Plain and simple, plans are necessary in order to reach a goal. When a person decides to run for a public office, he or she makes out a plan that includes where to get the necessary financing and how much will be needed for advertising, marketing, and other office expenses. Teachers must have a plan for what they will teach each day, each week, and each month. They are required to plan out when to give tests and to measure their students’ progress throughout the year.

If plans are so important, why do so many of us think we can manage our finances without one? Most people don’t use a spending plan.

Many people hear the word “budget” and respond negatively. They think of a budget as being restrictive, too limiting, and too legalistic. Yet, in truth, a budget can be very freeing; it can bring peace and break the bonds of being a slave to our money.

A budget is simply a plan – a plan for how to spend the money we have. A budget is a great way to make sure we are handling money in the best way.

Without a spending plan, it is impossible to know where your money goes each month and whether you will have available funds for the things you need. The “not knowing” can create feelings of anxiety and fear. Financial problems can cause stress in marriages and other relationships.

When you create a spending plan, you can have the peace of mind in knowing that your bills can be paid, you have funds available for emergencies, and you know what you can spend for the things you need and want.

Have a clear vision for your finances. Determine what your financial future will be, what financial abundance mean to you. Outline the things you must have in your life to feel that you have the financial abundance you deserve. Take a sheet of paper and draw a picture or describe what you consider to be your vision for your financial future.

Once you have your vision, establish goals that align with that vision. Develop solid and pertinent goals that align with the vision you have. The goals you set must put you on a path towards financial abundance. They must be specific and significant, measurable, achievable, realistic and relevant and time-based. Once your goals are established, you must pursue them vigorously. Perseverance is the key to accomplishing your goals because a goal without persistent action is only a dream. Don’t allow any one or any thing to stop you.

Develop your professional and personal skills is one of the most principal ingredients to achieving financial abundance. Professional and personal development is very important to your upward mobility. You must continue to grow in essential areas so that everything works together for you.

Once you earn money, you must make it work for you. Prioritizing where you put your money, how you spend it and how you share it will determine how money flows in and out of your life. Your financial vision and goals should dictate how you use and grow your money.

Information, motivation and productive action will ensure that you meet your financial goals. Attract the financial abundance you deserve.

Every budget starts with examining your spending habits and determining exactly where your money goes on a day-to-day basis. If you don’t know how much you’re spending and on what, you can’t decide where you want to spend and on what.

After you get over the horror of your daily spending, the next step is to make a list of what you need to buy or do over the next three to six months. These could be physical purchases (like new tires for the car, airfare for the family vacation) or financial plans (such as paying off a credit card, maxing out this year’s IRA or adding to your emergency fund). Do the same for planned long-term (one to five years) purchases.

Suddenly, you have a “spending plan” (so much nicer than the word “budget”). Now, every time you pull out your wallet, you have a tangible list of money goals to help drive your spending decisions and propel you financially forward.

Also consider the emotional uses of your money. First list five uses of your money that will positively affect your life in the near-term and the long-term. Then, list five uses of your money that will add little to your quality of life in a decade or more. Thinking about what you really want to do with your money can greatly affect your plans for spending and saving it.

With your money goals in hand, determine how much each item on your “wish list” is going to cost you on a monthly basis. Simply divide the total amount for that vacation by the number of months until you plan on taking it. With your targeted spending plan in place, direct your money towards your goals.

Keep in mind, the best way to save your money is to keep your cash out of spending reach by diverting it to a separate savings account — one different from the checking account you use for everyday expenditures. Set up automatic recurring cash transfers from your main checking account into your separate savings account. With your savings on autopilot, all that’s left to do is stay out of your own way. Make sure you cut out mindless overspending.

There are several car repairs you might be tempted to skip to save a little bit of money. Beware: that call could cost you a lot more in the long run.

Brakes: Don’t neglect your car’s brakes.When it’s time to replace your car’s brake pads, it’s easy to look the other way. Brake pads tend to wear gradually, so you might not notice changes in your braking performance right away. The truth of the matter is, when your brake pads are worn, they can cause damage to brake rotors. As the rotors rub against the worn pads, they become warped, if the rotors end up  needing to be replaced, you’ll spending four times what it would have cost to replace the brake pads.

