The Dangers of Incurring Debt to Finance a Lifestyle

By : Peter Kenny
There are messages everywhere in society telling us how we should live. It often seems like the media becomes the scapegoat for many of society's bad habits, but the fact is many people imitate what they see on television or in the movies, whether they are consciously aware of it or not. If your favorite television personality is wearing the latest pair of Manolo Blahniks or driving BMW's newest model, it can make you want these same luxuries.

The problem with imitating what we see on television and in magazines is that most consumers simply can't afford to live the same lifestyle as a television or movie star. Rather than realizing this lifestyle is currently beyond their means and working harder to afford it, the "must have it immediately" way of thinking that many people have causes them to use credit cards and personal loans to live the lifestyle they desire. This is where the trouble begins.

If you have to use credit to obtain a way of life, it follows that you will also have to use credit to maintain that lifestyle. Unless you dramatically increase your income, it is impossible to catch up on your bills while continuing to live the life of luxury. Many people build up a large amount of debt simply to buy consumable goods like clothes, food, shoes, and transportation.

Most of these things begin to depreciate immediately after they've been purchased. You wouldn't even be able to sell them to pay off the debt incurred to buy them. Worse yet, in a few years, you might not even use these items, yet you will continue to receive a monthly bill for them. Taking into consideration the interest charges, you could end up paying over a thousand dollars for an item that may have only cost a hundred dollars.

Debt keeps you from building up a personal savings. Chances are, if you're using credit to pay for your lifestyle, you aren't saving any money. What's going to happen in the case of an emergency, if you suddenly find yourself unemployed? Would you be able to continue to pay your bills as well as pay for your daily needs such as food and housing? You can't rely on your credit cards, especially if they've been maxed out on consumable items like clothes and shoes. Depending on your how much you owe, you may not be able to apply for a personal loan to help get yourself back on your feet again.

A lifestyle supported by credit and loans is not a responsible one. You can only live beyond your means for a short amount of time. Living a life that's debt-free doesn't necessarily mean you'll be free of all worries, but at least you will be free of money worries.
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Frugal Lifestyle for a Life Free From Debt

Many people are living beyond their means and credit is a solution for those expenses that cannot be afforded. A credit card can be an ally or a foe. An ally for those times when you really need it and a foe for those times when you don’t need it but you think you do. It is very easy to purchase items on every whim but it is hard to keep those impulses at bay when the purchases made six months ago are still being paid. This is where people with this kind of lifestyle and thinking eventually are in debt until they retire or worse bankrupt.

That is why it is important to change financial attitude early on. There are many benefits in understanding the limitations and capabilities of your finances and one of them is peace of mind. Having peace of mind will reap a lot of benefits in the long run. Having peace of mind can have an effect in work performance and may eventually lead to promotion and more financial stability. Having peace of mind will also improve personal relationship which is something money

can’t buy.

Dramatic change in lifestyle is painstakingly hard and no one says it is the other way around. As long as there is determination to change and the perseverance to do what is necessary no one will go the wrong way.

First thing to do is to understand your finances. Understanding your finances will give awareness on the limitations and capabilities your income has to offer. Next is allotting strict budget on expenses. Lastly, follow the budget allotted. It sounds so simple but the hard part of it all is the ability to maintain this state of mind of following the budget and not losing track of it.
By : Mat Isaac
Understanding finances mean monitoring how much is being spent on grocery, clothing, entertainment, utilities, transportation, insurance, services, etc. Note down every single penny on everything spent for a month. Then categorize expenses accordingly and find out the total spent on each category. Find out how much is the daily spent for all the expenses. If the daily spend is more than the daily income then there is serious budgeting to do. Find out if there are expenses that are extravagant and lessen the budget on those expenses for next month.

For the first few months of following the budget always check the budget list to keep track of it and to check if the expenses so far are still within in.

For those who are already in debt, consider debt consolidation. In debt consolidation, paying off debt is easy because of the convenience of paying multiple debts into single payment every month. This will make budgeting much easier for those who want to practice a frugal life.

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7 Proven Steps to Fix your Personal Finances That you Can Implement Right Now

By : Bruce Hokin

Fixing your personal finances is not rocket science. You can do it if you apply some commitment and are prepared to stick to the plan. Imagine how your world could open up if you were debt free. Imagine all the options. Quit your job, work fewer hours, have more holidays or just help others.

The proven methods listed below will work for you if you are determined to succeed and implement them in your own circumstances.

Step 1. Imagine how good life will be once the debt is paid.

Imagine for a minute how good life would be to if you were debt free. Think what you could do with the money you currently use to pay off those credits cards. You could use it to save for your future, save for your retirement, hit the sales with a clear conscience, go on holidays or save for your children's college education. Think on this often and visualize in your mind's eye how your life would change for the better once the debt was gone. If you seriously want this to happen to you it will be easier to follow the next steps.

