Budgeting. It’s a word we’re all familiar with. Everyone knows what a budget is, right? Yet how many of us actually make and stick to a solid monthly budget? The truth is that most of us start out with the best of intentions, but an unexpected expense comes up and busts our budget. Then we give up and go back to juggling our finances and worrying about having too much month left at the end of the money. However, if you are striving to create a budget for the purpose of systematically paying off your debts or to start a savings and investment program, then it’s critical to develop a workable and realistic budget.
So what’s the problem? Why do most of us fail at the simple task of creating a budget so we can live within our means? The simple truth is that most budgets don’t work because they fail to account for irregular or variable expenses. Everyone knows how much their rent or mortgage payment is. It’s the same amount month after month. If your rent is $1,000 per month, that’s a no-brainer. The same is true of many other fixed expenses, such as auto loan payments, cable TV subscriptions, insurance premiums, and so on. It’s easy to budget for these expenses because the amounts don’t change from one month to the next.
Besides expenses that are the exact same figure each month, there are numerous types of expenses that vary a little from one month to the next, yet we still have a pretty good idea what we spend each month. A good example is our grocery bill. Most of us have a fairly clear picture of how much we spend each week at the supermarket. So, we can insert a realistic figure into our budget-in-progress and not be too far off the mark. The amounts may go up or down slightly each month, but we usually know the range we’re dealing with. Other examples of this category include telephone bills, utility bills and gasoline (when prices are stable, that is).
The real culprit in busted budgets is the variable or irregular expense. How much will you spend on car repairs over the next 12 months? What about medical bills? Home maintenance costs? It seems that bills for these types of expenses hit us out of left field, and there goes our budget. Before long, we’re using food money to cover a new set of tires for our car and the whole budget comes crashing down.
So what’s the solution? There is no perfect answer to this problem. But we can come to a close approximation by using the simple technique of monthly averaging. Start by gathering 12 months’ worth of checkbook registers, bank statements, and credit card statements. Write down (or enter into a spreadsheet) how much you spent each and every time your money went toward something that was not a fixed expense. Group these expenditures into categories, such as auto, home maintenance, clothes, etc. Don’t try to break it down too far. What you want is a handful of useful categories. Then keep listing each of these expenses under their relevant categories for the full 12-month period.
When you are done with this exercise, you should have an excellent idea of your total annual expenditure for these variable expenses. For example, if you add up all the automobile repair or maintenance expenses for the year, and the figure comes to $1,200, then divide by 12 to get the result of $100 per month average. That’s how much you need to allow in your monthly budget in order to build up enough reserves to handle an auto repair when it comes up. Again, this method isn’t perfect, because an expense may come up that exceeds your estimated outlay, but at least it takes into account a closer approximation to reality than simply guessing, or worse, ignoring auto maintenance in your budgeting.
The trick here is to set up a separate savings account in which to set aside these “extra” funds. Let’s say the “extra” $100 goes into the savings account for six months, and then you get hit with an auto repair for $400. You pull the money from your $600 savings that was purposely built up for this type of expense. This way, you’re automatically setting aside amounts intended to cover each type of irregular expense that you encountered over the previous year.
Most people are shocked when they perform this 12-month analysis of irregular expenses, and it immediately becomes clear why their budget is always breaking down. This technique leads to the discipline necessary to recognize that “extra” money is seldom really extra. If we think we have our bills covered, and there is some cash burning a hole in our pocket, our tendency is to spend it on something fun. But if we know that there really is no cash left over, because we haven’t yet set aside the extra $100 needed to keep our car on the road, then we’ll be less inclined to spend it on pizza, beer, and movies.
Budgeting can be successfully accomplished by this technique of monthly averaging, especially if we consistently apply it year after year. As we move forward, our understanding of our true expenses becomes clearer and clearer, and we are no longer surprised by the occasional unexpected expense.
The best way to implement this approach is to set up a regular savings program, where the amount you’re setting aside to cover irregular expenses gets automatically deducted from your paycheck and forwarded to your savings account. If the money is deducted from your paycheck before you even see it, then you will be less tempted to skip this critical part of the budgeting process, and you will greatly increase the chances of making a budget work over the long term.
Lending and borrowing are parts of the financial market. The lenders on behalf of lending agencies like banks and financial institutions offer loans of several varieties. People borrow as they cannot manage with what they earn. The financial market has classified the loans, mainly, in two categories: secured and unsecured.
People can apply for secured loans if they have valuable possessions. The lenders ask the borrowers to provide valuable assets to be used as collateral, and secured loans are advanced against this security. A home, a piece of land, a vehicle, valuable investments etc are considered as valuable possessions.
It is clear from the above that secured loans are not available to non-homeowners, tenants and to many others. Unsecured loans are important for this reason. People who apply for unsecured loans do not require offering anything as security. Homeowners can also apply for unsecured loans.
People can borrow an amount between £500 and £25,000. The lenders study the financial status of the applicant and assess his repayment capacity before deciding the amount of loan may be granted. The lenders want that the loan amount must be cleared within 1 to 10 years. Interest rates for unsecured loans are higher than those for secured loans.
The loan-seekers are required to be qualified for unsecured loans. They must fulfill the following conditions for this purpose:
1. They must be citizens of United Kingdom. 2. They must be at least 18 years of age. This is necessary as persons below 18 years of age are not legally allowed to be a party to any financial contract. 3. The lenders, after approval of the loan application, send the loan amount to the respective bank account of the loan-seekers. Hence, it is a must that the applicants have checking account. 4. The applicants must be employed in any officially authorized office or plant at least for six months. 5. They must earn as low as £1000 in every month.
It is possible to submit application offline and online. It is, still, better to apply online. The applicants should go through the terms and condition of unsecured loans minutely, before they submit their application. They can find favorable quotes at reasonable rates of interest if they study the websites in which the lenders provide detailed information about unsecured loans.
Unemployment has been one of the biggest and grave problems which many of the nations are facing today. Moreover in today’s time when even a person getting high salary can’t pay the expenses in one go and even wants to borrow the additional funds. Then think about the unemployed people. The unemployed people have to face even far more difficulties. Sometimes when you go to some financial institutions they want you to pledge your precious assets as security in return of cash advance which is considered too risky by some. It involves a great risk of losing the asset if you are unable to repay the amount due to any important condition. These asset can be anything like your house, vehicle, debit card, car keys etc. they act as collateral. But the unsecured loans for unemployed scheme is far from all such problems and complicacy and is the best option that is available for the unemployed people in the market.
The unsecured loans for unemployed scheme have gained so much popularity in no time since its introduction. It is a short term fund provider without the need of pledging any asset and therefore it is an unsecured kind of a scheme. But before that there is a basic criteria which you should satisfy before you apply for this scheme:
• You should have permanent UK citizenship
• You must be at least 18 years old
• The proof of capability to repay the amount
• A valid checking bank account
The scheme is 24 hours available online along with its financial advisor to guide you through out the process and thus help you save your time from running here and there uselessly and you just have to fill an online form to avail this scheme. As soon as the lender is convinced the money is credited in your account electronically.
The unsecured loans for unemployed scheme are a short term fund provider without the need of pledging any asset. The scheme is 24 hours available online along with its financial advisor to guide you through out the process and thus help you save your time from running here and there uselessly.