Auctions Where Everythings Under A Dollar
Most contractors I run across confess “I never have as much money at the end of the year as I expect to.” Do you suffer the same fate?
Do you arrive at year end wondering where your money went to? If so, I’d bet you’d like to learn how to avoid that ugly outcome.
Pay attention here, I’m going to let you in on a little secret that will help you end those unpleasant year-end surprises. Lean in close. Don’t tell anyone about this. It’s so secretive that few contractors do it. Are you ready?
Use a budget
That’s it. That’s all it takes. Create a budget, track the variances, and take corrective action when necessary. Class dismissed.
Oh, you want to hear more? Okay. Keep reading to learn how to put a stop to those nasty year-end surprises.
Annual budgets allow you to stay on top of your financial progress as your year unfolds. They arm you with the ability to reel in expenses before they kill your bottom line. They force you to think through your business’ strategy and its resource allocations.
When you don’t have a budget to monitor, or don’t monitor the one you have, you are destined to arrive at year-end thinking “Rats. Where’d my money go?”
Contractors’ aversion to budgeting has always struck me as funny (not in the ha-ha sense). On the one hand, contractors tend to be obsessive about planning field work. They know that letting their field crews sort out what to do from day to day is a recipe for disaster. But on the other hand, they don’t apply that reasoning to their business. Lack of business planning leads to poor financial performance; it’s as simple as that.
You need a budget, it needs to reflect the reality of your market, you need to keep a close eye on its progress, and you need to take corrective action when it’s called for. Anything short of this will leave you with that “What happened?” feeling.
Look at the Market
Before diving into the how-to budget details, let’s make sure you understand the connections between your budget, your business plan, and your market.
Your budget is a financial representation of your business plan. Your business plan’s purpose is to take advantage of profitable opportunities in the market. Budgeting should not be attempted until your business plan has been developed.
Your business plan should be aligned to the size of your market, the prices your market will pay, and the cost of serving its needs. You can only make as much money as your market will support and your business plan will deliver. Budget accordingly.
Contractors often put the cart before the horse. They set sales, overhead, and net income goals, put them into a budget, and then try to craft a strategy to fulfill them. That sequence totally ignores the market.
It’s foolhardy to create the financial model and then try to craft a business plan that fits it when the business plan hasn’t been tuned to the market. First strategy; then budget; then meet the budget; then build a bulging bank account.
Your budget will be developed through five stages: preparation, rough draft, refinement, reality check, and rollout.
Stage 1 – Preparation
Unless you implement a new sales and marketing plan, you improve labor productivity, or you reduce overhead, your financial performance will be controlled by the market and the economy. If they grow, you will make more money. If they shrink, you will make less, or even lose, money.
In this industry, past performance is the best predictor of future performance - unless you force change. Build your budget on the foundation of your recent three year financial performance. To do that, gather together the balance sheets, income statements, and cash flow statements for those years.
Next, tap as many information sources as possible to gain an informed view of upcoming market changes. Visit with your banker. Visit with your insurance and bond agent. Buy construction forecast data from McGraw-Hill or a similar provider. Search the census bureaus’ website for reports on economic projections. Call the Federal Reserve and see what reports they have available. Call your local economic development councils.
Eventually, you will discover the experts’ consensus opinion. Even they can be completely blindsided by turns in the economy, but they are the most informed group to listen to.
Go over the information with your executive team. Reach consensus on your upcoming market opportunities.
Here are the Stage 1 steps.
Grab the last three sets of annual statements.
Gather up construction forecasts.
Discuss market opportunities.
Stage 2 – Rough draft
The purpose of the rough draft is to give you a reasonable starting point. Your rough draft will not consider changes to your business plan nor changes in the economy. To create the rough draft, study the income statements from the last three years and determine:
Your sales trends
Your direct cost trends
Your administrative overhead trends
Your sales and marketing expense trends
Your operations support trends
Your labor burden trends
Your average gross margin
Take your most recent income statement and adjust each line item for the trend (up or down) or jot down the three year average, whichever you feel is most appropriate.
