Saturday, June 27, 2009

The "B" word-Part 1

For over a year now I have been focused on getting deals, and saving money. The last 2 months we have been taking personal finance classes and we needed to budget. We sat down and figured it all out, and put it on paper. I am glad to finally have it done for two reasons: there have not really been many good deals, and I have been so busy that getting deals is on the back burner.

Before you disregard a budget, let me assure you that it was not as hard as I thought it would be. Basically, I reviewed the bank account for how much was spent on Gas, groceries, eating out, etc., and created the budget based on those numbers. It was out first month, and we went just a little over, and we wound up with enough money at the end of the month to pay almost an additional $1,000.00 on a debt!!!! You cannot take budgeting for granted anymore! It must be done.

The new budget works basically like an envelope system. First we put down all monthly bills, like mortgages, electricity, trash etc. Next, we took anything not paid monthly, like taxes for example. We pay taxes once a year. We divided that payment by 12, and that number goes into an "envelope" each month to be saved for when it comes due. Also, groceries were set at $50.00 per week, so that went into an envelope each week. When all was said and done, I went about $5 over budget. This month I will set the same budget, and if I still go over budget I will evaluate if it was me overspending, or if I set my budget too small. The class teaches that the budget should be done at the beginning of each month, My husband and I are going to sit down over today and tomorrow and work on the budget for July.

I don't want to relay alot of specifics about the class or the teachings, but I do feel that these are the basics of most budgets. I do however, want to leave you with one thing that I think I should share: You need to take care of the financial needs of your home and family first. That is, you need to pay rent, electrical, food & car payments before you worry about credit cards. You cannot go to work, earn money to get yourself out of debt, or just stay afloat, if you cannot eat, or shower, or get to work, or have a place to live. Those items need to be a priority in your life.

If there is anyone reading this that is struggling, realize that the Creditor will wait, the mortgage payment and feeding your family cannot. That doesn't mean you don't pay your debts at all, it means you pay what you can, after you have taken care of your basic comforts- Starbucks is not basic comfort people- and then pay creditors what you can.

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