Smart Budgeting

While we're beginning to see the light at the end of the tunnel, many of us have taken a beating financially from the recent economic crisis. Job losses, underemployment, student debt and credit card debt undertaken from investing in what would hopefully eventually be beneficial are crushing millions of us. But there's plenty we can do to make the day-to-day easier. We're all already familiar with cutting back. Here are a few tips on using your budget to get the most from your paycheck for your future.

Keep Investing
Paying off debt or keeping afloat may be your highest priority. However, if you can afford it, keep putting aside a percentage of your paycheck towards investments and retirement, especially if your employer offers a matching investments. Spending one year not putting aside money can result in spending hundreds more a month later down the road to make up for it.

Pay More than the Minimum
Paying the minimum balance on credit cards and loans is a good way to barely keep your head above water. There are plenty of online calculators to determine how much your monthly payment needs to be to pay off your cards completely in your chosen number of years. Try to aim for paying off your debts in 5 years or less. Balance your payments by how large the debt is. Let's say you have $200 a month you can put towards credit cards, and you have one card with a balance of $1000 and another with a balance of $3000. 25% of your debt is on the lower card. So pay $50 (25% of your monthly payment budget) to the lower card and $150 to the higher card. It will get paid down a lot faster and you can avoid hefty interest fees by paying more. Of course, the higher the interest, the faster you want to try to pay down that card.

Make Smart Purchases
This may seem obvious, but be discerning when allocating your money to extra expenditures. You may be able to live with a beat up old couch. But a leaky drain can turn into a flooded house, and a toothache can turn into a root canal. If you must spend extra money, be sure you're investing in something you really need. And especially spend on things that can turn into a problem later. It's better to nip it in the bud.

Buy Secondhand and Fix What You Have
You can get tons of good quality items if you give yourself a little extra time and keep a discerning eye out. We didn't have anywhere to sit in our living room and were in the market for a couch. We had the option of buying a new discount couch for $800 at a wholesale warehouse, but didn't really have the budget for it. We found a nice worn-in leather couch at a second-hand store for $300 and spent $100 and a few hours of elbow grease to restore the leather. That's half the price for a nicer couch! Same principle applies to clothes. Nice quality slacks and jeans that may just need to be dry-cleaned, dyed, patched or hemmed get dropped off at Goodwill because the last person didn't want to bother with it. Look for consignment shops in nicer neighborhoods for the best quality deals. Keep an open mind and see what you can find. If something you already have is wearing out and you don't know how to fix it, take it to a tailor or a dry cleaner to get it like new again for just a few bucks.

Keep an Eye on Your Credit Score
Make sure you always pay your bills on time, and if you can't, call and see what kind of deals you can make. Many loans and credit cards offer deferred payment programs, especially if you're unemployed. Try to avoid opening any new accounts and if you must have a card, keep the one you've had the longest for the most positive effect on your credit. If you can, pay your full debt instead of negotiating down. A chargeoff can really hurt your credit and be much worse for you in the future than just being in debt.

It's OK to Rent!
A lot of people think that purchasing is the soundest decision you can make, but purchasing an item new can devalue it instantly, just like driving a new car off the lot. That's a big dent in your investment. An even bigger dent comes from maintenance. Avoid the headaches of repairs by letting someone else do the work for you. Azuma covers all maintenance and installation at no charge for refrigerator and washer and dryer rentals, giving you one less thing to worry about.

Don't Get Caught Up in the Little Things
Oftentimes financial advisers will tell you to cut back on little stuff, like the fancy coffees or basic cable. It's true that these things add up, however sometimes that cup of coffee is the only thing keeping you sane through your workday. You know what you spend the most money on. Eating at home, using a prepaid phone instead of a smartphone and re-watching a DVD instead of going out to the theater are all things we already know save money. You still have to live your life, so don't tear your hair out over the small stuff. Sometimes having that small reward that you earned at the end of the week, like a cup of coffee, is what reminds you that you're working towards long term goals and are still doing okay.

Hopefully these tips will help you all continue to be wise with your money. Until next time, keep it clean!