Here are the Stage 2 steps.
Determine trends and averages for each income statement line item.
Decide whether the average or the trend is the most appropriate assumption.v
Mark-up last year’s income statement accordingly.
Stage 3 – Refinement
Now, adjust the numbers for changes in the market and changes in your business plan.
If you expect the market to shrink, assume both your sales volume and your margins will shrink. If you expect your market to grow, assume either your sales volume or your margin will grow. Do not assume both will grow (we’re not going to go into this but it usually holds true).
Now estimate the cost impact of new business strategies. For example, you may decide to expand sales by pursuing the office building market. In order to land the work, you will authorize a $10,000.00 advertising campaign consisting of magazine advertisements, direct mail, and client entertainment. This spending would be on top of the advertising you do to generate your current work load. Your advertising budget needs to reflect the additional $10,000 investment.
When thinking through your business plan, look at closely the cost impacts of:
Increased advertising to pursue new market
Expansion of sales staff
Purchase of new equipment
Adding office staff
Implementing or altering management information system
Employee training and development
Changing the bonus plan
Entering a new geographic territory complete with local office
Pay raises
Rising health care premiums
Another budget impact you need to account for is improved selling performance. Assume your sales team persuaded another 20% of your clients to hand you negotiated contracts. You budget would need to reflect the higher mark-ups associated with negotiated contracts.
You are ready to finalize your first draft. Adjust the trended or average numbers for each line item by the impacts of your business plan. Re-type the document so that it is easy to ready.
Here are the Stage 3 steps.
Verify your labor pool and operations support staff team can handle the projected work load.
Verify the targets for sales volume and direct cost markup are reasonable
Verify increases in marketing and sales expenses.
Update equipment expense and depreciation to accommodate new equipment needs.
Update sales volume goal.
Update direct cost margin goal.
Calculate expected work load (labor, material, equipment costs).
Revise and re-type your budget.
Stage 4 – Reality Check
One of the primary reasons contractors fail to hit their profit goals is because they are overly optimistic about their gross margins. The time has arrived for everyone to join a no-holds-barred discussion on operations and sales.
You need to challenge all assumptions made that the crews will perform better than they have in the past. No baseless, pie-in-the-sky claims are allowed. Unless, there is a reason to believe turnover has been greatly reduced, more efficient equipment has been purchased, or the operations management team will be able reduce downtime and rework, do not assume your labor will be more productive than in the past.
The other claim that you must question strongly is the ability of the sales and marketing team to generate better quality leads and better paying jobs. Sales and marketing personnel are highly optimistic individuals by nature. Take their promises of greater glory with a grain of salt. Believe it when you see it, not before.
In other words, don’t take their word on gross margins at face value. You need to analyze it segment by segment. Discuss the real mark-ups each segments produces. Pull out your job costing reports to see what the real mark-ups ended up being.
Ask them why they believe the leads will be better and why the margins will improve. Segment by segment, forecast total sales and margins. Pull them together and compare to your budgeted direct cost and gross profit.
Adjust your budget accordingly. Now, you’ve finalized your budget. Time to roll it out.
Here are your Stage 4 steps.
Call a meeting with your top operations and sales personnel.
Review and discuss field performance and projections for improvement.
Review and discuss advertising and selling segment by segment.
Tweak the budget based on the outcomes of these conversations.
Now, you’ve finalized your budget. Time to roll it out.
Stage 5 –Roll-out
Now that you’ve finalized the 12 month budget, you need to break it into manageable chunks (12 chunks that is). Create a spreadsheet with 14 columns. Label them by month. Each row is an income statement expense. The first column is the name of the expense. the second column is the total for the year. The third column is for January, the fourth for February, and so on.
Look at each income statement line item and determine whether it is an expense that stays consistent each month (e.g. office rent) or varies monthly. Many overhead expenses are billed twice a year or quarterly. Put the appropriate value under each month. The total for the months must equal the total for the year.
