Money Rewind: Are You Sticking to a Budget Yet?

Do you have more bills then money at the end of the month?  Having trouble paying down the mortgage, rent or groceries?  You are one of millions of people who have reached the end of their rope and need help.

Due to financial crisis from a job loss, unexpected expenditures or simple over spending, setting a realistic budget can create a sense of calm in what may otherwise be an urgent and out of control situation.

What is a Budget?

The online wikitionary.org describes budget as “an itemized summary of intended expenditure…”  The word is derived from the Old French bougette, literally meaning leather bag or wallet, the nature of its meaning has changed little since its first use in 1432.

The first step in creating your own budget is to track your spending.  To get a handle of your spending, gather all your bills. Be sure to include the big ticket items such as:

• Mortgage
• Electrical bill
• Water
• Groceries
• Insurance
• Credit card.

Do not forget about the smaller incidentals such as entertainment, movies or the early morning coffee.

Record each bill on a separate line in a simple lined school note book.  Fancier accountant books are available but are unnecessary.  For example, on the first line write 1) mortgage, or rent, and record the amount to be paid each month for your mortgage.  On the second line record, 2) electrical bill and continue until all the expenses are recorded.  Tally the amounts and you now have a simple estimate of how much is being spent every month.

The act of simply recording the amounts that are spent highlights where the money is going. 

Record Your Income

After documenting all of your expenses, record the income.  Below the list of expenses, register your income for the month.  Income will include your weekly pay checks and any commissions. 

Having more income than expenses results in a savings and any ‘extra’ money should be applied to the expense with the highest interest rate.

Paying Off the Bills

Finding more bills than income at the end of the month can be a shock.  Having a budget and recording all expenses can identify where you can trim your budget.  If your expenses exceed your income, start pruning with the incidentals.  Stopping for a cappuccino and a muffin can add up throughout the month and if you can apply this money toward an outstanding credit card bill then you will be further ahead in the long run.

Tips for Committing to Budgeting During the Holidays

It can be so tempting to buy out the store for your cute little nephew or for your sister you don’t see often enough but you need to set serious limits for yourself during the holidays. Otherwise, you will likely overspend throughout November and December, leaving you deeply in debt come the new year. While the economy may still seem shaky at best, consumers may still be quick to ditch their shopping lists in favor of sprees.

Here is how to commit to a budget and start a new year in a better financial light:

Create a Master Grocery List
Since Thanksgiving and Christmas are both cooking holidays, it would benefit you to create one master shopping list of the essentials you will need for both celebrations. Estimate how much you will need to buy and shop in bulk for pantry items that will last. Put some money aside to make one shopping trip for the essentials for both holidays and properly store or freeze what you can use for the next feast. Once your food needs are out of the way, you’ll be better able to budget your money for gifts and other things. For perishable items you will need to buy for each meal,  ask family and friends who are dining with you to each contribute an item.

Set A Gift Budget
If you stick with a regular budget for your household, it should be relatively simple to create a sub-budget for your holiday gift list. Go online or pick up sales circulars to find gift ideas and prices. Write down every person you need to buy for as well as a general idea of the cost. Prioritize your list in order of importance (family, friends, co-workers, neighbors, ect). When you run out of money, substitute gifts from the heart like homemade cookies or handmade decorations for those you aren’t as close to. It’s a good bet that if you create and work off a list, you’ll be able to stretch your money much farther and you’ll get more creative with sticking to your gift budget.

Forget the Madness
Shopping during Black Friday or during other over-hyped shopping adventures can leave you wide open for impulse buys that will blow your budget. Stick with your list and do enough research at home to know where to go and what to get. Don’t fall victim to Midnight Madness sales that likely will leave you just plain mad.

Don’t Feel Guilty
There are a lot of people across the nation that had to tone down their holiday celebration due to money concerns. Once you have worked out a budgeting list, you need to acknowledge that you just don’t have the money to get something for everyone. There is nothing to feel guilty about. It may be the perfect time to start new traditions instead of feeling regret. Perhaps you can make a new tradition of only buying gifts for the children of the family and not the adults. You may even want to try to start a potluck holiday dinner where everyone brings something and the burden and cost of the meal doesn’t rest entirely on your shoulders.

3 Key Steps To Make An Easy Household Budget

If you don’t yet have a household budget in place, there is no better time than the present to get started. Over the past two years, many consumers have discovered that a lifestyle of consumerism without attention to saving and investing can lead to financial disaster. One of the easiest ways to regain control over your finances and set your family on the right path toward financial independence is by creating and sticking to a household budget. Here we will offer three key steps in making an easy household budget.

1. Find out where you stand- In order to create a household budget you must first gather all of your financial obligations and income to evaluate what you are working with in terms of finances. Start by making a list of all of your expenses from reoccurring monthly bills to annual insurance premiums. It is very important to include all of your financial obligations to get an accurate picture of how and where to allocate your funds. Your list should include what expenses you have, the date they are due and the balance owed. Next you must determine how much money you have available (and when) to begin building your budget. By writing down what you make and what you owe you lay the foundation for a budget that will work for your family.

