Top Ten Personal Finance Mistakes - Part 2

Published by Eugene S. Melchionne, Attorney at Law July 31st, 2007 in Personal Finance, Financial Resources on the Web and Connecticut. 0 Comments

The second most common mistake is not changing your lifestyle to match your finances. Once you have set your personal financial goals, now you have to figure out what changes to make to your lifestyle to achieve those goals. Does this mean a change in jobs or careers? Or does it mean changing your spending habits? Never spend more than you make.

The first step to change is to set up a budget. The Federal Government has a web page set up for this purpose. You can also get a spreadsheet from the Wall Street Journal. Write down everything that has to be paid each month. That means rent/mortgage, food, utilities, insurance, transportation and other basic living expenses. Then write down payments on regular debts; car payments, personal loans, student loans, etc. Now do the same for your income from all sources. That’s the easy part. Now do the math; subtract the monthly expenses from the monthly income. If the answer is a negative number, stop now and figure out what can change in your monthly bills. Do you sell the car that costs you $800 a month in payments or do you start brown bagging your lunch? Is it time to take a second job or get more hours on the job? Either way, something must change.

Be careful with your changes. Taking second jobs can overtax your ability to work. Cutting your budget too severely will make it hard to adjust. Just like dieting, don’t make things so difficult at first that it is hard to sustain. Now, it’s time to go on to Part 3, Pay Your Credit Cards Off

What Is Doing Your Personal Finance Home Work?

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That means working on a consistent basis to keep your personal finance house in order. You say really, how do I go about doing this? There are many ways for you to keep your own personal finances in order. Here are some tips on how you can go about doing this:

1) Create a personal finance budget for yourself and your family if you have one. You can do this by categorizing how your money is spent such as; rent, mortgage, food, entertainment, utilities, credit and debit card expenditures, savings, income, travel, etc... You get the idea. Just categorize your budget with what makes you comfortable. You may also want to utilize a software program to assist you with the budget you create. You may want to consider a software program that has a spreadsheet. By the way, you may want to do your budget on a monthly basis. Your budget should assist you in determining where your money actually goes!

2) By all means get your credit report and credit score! You may want consider running your credit report on an annual basis. Did you know that you?re entitled to a free copy of your credit report from each of the credit bureaus(Equifax,TransUnion,Experian) every year? You can secure a copy of your credit report by going through http://www.annualcreditreport.com. So, go ahead and order your credit report so you can check it for accuracy. If you have any problems with your report, you?ll need to contact the particular credit bureau directly. The contact information will be provided when you?ve secured a copy of your credit report. By the way, you?ll have to pay a few dollars extra to get your credit score separately from the credit bureaus. But, it?s well worth it, to know how your credit is being scored for your overall credit.

3) Work on determining from your budget and credit report what problems you may have with your finances. These tools should assist you in what you need to do to improve or maintain your finances. It?s like a snapshot of where your money is going. So you don?t have to ask the question, where did all of my money go?

4) Consider working on adding if you haven?t already done so, savings to your budget. You may be saying, I barely have enough to make ends meet, how can I save money? Well, you can! Just say yes you can to yourself. A good way to start is by saving your change. That?s right just start by saving your change. You?d be surprised the amount of money you can save by doing this. You can also, set aside a certain amount of money on weekly, biweekly or monthly basis that you?d like to save. Make the amount of money you save realistic, so you can stick to your savings plan.

5) Set future financial projections for where you want to be with your budget in say one to five years. You may want to consider doing this to achieve your possible short and long term goals. For example, if you decide that you want to purchase a home in two to three years, a future financial budget projection may assist you in knowing how much money you need to save to achieve this goal. Or, maybe you plan to retire in five years, again your future budget projection may assist you with this plan.

6) Take a closer look at your credit and debit card expenses in order to assist you in tracking how you are spending your money. This may help you determine if you?re spending too much money in certain areas if you?re trying to save.

7) Check to see if your financial house is in order in reference to your insurance such as; vehicle insurance, medical insurance, rental insurance, homeowners insurance, life insurance, disability insurance etc... Make sure you have the insurance you need for yourself and your family. You may want to consider doing an annual check-up on your insurance, before the renewal due dates. This will give you the opportunity to reassess the insurance you currently have. You?ll be glad that you did!

So, now you have it! That?s what doing your personal finance homework means. You should be on your way to getting a handle on your personal finances if you have not already done so. You?ll be better prepared to manage your finances.

Nocita Carter is a writer and web designer that creates websites providing informative tips on various subject matter including personal finance tips on your personal finances at

Top Ten Personal Finance Mistakes - Part 1

Published by Eugene S. Melchionne, Attorney at Law July 30th, 2007 in Personal Finance, Financial Resources on the Web and Connecticut.

Rule #1, Have a personal financial goal and a plan to achieve it. The pressures of bills and getting the income to pay them typically cause you to lose sight of your personal financial goals.

The second thing I ask a new client is, “If I could wave a magic wand to make it happen, where do you want to be in five years?” Or sometimes, “What do you want to be when you grow up?” I ask clients this no matter what their age, especially if I sense that they are living without direction. In order to get direction, you have to set a goal and then the path to that goal becomes clearer. It may be too hard to set a lifetime goal, but a five year plan is always achievable. Once you have a five year plan, you can break it down into smaller parts with the short terms goals being something you can achieve in one year or less. Every journey starts with the first step.