Pull up monthly sales for the last three years. Calculate the weighting of the sales per month. For example, if you typically sell $400,000 in July out of $3,200,000 annually, July accounts for 12.5% of your sales. Calculate 12.5% of your budgeted sales and direct expenses and put them in July’s column.
Continue filling out your spreadsheet until you have the entire budget accounted.
Make copies of the detailed monthly budget and distribute to all individuals who have spending authority. Pull them into a meeting, shut off the cell phones, and explain the detailed budget to them. They need to understand the expenditures planned by the budget, the logic behind the expenditures, the assumed gross margins, and the planned timing of the expenditures.
A word is in order here regarding cash accounting versus accrual accounting. If you are running your business on the cash accounting basis, you should set up your budget and track your progress on the accrual method. Cash accounting is great for taxes but terribly misleading for managing a business.
Here are the Stage 5 Steps
Allocate the annual expenses to the appropriate months.
Determine the historic pattern of your monthly sales.
Create monthly budgets for sales, field costs, overhead, and profit.
Present the detailed budget to your management team.
By completing the 22 step budgeting procedure, you now have in hand the tool that empowers you to manage your year end performance. Of course, the key word in there is “manage.”
Tracking
The second reason contractors fail to hit their year end financial targets is because they fail to track their progress against budget and take corrective action as necessary. Have your accounting staff generate an income statement and cash flow statement at the end of each month.
A word is also in order regarding your accounting staff. Whether inside or outsourced, your accounting staff must get you these reports no later than the seventh of the month. Hold them accountable to that date. They will probably whine like mad but ignore it. Timely reporting must be a non-negotiable duty of their position or service.
The monthly income statement should show:
Budget value for the month
Actual value for the month
Budget value year-to-date
Actual value year-to-date
Actual vs. budget variance for month
Actual vs. budget variance year-to-date
Projected year end based on current trend.
Gather together your management team, review and discuss the income and cash statements.
Taking Action
Budgets do not produce the results. Managing to them is what produces the results.
As variances become apparent, investigate their cause and take all necessary action. That may mean visiting with someone or some group who is underperforming and discussing things can be done to meet the performance goals. Taking action may mean revising the budget in accordance with changes in the economy and market.
When spending exceeds plan, or sales fall short, discuss the situation with your management team and decide how to get back on plan, and whether the spending needs to be scaled back to offset poor sales or increased to take advantage of unexpected opportunities.
You should not ignore unforeseen opportunities just because money wasn’t set aside for them. Adjust the budget as better-than-expected opportunities arise. Reallocate your resources or increase your budget to accommodate the needed investment.
Cash Budget
Translating your monthly income budget into a monthly cash budget is surprisingly easy and highly beneficial. Copy your income statement spreadsheet and translate the monthly sales figures into monthly cash receipts.
The way to do this is to look at your aged receivables. If you typically receive your money 45 days after the job, then your inbound cash trails your sales by one and a half months.
Your outbound cash is also pretty easy to figure. You field labor gets paid weekly. Your office staff twice monthly or so. Your materials are due in 30 days. The overhead expenses are already scheduled. Lease payments are due every 30 days.
Monitor your cash flow budget just like you do your income budget. Go over them at the same time. Usually, when cash flow is becoming a problem it is due to slow paying clients. You need to know that as quickly as possible so that you can chase the money owed to you.
Final Reminder
To run a construction company successfully, you must pay attention to the rate at which your business generates gross profit and the rate at which it spends money on overhead. The only way you can know whether those rates are acceptable as your year unfolds is to create a budget and keep an eye on its progress. Otherwise, you might as well keep expecting those ugly year-end surprises.
Get tips to save money and develop a personal budget that really works for you. Money saving tips include recognizing when and how household budgets are likely to fail, tips to keep budgets on track and ways to save more money and organize monthly bills.