2. Track your spending- Once you determine what financial obligations you pay each month (quarter, year) you should get a realistic idea of how much money you need for day-to-day living expenses. Do this by tracking your spending for a minimum of one week, preferably one month. In doing this you may be surprised how much money is actually wasted on unnecessary or frivolous purchases each month. Pinpoint where you can save money and what costs can be eliminated or at least reduced to free up more money for bills and other financial goals.

3. Be honest with yourself- Many people make a budget with grand illusions of achieving all of their financial goals in a few short months. If you set yourself up with a budget that is not true to your earning capacity and standard of living, you will more than likely go over budget and eventually abandon all thoughts of sticking to your budget. For example if you regularly spend $150 each week on groceries for your family, allocating $50 for groceries in your budget might be a bit of a stretch even with money saving strategies in place. It is also a good idea to have a plan for each dollar you make. Once your financial obligations are covered, you should allocate money for savings and fun to avoid having “leftover” money floating around which will surely get absorbed in daily spending.

In addition to the key steps outlined above, you should also remember that each family and financial situation is unique. Make your budget based on your circumstances and goals in order to have a budget that works for you and your family.

Three Keys To Reducing Credit Card Debt

There are plenty of new and improved services that are available to help you reduce and even completely eliminate credit card debt. But what all of it really boils down to initially is that getting out from under credit card debt requires a debtor to turn three simple keys to start the ball rolling.

Here are 3 keys to reducing your credit card debt, no matter how deep you are in debt:

Track and Budget
If you are just now getting on track with managing your personal finances, the only place to start is with a budget and expense tracking sheet. For at least one month, you need to keep a notebook and pen with you at all times to record each and every penny you spend. Whether you are buying a coffee at the corner store or a cart full of groceries, you need to be writing it all down for 30 days. At the end of the month, sit down with all of your monthly bills and financial obligations, plenty of room, a calculator, a notebook, and a ledger tablet.

Start by categorizing each expense you put out using terms such as entertainment, food, child care, and miscellaneous. Go back down through the list and total each category. After recovering from the shock of where your money is going in thirty days, you’ll next need to write down your income for the month and tally your bills for the month. If there are more expenses than income, head back to the expense tracking sheet and see where you can start making cuts. Keep cutting until you have enough extra cash leftover after paying all of the bills. With a budget, you will know how much cash you have to spend each month on entertainment, groceries, clothing, etc, lessening the occurrence of overspending.

Prioritize Your Finances
Along with establishing a budget, you also need to start setting financial goals, both short and long-term. If you have a lot of credit card debt to tackle, you may consider getting a temporary second job and devote those paychecks only to the credit card bills. Sketch out a financial plan that can add a time line to the amount of time it will take to pay off debts in full. By sticking to a budget and following strict guidelines that you yourself creates, you should be able to implement a financial plan that works for your lifestyle and eventually will expand to include savings plans and goals.

The Drive To Be Debt Free
Like with many bad habits, you have to want to quit the bad and replace with the good. Overspending on credit is a definite bad habit that leads to debt issues and poor financial planning. You have to want to be debt-free and willing to make the changes necessary to get back on financial track. You have to be committed to stick it out with a budget plan, even when the going gets stuff. Seeing the big picture is what you need to be looking at when it comes to personal financial management and the ability to live a debt free, financially stable life.

You Need A Budget (YNAB) Review

Here at Leave Debt Behind we want you to have the tools necessary to do just that, leave your debt behind and move on to a life of financial security. In order to do that you must not only learn the steps necessary to pay off and eliminate debt, but also how you will manage your money to avoid finding yourself back in financial straits in the future. Today we will review www.youneedabudget.com to see how this online management tool can make moving forward after debt elimination a journey that is successful and easy to navigate.

What Is YNAB?

Created by Jesse Mecham a regular guy (husband and father) to help both his family and others manage their finances better, YNAB is a personal budgeting program that can be used by anyone to improve their money management skills. What started out as a simple excel spreadsheet used for budgeting monthly expenses has become one of the most lauded money management tools in recent years.

How Does It Work?

Once you download the software you can begin tracking your expenses and managing your budget. If you do not already have a budget in place you will start from scratch or if you have an excel based budget system you can import the information and work from that point forward. There are four main tabs located in the lower left side of your screen. They include a register which acts as an online checkbook register of sorts. Here you can manually record all transactions or import transactions from your bank or credit cards. The next tab is labeled Budget and this is where you will enter your budget and track how you are doing each month. There are several categories where you enter the amount of money you have budgeted for each section as well as the remaining balance (based on information you have added or imported from your bank). The two remaining tabs are titled “scheduler” and “reports”. The scheduler lets you schedule reoccurring transactions like paychecks or mortgage payments. Once you have entered the information the program will automatically update your information on designated dates which saves you the time needed to continually add or update transactions that are reoccurring. Finally the reports section allows you a quick overview of your spending by category, total spending month-to-month as well as your current balance.

If you are looking for a way to improve your budgeting system you can try the YNAB Pro during a free 15 day trial period. After the trial period expires you have the option to purchase the program for $49.95 and your information will carry over without delay. I have downloaded the trial version and am anxious to see how well it works with my pay structure. I’ll be sure to provide an update later as I become more familiar with this system.