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Budgeting 101: Some Things to Think About

In school, we learn the basics - reading, writing, arithmetic - with some science and history thrown in the mix.

Sadly, most school curriculums do not include an essential lesson that everyone should know in order to be successful in life - how to budget their money.

Fortunately, establishing a budget plan doesn't have to be a mystery. Following these basic steps can help you get started on the path to financial security.

Step 1: Determine your monthly fixed expenses.

Many people go through life not knowing exactly where their money goes. A bill here, a check there, before they know it, they are in a financial hole.

The most important step to effective budgeting is to identify what your fixed expenses are for each month. What is your mortgage payment? How about your car? Any credit cards? And don't forget about the necessities - groceries, gas and utility payments. All of these elements add up, and many people are surprised when they see the total.

Now you know the total. How does it look compared to your income? If your monthly income exceeds your monthly expenses with some additional cushion, then you are off to a good start. However, if your expenses are higher than your income or if your expenses are just about equal to your income (i.e. no financial cushion), you will need to take a close look at your expenses to see what can be cut.

A key reason many people fall into debt is their expenses exceed their income, and in many cases, they are unaware until it is too late.

Step 2: Take action to reduce your monthly expenses.

Reducing your expenses is good advice for everyone, but it is even more important for those whose income is less than their expenses. Luckily, there are some options out there that might be able to reduce your monthly bills.

If you have a medium-to-high interest rate on your home loan, refinancing your mortgage might be able to snag you a lower interest rate and a lower payment. You might also be able to refinance your car loan in order to reduce your payments.

If you are carrying debt on several credit cards, consolidating those balances might be just the ticket. Transferring balances on high-interest cards to lower-interest cards often can not only lower your payment, but also decrease the total interest you end up paying.

Step 3: Identify any hidden spending.

You've got your budget in place and feel confident that you are on the right financial track. However, at the end of the month, you are still coming up short. Chances are, you've got hidden spending habits that need to be addressed.

Man with casual smileMost of us have some cash set aside for incidentals - a cup of coffee on your way to work or a quick lunch with a friend. But if we're not careful, these incidentals can add up quickly.

If you are finding yourself coming up short each month and are not sure why, it would benefit you to track your spending for a month to discover exactly where your money is going. You might be surprised. Those $5 cups of coffee can accumulate pretty quickly - just buying coffee five days per week for four weeks can cost as much as $100 or more. You might find that dusting off that old coffee maker might be the difference between paying your bills and being in debt.

This is just some of the budgeting advice you can find online, be sure to do what you can to better your financial future. If you want to know more about a fast no faxing cash advance, read our frequently asked questions for answers that will help.

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