Question: My wife and I are always fighting over money and finances. Where is a good place to start building some common ground with money as a couple? Nate Rome, NY

Answer: Managing your money, planning your finances and making hard spending choices can be a joy or a battle with couples.

Getting your budget into fighting shape can take months. Each day, week and month as you begin to tweak your budget and its categories you’ll be faced with choices.

What goes where and how much to allocate.

My wife is great, she is very organized and works well from a list. So each time we walk into the store she knows what she wants – it’s on the list.

While at the grocery store today my wife and I were buying items for this week’s breakfast, lunch and dinner, plus extras for our holiday guest which will be showing up.

She worked from her shopping list. I don’t know why but today I looked around as we walked up and down the isles to catch a glimpse of "who" was using a list for their buying decisions.

It was somewhat amusing, yet at the same time sad. I’ll bet you could easily pick out the families with financial problems. They were the ones pushing a cart up and down the isle with no idea what they want ( young adults fall into this category). Or it’s the mom with kids in the basket asking for this and that. Mom fills up the cart paying no attention to a list.

Do you shop from a list? Buying at the grocery store may be an indicator of the way you manage the other financial aspects of your life.

To get a financial control by using a budget you must fight impulse spending. Try it. Next time you go to the grocery start write down all the items you want and ONLY BUY what is on the list.

Doing that can get you started on two things. Planning purchases and shopping from a list. Now stop the urge spend without planning and stick to a budget.

The purchase cost and the buying cost plus financing requires some analysis.

To find the financing cost – in case of loans, get the total of all payments and subtract the amount of cash obtained from the lender. In case of purchase credit – as in conditional sides or similar contracts, the financing cost is listed separately. Otherwise, in purchase credit, get total of all payments including down payment and subtract the cash price.

Financing cost may also include special fees, filing or recording fees and, setup fees on the account, delinquency charges. Insurance costs, separately stated, although part of the financing, are not considered part of the financing cost.

Thus, you can determine dollar cost of financing and total dollar cost of your credit transaction per month or per year. Dollars are what you pay and that is the important point in relation to your budget. However, if you must know cost of credit on the basis of percentages – or on basis of interest rate per year – banks and loan companies and finance agencies can give you an approximate figure.

The lowest dollar cost of credit, however, should not be the only consideration. All the elements of a transaction should be considered, such as terms, convenience, fairness, dependability, leniency, helpful guidance, etc.

Question: We need some tips on personal money management. We are tired of the games played with our “money management system” each week we bring home in our paychecks. Any ideas, tools, tips or a workshop to get a handle on our finances. Peggy, Rome, Georgia

Answer: Basic and personal money management is not a class for students in high school or college but should be. Many families find themselves in debt facing a financial crisis hiding in their future if the don’t follow the tips and advice of managing money which could be found in a high school course.

For example take a fictitious couple of Marty and Diane Average in their mid 40’s who think they budget well – but can’t seem to get ahead. They want to get serious about getting their financial future in shape to enjoy retirement.

Where does Diane and Marty start?

The first question to ask this couple – Do you have a completely developed budget?

A budget is the first step to “Mastering the Basics of Personal Money Management”

Most people understand a budget as being key. They start with good intentions on their budget but somehow always get off the program or things don’t work perfectly and they lose interest. A budget needs to be reviewed on a regular basis – like every month!

Marty and Diane are like so many families across America who do not understand the budgeting process.  Developing a balanced budget, building an emergency fund and saving all need to be a part of mastering their money.

Let’s look a little deeper at this couple. Marty and Diane’s children are grown and out of the house. They still help out their kids by paying a part of their kid’s student loans.

Their joint annual take home pay is $45,000. As for retirement they have some money in Diane’s 401(k) but Marty cashed his 401(k) in when he recently changed jobs. He cashed it to pay bills.

Basically in their mid 40’s they are starting all over again. Before they can start to save for the future they need to get a budget in place and both work on controlling spending.

Diane and Marty in error, honestly think that since they pay all of their bills – they have a balanced budget.  Beyond the bills which arrive every month in the mailbox they have not taken into account, car expenses or repairs, maintenance around the house, clothes, personal items, entertainment and any other irregular expenses. A fully functioning budget will include all of those items.

With a house payment of $775 and a monthly car payment on the SUV of $685, the car payment is not much different than their house. The monthly auto bill is way out of line. Throw in the growing cost of fuel and auto insurance the combined expenses chew up about 1/3 of their monthly take-home pay.

