Why is this method of paying of debt effective? Almost every financial plan you will find involves saving an emergency fund before you start paying off debt. By saving money in a savings account until you have enough to pay off an entire debt you are also keeping an emergency fund in case something major comes up during this time. I would suggest saving enough money to pay off the debt as well as some extra before paying off the debt.

For example, we owed about $10,000 on our car. We kept putting money in our savings account until we had about $13,000. We paid off the entire balance on the car loan and still had over $3,000 in savings. If at any time during this period an emergency came up we could have paid for it with cash and then continued to save.

I’m not saying this is the best way of paying debt from a maximum amount of money saved, but I think it’s effective. Paying down large interest rate debt month by month may allow for increased money saved, but might not be as effective for some. It’s just another method to  consider for yourself.

The reason I decided to write this article is because after warming up the noodles she decided she would much rather have the leftover baked spaghetti than the noodles. So, after asking coworkers if the wanted the noodles with no success she threw them in the trash, but it was only a dollar.

I would probably be considered a pretty frugal person. I don’t buy clothes unless I absolutely need them. I bring my lunch to work at least 4 times per week, and I am always looking for ways to save money. No need to say I was a little disappointed to hear the story of the trashed noodles.

Later that evening I got started thinking about the real price of that cup of noodles. Was it really only one dollar? The obvious answer was no, but how much did that wasted cup of noodles cost? I was a little surprised when I did the math.

I plan to retire in about 30 years so that’s the number I will work with in the example. One dollar put in a savings account for 30 years would be worth $2.12. One dollar put in the stock market that averaged a 10% return for 30 years would be worth $19.84. If you take inflation into consideration the $2.12 will only be worth about $0.87 and the $19.84 will only be worth $8.17.

So does this mean it’s OK to throw a dollar away, because it won’t be worth that much anyway? No, you know the answer to that question. Spend and save your money wisely, you’ll be happy you did.

I’ll start with my personal numbers and the minimum payments. I would also like to know how long you expect to take to pay off these debts.

Car Debt: $16,500 / $400 month
Student Loan: $9,000 / $100 month
Credit Card: $4,000 / $100 month (will be paid off this month)

Hope to have everything paid off in less that 18 months! What about you?

For those of us who work 5 days per week and require some type of transportation to and from work the answer is obviously no. Even if gas climbs to $6 or $7 per gallon we will still have to pay for gas to get to work. We will have to make otehr adjustments in our budget in order to pay the inflated gas prices.

There are however many ways to save small amounts on gas that may help in times of need. For example, don’t make unnecessary trips. Combine all your daily trips into one trip and make the most of fuel, you may even save some time in your day as well. Don’t buy premium grade fuel, most car manufacturers only recommend the lowest grade anyway so why waste your money? Don’t ride the brakes and drive in a responsible manner. Finally, take advantage of a gas rewards program. Many companies offer a loyalty program, but make sure the rewards don’t outweigh the price of their gas.

Once all the calculations are done the average American consumes about 500 gallons of gas per year or about 40 gallon per month. An increase of $1 means you have to come up with $40 more per month for gas. It’s probably worth $1.35 per day to not have to walk to work or ride public transportation.

One of the biggest energy drainers is that extra refrigerator in the garage or basement. Do you really have so much food that you need an extra refrigerator just for drinks? Couldn’t you find a little extra space in your fridge to put a 12 pack of soda or beer?

Other ideas include small kitchen appliances. Your toaster, coffee pot, can opener, blender, etc. all drain small amounts of energy throughout the day and night. How often do you really use the blender or can opener? Most of us actually don’t even use any of these appliances on a regular basis. Leave them unplugged until you actually use them and the pull the plug when you are done.

More electric drainers in the family room include the DVD player, CD changer, and surround sound, tivo or DVR, cable boxes, and even the television. Even though they only drain a small amount of electricity these electric devices start to add up quick. It’s easier to plug them into a power strip and simply unplug the strip during the day. It takes about 3 seconds to unplug it and then plug it back in when you need them.

Moving on to the next room the home office. Most computer users keep their computer plugged in and powered on all day and night. Hook up everything involved with your computer to a power strip and pull the plug before you go to bed. Items related to your computer include a printer, scanner, modem, router, and monitor. That’s a big list of energy drainers.

According to the government’s energy star program, 40% of the electricity that home electronics use is consumed while the products are turned off. The impact of this on your energy bill will depend on your particular situation–one Berkely study suggests the savings would be 6 to 26% off your total power bill.

It may not sound like a lot of savings but if you are one of the major power users who has a lot of appliances plugged in all day everyday you could save 25%. If your energy bill is about $120 per month that’s about $360 per year to keep those little red lights burning. If you are a penny pincher this is a great money saving idea!

