Improve Your Budget Skills

How Are Your Budget Skills?

Today’s mortgage landscape has changed dramatically from the past and it continues to change, rapidly. The days of the easy mortgage approval and loans are basically over. Today you need to qualify in order to get a mortgage, and qualification goes hand in hand with your budget.

Controlling your financial situation basically involves one or two big steps and, usually, a number of smaller steps. The combination of steps you make to get your budget in order can make a substantial difference in your overall financial posture. It can make the difference between affording and not being able to afford a home. After all you are looking for a comfortable homeownership experience, not a troubled and distasteful one.

Taking Control - The very first step in taking control of your finances and budget, is establishing a mindset that you can control and become budget minded. The easiest way to start is to understand that there is a difference between what you want and what you need. For example, you may want a gas-guzzling SUV, but what you need is a vehicle that will get you back and forth to work reliably. 

Compare - An important step in setting your budget in line is to start the process of comparison shopping for virtually everything you buy. If you currently make purchases for convenience rather than price, this new approach may take some getting used to, but eventually it will become second-nature. 

·         Learn which grocery stores have the lowest overall price and do the bulk of your shopping there.

·         Watch for sale prices in ads and circulars. Buying like this can reap big savings over time.

·         Use the Internet to make comparisons. There are numerous sites that will do the actual price comparisons, including shipping, for products you need to buy.

It All Adds Up, Large & Small – By keeping tabs on the biggest expenditures (cars, furniture, appliances and etc.) shows the quickest rewards. Your total spending for smaller items (groceries, fuel, supplies and services) can also have a big effect on your bottom line. Ask yourself the following:

·         Do you stock up on items when they are on sale or do you pay full price when the whim hits you?

·         Do you use generic or store brands, which are often 25-40% less than name brands? If you insist on name brands, do you clip coupons (and use the coupons at stores that double or triple their value)?

·         Are you paying for cellular minutes that you rarely or never use?

·         How about premium cable or satellite packages with stations that you almost never watch?

·         How often do you buy trinkets and "toys" that you never use or even look at much less use?

Saving money on the smaller items can really add up.  For example, slight adjustments in your buying habits can often save $30-40 per month in your grocery bill. Cutting back on cable or satellite may equate to an additional $25 per month or more. Purchasing less of the things that you don’t really need and don't use can show considerable savings. Unless you are currently a very thrifty spender, it is not unusual to save $100, $200, $300 or more from your monthly spending patterns. And that money adds up quickly, and then factor in the interest you could be gaining on money you put in a savings account.

Having a firm grasp on your budget and finances may be the difference between being able to afford a home and not affording one, especially with more demanding credit availability and the new standards that are prevalent in lending today.