2022

Budgeting Money Tip: Cash Envelope System Meets the New World

Credit and debit cards can lure you into spending frenzy that can spiral out of control before you know it. Have you ever come to the end of the month and asked, “Where did all the money go?” The convenience of plastic has made it far too easy to make purchases that we might not make if we had to dip into our wallet and make a cash purchase.

Studies have shown that spending increases as the means to pay for an item becomes easier. In other words credit cards have made buying transactions easier, so we’re more likely to buy stuff without concern, until the bill comes at the end of the month! Likewise, new ‘pay with a wave’ credit cards will make it easier still and foster even more poor spending habits.

I’m a big believer in the notion that cash is king when it comes to paying for items. If you don’t have the cash, you can’t afford the item and shouldn’t buy it. Traditional means of budgeting to help curb spending is the Cash Envelope system. But there are clearly some disadvantages of that. There’s also a 21st century version of the Cash Envelope system called Virtual Envelopes. We’ll explore how you can implement a Virtual Envelope system using your budgeting worksheets.

Traditional Approach: Cash Envelopes for all your Spend Categories

One past useful money budgeting technique was to set up your saving and bill paying system using cash envelopes. Basically the cash envelope system consists of keeping separate envelopes for your spending categories and populating them with cash from your income source. Then when a bill comes due or you need to go shopping for food or an item you need, you simply pay for it with cash from the appropriate envelope.

The big advantage of cash envelopes is that, if you budget properly, you will always have the cash to pay a bill when it comes due. No more worrying about where the money will come from, be it for mortgage or rent, utilities, car payments, repairs, taxes, discretionary spending, etc.

However, there are many disadvantages of this old technique in keeping all that cash around. It’s cumbersome and simply not safe as you can easily accumulate hundreds or thousands of dollars in your cash envelopes. Just imagine the heartbreak and financial setback should something happen to all that cash.

Alternative Approach: Use Virtual Envelopes for most of your Spend Categories

In today’s electronic world, there’s a version of the envelope system that can take the old proven approach and revamp it for the 21st century: Virtual Envelopes. Built on the solid foundation of the Cash Envelope system, Virtual Envelopes works seamlessly with your existing cash envelopes and your budgeting worksheets. The only difference from Cash Envelopes is that for some budget categories you will now deposit the cash into your bank or credit union and manage those categories online, or “virtually.” Hence, the …

2 Investment Bubbles Ready To Pop!

In the early 2000’s, we had the technology bubble. More recently, we had the real estate bubble. Now, I see two new bubbles that may be developing – and may be putting your nest egg at risk. I’m talking about bonds and gold.

The reason I won’t be surprised if there ends up being a bubble in bonds is that I just saw a statistic stating that year to date close to $150 billion dollars has gone into bond mutual funds. And in the same time period, over $50 billion dollars have been taken out of stock-oriented mutual funds. If my math is correct, that’s about $100 billion dollars that has flown from money market accounts into bond mutual funds.

When you think about it, that’s the herd mentality in action. After all, the real estate bubble was at its peak when it seemed like everybody was jumping into real estate, with “flip this house” and “preconstruction condos” and “flip the contract” and all that craziness. When I see a huge migration of money into a particular area, to me, that means a bubble may be forming. This could be the case with bonds.

Interest rates are at historical lows. Bonds go down in market value when interest rates go up. So if you’ve got money in a bond mutual fund, you need to be very aware of any increase in interest rates, because a raise in interest rates will cause the value of your bond mutual fund to go down.

Note that I’m not talking about individual bonds. When you hold those until maturity, you get your money back even if the value goes down. You just need to be careful about bond mutual funds and all the money that’s flocking in to them. The question you want to ask yourself is “what’s my exit strategy? How will I know when it’s time to get out of my bond mutual fund?” Now is the time to develop your exit plan.

The other bubble that might be forming up is gold. If you haven’t heard, gold just hit an all-time high. It crossed over $1,300. And that makes me kind of nervous. I’m not worried that gold can’t or won’t go higher, and I’m certainly not suggesting that the floor is getting ready to fall out from under gold. I’m just talking about being careful. Right now, when the media is saturated with advertisements to buy gold and nationally syndicated radio talk show hosts are peddling gold, I’m reminded, again, of the real estate bubble.

Remember all that advertising for “make money in real estate seminars” and home study courses and workshops? They were all over the place. But I haven’t seen those kinds of advertisements lately, have you? That’s how I feel when I see “sell your gold”, and “we buy gold “and “get your gold coins” everywhere. When an investment is suddenly advertised all over the place, that suggests to me that …

It would be great to dream about having everything we want without the need to purchase them but that would never happen in reality that’s why we must get a job to earn for our expenditures. But there are times when this money is not enough so we rely on various lending companies – read from finnforbrukslån.com/ for more ideas on how to find affordable consumer loans available in Norway. You will find here different rates, terms, and costs offered so it would be a good idea to learn from them.

Finding the cheapest offers is not even easy to get because of various restrictions and requirements so how can we choose a lending company in Norway? I guess we just need to be more cautious and smart especially now that these lenders are highly competitive so they’ll have marketing techniques as well. That’s why you can see all sorts of promotions and these will make it hard for you to decide on what offer is the best and who you are going to believe.

Well, if your primary goal is to find a cheap offer, then you might have to consider personal loans because of more flexible options and cheaper costs, too. Keep in mind that requesting a fund is not always easy because lending companies vary in standards and policies so you’ll have to look at those factors as well. Anyway, the whole process would be lighter if you have a good rating that reflects your creditworthiness but there are also other factors that you have to deal with before sending out your applications.

Realistic Amount

Let’s try to be realistic when it comes to figures which means that we should only request funds that we can pay back since it would be an added expense to our usual obligations. We can calculate how much repayment we should deduct from our paycheck through DTI or debt-to-income ratio. This is a way to compare your monthly debt repayment and gross income.

Let’s assume that your gross income is $25,000 with a 38% DTI ratio so the cost of your debt would be $9,500. Given these figures, you will still have enough funding for other expenses so it would be nice if the ratio is lower. Repayments will not only be your obligation and it is just one of your expenditures so make sure that your pocket not be left with a zero balance.

Type of Personal Loan Offered

If you will apply for secured loans then be aware of the policies as well as requirements associated with this, especially when it comes to the collateral. Remember that if you failed to pay your obligations on time, the lender has all the rights to seize this property and you can’t complain since you signed the agreement. Due to the collateral involved, you may borrow a huge amount and this can be paid over a longer term so can surely pay this.

When you want to request small amounts, then you …