Oil Change: an oil change should cost you around $40 at most quick oil change stations. To find out how long your car can go between changes, read your owner’s manual and make sure you follow it. Oil is like your engine’s blood, all sorts of impurities build up in unless your oil is changed regularly — not to mention that all engines lose some oil. Too much buildup and not enough oil lead to your engine seizing up. By putting off a $40 oil change, you could end up spending $4,000 on a new engine.

Air Filter: changing an air filter is cheap. It’s even easy enough for most people to do themselves. Not changing your car’s air filter, on the other hand, is expensive. A dirty air filter can reduce fuel economy simply because your engine won’t breathe as efficiently. By not changing a dirty air filter, you’ll save about $15. But, with the price of gas, those savings will evaporated quickly. On top of that, if the air filter isn’t clean that means enough air isn’t getting to the engine, you could damage your spark plugs and might have to replace them. That can cost anywhere from $100 to $300. You do the math.

Transmission Fluid Leak: this is one of the most common problems associated with your transmission. You’ll notice it when you see drops of red fluid on the pavement where you park your car. Ignored for long enough, the leak leads to your transmission shifting roughly, or the gears slipping. Transmission fluid is what cools and lubricates your transmission. If it’s leaking, you need to fix it, and fast. Resealing a transmission is a relatively easy job and should usually only cost a few hundred dollars. Ignoring the leak can lead to the transmission seizing up and a subsequent transmission replacement –which costs several thousand dollars.

Burned Out Lights: this is one car repair that is really easy to ignore. Failure to keep your rear lights working can be an expensive proposition. First, if a police officer sees you with broken tail or brake lights, you’re going to get a ticket. Second, broken lights increase your risk of being on the receiving end of a rear-end collision.

Clogged Fuel Filter: an important part of maintaining your car is keeping impurities out of the engine. While the air filter does part of the job by keeping airborne impurities out, the fuel filter keeps impurities from the fuel out of the engine. Like the air filter, if it gets clogged and you don’t fix it, you’re looking at some major problems. Don’t skip it. At its most expensive, replacing a fuel filter will be a few hundred bucks. Let it go too long, and not only are you looking at dealing with a car that will barely run, you could also have dirt in your fuel injectors — causing them to need replacing. Replacing just one fuel injector can cost over $500. But if they all need replacing, you’re looking at least $1,000 in repair bills.

Source: US News & World Report  article by Jamie Page Deaton

During his life, Michael Jackson sold hundreds of millions of records. His musical legacy should easily have led him to amass one of the greatest fortunes in show-business history. But instead, a history of bad management, excessive personal spending, and big legal bills left him almost broke.

Jackson’s financial problem stems from the fact he continued to spend tens of millions of dollars a year even as his musical output—and his income—slowed down.  In recent years Jackson financed his personal debts by borrowing against assets, and by some estimates his total borrowings at his death may have exceeded $400 million.

His death parallels that of Elvis Presley, who died in 1977 at age 42. Like Jackson, at the end of his life, Presley hadn’t had a hit album in years. He was mostly relying on royalties from his past hits and doing shows in Las Vegas. But in death he became a moneymaking phenomenon.

Might not be a bad time to become a Michael Jackson impersonator.

by Andres Rueda

Which bank’s credit card do you have? What is its credit limit? What type of card is it? Some consumers can’t even answer these questions today. The world seems to have been squeezed and wrapped into a credit card. The credit card syndrome seems to have gripped all of us. But are credit cards beneficial? Not really.

Unfortunately, many people see credit cards as simply a way to spend more money than they have. This isn’t what credit cards are designed to do, and this disregard for their purpose can lead to credit problems and even bankruptcy if left unchecked.

Throw away your credit cards and stop buying stuff you don’t have the money for. If you don’t have the money for a brand new television then simply don’t buy it. Look in your classified ads and buy a used television for a fraction of the cost of a new one. If you need furniture, check out Craigslist, or scan your local classifieds for what you need. There are some great bargains on furniture and many other items as well. Visit neighborhood garage and yard sales. Check out your local paper to see where they are at in your area (remember, the early bird catches the worm).