Step 2. Do a budget.

Unless you know what your financial position is currently you won't know what targets to set, will you. Agreed? Good. The best, most simple way to do this is to set up a personal or family budget. A lot of people stop here and don't progress any further. Bad idea! This can be done very simply. Just follow the points listed below:

a) Get out your latest credit card statements. Add up all the unpaid balances.
b) If there are any other unpaid debts (not home or car) include these balances as well.
c) Calculate your (or family) monthly income - just the amount brought home each month.
d) Calculate your monthly spending. Work out where all the money goes. Don't leave any thing out.
e) Take the monthly spending total away from the monthly income total and review the answer.

Are you living beyond your means? Are you spending more than you earn each month? Are you putting any money aside for emergencies or saving to replace costly items such as the car or some major electrical appliances? Do you have any money left over to increase your monthly credit card payments? Set your self a goal of paying off your credit cards within a certain time.

The questions raised here can be addressed by putting Steps 3-7 into practice.

Step 3. Live within your means.

You can never get your finances under control if you continue to live beyond your means. The cost of living this way is the interest charged by the credit card provider. This is one of the major reasons you are suffering now. Commit yourself to live within your means. Once you have done the budget as outlined in Step 2 you can easily see what you have available to spend.

Step 4. Cut up your credit cards. (Well, maybe keep 1 for emergencies, if you have to.)

It is really important not to add more debt. Read that again. If you can live within your means, you can cut up your credit cards and focus on paying off the credit card balance as soon as possible. You may have items around the house that can be sold. Maybe a second car that is not a necessity. Sell these things and use the funds to pay down the credit card balances. Take on some extra hours at work, think of ways to earn extra income so that these extra funds can be applied to those credit card balances.

Step 5. Find bargains - have fun.

If this whole process becomes a drudgery then it will all become too hard and you won't keep going. Don't let this happen! Set some money aside so that you can, occasionally, buy those things you want. Learn how to only buy things you need and ensure they are at the cheapest price possible. Here are some hints that will help:

a) Look for sale items
b) Don't buy on impulse
c) Only use free cash funds to buy - not by credit card
d) Ask yourself "Do I really need this?" twice or three times before you hand over your hard-earned cash.
e) If there is something you really want - wait for it to go on sale.
f) Don't buy your items at the height of the fashion or the fad, wait a few weeks.

Step 6. Set aside a savings amount.

A target of 20% of your take-home salary is recommended. However, saving any of your salary is a good start. Set your goal and stick to it. The idea is to match your lifestyle to your income. Having some savings can help in emergencies, pay a larger deposit on your next car or be the beginnings of your holiday or retirement nest egg.

Step 7. Don't compare yourself with others.

Your task of living within your means will be made easier if you don't compare your lifestyle with others. You don't know, but their finances may be in a worse state than yours. If you want a better lifestyle, then save for it and/or work out ways to increase your income.

These are just the very beginning steps that you can take towards getting your finances in shape. With a little commitment and the right tools, you will succeed.

Article Source: http://www.articlesbase.com/finance-articles/7-proven-steps-to-fix-your-personal-finances-that-you-can-implement-right-now-160350.html

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Your Finance and Lifestyle - They Are Connected!

When it concerns lifestyle, numerous arguments fire up. A lot of people possess their own idea of what lifestyle actually represents. Only it is unmistakable that finance and life-style need to co-exist in roughly some shape.
So for you to afford a certain lifestyle, you are required to be in a correct fiscal standing. Whenever your life-style comprises of buying the most red-hot fashion, and so it's clear that you have got to have or had better hold a certain sum of money. If you do not have sufficient income or resources to sustain this life-style, it will necessitate you stopping expending money.
If you experience a vision of what your perfect life-style ought to be, then it is time you made sure your finances meet that reality. Zero amount of daydreaming will make things come true. There has to exist some sort of practicality as well, since income can disappear and debt can climb.
Do not take for granted that a certain lifestyle is possible for you merely because the magazines say you it is so. The first thing to do is to have a look at your finances and Figure out if they will be equal to and be capable of supporting the lifestyle described through the magazine or by your friends.
The common fault that most individuals make is that they believe they have got more money than they actually possess. So they spend more on their perfect lifestyle just because it represents a status symbol.
The philosophy is this: if they recognize that I am wearing something by so and so or driving such and such a motorcar, then they will not find out that my monetary resource are in the red. Finance is the primary thing you need to consider as you choose a certain life-style.
You will merely look foolish if your financial position drops so badly that your house gets repossessed and you have to file for bankruptcy. Live inside your means and your finance and lifestyle will be able to take care of themselves.
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