More on Creating a Budget

More on Creating a Budget

Photo credited to chodra on morguefile.com.

In researching other blogs on personal finance and budgeting, I came across a blog called Get Rich Slowly. This blog has a lot of great information on managing one’s personal finances. In one article titled “HowDo I Create a Budget?”, Richard Barrington writes about how important it is to find a budgeting system that works for you. Keeping good records is vital to maintaining any budget. This is an area that I struggle with greatly. Barrington stresses that the method you choose is less important than committing to it. My goal will be to find a record-keeping system that I can keep up with and manage. No small task with my ADHD.

Another point he makes is one I made recently about using the income you can count on in your budget. Bonuses are not static and should not be included as part of a person’s regular income. When you receive two paychecks every month for 10 months out of the year, the two paychecks is the amount you should use in your budget. That makes it easier to manage expenses month to month. That is one thing that I have discovered over the years. 

Barrington also mentions that when you find yourself with a surplus, such as those two months when that third paycheck arrives, be smart about how you manage those funds. You should decide ahead of time how that money will be spent. Either add it to savings, put it toward debt, or spend it on something you've been putting off, but make sure you allocate it somehow or you could end up spending more than you intended. That is an important point. I often find that I overspend those funds simply because I did not allocate the funds appropriately ahead of time.

Next Steps:

Continue work on my budget

Get real with the debt

Budgeting for the Broke

Photo provided by cohdra at morguefile.com

In my search for tips on budgeting, I came across an article that gave several very good tips that those of us who are broke can employ to create a workable budget. I decided to share a few of the tips here and encourage you to read the article in its entirety at the link provided.

Take Stock and Prioritize

One of the first steps is to prioritize your bills so the most important bills, like housing and transportation, are paid first. You need a place to live and a way to get to work more than you need cable. Another important step is to make sure that you know the due dates of all the bills you owe and the minimum payments on all the credit cards.

Negotiate Rates

Try contacting your credit card companies and see if they will reduce the rate you are being charged on your cards. A reduced rate could help pay that balance down a lot faster. This is one I haven’t tried yet and will look into soon.

Review the Past Spending

Go over bank statements for the past month or two and evaluate where the money is really going. Often we think we know where the money is going, but doing an evaluation can help see where the spending is really happening. This would help identify what expenses can be cut to help pay off debt.

These are a few tips I will be studying as I build my budget.

Next Steps:

Continue developing the budget
Get real about the debt

Link:

http://finance.yahoo.com/news/budgeting-youre-broke-080000891.html

It Starts With a Plan

Photo provided by gracey on morguefile.com.

Budgeting

Budgeting scares me. Let me just say that right now. Every time I have tried to create a budget with all of those spreadsheets and columns including the extra stuff that you should be setting aside money for like tires and eyeglasses, I would get a little nauseas and have a panic attack. I still do. The problem was that a lot of these budgeting tools are not realistic for most of us single parents or those with limited means. To be quite honest, to actually budget for everything I was supposed to be including in the budget would have required me to work multiple jobs. As a single parent, that was not a feasible option.

I believe the key is to work with what you have. Work with the cash you have in hand every month. Start where you are. For example, if you get paid every two weeks, you will get 26 pays per year. That means that two months out of the year, you will get three paychecks instead of two. Some budgeting tools give instructions to average that out to a monthly amount by multiplying the average paycheck by 26 and then dividing by 12. Then use that monthly amount to work out your budget. That might work in theory, but it doesn't work in reality.

Instead, I suggest creating a budget based on the actual money in hand each month. This means that if you get two paychecks a month for 10 months out of the year, budget on those two paychecks every month. It’s far less stressful to budget on what you can count on every month. I feel the same way about child support, especially if it is not very regular as in my case. That might be a post for another time, though. The bottom line is that you should create a budget based on the money you know will be available each month.

Bonus Pays

What do you do with those bonus pays or those two months when you get that third paycheck? When those extra paychecks arrive, utilize the income to your advantage. Set some money aside for those eyeglasses, tires, or even Christmas presents. Put some money aside for nonperishables or pay down a credit card or doctor bill or just add it to your emergency fund. It's up to you to decide how that extra cash can be put to best use. Just make sure to use the money wisely, and that it helps you reach your financial goals.

I'm still working on my budget plan. I've been doing some research to decide what resources work the best for me. I have an old copy of the Total Money Makeover by Dave Ramsey that I plan to review, but I intend to take my time with this and work on a plan I can live with. Ultimately, for any budget plan to work, it has to be one you can stick with over the long term. I’ll keep you posted on how it comes together. Meanwhile, you could add your budgeting tips in the comment section below. 

Here are some online tools I plan to explore as I work on creating my budget:

Dave Ramsey's Budgeting Tools

Budgeting help

Budgeting Software Options

Next Steps:

Start planning a budget
Face the music with regards to the debt

This is Me

Photo provided by andyk at morguefile.com.

Introduction

I'm in my early forties, and I've spent the majority of my adult life either in debt or struggling to make ends meet. It’s a depressing existence and one that I am determined to change before I pass the lifestyle of debt and despair on to my daughter.

Who am I?

I am a single mother who found herself several years ago stuck in limbo. I decided that if I wanted a better paying job, then I would have to finish my college degree. In my mid-thirties, I went back to finish my bachelors degree. After I did that, I decided that if one degree was good, two would be even better. Now the chickens have come home to roost, so to speak, in the form of student loans. Lots of them.

For several months since the loans came due, I’ve been struggling to stick to a budget. Child support has dried up now that my daughter is over 18, and, on top of all of this, I decided to take on the project of replacing all of the carpet in my house with laminate wood flooring. Yeah. The added financial stress has not helped matters.

But it will get better. I've been in worse situations so I know that things will improve. I just have to face the music of where I actually stand debt-wise, and create a strategy that will lead me out of this financial desert.

Money-saving tips and ideas

I'm hoping to use this blog to motivate myself to come up with some creative and realistic ideas for how to save money on a day-to-day basis and stick to my debt-busting plan. These ideas might just allow me to funnel more cash into paying down the balances I owe and bring financial freedom a little closer, one small step at a time.

This is going to be a huge learning experience for me. I am totally stepping outside my comfort zone here by putting myself on the line and committing to living and experiencing life in a way that not only will lead to financial independence, but will, hopefully, add more meaning to my life as well. 

I invite you along on this journey and welcome your ideas and suggestions. 

Next steps:

Start a planning a budget
Face the music with regards to the debt