Change your attitude about your needs and how you will buy things to fulfill those needs. Do you need that brand new car or will a nice looking used car meet your requirements instead? Anyone can learn to budget their money when they set their mind to it.

When we love money too much, especially money we really don’t have in the first place it makes us greedy for more and more stuff. People’s fear of “not having” is what spurs on credit card purchases. We all just need to learn how to relax, smell the roses, and take a break from “buying with credit”. 

Credit card purchases have become an addiction. It is most often the addictiveness of these cards that is a source of trouble.  Put and end to these spending habits and only use money that you have. It’s inevitable, people who continue to draw from the bank’s or company’s credit suffer largely. Make the decision now to stop the credit card madness.

Part of making the lifestyle adjustments associated with spending less and saving more involves making an inventory of what you do spend. If you keep track of your spending habits for even one week it may be an eye-opener for you. If you need help calculating your expenses and allocating the right sum of money for entertainment and shopping, a budget or credit counselor can help. They will also help you find a way to set aside money to help pay off your debt. These options may help you escape the plight of financial ruin. In the most severe cases people often need further assistance. This is especially true if you are not disciplined with money.

Some people who need drastic help with their finances will seek help from a debt negotiator. Negotiators are available via enrollment into a debt settlement program. The people who are in charge of helping you settle your debts usually evaluate your case very carefully. Then if they know they can help, debt settlers are usually happy to help you right away. Many people who join a program like this are able to pay their balances with affordable monthly payments. The debt repayment plan associated with this type of program usually takes place over a far shorter time than it would take for consolidated bills. That is because professionals negotiating on your behalf have an upstanding relationship with creditors. If you take advantage of their services, your total amount owed to credit card companies could be cut in half. Sometimes portions of what you owe may be completely forgiven as well. This help is often provided at a very low cost to you. After all, your goal is to get out of debt not further into it.

However, you are warned that this method of squashing debt is not going to work for everyone. That is why some people still resort to filing for bankruptcy.

Make Getting Out of Debt Your Top Priority

Although it is extremely easy to get into massive amounts of debt very quickly, it takes time, discipline, and commitment to get out of debt. You have to make a life-changing decision that you no longer wish to be in debt because getting out of debt is going to affect every area of your life.

The first thing you need to do is to complete a spending inventory to find out where you are right now. A spending inventory is simply a list of everything you spend for an entire month, whether by check, charge, or cash. This will help you locate the waste in your budget. Most everyone can find $100 to $200 a month in wasteful spending that can be cut. This additional money can be used in your plan to get out of debt.

When you make getting out of debt your top priority, it affects your thinking, decision making, and habits. If you usually walk around the mall at lunchtime and end up compulsively buying things, then you will no longer go to the mall. Instead, you will take a brown bag lunch to work or eat in the company’s cafeteria. You will begin to analyze every purchase to decide if it is really necessary. You will cut unnecessary expenses and learn to live frugally. It’s important, as you start your plan of action, that you do not incur any new debt. Begin to only purchase things that you can pay for in cash.

Call All Your Creditors and Contact the Credit Bureaus

One of the first things you should do when you decide to become debt-free is to obtain a copy of your credit report. By getting your credit report from each of the bureaus, you will know all the debts that you have outstanding, including any collection accounts or charge-offs that you’ve forgotten about. You can obtain one free copy of your credit report from all three bureaus, Experian, Trans Union, and Equifax.

After reviewing your credit report and your current account statements you should contact your creditors if you are currently behind in your bills to let them know you intend to pay them off. When you call your creditors first, they will be more willing to work with you than if they have to track you down. Talk to them about how much you can reasonably afford to pay each month to see if they are willing to negotiate lower monthly payments. If a creditor does negotiate a deal with you, make sure you keep your word and send them the agreed upon amount every month, faithfully.

If you are current on all your accounts, especially if you have a good payment history, you should contact your creditors to ask for lower interest rates.

