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It may be time to create a budget
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Many of us have never had to think about budgeting before, but with today’s economic meltdown, it may be time to do so. If you’ve never really developed a budget, here is how to do it.
Sometimes it is tough, but like the concept of tough love, it may be the only way we can pay off those credit cards, prevent foreclosure, and keep our sanity.
The first step is to see what our expenditures actually are. Most of us really don’t know the exact amount of outgo we have every month. To do this, I want you to list every penny you spend each month. I’ll make it easy with a list for you to fill in.
First, we’ll do those items that MUST be paid every month.
Food ____________
Clothing ____________
(include dry
cleaning,
repairs, etc.)
Mortgage/ ___________
rent
Furnishings ___________
Utilities ____________
Appliances ___________
Child care ___________
Loans __________
Credit cards __________
List ALL credit cards)
All taxes __________
Car payments __________
Car __________
Maintenance
(include gas)
TOTAL ______________
The total surprise you?
Now let’s look at your discretionary spending. These are expenditures you don’t have to make, but do because you want to.
Entertainment ___________
(include books, etc.)
Vacations ___________
Health Club ____________
dues & expenses
Cell phone ___________
I’ll bet that total surprises you as well. But this is where the tough part comes in. If you are really in a tight, your solution is to cut out some of these discretionary items. Your cell phone, your cable TV, your high speed internet, vacations, eating out, movies, all may have to go.
For example: if you have large credit card debt, your goal must be to reduce that debt. You do that by attacking the card with the smallest balance first. Take the money you’ve generated by cutting out some of those discretionary items and apply as much as possible to that card each month. Once that card is paid off, take the money you were putting on it and apply it to the card with the next lowest balance, etc, etc., etc. It may take awhile, but eventually you will have them all paid off.
And by the way, don’t start charging on them again when they get paid off!
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