Free From Broke

A Personal Finance Blog for Regular Folks

Budget

Excuse Busters For Not Having A Budget

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Watch Over Your Money With A Budget

Yesterday I wrote about 9 common excuses why you don’t have a budget. Today I’m going to bust those excuses and show you why you need a budget.

Excuse Busters For Not Having A Budget:

  • You Don’t Want To Be Told What To Do – Really?  You don’t want something to tell you how to spend your money.  Well how do you like the bills you pay every month?  Or looking at your bank account and being told you don’t have funds to cover an expense?  Truth is, when you have an effective budget you are in control of your money and you can see what you are doing.  The only one doing the telling is you with a budget.
  • You Feel Constrained – Yes, a budget tells you how much money you may have for different expenses.  And you may not be able to spend indiscriminately.  But the truth is a budget can be liberating!  You know exactly what you can afford and you know where your money is going.  When you know your expenses you can re-allocate your spending to fit your needs and wants.  Without a budget it’s more like a high wire without a net.
  • You Can’t Do What you Want – Not the case.  A budget will tell you what you can afford.  With a good budget you can change your spending to allocate more money for things that are important to you.  You cut out the frivolous spending for things with more purpose.
  • Can’t Give up Your Ego And Admit You Need to Control Your Spending – Get over yourself and take a good look at the bills you have and the stress you go through every month to pay them.  Look at how quickly your paycheck disappears and how your bank account dwindles.  You want the best stuff, I get it.  But you have to reign in your spending.  The lifestyle you are trying to live is an illusion and it’s much healthier for you to truly live your life instead.  Don’t worry so much about appearances because appearances lie.  Be!
  • Your Expenses Are Too Big To Get your Head Around – It can be a daunting task to start a budget if you haven’t done one before.  Start small.  Gather up your bills.  If you don’t have them then as they come in write down their totals in a spreadsheet (or a notebook).  After you have put together your expenses, compare that to your income (for most that’s you paycheck stubs over the month).  Once you can see you expenses and income you can start to go more into the details.  Start holding on to receipts as you spend and mark them down.  Track down the little expenses.  Take a look at those bills and see what they are made up of.  The point is, if you want to start a budget you can.  Don’t think you have to do it all at once.  For most a budget is  work in process.
  • You’re Afraid – Liberate yourself from this fear.  If you are afraid then you probably think your expenses/spending are out of control.  It may not be as bad as you think.  Even if it is, once you can put a definite figure on it you’ve taken a step to start attacking it.  It’s not going to get better until you decide to do something about it and a big first step is starting a budget!
  • It Takes Too Much Energy And Time – Maybe at first it takes some time.  But once you know your recurring bills it gets a lot quicker.  Get yourself organized and you’ll find it doesn’t take much time at all (personal finance software like Mint, Mvelopes, or Moneydance – review can help).  And you will also find that tracking things like your taxes expenses will be easier since you’ve been keeping track of spending all year.
  • It’s Depressing – It doesn’t make me happy all the time to see what money I have left for the month.  Or to see how much I pay out.  But a budget is empowering.  With you budget you are in control and you see exactly what you spend.  What makes me happy (not depressed) is knowing that I have a handle on my money.  It’s a powerful feeling in fact!
  • You Manage To Get By Without One – That’s great if you get all of your bills paid and still have money left over without a budget.  You might even have money going into savings and a retirement account.  Some people are naturally good at keeping track.  But if you put together a budget you may find lots of small “money leaks” that you weren’t aware of previously.  You may find that your savings and such will grow considerably when you see exactly what your spending is.  From personal experience, my wife and I were surprised to see how much we spent on the weekends on little things.  Had we known then what we know now we’d have much nicer savings!
  • Your Spouse Isn’t On the Same Page As You – You need to sit down and talk to your spouse and have a serious money talk.  A budget doesn’t mean you can’t use money any more it just means you know where that money is going and why.  A budget allows you to align your goals for your family.

Hey, you know what? A budget isn’t that tough!  Stop making excuses and get started on one.  You just might find things are easier once you see where your money is going.

Bonus: I just discovered these templates to help manage your finances in Google Docs!  They’re free and there’s a whole bunch of them!

No More Excuses!

See Part I: 9 Excuses Why You Haven’t Started A Budget
Creative Commons License photo credit: peasap

Never Mind A New Economic Stimulus Package – Save Yourself!

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There’s been a lot of talk in the news about a new economic stimulus package.  Some are talking about a new one being approved this year while others speculate that it won’t happen until President-Elect Obama takes office.  There’s been talk that a new economic stimulus package would be more infrastructure and not checks as the last package was.  And there definitely has been a lot of talk of whether we even need a new economic stimulus package; questioning if it even makes a difference.  Here’s what I say:

Never mind a new economic stimulus package – Save yourself!

Don’t count on the government to come through with legislation to help you make ends meet.   That attitude will never get you ahead.  You need to take matters into your own hands.  If you are in a bad financial situation you need take control and ownership of the problem and fix it yourself.

