Categories
Master Your Budget

How Do Budgets Work?

Before credit cards were part of society’s mainstream purchase method, people paid for products and services in two main ways – either they bartered or they paid cash. In both these cases, they owned what they traded for or bought. Here are four things that budgets do:

1. Allow people to be more focused financially

Before I really got into budgeting and focusing on where my income was going, I would pull out my credit card if I saw something just to have whatever it was I thought I needed. I guess you would say I thought of credit as extra cash in my pocket – whoa, was I wrong!

When I really started focusing on my finances, was later in life. Your income and expenses must balance. Credit is an expense. You need to make sure all your current bills are paid FIRST, then the minimums of all your credit cards except for one, the least amount that you work to pay off FIRST – then rolling what you allocate to be paid until paid off for that card you roll the amount into the next one on the list in addition to the minimum you are paying, and so forth down the line.

2. Give your income dollars jobs to do

You don’t have to wait until next year to start budgeting. You should start next months budget at least a week of two before the next month begins. This way you have the current months bills paid, and are now getting ready for the next month, There are several good budgeting programs out there – some even for FREE. One I personally use is called “You Need A Budget (YNAB)” as I find it extremely customizable and easy to use. I have tried others, but always come back to this one.

3. Gives you greater chance to save more

Okay, you are focused and giving your income dollars jobs within your budget to do – one job first aBudgetingnd foremost is to have a savings account for EMERGENCIES only and work on saving $1,000 – 2,000 in this account. Don’t touch it! It is NOT AN EMERGENCY to have your nails and hair done; those are flexible expenses that need to be part of your main budget.

Recently this account came in handy when I had major automotive work done amounting to $900.00 – I did not have to put it on my credit card. However, tapping into these savings you MUST repay yourself every month until you bring the account back up to the $1,000 – 2,000 level. The good part is – it is YOUR money, you won’t be calling yourself if you are late paying it back and you won’t get hit with exorbitant interest charges.

4. Brings you greater enjoyment & less stress in your life

All in all, these are good reasons we all need to be budgeting and using less credit. I personally find budgeting brings greater enjoyment back into life and less stress. I never realized before all the things we can do that don’t cost and arm and a leg to entertain ourselves.

It’s important to communicate with every member of your family

When you are looking for a good budgeting program, easy of use and understanding is key. God forbid something happens to you, your spouse or child or someone else should be able to go in and keep everything paid until you are able to take over again. This is why it is important that you communicate financially speaking with every member of your family.

Well, hopefully this article has given you some good positive ways and answers the question you may be wondering, just how do budgets work. I look forward to hearing your comments and opinions.

Categories
Budgeting in Tough Times Handling Our Finances

Handling Our Finances – When Times Are Tough Can be Rough

The way we go about handling our finances especially when times are tough can be rough on us all. If you are not careful, it can lead you into a depressed state of mind, Depression is a serious condition that can cripple you. It produces negative effects on its victims in the way they think, feel and function in their daily life. Let me ask you a question, who in your life do you look up to and know who had a rough time in life, but managed to come out ahead?

The Inspiring Role Model in My Life – My Mother

In answering that question I would have to say “my mom”. In my eyes, she was a pillar of strength in a rough time. My dad walked out on us when I was nine, and my sister was only three. My My Momparents had just built a home near the High School in my hometown, and we had only been in there for almost a year. My mother designed that house as she loved split-level design, and my dad wanted an in-law apartment for his mother.

Mom had no income coming in except for what he brought home. So after he left, we lost the home to foreclosure. It had to hurt, but she never let on as we (her children) were what mattered more than material things. I remember we would go all over with realtors looking at places that were affordable for a mom who is being supported by the welfare program- Aid for Families with Dependent Children (AFDC). This program allowed her to keep a roof over our head and food in our bellies so she could stay home and take care of us.

Finally, she found a place that a friend had in Green Harbor and we moved in. There we lived for the next seven years in the heart of summer residences. The winters were cold and blustery, with few people around. Come 4th of July, all hell broke out – the summer people returned. She made sure we were never in want of anything, even giving up things for herself so we would have enough,

My dad’s best friend in High School stepped in to fill the void he left, and supplemented the small check she received once a month. He was divorced, and loved kids – but his ex didn’t want children. So he accepted us as his own. After mom’s divorce was final in 1972, they got engaged and she designed her second home which they built on a lot he owned in the north end of my hometown. – not far from the first home she and my dad built. We moved in first with mom, then they were married by a justice of the peace in Scituate on the 11th of February, 1973 afterward he joined us.

