Why does a person go into foreclosure? Layoffs, medical circumstances, lack of priorities, too much spending, and getting into a home that really wasn’t in the budget can all be reasons that homeowners stop paying the mortgage, and the mortgage goes into foreclosure. The bank is taking back the house.
Over the last few years, our country has seen a dramatic change in economics comparable with that of the 1930’s. Many homeowners are not really safe from those factors that cause foreclosures. By taking a few precautionary steps in your financial life, you can strengthen your financial standing and guard your home from that dreaded defeat.
Budget, Budget, Budget!
For many people, budgeting is not an easy task. Many find it difficult to keep track of spending and to limit and prioritize their wants and needs. The best way to save money is to set a budget and stick to it. To do this, prioritize the needs and wants. Needs would be shelter, food, and clothing (and love, but you can’t buy that). Wants will be anything else that doesn’t fit in the previous category. Make a list and prioritize your needs then below that add a priority list of your wants. Determine how much money should go to each item—keeping in check with your monthly income—and plan accordingly.
For those who are new to budgeting, a great way to keep track of what you are spending is the envelope system. Place the cash that you have allotted for each item in an envelope and label it. When the money is gone, you are done spending. This allows for quick analysis and good decision making when it comes to spending money.
Record What You Spend
For those who feel that the envelope system is not for you, write down what you spend every day. Keep a check register and balance it. Always write down all expenditures coming from the checking or savings account. By keeping in check with the account, you will always know the balance and can make better decisions for your spending.
Trim the Fat
Just like with any diet, eliminating the fat from your expenditures is sure to help keep you financial life fit. What is financial fat? This includes going out to eat, paying for cable TV, shopping sprees, going to movies, buying video games, playing golf, attending concerts and needless traveling. This doesn’t mean you can never indulge, but by limiting the extras, there will be more money for a real vacation, an exotic golf experience, or even a new car. Though making these sacrifices now may only save a few dollars, those dollars will snowball and soon your financial fitness will begin to shape up.
Live to Work or Work to Live?
How long do you plan to work? How much debt do you have? How long do you plan to live your life in debt? Debt is a prison that financially binds us to our jobs. To avoid working forever, just to pay the other guy, take the time to get out of debt, so your money can work for you. Several debt relief plans are out there. Find one that works for you and commit to work to live.
Rainy Days and Mondays
As mentioned before, the future is unknown and layoffs, unexpected medical expenses, and other situations can cause hardship and financial struggles. But by putting 10% of all your income into savings and living off the rest, you will bring a peace of mind to your financial future. That means if you only make $100 a week, you put $10 in savings. If you make $10,000 a month, put $1000 in savings. Sometimes getting a separate savings account at another bank helps because the money is much less accessible. Building an emergency account, vacation account, a living expenses account, or even an investment account is easy and well worth the sacrifice.
A good way to save money is to barter for what you need. Bartering systems are becoming very popular in communities around the country. If you have goods or services you can trade, then approach someone about trading with you or seek out in your local paper for any sign of barterers. By participating in this kind of economic system, things that you once paid for can be yours for trade.
Food, Glorious Food
Food in any household can be a huge expense. But there are several things that can be done to cut the cost of food dramatically. First, consider couponing. Using coupons has become a big thing lately, and a good way to really save some money is to find a web service that provides a couponing system. These services provide a free service to organize your coupons and keep you up to date on sales and deals found locally. Another expense cutter to consider is becoming a member of a co-op. With a co-op, a group of people get together and purchase foods and goods, wholesale and in bulk. With this double whammy, you’re sure to get more bang for your buck.
These are just a few ideas that will aid in saving money to ensure that when that foreclosure monster comes knocking at the door, tools of preparation and sacrifice will be on your side. You will be ready to defeat that threat and protect your home from financial ruin.
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