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Beware of These 7 Budget Blockers

Everyone knows the importance of having a household budget, yet Gallup and other surveys suggest that some 60 to 70 percent of American adults admit they don't have one; even fewer stick to the budgets they do make.

Why is that, exactly?

Two words: budget blockers. Those irksome situations in our lives -- some, ahem, of our own doing -- that sabotage our attempts at money management. Sound familiar? See if one of the following factors could be to blame, and learn how to stay standing the next time they try to trip you up.

You don't make enough money -- or you need to pare down expenses. According to the Pew Research Center, for most American workers, real wages -- after inflation -- have been flat and possibly falling over the last five decades. So while the economy is on the rebound, your salary or hourly pay may not be keeping pace.

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If you budget carefully, but still keep coming up short every month, it may be time to find a better paying job or look for ways to further reduce your expenses.

Easier said than done, especially if you feel you've already pared down to the bone, but it may just require some creative thinking. Mackey McNeill, a certified public accountant and financial planner in Bellevue, Kentucky, suggests scrutinizing your routine to see what other tweaks could help your dollar go further. "For example," she says, "if you get a haircut every four weeks, go to five or six weeks." Buy frozen instead of fresh vegetables. Try carpooling, and brown bag your lunch instead of going out. You could make your own toothpaste or your own beer, and even if it doesn't go well, at least you had fun. There's always something in your budget you can adjust.

You don't have an emergency fund. A 2014 Bankrate.com survey of 1,004 American adults found that 26 percent of consumers have no emergency savings. It's understandable how that can happen if you're buried under credit card debt or haven't had a decent raise in ages, but if you're living paycheck to paycheck -- and an emergency strikes -- you'll either have to plunge yourself further into credit card debt or use money you'd reserved for upcoming bills, setting you back on those expenses.

An emergency fund and a budget are inextricably linked. Without a budget, you can't properly save for an emergency fund; without an emergency fund, you'll bust your budget when the unexpected arises. And it will.

You have too many spontaneous expenses. You can count on your monthly car and mortgage payments to stay constant, but if you're throwing in a lot of wild-card expenses -- regular happy hours or dinners out with friends -- you can seriously throw off your cash flow. And, according to data compiled by the economist Mark J. Perry and released in January, that behavior is happening more frequently, at least when it comes to food and drink: For the first time ever, he found, Americans spent more on outings at restaurants and bars than they did at grocery stores.

So what to do? Clare Levison, a Blacksburg, Virginia-based certified public accountant and author of "Frugal Isn't Cheap: Spend Less, Save More, and Live Better," suggests adding a category to your budget for those spontaneous or unexpected expenses.

"You can't plan for every single detail, but you can expect the unexpected," Levison says. "Start by carving a small amount out of your budget each week and work to increase your fund little by little."

If you don't do this, "you'll immediately be reaching for your credit card" when these things come up or spontaneity strikes. That's why, she says, you might think of this as your "debt avoidance" category.

You have too much credit card debt. If you're carrying revolving debt, you're probably all too aware that the money you're using to pay down your debt could be going toward your bills, an emergency savings account, retirement and everything else. And you aren't alone: The average debt that debt-carrying households let sit on their credit cards is $5,700, according to research released last year by the Federal Reserve.

So pay down that debt, and pay more than the monthly minimum payment to make a dent more quickly. Once you get it paid off, or at least under control, aim to never have more than two credit cards, advises Terry Seaton, a certified public accountant and financial planner in St. Augustine, Florida.

"More than two is unnecessary and just increases the chances of running into problems," Seaton says.

You aren't planning for maintenance costs. If you're tracking your monthly expenses but not putting anything away for those sporadic, but inevitable, maintenance costs -- think oil changes, pet vaccines or home siding replacements -- you could be bulldozing your budget.

Travelers insurance company, for example, recently reviewed its homeowners insurance claims from 2012 to 2014 and found that hail and windstorm damage, as well as sewer and sump pump backups, occur more frequently from March to May than any other time of year. Does your budget leave room for hiring a roofer or replacing your sump pump should it give out? Or what about new tires, which generally last three to four years, according to Edmunds.com, but average $80 to $150 a pop, per CostHelper.com?

You aren't adjusting your budget as your life changes. If you're not reviewing your budget closely once a year, no wonder it never seems to work. Your disposable income at age 26 isn't going to look the same at age 46, when you may be earmarking extra dollars for your child's college fund or your parent's health care needs, not a white-water rafting trip.

Even if you are accounting for major lifestyle changes and shifting priorities, your life can evolve in more subtle ways. Maybe you just upgraded your cellphone plan to a more expensive version. Did you adjust your budget? Or perhaps you bought a pet without fully appreciating the expense. That first year of pet ownership can decimate a budget if you aren't careful. According to the American Society for the Prevention of Cruelty to Animals, the cost of owning a small dog in the first year generally averages $1,314; that's $1,843 for a large dog and $1,035 for a cat. Even if you buy a guinea pig, expect to spend at least $700 during that first year.

You also aren't budgeting for gifts. Holiday gifts can throw off your budget well after giving season ends. But even if you do plan ahead for your holiday shopping, are you budgeting for all the birthday parties, weddings and baby showers you attend throughout the year?

Depending where you are in your life, you may be purchasing birthday presents for all your family members, kid's friends and co-workers, along with paying for bridesmaid gowns, rental tuxes, hotels and airfare.

Start adding up what you spend on friends and family every year, and you may find that this category is your most lethal budget killer.



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