Here are 12 ways you can take matters in your own hands and save yourself:

  • Get your finances in order.  If you haven’t done so get all of your monthly bills and expenses together and figure out what you are really spending.  Put together a realistic budget that you will follow.
  • Make sure you excel at your job.  Unemployment is the highest it’s been in quite a while and I’m sure there will be many more layoffs to come.  Don’t be the robot at work that does just enough to get by.  Get yourself interested and make yourself valuable to your company.  Don’t just get your job done – get it done well!  If layoffs are coming you may be able to save yourself from the chopping block.  Hey, maybe you could even get a promotion?
  • Build networking relationships with friends and co-workers.  Sometimes, as unfair as it seems, it’s not what you know but who you know.  Keep up with co-workers when they move to other jobs.  They can be your foot in the door if you leave your current job.  Stay in contact with friends as well.  Even if they don’t work in your industry they could prove to be a valuable contact.  Network!
  • Pay your bills on time.  Lenders are getting shy about giving out their money these days.  If you pay late you may find your interest skyrocketing.  Universal default allows one credit company to raise your interest rate if you’re late on a different company’s card.  A late payment can make all of your credit cards have high rates.  If you aren’t paying off your balances every month you can find yourself sinking faster into debt.
  • Put money away for emergency savings.  Really you don’t know what the future holds and as the saying goes: “when it rains it pours!”  What happens if you find yourself out of a job?  Then the car breaks?  Then you need a doctor’s appointment?  Hopefully you don’t need your savings but put yourself in good shape by having savings in place.
  • Make sure your credit report is clean.  Errors on your credit report can be costing you in higher interest rates on your credit cards and loans.  Make sure your credit report is accurate.
  • Check you credit score.  Your credit score is like your code of honor among credit agencies.  A low score means higher interest rates and could also mean you won’t get a needed loan or credit.  Credit scores are also used in housing and in job hunting.  Get that score up!
  • Cut costs.  Remember that emergency savings?  A way to help build that up is to cut costs.  Cut a few corners here and there and you can find yourself with significant savings!
  • Analyze your tax withholding.  Are you paying too much?  Pay what you need to and no more.  Many like to get a big tax refund but you’re better off having that money in each of your paychecks instead.  You don’t earn any interest when the government is holding your money!  Adjust your tax withholding so you maximize your paycheck.
  • Re-evaluate your holiday spending.  The holiday spending frenzy is starting.  Don’t get caught up in the current!  You don’t need to spend exorbitant amounts on every person you know this holiday season (here’s a challenge: see if you can keep a $100 holiday).  What really the point in spending so much if it puts you in a bad financial situation?  Budget what you can spend on gifts and don’t go over.  Make sure your budget is within reason of your financial situation (don’t spend more than you have!).
  • Go to school.  Yes, school is an expense.  But taking some extra courses or pursuing/finishing up a degree can help make yourself more marketable to employers.  This can be as simple as taking an advanced Excel course to working on a higher degree.
  • Work on building alternate sources of income.  Try your hand at blogging.  Work on developing a hobby that could earn money such as photography.  Other streams of income are a good thing, especially when money is tight.  And you never know, what you start could develop into something bigger.

It always sounds nice when the government offers to give us money back but we have to remember there’s a price to this.  It could mean less services somewhere else or more taxes down the line.  Remember the money has to come from somewhere!

Don’t hope the government will do something to ease your situation.  Get a hold of your finances and take care of it yourself!

What other ways could we take financial matters in our own hands?

What We’re Doing To Adjust To One Income

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Contando Dinheiro

As I told you yesterday we’re moving from a two income family to one income. This will take some adjusting on our part.  If you’re considering moving from two incomes to one you should check out 9 Tips For Going To One Income from PT Money.

Among the things we have done so far to adjust:

  • Changed my 401(k) contributions – I was contributing more than the company match for my 401(k).  I’ve now lowered it to the company match.  Anything lower than the company match and I would be missing out on free money.
  • Roth IRA contributions – We lowered our monthly contribution to our Roth IRA’s.  Yes it’s important to save for retirement but for right now we need to make sure we can handle our new budget constraints.  If we find we have enough left over we’ll up the amount.
  • 529 Plans – Again, it’s important that our kids are able to go to college but having money now is more important.  We didn’t eliminate contributions, just lowered them.
  • Tax Withholding – With my wife not working I plan to change my tax withholding so I can keep more of my paycheck.  We’re waiting to hear back from our accountant for advice on what we should set my withholding for.
  • Health Care – Our health care was through my wife’s job.  I’ll have to switch it over to my company’s once my wife’s coverage officially ends.  This will cost us as my wife had free coverage and I don’t.  We had to keep this in mind when we worked out our budget.
  • Look for ways to trim expenses – The Starbucks days are coming to an end.  And now when we go to Target or BJ’s we’ll go in with a set list of things we need and not buy things we want.
  • Work on finding alternate sources of income – We’re keeping an eye out to see if there are any ways to earn some extra money.  I’d love to say this site would help support us but blogging isn’t as lucrative as some make it out to be.
  • Go through all of our monthly bills/expenses – We made sure to see where our money was going monthly.  We didn’t want to build a budget then find out we skipped something that would make us go over.  Make sure you check for any automatic contributions or payments you may have set up!

This will be a big adjustment for us but it will be worth it.  We’ve saved and planned and budgeted and I think we’ll be fine.  A little tighter than we used to be but fine.

Do you have any other ideas?

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Creative Commons License photo credit: Jeff Belmonte