Money Saving Tips: Creating a Personal Budget
There are some money saving tips you can use to make your personal budget really work. Household budgets often fail because the family trying to track expenses and plan for the future simply gives up. It’s important to recognize from the beginning that maintaining a personal budget is stressful, difficult and not a perfect process. Keeping realistic goals with regular expenditures in mind can also help you save money. Understand it will take time to get used to a new household budget and don’t let mistakes or occasional bloopers deter you from your goals.
More Money Saving Tips that Make a Household Budget Work
In addition to making room in your life for a personal budget, money-saving tips include thinking about short-term goals in addition to long-term goals. It’s important to include buying a new (or used) car in your budget over the next five years. Including exact costs for vacations, weddings, birthdays and other recreational expenses can be hard to do, so focus on estimating expenses to stay on track with your long-term goals.
Ease Household Budget Woes with a Balance Transfer Credit Card
Ease household budget problems with a balance transfer credit card. These cards are designed to reduce high interest debt. Use a balance transfer credit card or a low interest credit card to improve household budget results. High interest debt can be a killer over time. You’ll save money in the short term with reduced monthly bills. Transferring balances to a low interest credit card can also help track monthly household budget expenses, since there are fewer bills to pay.
Budgeting isn't that big a deal. Too many people look at budgeting as this large sign saying "I have money trouble."
But it is far from that. Budgeting is responsible financial management. Every successful business budgets. Even the government budgets. It is necessary if you want to meet your financial goals. You may be thinking that no one you know budgets right now, but eventually they will need to. After all, you don't want to be working well into your retirement years just because all of your friends are.
Budgeting keeps you ahead of your bills. It helps you pay off your debt and save for the things that really matter to you. Stop thinking of it as a way to limit your spending or hold you back. It isn't a financial diet. It is a financial road map.
Think of it as three main parts: summarizing how you spend, controlling what you spend and planning for your future.
When you first start budgeting, the first step is to track your spending for a short amount of time to see where it is going. Set up income and expense categories to fit your spending. Using someone else's categories or budget template almost never works. We all have different expenses. It helps to keep all of your receipts for two months. Use these to create your categories and see where you are spending your money.
Make your categories detailed enough to tell you where things are going, but don't go too far and get too detailed. This will just slow you down and make you want to give up.
Once you know what you are spending and where, you can establish some spending goals for yourself. There are some places you can skim back and there are some that you can't. You have to be realistic. Don't set a goal of cutting back your grocery bill by $200 in the first month. Take smaller steps and set smaller challenges. Look for ways to reduce your spending and make it a challenge.
As you work on cutting your costs and reducing your spending, you can start working towards the financial future part of your budget. I like to include with my budget all the planning I do financially. Your debt reduction, your yearly expenses savings, your insurance needs -- this is all tied to your budget. Plan out what you need to do to get out of debt. Without your budget, you wouldn't be able to find the money to pay off your debt faster. Include in your budget categories for debt reduction, emergency savings and yearly payments. You will probably find that you have to choose one goal at a time to work towards. Pay off your debt first, then start your savings.
And keep in mind that a budget isn't something you write down and then try to stick with no matter what. Budgets move. They are adjustable. Just as your finances change, so will your budget. You may find that you have less income one month and need to readjust how much you can spend on groceries and entertainment for the month. Or you could have an unexpected bill come in. Don't just toss away your budget when this happens, use it to take care of the situation.
Do you have a household budget? Do you balance your checkbook to make sure your expenditures are less or equal to the money you have in your account? Consider the same for your body.
You have a certain number of calories to consume throughout your day. Are you overextended or saving with your calories? If you're eating too many calories, you're gaining weight and out of balance with your caloric budget. Many of us don't consider the cost of the extra calories on our bodies until our clothes start feeling tight. However, if you're eating appropriately within your calorie budget and exercising, you are in balance in the form of maintaining your weight. If you eat less calories and/or exercise to expend more calories, what happens? You will lose weight. The equation of calories in/calories out is the way to lose weight and maintain your weight long-term.
