In the last blog I went over how much money you have coming in and how much money you have going out. There are few different things to keep in mind. Lets take for example you have more money coming in than going out, then you can make your budget work better for things that you want. I had to budget for Christmas and had to put a certain amount of money away or budget for a certain amount to spend on it. This number should be a comfortable number so you don't over spend for things. My wife also likes to get her hair done every other month (used to be every month until we talked about how much we can save). Also if there is a birthday or maybe something you want or need to buy. Now when I say need to buy I mean your computer broke and you need one for work or a cellphone broke and you need a new one.
OK this is what I did to help get me out of debt. I took my monthly income and my monthly expenses and minus the income vs the outgoing. I was left over with more than I thought, I thought, where is this money going. I started to look at my bank statement and saw that I was spending money on the most random things like food,cloths and just stuff I don't need. I couldn't go a day without swiping that card. I fixed this by paying myself after I payed my bills. I gave myself $200 a month CASH to spend on things however I wanted to. This is hard to get used to but spending cash will help you understand how much money you have left in your pocket and that thing you really want isn't that cool anymore.
Sticking to a budget that you set is really hard at first but gets easier over time. I know I am not telling you the exact number you need to set aside on just spending, but this is going to based on what you feel comfortable with. It might start bigger, but try and work it down as much as you can. You might realize that you have to much spending money and not enough for gas, so next month fix it and move on. The best way that I have used is to look at you bank statement, this will give you a better idea than making up a number that you think you need.
In the next blog i will go over how much money you should save each month and what to do with the money left over after paying your bills and yourself.
Friday, January 3, 2014
Thursday, January 2, 2014
The Beginning to the budget
Lets start this thing off with a bang. First you need to sit down and really come to terms with how much money you have going out and how much money you have coming in. I first started by making an excel spreadsheet to make it easier for me to track it. But if you are not good with that sort of thing than use paper and pencil. First I wrote down in the first column how much my monthly income was. For example I made about $2500 a month and my wife made about $3000 a month, so together we made $5500 a month. This is about the normal amount most Americans make a month, some less, some more, but the budget will work either way.
Once you write down how much money you have coming in then its time to see how much is going out. Put all expenses, for example: Cable, water, rent, car payment, credit card payment, student loans, etc. When you have this then compare the 2. If you have more money coming in then going out then you are in a good place. But don't forget about other things that are apart of our everyday life such as gas, food, clothing and misc stuff. The first time I added these numbers up I about had a heart attack. Well you need to make those things an expense, money that is still going out.
If you don't bring in more money than you put out every month then you need to change some things. There is odd things that I was subscribe to, like magazines, credit checks, game subscriptions, shooting range memberships, etc. Well those are the first to go if you need to get yourself back to more income than out going.
To budget for gas, and groceries you need to first look at you bank history and take the medium of what you usually spend each month on each. I started with $200 of gas and $500 on groceries since I had to feed a family of 4 and we didn't drive much or far.
This is a good start to figure out what you have coming in and what you have going out. Remember to you exact numbers to the cent and don't over look anything, no matter how small.
In the next blog i will go over how to take this budget to the next level and modify it to fit your lifestyle.
The Tight Dollar a New Year
The New Year for most people means New Year resolutions. This is your year to get in shape; financially that is. This year I am starting this blog to share what I have learned from reading various books and pulling myself out of debt. I want this to help you do the same thing and help you achieve financial freedom.
I will discuss things that apply to the everyday family, and the single person as well. Help yourself by reading everything you can about your finances and understanding them. Many of people I've talked to simply don't know were to start. Well wait no further....
I start by telling you my story. I have been in debt since I was 18. What I mean by that is, ever since I was able to get a credit card I thought that money was mine and that I could spend it whenever and however I wanted. I spent most of my early 20's buying cool clothes and an SUV with all the extras. I always felt that if I had these nice things, people would see me and say "Look at that guy, he is in his 20's and has all that, he must be smart and successful." It made me feel good, but while I had all these nice things and great dinners, I hated to pay that bill at the end of the month.
If only people knew that I was living paycheck to paycheck. I was working a job not a career. I thought that once I started my career I would make more money and still be able to live this lifestyle and have money left over. I was seriously wrong. Once I did start my career and started making more money, I just increased the way I lived and soon I was back in the same spot; living paycheck to paycheck. But one day, like most people in life, I met my wife and started to realize that I was not as bad off with money as I thought.