Even Diane knows that’s way too much.

Their monthly budget suffers from omissionitis.

Without looking at all your expenses you’ll never know the true expense of running your home and living each month or what you are truly spending.

At the moment Marty and Diane’s money is ruling them. They are not ruling “Mastering” their money!

Some consumers want to run and hide or get mad when anyone brings up the B-word (budget) because they only think budgets will restrict their freedom. The truth is a clearly defined, fully expensed budget actually liberates the spending.

The budget is a spending plan for your money and gives those who follow a budget a way to turn their fiscal situation around and begin to build a nest egg for the future.

Going the route of a debt consolidation loan may help some but without proper discipline the debts will return shortly. Countless times I’ve seen debt consolidation loans provide an element of relief and a sense of “accomplishment” in handling the money management issue. Working through the debt process of paying each debt off individually usually helps create and teach better money handling principals.

Fortunately, Marty and Diane decided to work together to get on track with their finances. They started to take the biggest steps of managing their money – they started developing a complete budget of their spending, building an emergency fund and begin to save.

Are you next to take back your life that money controls? Start a budget today!

When looking for help with debt management one of the first things you will need to do in controlling spending and reducing debt will be to track your spending. As simple as that may seem. Here is how the debt plan works.

Before pulling out any bills start writing down all the expenses, items and places you spend money. Don’t be shy get your family and friends involved. Don’t expect every expenditure to come to mind, we all have those – Oh Yea moments.

Now do your best and try to put an estimated dollar amount to every expense on the your list. You are just guessing so don’t worry about being exact but try to get close.

Now that the rough guessing is done, total up all your expenses and subtract it from what you bring home every month. We are only concerned with what you can spend from the paycheck not to total before deductions.

If your income does not cover your estimated expenses it is time to start looking for ways to cut the extra expenses out.

Go line by line looking at each expense. Ask yourself if there is a way to reduce the monthly expense or cut it out all together. For example if you are getting your nails done twice per month can it change to once per month. There are so many ways to reduce your monthly expenses.

Families make the problem of reducing expenses a little more difficult. As each family member plays a part in “spending” the monthly budget in some way. Sorry, it is part of life and adjustments will need to be made.

No matter how well you track your expenses adjustments will need to happen during the month. The car breaks down or an unexpected guest comes in town. Life happens! As circumstances change your budget figures will need to adjust.

Even though knowing what your expenses are is important, being able to cover those cost is more important.

The method above is a baby step to get started. You want to get to the point your track your spending down to the penny and not vague round numbers. Those little numbers can add up! You want to get to where your money runs off a budget. Where you spend every penny in your budget before the month even starts.

Many people fail at using a budget by making it too difficult to maintain. Set up your budget to be your guide for getting reducing debt and paying off credit cards but make using a budget as simple as possible. You will greatly increase your chances of being successful.

When the money for your daily household expenses begin to be eaten away on a regular basis due to the repair bills on your car, it may be time to replace the vehicle. Of course this factors in that the repair bills total more than a monthly payment would be.

How can you know for sure IF you can afford another vehicle?

The question – “Can I afford this?” happens to be a question many consumers regularly ask themselves… and not just about what they drive.

Many Americans go through the month without any idea of their average household expenses. Without a firm grasp on your financial position there is no clear way to tell. You must know and track both income and expenses on a month to month basis. It is the only way to know IF there is enough money left over for any purchases.

Budgets – Yes that “B” word is the only way to determine of you can afford to purchase anything. Budgeting includes tracking income and expenses but also includes money for long and short term expenses.

All the income flowing in and regular expenses going out must be accounted for in your budget.

Getting The Budget Started

Budgets do not need to be complicated. Begin by determining how much disposable money you have each month. Don’t take the gross amount. Calculate the disposable income by taking the money you bring home in your paycheck, add in any other income you receive after all deductions.

Tracking expenses – Your next step in building a budget is to look at your regular monthly expenses. Write down all of your bills which must be paid every month.

• House or rent payment
• Utilities
• Phone
• Car payments
• Insurance – Car, Home, Medical

These numbers should be easy to come up with. Although every amount may not be exact each month you should have a good idea on what to expect.

The Hard Part of Tracking Expenses

The “other” household expenses are the ones which are much more difficult to nail down. These expenses are the ones which vary each and every month.

