After a decade of ten-thousand dollar flat-screens and tricky double mortgages, the party is over, and it's time to pay the bills.
Although we all need to make some tough adjustments financially, it isn't necessarily all bad news.
Here are some helpful tips to help your family to organize finances easily.
Without a budget, it's extremely difficult to know where money is going, how much discretionary remains, and how to prioritize fluctuations in income and expense.
A simple monthly spreadsheet (projecting forward for a year) is sufficient to help you organize finances effectively. Anticipate expenses as realistically as possible, map out income and savings goals, and keep good records.
The key here is continuity, and discipline.
Understand that an emergency fund gives you a certain, mental freedom from stress that is the basis of financial security. If you don't have one of these, build a budget around its creation.
Every financial planner preaches it, and yet, there are still folks out there living from check to check.
An emergency fund is 3-5 months living expenses, cash, which is immediately available. An emergency fund is not Stock, 401k money, IRA's, gold doubloons or, heaven forbid, a line of credit.
You should not even think about systematic investing until this is set up. Just do it.
There's something very special about the way human beings treat cash. You look in the wallet and say "I don't want to break that 20 dollar bill" or "wow, if I buy a 4 dollar mocha-chino, I'll have to skip lunch". People are naturally conservative with physical notes, and it's a more healthy relationship with money.
Set a weekly dollar limit on dining out (it's definitely an individual budget item), start sharing those gigantic restaurant portions, and eat healthier at home.
Share cooking chores, teach non-cooking family members how to take care of themselves, and spend more time teaching and modeling good behavior for your children (and spouse).
There are lots of other things available at the library besides books: DVD's, audio books, magazines, and more.
This one doesn't just save money, it also teaches community values, encourages more frequent and experimental reading.
If you use DVD rental services, satellite radio, cable, and internet, you could be paying over 200 dollars a month for what is essentially discretionary entertainment.
See if there's any overlap in services. You may not cut the cable entirely, but if going down to basic cable for a year gets you closer to a fully funded emergency fund, it may be worth it.
Make sure you're getting good value for what you pay.
Take a close look at every single monthly bill and see if you are getting a realistic return for your dollar.
If you haven't used it appreciably in the last 6 months, it's time to consider the axe.
During your budget creation, sit down and assess every fee your bank charged you in the last year.
Most folks will be shocked, because banks work hard to insert fees into inconspicuous areas.
If this is the case, consider joining credit unions.
If you do not have this option, consolidate your accounts; simplicity isn't the only reward, bankers typically reward customers that have multiple accounts.
A hot tip: Your local discount brokerage house may be easier to deal with than your bank, and cheaper too. Pick your favorite, and ask them about their local banking options. If you're willing to forego the safe deposit box, you'll be pleasantly surprised at the options available.
You may have hidden, unused value all over your house.
Obsolete computers, displays, printers, VHS tape playersâ€¦ all these things have SOME value, and once you set these things aside, you aren't likely to return to them. Get them out of the house, and get cash (or a charitable tax deduction for donated items) as a result.
Books, video games and movies are extremely easy to sell and ship (try Amazon.com).
Why do we buy a new toaster when the old one still works? Because we were just shopping, and the need was created when we saw the new one.
New things do not make your life any better.
How many hours have you spent in your life, wandering around some retail outlet isle? Or have you bought anything that you didn't even need? If you did, stop now.
Buy only what you need from now on.
Do exhaustive research online, defer purchases when you can, and don't drive around looking for new (unspecified) stuff to buy.
Every budget-wise household needs a little extra, a sideline.
Instead of shopping, why not start a hobby that makes money? It should mirror your interests, be fun, and not require any sort of significant investment.
This isn't a get-rich quick scheme, just something fun that makes money, and maybe helps teach the kids (and you) some entrepreneurial skills. Be creative, keep good records, and enjoy a little extra income.
Maybe it will get profitable enough for you to retire one day.
Follow these simple methods to organize finances effectively for getting out of debt and growing your personal wealth!