My wife had a really nice car and spent more on her hair than I did on dinners every month. She also had a 4 year old at that time that wore nice cloths and went to preschool. She made more money than I did and had more debt than me, so I looked good until we got married and then we had a lot more debt together. With 2 car loans, student loans, 5 credit cards, all the best cable stations and services we could buy, eating out almost everyday, etc. We had a plethora of debt and needed to find a way out.
After I found that my wife was pregnant and realizing that we were in more than $40k in debt I thought I would try and save more money and get ready for the new little one. I knew a guy at work that had a really nice house and drove a really crappy car, at least it was to me. So I asked him if he saves money or budgets? What he told me would change my life and confuse me at that time. He told me that has a very strict budget but doesn't really have a traditional savings account. The money he saves is for specific things and when he isn't saving for those things he only has a few thousand in the bank. I figured this guy can't help me.
He went on to tell me that he invests about 20% of his salary. I asked him how many credit cards he had and he said none. He told me he had only had one credit card and will never have one again. He was excited to tell me these things and went on about how all of his cars were payed for and that he was paying cash for his wife to go to college. Now, I knew how much money this guy makes because we worked together and had the same position and here he was, completely debt free except for his mortgage. I asked him to teach me everything, and he did. And the best thing he ever taught me is that if I really wanted to be financially independent that I needed to read, study, and really stick to a budget. So that's what I did and before I knew it, in a few months iI was 1/3 out of debt.
This blog will be a list of resources and strategies that I used to get myself out of debt that you can apply to your own life to do the same for you.
I will discuss things that apply to the everyday family, and the single person as well. Help yourself by reading everything you can about your finances and understanding them. Many of people I've talked to simply don't know were to start. Well wait no further....
I start by telling you my story. I have been in debt since I was 18. What I mean by that is, ever since I was able to get a credit card I thought that money was mine and that I could spend it whenever and however I wanted. I spent most of my early 20's buying cool clothes and an SUV with all the extras. I always felt that if I had these nice things, people would see me and say "Look at that guy, he is in his 20's and has all that, he must be smart and successful." It made me feel good, but while I had all these nice things and great dinners, I hated to pay that bill at the end of the month.
If only people knew that I was living paycheck to paycheck. I was working a job not a career. I thought that once I started my career I would make more money and still be able to live this lifestyle and have money left over. I was seriously wrong. Once I did start my career and started making more money, I just increased the way I lived and soon I was back in the same spot; living paycheck to paycheck. But one day, like most people in life, I met my wife and started to realize that I was not as bad off with money as I thought.
My wife had a really nice car and spent more on her hair than I did on dinners every month. She also had a 4 year old at that time that wore nice cloths and went to preschool. She made more money than I did and had more debt than me, so I looked good until we got married and then we had a lot more debt together. With 2 car loans, student loans, 5 credit cards, all the best cable stations and services we could buy, eating out almost everyday, etc. We had a plethora of debt and needed to find a way out.
After I found that my wife was pregnant and realizing that we were in more than $40k in debt I thought I would try and save more money and get ready for the new little one. I knew a guy at work that had a really nice house and drove a really crappy car, at least it was to me. So I asked him if he saves money or budgets? What he told me would change my life and confuse me at that time. He told me that has a very strict budget but doesn't really have a traditional savings account. The money he saves is for specific things and when he isn't saving for those things he only has a few thousand in the bank. I figured this guy can't help me.
He went on to tell me that he invests about 20% of his salary. I asked him how many credit cards he had and he said none. He told me he had only had one credit card and will never have one again. He was excited to tell me these things and went on about how all of his cars were payed for and that he was paying cash for his wife to go to college. Now, I knew how much money this guy makes because we worked together and had the same position and here he was, completely debt free except for his mortgage. I asked him to teach me everything, and he did. And the best thing he ever taught me is that if I really wanted to be financially independent that I needed to read, study, and really stick to a budget. So that's what I did and before I knew it, in a few months iI was 1/3 out of debt.
This blog will be a list of resources and strategies that I used to get myself out of debt that you can apply to your own life to do the same for you.
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