This Expense List includes:

• Gas for the car
• Groceries
• Personal Care Products
• Eating Out
• Trips, Holidays and Vacations
• Gifts
• Etc…

The best and most effective way I’ve found to “get these numbers” is to track your spending for 30-90 days. Most people lose interest after a week or so. For starters site down and write down on a piece of paper what your estimated expenses are. Make it a game and track your estimates to see how realistic your guesses are. I’ve had many people share with me they had no idea they spent as much as they did on fast food or coffee and a muffin in the morning. Giving up and making a few changes put hundreds of dollars back in their control.

Long and Short Term Saving – A Part of The Budget Plan

You now have a starting point of a budget but you are not done yet. Your income and expenses are a portion of budget. Long and short term savings need to be a part of the budget. Savings should be looked at and considered as important as your bills!

The goal should be to save at least 10% of your income. Some “experts” recommend splitting the amount equally into long and short term saving.

I opt for the Emergency Fund approach and first build 3 to 6 months of an emergency fund to act as a buffer for those unexpected expenses.

After the “emergency fund” is fully funded begin to build the long term saving. Don’t forget, the money is coming from the money you bring home. For long term investing consult a professional financial adviser before making any investment decisions.

After going through and building a budget you can answer the question of “Can I Afford This?”

If enough money is left over, after reviewing the budget and can afford an extra payment you may want to make that purchase.

Here is a simple budget formula:

Income – Bills – Expenses – Savings = How much extra money you have to pay an extra bill.

If there is not enough to cover an extra payment? Then you simply Can’t Afford It!

Many consumers close the holiday season and ring in the New Year with credit cards maxed out, and bills they hope will have a less shocking smaller balance.

The holiday rush of unplanned and unwise spending will be haunting them for months and months. When the bills are finally opened a true reality check with hit. It makes for a vey unhappy start of the year.

Consumers can start taking steps to establish better financial health during the year by taking a few key steps – budgeting and savings.

One big mistake people is neglect. They neglect to do budget planning or seek any financial counsel before the holiday’s start. Without this key planning they find themselves overspending. This overspending comes from using credit cards instead of cash for purchasing of gifts.

The extras also play havoc – travel expenses and gifts for co-workers. With fuel prices rising and weak housing market paychecks don’t go as far as they use to.

With parties and food to attend to, getting ones financial house in order is not usually at the top of people to-do list and finds its way push down the “importance” postision.

Don’t wait until after the holidays. Stop building a budget long before the New Year’s ball drops.

Personal finance and family budgets in particular fail for a number of reasons. The most common factor for the family budget failing comes down to people not wanting to change their lifestyle or better said they way they live and how they handle their finances.

All of us are made unique and get into a comfort zone of “living life our way.” Taking the steps to change our lifestyle can be a scary descision. Success in the world of personal financing is not rocket science. There is a proven way to get yourself out of debt, keep your finances in order and take living to a new level.

I am sure after reading about daily household expenses you a re probably starting to get upset with me. It seems as if some person is trying to change everything my life and I do not have any interest in that.

It is OK to nod in agreement. All throughout our life we’ve lived with a budget even if I may be stretching the use of the term.

• When you fill up the gas tank – the car only goes so far on a tank of gas.
• You come in late for work to often – you lose your job.
• Eat more calories than you burn – and you’ll gain weight

Changing the way to think, view and handle your finances is a welcome shift which can completely change your life for the positive.

The first step in changing the “stinkin thinkin” you carry about money is to decide what you want to do with your money. This is a simple goal setting. Setting a goal makes reaching it much easier.

I am sure you’ve tried goal setting but figure if you cannot pay bills what good is setting a goal. Goals and budgets are nothing more than problem solving in reverse. The goal is the solution the steps needed to get to the goal are the problem.

For example if you want to be debt free in 5 years but currently do not have enough money to meet your current bills and eat, what steps will you take to get to that point. As difficult as the dream of being Debt Free in 5 years may seem, if you really want to reach that goal because it is important you’ll attack the problem to meet the goal.

Let’s look at a different “problem.” If your credit card had a $5000 balance on it and you had one year to pay it of could you? Most would say probably not. What if we added in the fact that if the credit card was not at ZERO on December 31 you would lose your hand. Could you find a way to pay it off then? Most likely you would find a way! The only think that has changed in the problem is perspective!

Time to get a new perspective on money and it starts with a budget.