On the 30th of July, 1973 our youngest sister was born. Mom always told me she knew she was having three children, and she was right. God blessed her with the time to see each of us to adulthood – unfortunately, she never got to see grandchildren. She passed at the age of 69 from complications of diabetes the morning of Christmas eve in 2001. Our stepdad passed fifteen years later a few days after there anniversary at the age of 89 from colon cancer on Valentine’s day, 2016. It’s true that parents are the glue that holds the home together, it was not the same there – too quiet and sad now for they both had moved on.

My stepdad left the family home and land to his daughter, and my sister – my sister smiled and gleaned with pleasure to tell me now I would be the boarder only for the rest of my life. Only the personal property and possessions however belong to all three of us according to his last wishes. My sister immediately had her friend install locks on all the inside doors while our younger sister was taking some time out at a spa for the weekend unannounced to any of us..

I had a ground floor bedroom, and it was February and quite cold. Having just got home from work as a waitress, I went to turn the heat on and discovered the locks. So, I picked up my blanket and went upstairs to the living room to sleep on the couch. My sister woke up to feed the dog and found me there, and hollered – “GET UP! GET UP! We don’t sleep on the couch. Now you will owe us a new sofa.”

Well, I texted my younger sister and she didn’t want to hear anything while she was on vacation. So, I went and had coffee to think. God has ways of always stepping in when I needed Him most, and I know mom somehow managed to get his attention. My friends started telling me, he left you in a great place – you can get your own place and learn to manage your life without asking for permission. I was working with a realtor friend helping her, and we started looking.

It was May 2016, after looking all over this place stood out – where I am today. I never thought I would ever be able to afford a place of my own in my life. I was dumbfounded. Though in high school I had said if I didn’t marry, I would get my own place by the time I was 40. Well, here I am at nearly 60 or so – I guess in today’s society, sixty really is the new forty.

How Her Role Helped Me Face the Adversity of Debt

I learned at a young age how to budget and shop wisely. She taught me well, and then when I got my first job and decided I wanted to build credit – all that slipped away. I saw credit as having more money to get things with. When I realized I took steps to correct the situation and slipped into the dark side of credit two more times. Mom was great, she would slip me extra cash every month to pay my card down. The second time I was denied a loan, so I talked to my mother and she agreed to get a second job to pay back my stepdad’s loan was a good idea and she went with me to apply.

After paying him off, I held on and gave mom money each week to put to new appliances for the house. She would hold the money and then we all would confront my stepdad to tell him we wanted to go look at whatever mom wanted to replace. She was the example I had to follow – when dad left, she could have gone back home to her parents with us and we could have grown up in her hometown. She took the road less traveled by and did not want to up route us from school and our friends. She understood struggles and I believe she used herself to show me how to stand up to it and not let her struggles take us down.

Greatest Lesson(s) Learned in My Own Financial Struggles

After the third time down, I finally got the picture and was older. For years I thought I would never be able to retire with my debt looming over me – however, when forced to make the decision I realized I had the time and age, I could not live another year under the work pressures arising any longer. Suddenly I realized how she managed – to survive struggles you sometimes get lost and just need to find your Alpha state (where you are in the moment), then set an Omega goal you want to achieve. Knowing we cannot go from Alpha to Omega in one step without risk of failure; I set few mini-steps in between (usually 4-5 smaller, bite-sized steps) to make achieving our end goal more doable. My initial first end goal was to establish a working budget and work on living within or just under my means.

Advice for Today’s Young People

You may not realize it until later in life, but your parents are your greatest role models. Look back at times in your life when they were there and made things better. How they made things look so easy and offered advice to help you through. Remember the little things about them and how you felt – I know I felt a sense of security with my mom. She would never let anyone or anything hurt me. I know now she was preparing me to one day stand up on my own two feet and step out into the world poignant and alive as she always seemed. As I stepped out into the world for the first time, it was scary and I felt alone; but then I sensed she is still with me giving me the strength I need to carry on. I will never let her down!.

Let’s Sum Things Up!