Get Out of Debt Plan of Action

1.Make a commitment to get out of debt, and stick with the plan. Set a deadline date for completion.
2.List all debts, including loans from family members.
3.Find an extra $100 to $200 per month in your budget using the spending inventory.
4.Put debts in order of priority to pay them off. Put them in order by highest interest rate to lowest, or by lowest balance to highest.
5.Separate debts into categories, in this order: credit cards and lines of credit, student loans, personal debts, car loans, mortgage debt.
6.Start with bill number 1 as your targeted bill. On the targeted bill you are going to pay the minimum due plus the extra $100 to $200 you located in your budget. Pay only the minimum due on all other debts.
7.Once bill number 1 is paid off, target bill number 2. Take everything you were paying on bill number 1 plus the minimum you were paying on bill number 2 and begin paying it all on bill number 2 each month.
8.Once bill number 2 is paid off, repeat step 7 with bill number 3. Continue this process until all your debts are paid.
9.Close credit card accounts as they are paid off. Keep one MasterCard or Visa account for emergency purposes only. Write a letter to close each account and to tell them not to have their telemarketers call. If you call to request the account closed, the creditor will offer you something tempting to convince you to keep it open.
10.During this process you must pay cash for all purchases and not incur any new debt.

The Benefits of Being Debt-Free

After you pay off your bills you can begin to target your money toward worthwhile financial goals, such as saving for retirement, your children’s college education, starting a business venture, or simply taking a well-deserved vacation. One of the biggest benefits of being debt-free, however, is peace of mind. You will no longer have to be stressed out about money.

The $787.2 billion stimulus plan that President Barack Obama will sign Tuesday includes the nation’s largest investment to date in cleaner energy. More than $80 billion in spending and tax cuts will go toward renewable domestic energy, a better grid to transmit electricity, energy research and programs to reduce the use of fossil fuels, such as weatherizing homes and federal buildings.

It’s difficult to put precise numbers on how many new green jobs to expect. Government economists use a formula to figure out how afiscal stimulus translates into jobs, but uncertainties remain. Some of the results will depend on decisions that the Department of Energy and the states make about how to spend the money.

Even so, it’s possible to look at the big picture and see how the environmental spending can create some jobs in the hard-hit manufacturing and construction sectors.

Dorothy Coleman , the vice president of tax and domestic economic policy for the National Association of Manufacturers , said she didn’t have an estimate of the number of energy jobs the stimulus plan might produce but that the association expected the renewable energy provisions to help some of its members expand production and add workers.

The association supported incentives for wind and solar development for that reason, Coleman said. Similarly, weatherizing schools, hospitals, federal buildings and homes would create a need for goods made in the United States , such as more energy-efficient windows, she said.

The White House’s economists have said that the overall stimulus plan would create or save more than 3.5 million jobs by the end of 2010. The government estimates that nearly 500,000 jobs will be created by the end of 2010 from investments in the energy transmission system, advanced battery technology and energy efficiency.

Robert Pollin , a professor of economics and co-director of the Political Economy Research Institute at theUniversity of Massachusetts , said the green investment portion of the stimulus more broadly should yield about 1.7 million jobs, about 30 percent of them in construction.

“Of course, the jobs crisis is deepening quickly, so that much of an increase in spending for green investments and job creation is not big enough on its own to fight the countervailing recession forces,” Pollin said.

Still, Pollin has said that investments in green technology create more than three times as many U.S. jobs asfossil fuel production because they generally require more workers and much of the money stays in the U.S. economy.

Daniel Weiss of the Center for American Progress , a liberal policy-research group in Washington , said that Obama’s recovery plan would more than triple clean-energy investments.

The efficiency elements of the plan are useful because they put people to work quickly and put money into the pockets of people who pay heating or air conditioning bills every month — and those savings keep adding up, year after year, said Nathan Hultman of the University of Maryland School of Public Policy .

“Arguably, it’s better than any other rate of return you can get in the economy,” he said.

The White House estimates that the average family would save $350 per year on heating and air conditioningafter weatherizing.

The spending on weatherization would create jobs quickly, Hultman said, because there’s no need to invent anything; the materials and skills are readily available.

The bill sets aside $5 billion to improve energy savings in more than 1 million modest-income homes and about $4.5 billion to weatherize federal office buildings.