There are 3,500 calories in a pound. To lose a pound, you need to consume less calories than your body needs as you conduct your daily routine. Like any good budget, your goal is not to spend more than you can afford. For example, you see a treat that looks good, check out the nutritional breakdown. As yourself if it is worth the calorie expenditure from your budget if you eat it? If not, don't allow it to break your calorie bank account and pass on to a better food choice.
Do you want to increase your calorie burn? You need to exercise. If you add exercise to the equation, you'll lose weight quicker and more efficient than if you were sedentary. In addition, calories burned through exercise increases your metabolism and the benefits continue even after you stop the exercise activity.
The more muscle you have, the higher your metabolism and the more calories you naturally burn. Aerobic exercise is important. Strength training to increase your overall muscle nass is equally important. Resistance training and weight lifting also add a boost to your metabolism and calorie burn.
If you keep a food and exercise journal, consider it as your health checkbook. Your calorie and exercise budget build your health account better and stronger. Your financial picture can be successful if you monitor your finances closely. Your health will benefit from a successful calorie and exercise budget. Monitor your budget to enjoy maximum weight loss and weight maintenance.
By working with a coach, you can create a comprehensive calorie and exercise budget that is customized just for you, your likes and dislikes.
Just as you are diligent in your personal and family finances, consider the same for your body's calorie and exercise budget as well. By creating a calorie and exercise budget similar to your financial budget, it will help you think about how much you eat and exercise. A calorie and exercise budget will not only help you to eat less, but will also help you make healthier food choices to promote a balanced budget. The bonus of a good calorie and exercise budget is a balanced, successful, healthy and happy life.
I was talking to a lady the other day… in her mid-forties, who told me that they “don’t need a budget”. Naturally, my curiosity was aroused… not 5 minutes before that statement she was complaining that she had to work, and she hated it. “So why don’t you need a budget?” I asked. Her reply was simple… they “don’t have a credit card and they don’t owe any money”.
My question about how much money they have saved in a bank account was met with a blank stare and an answer of ‘Nil savings’. Their future? - Well, they have nothing apart from the employer funded superannuation which now amounts to about $35,000.
How are they planning to spend their retirement? What activities would they like to enjoy? Have they even thought about this? You see, at the moment the old age pension is a little more than $250 per week. Now I don’t know about you… but that will barely cover my household expenses.
So while this lady has worked hard to make sure she has all her debts paid out, she hasn’t given much thought to what lies ahead in the future. She readily admitted that they’ve frittered a lot of money away each week, since they paid off the mortgage. But then she also realized that if the fridge packs it in tomorrow, they don’t even have the price of a new one in their bank account. That would mean going back into debt again.
Even if they just saved half of their old mortgage payment each week, they’d be in a much better situation when they retire and that could mean the difference between eating out in a restaurant and eating out on the back lawn. (c)
http:www.budgetbitch.com.au
Rules. No-one likes rules. But we all realize that if we didn't follow traffic rules and stop at a red light, our streets would be chaos. If you want to have a successful personal budget, you have to follow the rules (in this case one simple rule).
Many people believe that there are a lot of rules to follow when making a personal budget. People believe you must work on your budget every day, and keep track of every penny you spend, or else your budget won't work. Most people think budgets are a lot of work.
Most people also believe that budgets are hard. They think you need to be an accountant to be able to create and maintain a personal budget.
Budgets can be a lot of work, but they don't need to be, if you follow the First Rule of Making a Personal Budget: Keep it Simple. Yes, like a lot of things in life, the KISS rule applies to your personal budget.
Don't try to create a complicated series of linked spreadsheets with fancy graphs and tables. Don't try to master the most complicated personal budgeting software. Don't believe that you have to go to school and study bookkeeping and accounting to make your budget work for you. Keep it simple.
Start with a blank piece of paper, or a blank spreadsheet, and make a list of what you spend money on every month. That's right, you are not making a budget; you are making a list - how easy is that?
