Tag: budget

Continued from Part

PLANNING YOUR FINANCIAL FUTURE

 

BUDGET FIRST

The first thing you should do is work out your budget. That means looking at the reality of your situation here and now.

There are a number of free online tools and sample worksheets you can use, including at the America’s Debt Diet website. There are also templates in the Microsoft suite as well.

Then get out your most recent pay stub, and all your rent/mortgage, utility bills, and start filling in the blanks. Look at the receipts for all the things you’ve bought in the previous week. Work out in round figures how much you spend on items like gas, electric, cell phone, regular phone, food, clothes, and entertainment.

 

EASING YOUR CREDIT CRUNCH

Then look at your credit card statements, and the minimums you are paying each month. Is there anything left at the end of your calculations?

If yes, great.

If no, not so great. But take heart.

Now look again. Is there anything you can cut back on, any ‘luxuries’ you could do without, or do with less of? How much would you save each month.

Look at your credit card statements, at the balances, but also at the APRs, the annual percentage rates for the money you are basically borrowing for that new sweater or great pair of jeans you ‘just had to have’.

 

PAYING DOWN DEBT

If you took the money you saved from the luxuries, how soon could you pay down that debt?  If there is any left over, pay down the ones with the highest APR first, then the second, then the third, and so on.  You will improve your credit score very rapidly too if you don’t always pay at the last minute, but rather pay as soon as the bill comes.

In a lot of cases you can even pay quickly and easily online, free of charge.

 

SPREADING OUT YOUR BILLS

Once you have filled in your budget, make a calendar for yourself of when all the bills are due. It is easy to lose track of one and then end up with big problems on your hands.

Look at whether your pay cycle is weekly, bi-weekly, or monthly. Then you can space out the payments over X number of checks you are getting.

 

Continued in: A Budget: Your Ultimate Financial Management Tool, Part III.

 

A builder uses a set of house plans, or blueprints, whenever he builds a house or office building.

Rocket scientists would never begin construction on a new booster rocket without a detailed set of design specifications.

Yet most of us go blindly out into the world without an inkling about finances,  and without any plan at all as to how we’re going to achieve our  lifestyle goals in the short term and long term.

 

A BLUEPRINT FOR FINANCIAL SUCCESS

The most financially successful people have a blueprint or plan, called a  money plan is called a budget, to help keep them on track in both the short and long term when it comes to achieving their financial goals.

Without a plan, they would spend whatever they wanted, whenever, and basically end up living hand to mouth. Worse still, they might end up running up a great deal of debt, spending more than they earned, until they couldn’t even meet their credit card minimums any more.

 

THE CURRENT ECONOMIC CLIMATE: CREDIT CARDS ARE NOT YOUR FRIENDS

Credit has been easy to come by for the past few years, but in this current economic climate, a lot of credit card companies are pulling the plug on consumer credit. They might also be inflicting much heavier penalties on anyone who misses a payment, or increasing the interest rate, or, in some cases, even changing the payment date in the hope that you WILL make an error.

They are also making a great deal of money preying on people’s fears of credit card fraud, rather than taking the sensible steps of trying to cut back on credit card fraud in whatever way they can.

So credit cards are not your friend, and yes, it may be tough to get along without them, but your budget will be a lot better for it in the long run. Your budget is the one way to try to make sure you don’t end up on the rocks of a financial disaster. Or, if you think you’re already in danger of running aground, it can be the action plan that helps get you out of danger with persistent effort.

 

Continued in: A Budget: Your Ultimate Financial Management Tool Part II