Weatherizing buildings across the United States offers an easy, relatively cheap way to put people to work and cut energy consumption and costs, said Phil Angelides , the chairman of a coalition of labor, business, community and environmental leaders called the Apollo Alliance that promotes investments that build clean-energy industries and cut energy costs.

About 40 percent of energy use and carbon emissions in the United States come from constructing, operating and powering buildings.

Other parts of the stimulus plan related to cleaner energy that might create jobs:

— Transportation: The measure provides $8.4 billion for public transit and $8 billion for high-speed rail.

The American Public Transportation Association surveyed transit agencies starting a year ago and recently released the results. It found that 227 public transportation agencies said they could provide 787 projects that were ready to start within 90 days that otherwise wouldn’t have been able to proceed. It said these projects would “create and sustain more than 440,000 new jobs in the coming months.”

The bill also provides a tax credit of up to $7,500 for plug-in hybrid vehicles and funding for advanced battery technology in an effort to stimulate the automotive industry.

Menzie D. Chinn , an economist in the School of Public Affairs at the University of Wisconsin , said that tax credits for fuel-saving cars might have helped the auto industry incrementally, but a more important benefit would come from boosting the economy overall and fixing the financial system to encourage more people to buy cars.

— Renewable energy: Over the next decade, the government will provide $20 billion in tax incentives for renewable energy and energy efficiency, including grants and an extension of the production tax credit for renewable energy.

Greg Wetstone , the American Wind Energy Association‘s senior director of government and public affairs, said the plan would create jobs in the wind industry and was a “critical down payment” on ways to increase the nation’s use of renewable energy. A developer needs only six months to set up a wind plant to generate electricity, he said.

Wind advocates also say that since many of the parts of wind turbines are so large, it makes economic sense to build them in the United States to save on transportation costs.

The U.S. wind market grew rapidly last year: Its power-generating capacity increased by 50 percent. The industry also created 35,000 jobs in the U.S. for a total of 85,000, according to the Global Wind Energy Council in Brussels, Belgium . By late in 2008, however, the financial crisis hit the wind industry and greatly slowed wind-farm projects and turbine manufacturing.

Source: Yahoo!News-By Renee Schoof, McClatchy Newspapers (Jack Chang contributed to this article.)

Taking these wise steps can turn your financial dreams into realistic goals.

Create a budget

It will be difficult to lower your debt or save for your future if you don’t have a clear idea of your current finances and how you’re spending your money. Whether you use a software program or a sheet of paper, set down what you earn and what you spend. In the spending category, include regular items such as rent or mortgage, car payments and other outstanding loans.

Next, make accurate estimates about your variable expenses, such as food, transportation, entertainment and clothing. Try to include those easily forgotten expenses, such as the price of takeout lunch at work or stopping for a bottled water or coffee. 

Look for red flags

Now that you’ve listed what you spend each month, consider problem areas. Do you have a high-interest loan or credit card balance? Are you spending a lot each month on take out meals or entertainment?

Think about whether you can make better choices. Just because you can afford certain expenses, that doesn’t mean you are making the best use of your money. If you change bad spending habits or poor choices, you can preserve your cash and use it more wisely. 

Make savings automatic

We all know that saving something each week is a good idea, but we can easily forget to do it. That’s why it’s a good idea to enroll in an automatic savings plan at your bank or a 401(k) plan through your employer.

Remember that you don’t have to settle for a low-interest savings account. Some mutual funds accept initial deposits of as little as $50 or will even waive the deposit requirement if you agree to save a certain amount each month. Many people aim to save whatever remains at the end of each month but find that there’s little left. When you designate an amount for automatic savings, it becomes a part of your regular budget and can’t be forgotten.

Choose realistic targets

Paying off all of your debt is an excellent goal, but it may not be something you can accomplish this year. That’s no reason to give up, however. You can make great progress if you set reasonable targets that are achievable and that will also make a difference in your financial life.

If you resolve to reduce your debt by 25 percent this year, for example, you might be in a better position to make a meaningful, positive change in your financial situation and gain the satisfaction of accomplishing a goal.

Monitor your progress

Your aspirations and your financial situation may change as the months go by. As a result, review your goals and your progress toward them at least every six months to see how successful you have been and if you need to make changes in your targets, your savings rate or any other factors.