Most people can't even make a list of what they spend each month, because they have no idea what they spend their money on. No problem. Keep it simple. Get a pencil and a piece of paper, and carry them with you everywhere. Whenever you spend money, write in down. At the end of a normal week, you will have a good idea of where you spend your money.
You could then take your week's worth of notes and make a monthly budget. But, to make your budget even simpler, do a separate budget for every pay check, or make a separate column on your spreadsheet for every paycheck. That means if you get paid every week, have a column for every week.
Then, make a plan for how you will spend every paycheck. It's much simpler to decide how to spend your paycheck this week than it is to try to budget for the next six months.
Read that sentence again: make a plan for how you will spend your money. That's the only reason for making a budget. By keeping track of where your money goes, you can make a plan to spend your money where you want to spend it.
If you keep it simple, your budget will be a success. And remember, if you don't follow this simple rule, your personal finances will be a mess, and you could have to declare personal bankruptcy. So keep it simple, because proper budgeting is the best personal bankruptcy alternative.
For some, the idea of a budget is often a blur. It is frustrating to see how hard it is to do a budget and realizing that with one wrong purchase, you can actually ruin the entire thing. And this has been a perennial headache for most homemakers.
It is about time to overhaul the way people look at budgeting. It can actually be a great way to keep track of your family's expenditures and help you evaluate the things that you spend the lion's share of the family's earnings on.
What is a budget? A budget is a tool for handling your finances by controlling the family's expenditures in a way that money is enough for paying up bills, and still ensuring that savings are set aside for future expenses - vacations, or children's education, or even for retirement.
Try these simple steps in preparing a no fret family budget, and see the benefits of intelligent spending.
1.Gather three months of your pay stubs and get your average monthly earnings.
2.Get out three months of your monthly bills. Do this for the fixed expenses like the rent, phone bill, car payments and other loans that come monthly. Add them up and get the average. Do the same for other expenses like groceries, and credit card bills.
3.Evaluate the results of your computations. Looking at your average monthly earnings against your monthly fixed expenses and other monthly expenses, think of some ways to economize. Cut back on some items that are somehow unnecessary.
4.Knowing the facts of your income and expenses, develop a family budget and try to stick to this monthly budget.
5.Now that you have a monthly budget, set up a savings account. Save up by making regular deposits to this account.
6.Keep track of this monthly family budget just to see if it is working for you. Try to fine-tune the "rough edges" of this budget as you go along.
7.If you can get hold of a personal budgeting software or spreadsheet application to keep record of your budget, the better. This will make organizing your expenses very easy.
These are the basic steps in developing and implementing a no fret, easy to stick to monthly family budget. Of course each family has diverse needs and wants.
You have the freedom to develop your own monthly family budget, depending on your family's financial background and needs.
No matter how you do it, just focus on the end result, which is building a savings that leads to a bright and financially stable future for your family.
Here are some of the favorite tips for budget travel in Europe. Actually, these budget travel tips apply to any country that you want to visit!
Budget Travel Tip # 1 Eating with the locals instead of the tourists. This way, you will save some money and enjoy the local food at the same time. Restaurants or eateries that are popular with local residents tend to be the ones with the best meals at a low or reasonable price.
Budget Travel Tip # 2 For a quick and economical breakfast, pick up a roll, some fresh cold cuts and a piece of fruit from the local market. Then enjoy a delicious sandwich and a cup of coffee in the local park. Take in the view and local life around you. You may end up with some great photos while at it.
Budget Travel Tip # 3 When eating out, choose the fixed price menu and the house wine for the best value. These dishes are often a good way to sample the local cuisine.
Budget Travel Tip # 4 Overnight trains are a great way to get from place-to-place and rest or sleep. During your budget travel in Europe, be sure to bring a meal, bottle of water and snack along. That way, you can save money and enjoy your packed meal.
Budget Travel Tip # 5 Snap away! Take loads of pictures of the people you meet during your budget travel in Europe. If you are using film camera, develop them when you get back home as developing at tourist locations can be expensive. Of course, if you are using a digital camera, you can take as many shots and print only your favorite ones.
