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You are not totally in charge of many things in life, but you can take control of part of your life by taking control of your money.
When you do something new, the first step is always to assess where you are now. This process of a financial inventory will be a little time consuming and maybe a little painful, but it is an investment in yourself and your future. This process could take several days of working on the budget and then revising the budget. If you have a partner, it will take longer but like anything worthwhile, it will be worth it.
I originally just used a spiral notebook and a pen to keep track of the budget. You do have to stay on top of it daily (if you spend daily). There are great computer programs out there with tons of tools to elevate your budget, like reports on spending and saving like Quicken, Ibank or Mint. The Federal Trade Commission offers free resources to help make your budget here: Make a Budget – Worksheet
From rent/mortgage to the phone bill, don’t forget all of those auto-pay subscriptions.
Is it fixed or can you average it month to month? Be sure to calculate in non-work income such as alimony, child support, disability, pension or retirement income.
For example, you won’t have car problems every month (or at least we hope not) so average out how much you spent last year and save that much a month toward a fix.
This is the highest priority to work on and put any “extra” money toward this to get rid it of as soon as possible. If you do not have any surplus even after you make cuts, it is time to add extra income.
Working one or two nights a week and applying all of it can dramatically reduce your debt. Here is how you can make money from your couch. Delivery services are great ways to get some tips and have a flexible schedule. Take a hard look around your house and garage for stuff you really don’t need and sell it. It costs nothing to list items on Craig’s List or Facebook. Take some time to clean up the item and make it look the best it can. If you have a storage unit, you might have too much stuff, plus it is a monthly expense. Sell, sell, sell.
Christmas (or any major gift-giving holiday you celebrate) and birthday gifts happen every year. Save even if it’s a small amount every paycheck, It will be a good head start to your annual needs.
There is nothing like going on vacation that is paid for and you don’t have to return to paying for it. Vacations are important, even one of the cheap to a campground for a few days. Also, plan for a new car in the next few years. Even saving $20/month will add up and help.
You need to start with at least $1,000, according to Financial Guru Dave Ramsey. An emergency fund is simply money set aside for an emergency. Not a pair of shoes but a true emergency. Eventually, you should save about three months of income for an unexpected life situation like losing a job or a medical bill.
Nails, magazine subscriptions, eating out, even Netflix! Maybe you keep all or some of these but you need to recognize and categorize them as cuttable. We spent a summer with the cable subscription on hold to save money and give our brain a break. We got more sleep and more things accomplished without being able to plop on the couch and waste hours surfing the channels. Also, investing in a regular TV antenna you can cut the cable cord forever and get plenty of high-def channels (depending on your location). My brother-in-law bought a big $200 TV antenna for the roof and they are very happy with their options after getting rid of a month cable bill that seems to go up every month. They supplement with a simple Netflix subscription. I have other friends who bought a simple $30 TV antenna from Amazon that is about the size of a piece of paper that goes next to your TV with some clear network channels.
You must set aside some money you can blow however you want. Keep it in an envelope so you have the cash ready. Our first budget was $5 per paycheck, so just budget for some because you will need it.
Unlike the government, you must have zero at the end of each column. If you have more money than you spend, good for you, put the surplus in the emergency fund. If you are like most people, start cutting until your income and expenses are the same. Do not give up until it is balanced.
The best advice overall is just to make a plan and be mindful daily of that plan.