The Dreaded “B” Word…
By Keith Bunn Jr.
January 8, 2012
I know that one of the reasons why people don’t do a budget is because they think that they won’t be able to do anything if they do one. The truth is, most people who manage their money, know where every dollar is going, and they have more money to do stuff with. It is like time management. The more you manage your time, the more time you have. Your money is the same way. I can’t tell you how many times, while coordinating Dave Ramsey’s Financial Peace classes, people telling me that it seemed like they got a raise because they found extra money they didn’t know they had just because they did a budget.
Another reason why people don’t do a budget is because of fear. They are afraid of the big pile of bills that just keep getting bigger and bigger. If you have a big pile of bills that you have been ignoring for some time, more than likely you have multiple copies of the same bill. All you really need is the most current one and the rest can be thrown out.
Whatever the reason you haven’t done a budget, you really need to do one and they are really not hard to do. The hardest part is sticking to it. The simplest budget method is called the Zero Based budget. This means you write down your budget, spending your money on paper before each month begins. Income – Outgo = Zero. Believe it or not though, there is a wrong way of doing this. You need to prioritize what you’re going to be spending your money on. It is unwise to pay on your credit cards, boats, camper, etc… and be behind on your house and/or car payments or utilities. I suggest you do what is called the Four Walls. The Four Wall are Food, Shelter, Utilities, Transportation & clothing. You have to do those four things first before you do anything else. This leaves you and your family in a much stronger position to fight another day.
After that, you can start on the Debt Snowball listing all your debts, except for your home, on paper from smallest to largest. You pay the minimum amounts you need to pay on your debts except for the smallest one and you scrape up extra money by selling stuff, extra jobs, or overtime and you throw it all at the smallest debt. Once that is paid off, you take all that extra cash you were putting on that smaller debt plus the minimum amount you were already spending on the next debt on your list and you throw it all on that next debt. You keep doing that as you work your way down your list until you are paying large amounts on your larger debts.
If you just follow these simple guidelines, you will be doing far better than most people in our culture, but as I said earlier, the hardest part of this whole budget thing is sticking to it. We are creatures of habit and it will be easy to get off track. But if you stick to it, the rewards will out weigh all the sacrifices you will have made to win with your money.
As with all my blog posts, and social media posts, I welcome any comments and feed back on the topics I write about. It is the only way you and I will learn more about our selves and each other, so ask away!
“A budget is nothing more than telling your money where to go instead of wondering where it went.”
- John Maxwell -
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