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I hope that you taken the time to start tracking every penny you spend. What have noticed? Do you like to go out to eat a lot? Do you wait till the last penny to tithe? What did you spend the most money on?
I hope that you taken the time to start tracking every penny you spend. What have noticed? Do you like to go out to eat a lot? Do you wait till the last penny to tithe? What did you spend the most money on?
Please understand, this is not to constrict or condemn you. Instead this information will help to bring self awareness and point out some things that you may not have already known about yourself. I promise I am not stringing you along. There is a tingling feeling, an excitement, and sometimes a little suffering in the magic of what needs to be done to accomplish this feat of debt freedom.
Now that you are armed with that information and awareness, here is the next step…
Things you need:
1. Paper and a pencil (If you are tech saavy, Excel or Numbers, for the Apple users)
2. Commitment
3. A WRITTEN Budget
Just in case you missed the magic, those 3 things above are ingredients of this magical accomplishment.
Let’s get started…
Many, many people have a mythical idea about a budget. They believe that a budget is the bondage that keeps them from doing what they want to do. They mistake the freedom of saying I’m specifically going to plan to spend money on this as limitation to doing anything else.
This is a complete myth about paying off debt and about using a budget.
The beauty of a budget is allocating EVERY penny to be spent in some way. Are you freaking out?!? Yes I just said “spend every penny ”’ on paper before you spend every penny in real life. So what does that look like?
At the middle of July, I started thinking about all the things that are going on my life and what I expected to spend time and money doing for the month of August. Yes, at least 2 weeks ahead of the time,, I start planning money! Here is an example of what was on my list…
- Living expenses
a. Rent – $365
b. Transportation – $50
c. Cell Phone – $45
d. Food – $50
e. Credit Card – $50
f. Emergency Fund – $120 (Remember you should be saving a Baby Emergency Fund of $1000 before you start working to pay off your debt)
Now if I compare that to what my income was for that 2 weeks (totaling $800), it may seem that I have money left over. WRONG!!!!! That is exactly where we get into trouble. There should NEVER be money left over. REMEMBER: every penny should be spent on paper, before you spend it in real life. So the total of the amount of the expenses listed above is $680 for this bi-weekly period and we received $800 in income for this bi-weekly period. The means we still have $120 that is not accounted for within our budget.
This is where the importance of commitment comes into play. If there is come thing on your miscellaneous list that your REALLY want to do, will you change the budget so that you can spend the money on things that you want – OR – will you have the discipline to stick to the plan and spend the money where it is most needed.
So based on the list of things that you would like to do for the month of August how will you distribute this money?
Additional Things to do for the Month of August:
Out of the $120 that still needs to be allocated, dictate an amount to spend for each item in the list below.
• Birthday Gift – $50
• Comedy Show – $70
• Beyonce Concert – I can’t afford this right now, but Bey will be Bey and I will see her another time when I can afford to buy the seats I really want.
Now when I add up my monthly expenses plus my miscellaneous expenses. It equals $800. Every penny has now been spent on paper.
Yay for accomplishing a balanced budget!