Budget Travel Tip # 6 Find a website that offers some photographs of local attractions or upload your own from your digital camera. Personalize these shots with an epostcard and email them back to family and friends at home.
Budget Travel Tip # 7 Learn a few basic words of the local language. It will be easier and cheaper to buy things.
Budget Travel Tip # 8 When making large purchases, it is always best to use a credit card. That way you cash lasts longer.
Budget Travel Tip # 9 Like credit cards, ATM cash transactions provide the best exchange rates. You will avoid the sometimes costly fees charged by hotels and currency services when you need cash.
Budget Travel Tip # 10 Many travel locations provide student discounts, senior discounts, etc. If you are not sure a, always ask.
Budget Travel Tip # 11 Plan your budget travel wisely. There are some inexpensive souvenirs that you can get from your budget travel in Europe. For example, stickers, fridge magnets or postcards. For more expensive purchases, remember that the further you go from the tourist attraction, the less expensive the souvenirs will be.
Budget Travel Tip # 12 Go on a tour of the city. A bus pass or subway token is a great avenue for meeting the local people and sightseeing. The public transportation service of most European cites is efficient, clean, safe and easy to navigate.
Budget Airlines, also known as low cost airlines, discount carries, or no frill airlines, have revolutionized the way the people travel. With the introduction of the budget airlines, even a common man can now dream of air travels, which was once just confined to upper class people as well as business executives.
A budget airline is simply a category of airlines that render low fare services via cutting off majority of traditional passenger services. In other words, budget airlines are flight carriers that provide services at exceptionally low rates. Sometimes, budget airlines could even fetch you more than 50% discount.
The concept of budget airlines was first introduced in the United States. During the 1990s, it spread to Europe, and later gradually to Asian destinations. Now this concept has become popular across the world.
Today, many of the reputable airlines in the scenario provide low cost airline services and that too without sacrificing the quality of services. Budget airlines generally make available low fare services through adopting certain practices, such as, providing food options to be paid separately rather than providing it as an all inclusive service and by providing seating on the basis of 'first come, first fill,' ie, in the case of budget airlines, the plane is boarded just as a bus and as such, seats would be occupied by those who would come first. In fact, budget airlines have now become one of the smartest ways to travel.
Some of the salient features of budget airlines are single traveler class, single category of airplane that reduces training as well as servicing expenses, easy fare scheme, unreserved seating systems, early flights in order to eliminate delays in air traffic, short flights, ticket sales via the internet, thereby enabling passengers to save money in the form of commissions and fees paid to travel agents, issuance of tickets in electronic format, absence of services such as in flight catering services as well as other complimentary services.
In the case of budget airlines, the pricing of air fares is based on the duration of time between booking and departure. The earlier you make bookings for airfare, much cheaper would be the airfare. Similarly, in order to fill the unsold seat in the plane, some airlines would slash the price prior to a few days before its departure.
A specialty of most of the budget airlines is that they cater to almost all types of travelers. For instance, some airlines operate budget flights according to the convenience of the business travelers. There are certain airlines providing incredible deals on air fares for students as well as leisurely travelers. In most cases, budget airline fares are flexible, al though, in some instances, these airlines may charge a nominal fee to make changes in flight reservations.
A budget airline provides almost the same superb services that a standard airline offers, such as excellent dining options, superb entertainment facilities, and comfortable as well as soft cabins. Additionally, some of the budget airlines render special services for passengers such as elderly travelers, children traveling alone or not accompanied by their parents, pregnant as well as passengers flying with infants, and passengers who have visual, speech, or hearing imparity.
With the introduction of the internet, it has become quite easy to find a budget airline. Many of the airlines have their own websites with facilities for online ticket booking. This in turn is very convenient. It is not only beneficial for hassle-free bookings but also enable you to know whether they provide any kind of discount or deals for traveling within a stipulated period or during a particular season such as Christmas or New Year. All you have to do is to just log into their website and inform them regarding the destination you are going to travel and date of departure.
