Tuesday, February 15, 2011

Budget Basics

I guess the word of the day is the B word.  "Budget".  Yes it seems like many people from Obama down to little old me and a whole bunch of folks in between are talking "Budget".

The B word can cause a visceral reaction in some.  Stomachs tightens, lips curl and shoulders slump.

This doesn't have to be the case though.

If you learn to take control of your money instead of it controlling you, you can face your budget head on and not even flinch.

People that stick to a budget and plan their purchases, even budgeting in for fun, vacations and stuff, feel good about the B word.  They know it's a tool  A tool that can help them stay out of debt and begin to build savings.

I'm not going to go in depth here and I'm no financial guru but I've learned a few things over the last couple of years and I'm just gonna share what works for me.  (For those of you that have been following a budget and have no issues with debt- Hooray for you! I'm so happy for you!- (I'm clapping right now, you just can't see me)- then you don't need any of these simple guidelines)  For those of you who are interested or may be struggling with this issue read on.

I'll begin by covering a couple basic principals:

1.  Start by finding out what all your expenses and debts are.  You can use a simple spreadsheet or any of a number of programs available for this.  You may have done this before- felt sick and shoved it in a drawer.  If that's the case then do it again.  I list mine beginning with the biggest debt, the mortgage, then I list the next one, for us it's our children's school (it's equal to our mortgage- ouch!)  Then I list the next, going from any credit card debt, food, fixed expenses like cell phone bills or cable, internet services, gas, electricity, water, trash.  You get it.  Just list them.  List every little thing.  Be as precise as possible.  You may need to pull out old statements to do this or if you pay your bills on line (like I do) you can just pull up this info and enter it onto your spreadsheet. Oh, and if you have any unsettled personal debts that you owe to friends or relatives, list those too.  You need a plan.  So many relationships are ruined over unpaid debt- you don't want that.

2.  Track your spending for at least a month.  Save the receipts.  Later you will analyze what it is your buying.  Look at how many times you are going into the stores.  Little trips to Target, Walmart etc. really add up fast. Analyzing your spending will help you later when you are looking for areas that you can cut expenses.  We'll get into this more in a future post.  We'll look at how to control those variable expenses and more importantly how to control ourselves!

Good Luck and Warm Wishes!


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