Organizing a budget can be stressful, but the benefits can be dramatic. A well thought-out budget will facilitate financial stability, preserve your hard earned credit repair efforts, and even provide the framework for building real wealth. Let’s get started!
Clear off your desk or kitchen table, get a fresh pad of paper, and prepare to spend some quality time with yourself. Write down everything you spend money on. Start with the big items like housing and auto payments, and work your way down to daily incidental expenses. Include everything, even occasional expenses like vacation. If you take an annual vacation estimate the total amount you will spend. It’s easy enough to translate the total into a monthly amount by dividing by twelve. The quotient is the amount you will need to set aside each month.
Do the Math
Once you have listed all of your outflows, compare your monthly expenses with your monthly take home pay. If there is a comfortable surplus you are in great shape. But if you discover that you are spending more than you earn it’s time to make changes. The math is simple, if you are spending more than you earn your net worth is shrinking, your debt is growing, and eventually you will wind up in a jam. Many of our credit repair customers are familiar with this outcome. But there is a way out.
Making Decisions Work for You
If you find that the numbers don’t work you must make changes to the way you spend money. Consider that everything is fair game. If you pay rent you might discover that you can find a very nice home for less money than you currently spend. If your monthly auto payment is a burden you might visit your local auto dealer. Auto finance managers are usually pretty creative. You might be able to trade in your car, lower your payment, and still drive off the lot in a nice set of wheels. Think outside of the box, you will find a way to make the numbers work.
Learning to Save
While you are building your budget, allow for a regular contribution to a saving account. Develop the saving habit; there are many benefits. Savings will provide a buffer in case of unexpected expenses, protect your credit repair progress, allow for large investments like the purchase of a home, and even give you inner peace and confidence. Like the advertisement says: Priceless.