Category Archives: Budget 101

Why Am I Living Paycheck To Paycheck?

You Work Hard For Your Money – Know Where It Goes

Everyone, at some time or other, has said, “I don’t know why I have no money”….or some such phrase.  You work hard, get paid, pay the bills, and there’s nothing left.  Where…did the money go?  Good question…..do you ‘know’ what you spend your money on?  Really, ‘know’????

A good guess is you are wasting a lot of money…..without even realizing it.  So, grab paper and pen.  Make a list of ‘incidentals’…. stopping for coffee, lunches, vending snacks, entertainment, gift giving…..  You get the picture….they are anything other than necessary living expenses (‘have to’s).  Think through a few days last week. Where did you stop to get an item, and come out with a few?   Add up what you spend each week on incidentals. Surprised? Those quick stops can be costly.

Some of these items, although necessary sometimes, can be easily scaled back.  Quite often, these are the things that eat up a good chunk of your budget each month — far more than you thought.

Paying bills on time and in full, will eliminate interest charges and late fees which are a complete waste of money.

There are hidden, and easy, ways you can lower costs on other items in your monthly expenses too, which leaves more of your money going into your savings, whether it be your Retirement, Emergency Reserve 6-12 month ‘Cushion’, or Liquid Emergency Account.

Once you get the hang of it, you’ll be able to continually scrutinize your entire budget, and find some savvy ways of shaving your expenses.

 

Setting up a budget

See it in black and white

Most people truly have no idea where their money goes.  They spend, pay the bills and then wonder…. ‘where did it all go’? …. So, get paper and pen.

Make a list of all your monthly expenses….every single one of them.  List according to priority.  Any outstanding debt should be paid off as soon as possible.  Now, make a second list of all your annual expenses… such as insurance, life, home, car, excise, RMV expenses, birthday, anniversary, holiday gifts etc.  Don’t miss any.   Add them up.  The total should not be more than your take home income.

Once your outstanding debt is paid off, begin to save.  Savings should now be listed first in your budget….’Pay yourself first’. it’s an ‘expense’ which is, in truth, a gift to yourself.  And you need to get in the habit of saving.

If your expenses are less than your take home pay, kudos to you!  Keep up the good work!

If your expenses are more than your income…..common sense…..you are overspending!  You are living beyond your means.  It’s time to take a hard look at exactly where your money has been going, and make a serious commitment to cutting back, going on a spending ‘diet’.

It’s time to start backing off on incidentals… shaving unnecessary spending.  This will be easier than you think.  Really.  Start by listing things you can cut back on – even here and there, or maybe completely. Examples:  Make coffee at home 3 times a week, dine out once a month instead of once a week.  Cut out vending machine food.  These are starters, but you’ll come up with more.

Seeing it all in black and white, and where and how your money has been spent, will help get you on track to keeping your financial health in check.  It’s a matter of continued discipline, and it’s easier than you think.  You’ll be very happy you did.

Having your financial health in order relieves stress in your life.  Knowing that, should an emergency arise, you have the money already set aside to handle it.  You’ll also be able to enjoy the lifestyle you chose when it’s time to retire, because you’ve been saving for it all along.

 

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Discipline

Let budget discipline become a habit

Once you get in the rhythm of budgeting, you become disciplined – keeping within the boundaries of it.  Honestly, it’s easier than you might think.

Your absolute expenditures are savings, rent/mortgage, heat, light, food, health, insurances.

Notice that cable, eating out, entertainment, incidentals, etc are not there.  Until you get a handle on budgeting — these can be shaved down considerably, or eliminated.  You will survive this.  It just takes some discipline, which will become a good habit.  Try it.

Any outstanding credit card debt should be paid off as quickly as possible.  By paying just the ‘minimum due’ at month’s end, will not suffice, because each month a portion of the following bill will be interest added on to the prior purchases, and so that cycle has begun and will continue unless and until there is a zero balance.  Until then you will find yourself always owing – and sadly, it’s just added debt.  You didn’t buy it.  You have nothing to show for it.  It’s ‘fees’ – interest and or late fees.  A total waste of money… money you worked for, and are now handing over to the bank.  Why are you doing this to yourself?

Until your bill shows a zero balance, do not use your credit card(s).

 

Ways To Trim Your ‘Monthly Have To Have’ Things

Common Sense ways to cut back — it can be done, saving $$$.

Heat/AC – When the heating season begins, don’t put the thermostat on what you’d have it on in Winter months.  Instead, as needed, start with 59-60.  You’ll become accustomed to that for a while.   Next month, add a degree or two – only if needed….and so on. Wear a sweater.  Before you know it, it’s Spring and begin to reverse the thermostat.  This saves $$$ over the Winter months.  In the Summer run the A/C the same as the heat, but in reverse.  Running a fan is even cheaper.  Follow the sun with your blinds – open to sun in Winter, close to sun in Summer.

Light – Proper lighting is needed for reading, project work, doing anything requiring seeing and avoiding eyestrain or falls. But when not needed, and certainly when leaving a room, shut off the lights.  Use energy saving bulbs in all light fixtures.  Night lights give off a lot of light too.

Food – Don’t waste food.  Eat or freeze leftovers. If expiration dates are coming due, cook and freeze.  Use coupons when shopping.

Phone – Make sure you’re getting the plan that fits your needs so you don’t pay extra charges.

Health Ins. Premiums – At ‘open enrollment’ check all plans and pick what works best for you.

Internet – Having internet allows you to have internet along with streaming features.  But rather than paying cable charges for channels they choose but you never use, drop the TV part of the bill.   Streaming services are available for $10 -15 a month, and gives you more than an ample variety of all kinds of shows and movies.  Each service has their own specials as well and they update often.

Car/transit costs – Keep your car in good working order. Pay your insurance premium when due, and in full, saving 5% or more.  Follow the rules of the road, avoiding tickets etc., and it also give an additional discount on your insurance premium.  Check all discounts you may be eligible for.