Monday, April 13, 2009

Are You Leaking Money?


By James Stevenson, Extension Specialist, Pinellas County Extension

According to University of Florida Extension, one of the first steps you need to take when dealing with money issues is to establish a spending plan. This tool will help you live within your means, and identify any “leaks” in spending.

It sounds easy enough, but a surprising number of folks have yet to put pen to paper and figure out where the money goes. To start, make a list of your fixed expenses. These include rent, mortgage, car payment, insurance, etc. Then list variable expenses—the ones that are flexible and often change from month to month; power and water bills, cell phone charges. Take a look at the previous three months’ statements for an average of these expenses and add them to your worksheet. Then have a look at your discretionary expense. Here is where the fun begins. Discretionary expenses are the ones you have total control over, and include expenses like eating out (a biggie,) food, clothing, dry cleaning etc. This is where you will detect leaks.

It is not to say that you will need to live a deprived life, and no one would suggest you eliminate food expenses, but with discretionary spending you will need to give yourself an allowance. See the link at the end of this post for some excellent tips on saving on these expenses.

To adjust fixed expenses, consider working with your providers for the best rate. Can you afford a higher deductible on your insurance? Does your energy provider have a flat-rate program for billing through the year? Can you negotiate with your credit card company for a better interest rate?

When it comes to credit, remember that is money you DO NOT have; it might be tempting, but use credit only for emergencies and only if you can pay the money back quickly. If you have credit debt, get that paid-down as quickly as possible—there is no sense in having a savings account earning 3% interest if you have credit debt racking up 15-20% interest. Use any windfalls to pay down credit cards. It is tax time, so any refund should to straight to the creditors, not to purchase that flat-screen TV!

It will take a few months to get used to your spending plan, but simply starting should give you the feeling of being more in control of your expenses.

See: Cutting Costs to Live Within Your Income from the University of Florida experts.


Email Subscription

Enter your email address:

Delivered by FeedBurner



Company and product listings do not represent endorsement by either: Pinellas County Extension, Pinellas County or the University of Florida / Institute of Food and Agricultural Sciences.