It’s not only the fast food restaurants that have inflated prices for healthier eating. At the grocery store there are tons of food items that are dirt cheap but can hurt your overall health if you eat too much. Take for instance the popular food choice of college students, Roman noodles. Roman noodles only cost about $0.15 per pack and sometimes even cheaper if you buy in bulk, but how healthy are they? After a quick glance at the nutritional facts I found that 1 block of noodles is actually two servings and I always eat the whole block. There is 1420 mg of sodium in a pack of Roman noodles, that’s 60% of your recommended daily sodium intake! On top of that is 24 grams of fat or 24% of your recommended daily fat intake!

More examples of cheap food that is unhelathy is canned meats and canned soups. All of these items contain large amounts of sodium which can lead to high blood pressure and heart disease. Looking for cheap cereal? Most cereals that are cheap and always on sale are high in sugar and calories where their healthy counterparts can sometimes cost up to $4 and $5 per box.

The best solution to eating healthy is to have a diet filled with fresh fruits and vegetables. Add in fresh lean meats such as fish and chicken while eating very little sugar. The only problem is this greatly increases your monthly grocery bill. How can you balance a healthy diet with a healthy grocery bill? Stay tuned!

I have used a credit card for years to pay my monthly expenses, but I have always paid the balance in full each month. There are hundreds of credit cards available today and each offer something special for using their cards. If you have good credit you can get gift cards, free air miles, free hotel stays, and other items just for signing up. The days of a free t-shirt or poster are over, credit card companies offer much better temptations. However, you have to realize they are giving this stuff away for a reason, they are still making plenty of money. The trick is to be one of those responsible users in order to take advantage of the credit card companies.

The first step of using credit cards responsibly is to not spend money that you don’t have. Don’t plan on buying big items that you know you won’t be able to pay for when the bill comes. Credit cards are a very convenient way of paying for everything as long as you only use them for properly.

Second, pay your bill on time. Credit cards always carry harsh penalties and fees if you are even one day late paying the bill. You will probably see at least a $25 to $30 late fee for being one day late. Also don’t think you can call in a payment the day it is due without paying a hefty fine. Keep a calendar or schedule of when all your bills are due and check up on it daily. Paying your bill on time will save you some cash.

Finally, don’t choose a credit card that carries an annual fee to use. Most of the time the advantages that these companies try to offer won’t be worth the annual fee. There are hundreds of credit card companies willing to pay you to take their card so why pay them?

Just like anything else in life use credit cards responsible and they can be rewarding. Don’t get caught up in the spending spree spending more money that you have. Always pay your bill on time and never pay to use a credit card. Follow the rules and be responsible, credit cards can be rewarding!

As I’ve said before my wife and I make all our purchases on a credit card and pay off the balance each month. I’ve been doing this since I graduated college and on this paticular card have never carried a balance. I have also never missed a payment and I’ve not been late on a payment either. I was close once and had to pay the bill over the phone and pay a small fee but I’ve still came out way ahead on the credit card rewards.

Currently many credit card companies are offering 0% interest rates for over 1 year and many of them even offer this same interest rate on purchases. Many credit cards are offering lower fixed rates for the life of the loan and many great rewards program.s

Be advised that there is fine print with all credit cards and be sure to read this. There are many terms that you must be advised about before you transfer the balance. Some charge a fee, usually 3% but a maximum amount, usually $50. Most of the time you will still save a lot of money on the lower interest rate, but be advised of these terms.

Be responsible and in control of your personal finances and take advantage of any offer that will benefit you financially.

For those of you who plan to make the resolution this year to manage your money better, start with the most simple tool of personal money management, a budget. Start by making your budget realistic and simple. Creating realistic a realistic budget will help keep you motivated and accomplish your financial goals.

First, examine your current financial situation. Make a list of all your financial debts including credit cards, personal loans, medical bills, auto payments, mortgages, etc. Be sure to also include their balances, interest rates and minimum payments. Total up the balance and you might be amazed at just how much debt you have. Maybe this will be enough to make you realize how important it is to create a budget and stick to it.

Next, analyze your current income situation. How much cash does your total household bring in each month to spend on living expenses, bills and entertainment. You may realize here that you don’t have enough cash coming in to live the lifestyle you have.

The next part is going to take some effort. You need to analyze your spending for one month. Write down every penny you spend for one full month. This includes all your utility bills, entertainment, vending machine visits, bad habits, EVERYTHING.

After you have completed these steps you will have enough information to create a simple budget and spending plan. You need to divide all your spending into several different categories. There are many places to find sample budgets with specific examples of these categories. Distribute your household income into each of the categories. Start with all the mandatory expenses such as mortgage, car payments, groceries, gas, etc. Once you have these categories filled the remaining money should be divided into categories such as clothing, entertainment, eating out, etc.

Some of you may realize you have run out of money before you get to the enertainment and eating out categories. If this is the case you have the option of finding free entertainment, not eating our or getting a part time job to fund these categories.

Make your personal budget experience fun and easy. Don’t get frustrated if it doesn’t work the first month. Adjust categories to suite your needs and if necessary find other income sources. Don’t let this New Years resolution be one that is forgotten!