Friday, February 1, 2019

Back to Basics ~ Finances & Budgets

I made an early post about budgeting for Christmas and said I would come back to the topic of money.  I may have done this a little backwards.  I probably should have done an intro type post and then the Christmas budget one, but the timing of the year is what pushed me to write about it and share it sooner, rather than later.

So let's go back to basics.  We have money coming and going in our households.  Pay day comes, expenses go out throughout the month, and then the next month comes and it is the same thing.  Even kids can be making an income and have expenses (chores anyone? allowances?)

Put in it's most simplest form, expenses going out shouldn't exceed income coming in.  Sure, yes there are pop up, unexpected, sometimes one time expenses.  But that is what your emergency fund is for.  But we will get to that in another post.

For now, let's stick with the expenses shouldn't exceed income.  I want you to take a moment and list out all your expenses.  I mean it.  Take a moment to list them all out, what they are and what they cost.  The daily, the weekly, monthly, bi-monthly, quarterly, yearly.  List them all!  Make a separate list for the daily coffee, lunches out, dinner out, the expenses that are more about wants rather than needs.

Once you have your list of expenses and cost for each, total them all up.  Take a moment to compare it to the income coming in.  What do you see?  Are your expenses total less than your total income?  Are they more?  Or do you come out right around even?

What happens if you add in those miscellaneous expenses that are more about fulfilling wants (like the daily coffee shop type of expenses)?  Now how do things look?

At this point, I am hoping you are getting a more detailed picture and understanding.  You may even be able to see why people fall into using credit cards and even have a carry over balance from month to month.

Are you living pay check to pay check?

These are just some things I encourage you to think about.

It is possible to live without a credit card.  It is possible to not live pay check to pay check.  It is possible to be debt free or virtually debt free as you work toward debt free.  And it can all be a good thing, freeing.

But it all starts with knowing your finances and setting up a budget plan.  Knowing your income, knowing your expenses, knowing how to get out of debt, knowing how to save.  Knowing where to start.

If you are looking for a resource, Dave Ramsey is a great resource.  He has been through it all.  From making money, to filing bankruptcy, to coming out of it and living debt free.  His books, his podcast, his website, his courses, his life all are a great guide.

We have utilized most of Dave's resources and methods.  When we haven't used a piece it is because we needed to tweak it a little to fit the way our income comes in verses the way our expenses go out.  But in the end, we still aim for a $0 budget plan.  We have monthly calendars that list out all the expenses for that month.  Than we do a bi-weekly budget sheet based on the income that comes in from pay day until the day before the next pay day and the expenses that are going out during that time.  For us, this set up works best and we can keep track better.

I will keep sharing more about our story, how we handle budgets, and the money side of things in posts to come.

For now, just take some time to sit down and truly look at your finances.  Make some decisions about where you want to go, where you want to be.  List out your income and your expenses.  List out the wants, dreams, etc. as well.  Then just take it all in.

Next time around, I will share our story.  Then after that I will get more into the mindful money side of it all.

What would it be like for you to be sitting on your couch, this time next year, and knowing you are debt free or have less debt, not living pay check to pay check and not stressing out or arguing as much about finances?  What would that truly mean to you, for you?

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