How To Organize Your Budget
When you have followed the first two crucial strategies in my last Factoid entitled, “Two Key Steps Before Organizing Your Budget”, you are now ready to take a look at a few tips to actually doing it.
To start, I am a young single mother. I am raising my son (financially) solo, own my own home, am credit card debt free, work at home full time, homeschool my one son, have no car payments, keep my savings where it needs to be for my family, have a few investments, and run on a tight budget. It is true that I cannot afford every thing we want (yet), and I sometimes ask for assistance for certain programs or opportunities we desire to join. However, overall I manage my money in a fashion that allows for integrity but basic freedoms. I say none of this to boast but to share some of my credentials with you as I write some tips and tricks that have saved my finances over the years.
Let’s look at some basic principles to cut some unwise spending, reduce debt and learn how to live on a budget with an agenda.
1. If you are in more than $5,000 unsecured debt, immediately start researching debt consolidation firms. Some of them only accept the application if you have more than $10K debt, but it’s always worth a try. They are your best bet to lower all your interest rates. It’s a must and eventually shaves years off your payment schedule to becoming debt free. If you have less than $5,000 or are not approved for the consolidation loan, call each creditor and ask them about a payment plan and lowering your interest. You have to stick with the payment plan or you’ll be booted out of the program, so choose a payment you have the means to pay each month. Unfortunately, the company I used to consolidate my once-was debt is no longer in service, or I’d highly recommend them.
2. Make sure you aren’t paying any dues at your local checking account bank. Do not be fooled by these rip off banks. You should not pay a penny for them to hold your money. Even online banking and those types of services are free at most competitive banks. Do not be afraid to switch your provider. You are in charge of your finances now.
3. If you don’t have one, open a savings account. To start, try an online account like ING or HSBC. Don’t worry about rates because, frankly, rates are awful right now. Unless you have a large chunk to invest, just start putting $25, $50, $100 away each month to an account like this. That way you can’t access it every time you want to make an impulse buy.
4. Take a solid look at your utilities. I guarantee you are paying too much for something. Here’s where the homework comes in. For instance, look at your propane or oil company to see how much you paid last year for heat. Call around and compare rates. Again, do not be afraid to switch. Also, utilities are the places that you also do not want to be afraid to tell them you are thinking of switching. If you announce it, they should be quick to attempt to appease you. They might match the lower rate and then you don’t have to have the hassle to switch. If they don’t offer or won’t lower, just switch and enjoy the extra money in your account each month after that short term hassle. In recent months, I weighed the costs and canceled a contract with my cell phone provider and swapped over to a no contract “get everything” phone. I paid a cancelation fee, but it made up for itself in the savings in 3 short months. I also moved propane companies, and they charged no fee for the new install or the cancelation. I anticipate saving almost $700 this winter with the new company. You can also lower your electricity and car fuel costs with some simple tips from other sources. (Maybe I’ll write an article about it.) Learning the differences between light bulbs, using power strips, filling air in your car tires once a month are the types of recommendations you will find. You can save $20-50 a month in certain situations. You get the idea: turn your water heater down a few notches, use the light wash cycle on your dishwasher if you don’t have a really dirty dishes, seal up unused windows in the winter, fix that leaky sink. You might not believe it until you get the lower bill, but these are exactly the right ways to reduce your expenses.
5. Stop taking cash out of the ATM! I say, “Once it’s green, it can’t be seen.” Your next step is to track all your discretionary income ... Those $3 lattes, those late night stops at the 7/11, that eighth DVD you’ve rented for the month when it’s probably on Hulu, that magazine subscription to Self when their website is just as good. You have to be able to track to see where you are being unwise. If it’s on your debit card, you have to account for it. Take a long, hard look at your check register. Ask yourself if those small line items are good choices to help you attain your goals that you set. Make the hard choices and choose sacrifice if you are trying to get your finances under control. Once you have a good handle on your wallet and are able to save each month and get your debt reduced, you might not need to be as sacrificial. You still want to have fun, live and enjoy the world out there. My rule of thumb? Splurge every third chance. “Mommy could we go get an ice cream?” or the smell of McDonalds that overwhelms your car as you drive by. Say No, No, and then Yes. Ask some tough questions like: “Is this good for me?” “Do I have the money in my bank account right now to cover this?” “Is it worth it?”
In the long run, getting control of your finances is really having the ability to control your desires NOW to attain the goals you have set. All you need is a little patience, self control, healthy ambition, and proper perspective. Prosperity doesn’t look the same for everyone. So take the time to buy your own admission ticket to your future by paying the price of adjustment now. You will be glad you did.