2 cribs complete with mattress, sheets and those darling quilts with bears all over them.  Get this people - they had an electronic cash register!  A cash register! And a power pack to run it.  And clothes - all kinds of babies and childrens clothing.  Shoes - boxes of them.  If all these shoes belonged to their children, they must have given birth to centipedes.

I finally had to ask - and what I found out astounded me. These young women were both stay-at-home Moms who needed to supplement the family income.  They resourced the baby items from a range of places - garage sales, flea markets, friends and acquaintances, word-of-mouth, ads in the local paper etc.  They knew their market, so they bought low, and sometimes traded to get the items.  Then they readied them for sale - washing, mending, repairing, painting, packaging, pricing.  In our area, so they told me, there are at least 6 baby bazaars, fetes, markets or other public selling events, each month.  The events are mostly run by school, church or charity organisations, so the cost of the tables is fairly low.  Apart from this, and the purchase of the cash register (which they saw as a long-term investment), there was very little overhead.

Their goal was to earn enough money every year for a family holiday at a beach resort, and to cover the cost of replacing their children's clothes.  For the past three years, they had achieved that, taking a huge load off their husband's shoulders, and relieving the pressure on the family budget. It worked for them because the one thing they had spare was their time, so they turned this into extra income.

So if you have spare time, initiative and the ability to talk to people, this could be for you. Isn't free enterprise wonderful!

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