Whoever that inspiring role model in your life has been, take the time to stop and thank them! If you wait too long you may never get the chance. I want to thank my mom for showing the great strength in overcoming her struggle raising two girls alone in a state assistance paycheck and never caving in under pressure. It is through her adversity and strength that I now see I have the same spirit of strength in me to never give up. Life is tough enough – always keep a goal in front of you to strive for and keep chasing your dreams – you will get there!

Now I ask you, who is YOUR inspiring role model and why? How have they made a difference in YOUR life? I welcome your comments and thoughts.

Categories
Dispelling Myths Master Your Budget

Finance Talk – Public Discussion Myth

Do you dread balancing your checkbook or reviewing your personal finances every month? It seems nothing ever changes. The same problems are occurring every month. You are just as stressed after you look at them as you were before thinking “I will never be able to retire at this rate, and I just turned (insert your age here)..” Finance talk is important in overcoming the public discussion myth above money.

The “You Never Discuss Your Personal Finances” Myth

Well my friends – You are NOT ALONE!

I have been there perhaps in worse shape than you are. I understand and feel your stress and pain. As I have said before, I have been there not just once, but three times, and felt embarrassed. Perhaps the reason for that feeling was because I grew up in an era families did not talk openly about money. Money was considered a taboo subject for conversation.

You were led to believe you had to keep up with the Jones’ family next door or give that image, regardless of the reality of your situation. You see Jack Jones next door suddenly has a new black shiny limousine in his yard. He is bragging about how they paid $40,000 and got all the bells and whistles included. Well, you just assumed his family was doing quite well or was well-to-do. You never asked him how he paid for it – cash or credit.

Personal Finance Concerns Need to be Talked About

The truth is Jack Jones and his family may be struggling more than they want to let on. They are embarrassed by their situation. They may feel this new car makes them feel better for their real struggles where finances are concerned.

Fact is, he is lying to himself to feel better. Sooner or later, those lies will catch up to him and his family, and the bottom of their money pit will buckle and collapse under the weight of debt that is placing a burden on their family’s true happiness. They could have found a nice second hand, single-owned car for about $3,000 and really paid cash for it.

Assumptions Can Lead to Contagious Actions

Now you look at your car in the driveway and start comparing it to your neighbors, you think “gee, maybe its time we get a new car!” You are afraid if you don’t follow his led, the neighbors will think you are too cheap or even label you in some way for now keeping up the aesthetic look for the neighborhood.

The only thing assumptions do is led you to ASSUME. This reminds me of the old show, “The Three Stooges” when Moe explains to Larry and Curley just what you do when you ASSUME anything. He told them when you assume you only make an ASS out of U and ME.

Step Back Now and Think

Okay, you don’t know your neighbor’s finances, but you should know your own. You know you cannot afford a brand new car and that is okay. You need to be comfortable in your own skin. Mr Jones was not thinking of you or your other neighbors when he bought his new limousine, he was fulfilling his own thoughts and dreams. If he misses a payment or two, you may just witness a tow truck hauling it away in the wee hours of the morning. That is a devastating feeling no one should experience, and yet – I did, now I own my current car. Oh, it has some dings and nicks but that is okay, the important thing is – it still works and gets me around.

Remember – You Are #1, think before you act foolishly!

In closing, the only one we need to think about is our self. If you need something, do your homework thoroughly with lots of research and consider others who may have already gone the route you are thinking about. Talk to them, let them know what you are thinking and ask for pros and cons they have found since they already have done what you are looking into.

Once you have all the facts and looked at your budget – you may realize all you really need is a tune-up, and through talking you learned your neighbor is willing to give you a discount and do it for you as that is what he does for a living.

I look forward to your opinions here. Please share your thoughts as you were reading this post. .

Categories
How To Master Your Budget

Master Your Budget – The Limitations of Debt

When I was looking to build my credit as a teenager and securing my first credit card, like everyone else I never stopped to realize the limitations of debt I would be placing on my life. Its true, if I knew then what I know now – I would probably never wanted to build my credit, at least in that fashion. I may have stopped and given it more thought.