All of the rest they will take care. In addition, airfare bookings online is economical, as it enables you to save pennies on issuing tickets. The airlines, in most cases, sent confirmation through a simple document containing flight details as well as booking reference. When you make payments and bookings online, it allows you to easily take a print out of this document as soon as the booking process is completed. In short, with just a click of a mouse you can make bookings for a comfortable air journey.
On Wednesday April 4, the Reserve Bank of Australia (RBA) decided leave the official cash rate on hold at 6.25%, saving homeowners the much anticipated 0.25% increase in variable mortgage rates. Many analysts are tipping the RBA is waiting on official March inflation rates before deciding on any increase and believe an increase is likely in May.
www.news.com.au stated that "Higher rates are forcing people into financial hardship with a survey by NEWS.com.au and Coredata released today revealing almost one in three Australians would be forced to sell their home if interest rates rose by 1 per cent."
Furthermore, "Of property investors, 44 per cent said a 1 per cent rate rise would force them to sell their properties as mortgage costs got too much to service."
Take the following mortgage and see what happens when interest rates increase:
Current situation
Loan amount$400,000
Interest rate7.99%
Loan term25 years
Weekly minimum repayment$711
Total interest payable over 25 years$524,642
0.25% interest rate rise
- Weekly minimum repayments will increase to $727
- Total interest payable over 25 years will increase to $544,588 - that's another $19,946!
- Additional amount required per annum to satisfy minimum repayment requirements will be $812
0.50% interest rate rise
- Weekly minimum repayments will increase to $742
- Total interest payable over 25 years will increase to $564,706 - that's another $40,064!
- Additional amount required per annum to satisfy minimum repayment requirements will be $1,616
1.00% interest rate rise
- Weekly minimum repayments will increase to $773
- Total interest payable over 25 years will increase to $605,445 - that's another $80,803!
- Additional amount required per annum to satisfy minimum repayment requirements will be $3,246
The Sunday Herald Sun reported on April 8 that "Battling families are using their credit cards to pay their mortgages in last ditch efforts to save their homes." reporting one family that has accumulated approximately $160,000 in credit card debt on eight credit cards and that "charities and financial counsellors say there are thousands more - many just one interest rate rise from losing their homes."
All this talk about interest rate rises and the impact it is having on homeowners enforces the important of staying in control of your finances. Applying additional amounts to the mortgage repayments means families will need to cut back on other areas of spending to avoid the trap of financing their lives via credit cards which attract interest rates of approximately 20% p.a..
The best way to stay in control of your finances is to ensure you regularly complete a budget. Budgeting is the key to understanding how much you are spending and where you are spending your money - this is the first step to being able to save money.
By regularly completing a budget you regularly understand where and how you plan to spend your money over the coming period. That way you can determine which areas of your spending can be better managed i.e. where you can save money which can be applied to those additional mortgage repayments.
For those people who struggle with budgeting or don't know where to start when it comes to budgeting, www.easy-budgeting.com can help.
www.easy-budgeting.com has made the process of budgeting easy and possible for everyone. The web site offers a simple and easy to use 12 month budget model created in Microsoft Excel. You don't need to be a computer wizard or an Excel expert, you just need to have the desire to control your finances.
The main feature of the 12 month budget model provided by www.easy-budgeting.com is the ability of the user to budget an income or expense item by completing just 3 easy steps. The user simply selects the start month, the frequency and the amount of the income and/or expense and the data for the 12 months is automatically generated based on the parameters selected.
After completing the budget and reviewing the 12 month summary and the expenses graph, users can easily determine where their money is being spent and where cut backs are possible. The budgeting process will help you identify your problem areas, take control of your spending and ensure you are better prepared to manage those inevitable interest rate rises. If completed regularly, budgeting will become second nature and you'll find that your money will go further and work harder for you and your family.
Visit www.easy-budgeting.com for more information on the 12 month budget model.