Understanding the Truth About Debt

The truth as I have come to learn about debt is that it is NOT added income available to spend. Sometimes I think we get a card and see it as added funds to our budget. The fact is, IT IS NOT! When I got that first credit card I thought “WOW!” thinking I had more funds to get things with. Debt is future money with interest – YOUR MONEY less interest. We see our neighbors showing off their new fancy car and think, “Gee, I can use one too – this clunker is older than dirt!” So you traipse off looking for a new car to keep up with your neighbor and come back with a new one ON CREDIT.

You are not your neighbor, and they may have saved up for that fancy car and paid CASH for it. They could own that car outright, and because you feel you deserve the same – your new car is not yours, not until you have made all the payments with interest.

When you realize the importance of a budget over accruing more expenses using credit – you can begin to see, the wealthy people know how to manage their money with a budget. Talking about your finances and having a budget is the only way to go for the wise budgeteer.

BUDGETING SAVES!! Budgets allow you to HAVE more and get the most from your income. Now let’s see how much debt you owe.

Listing All Your Debts

On the Simplified Budget Worksheet I provided you, lets move to the bottom third of expenses and list ALL your credit cards, loans, and anyone you still owe. This will show you how much less your net worth is. Use a separate sheet, and then transfer them to the worksheet with the lowest balance FIRST under the “BUDGET” column. Once done, tally up your debts.

Now go back to your statements to find the minimum due this month on each and list it under the payment category.

Snowballing Your Payments

This is the best method in eliminating debt, but it takes time. One by one you will witness them falling off your financial grid increasing your payment to the next one on the list, until they are all gone. You possibly could through more money into your smallest debt on the list and pay it down a little or best yet, pay it off and cut up the card. But wait, we have one more area to look at tomorrow to find out if that is possible.

Imagine the Day You Have NO MORE DEBT PAYMENTS….

This is my ultimate goal waking up one day, after paying all my essential bills for the month having $300 – 500.00 with no place to go but my Savings. I could then build my savings for those rainy days – $500 a month free to save is $6,000 a year.

Tomorrow we will look at the other bills left in the pill and see what really is necessary as a non-essential bill, and what is. Then you will know how much you can afford to apply as an extra payment to the first debt on your list.

Please share your thoughts and opinions so far? Does it make sense? Anything I can add to make it better. I look forward to your comments and opinions below.

Categories
How To Master Your Budget

Master Your Finances – Put Essentials Things FIRST

As you start to master your finances, it is important that we put the essential things FIRST and make sure they are paid each month – what’s left is what we will use later to work on paying off our debt.

What are Essentials?

Okay, I know you are thinking – What do you mean by essentials? Very good questions! Essentials are those things that we NEED to pay each month just to live day to day without sacrificing your basic needs:

  • A Place to Live (your home)
  • Food to live on
  • Basic Utilities (heat & electricity)
  • Transportation

Entertainment and dining out are NOT essentials but are excellent tools to used to help you celebrate when you reach your goals. So, once you have your essentials down and know what you need to meet this portion of your budget – go ahead and celebrate. Treat yourself to a Dunkin coffee and donuts, you will have earned it.

List Your Household Essentials FIRST and their Status

So its is time to list out your essentials followed by a (C) if they are current, then the amount you need to pay each month in the second column labeled “Budget”. Here is a list of essential categories which may or may not apply to your situation.

  • Mortgage
  • Rent
  • Utilities (OIL, GAS, ELECTRIC, PROPANE)
  • Food
  • Insurance
  • Car Loan / Transportation

These are the true necessities you have to pay to meet your basic needs. Many things we spend money on are pure luxury items to make us feel good. Personally, I will feel the best when my debt is paid.

Are You Current on These Essentials

Now that you have a list of essentials you must pay each month to meet your basic needs, have you placed a (C) next to those you are current on – hopefully all. In the next column, write how much you owe each month or need to pay in order to bring the item’s current. If they are already current, you will just put your monthly payment or an estimate.

Then tally up your budget column to see how much of you need from your paycheck to satisfy this area of your budget.

That Wasn’t so Bad Now, Was It?

I hope this helps you see where I focus first when preparing for the new month ahead. Download Simplified Budget Worksheet. Your categories may be different – using this worksheet put together your essentials. If you are not current on a particular item, add what you need to bring it current to your normal monthly payment. You will start to see your new monthly budget coming together

Interested to get your feedback and opinions on this article.  Did it help you get started?  Do you have any suggestions?