My mom has recently transitioned from a middle school English teacher to a middle/high school math teacher. She was telling me this "side project" she is doing with her seniors that I absolutely wanted to share with you!
She is helping her students with a budget and paying their bills. I couldn't be more proud of that. My coworkers and I frequently talk about the fact that we never learned this real life stuff in high school or college. Oh man, budgeting can be such a touchy subject for singles who aren't ready to cope with having to make a plan for their money, but even for couples who aren't ready to combine finances. Having a budget will help you now, but more importantly in the future too!
I was blessed to be a part of this program, About Face, that the National Guard used to put on (not sure if they still do). It was a summer program that paid kids $100 per week to attend several hours of classes per day to learn basic life skills. This was a program for kids on welfare, and one that my mom taught in for most of my middle and high school years. I was blessed to actually become an assistant teacher there for one summer when I was 17.
This program is one that I think all kids and young adults should be a part of. It taught you basic life skills, such as budgeting. How to budget, what to include in your budget, how to adjust for the unexpected. To put it plainly, it was probably one of the best things that these kids (and myself) could possibly have learned growing up.
Below are a few pointers I have created to help those of you who have never budgeted before. I promise it's not as scary as it seems. The moment you get a plan going, you will feel so much more at ease about your money.
Write out all of the bills you have in two lists. On the first list, do not include the cable bill, or the internet, or the car insurance. You are simply starting off by writing the bills you owe such as a mortgage, student loans or credit cards. These are the ones that once paid off you will no longer have. Then on a second sheet of paper or spreadsheet if you are using excel, include all the bills you have that you will always have, such as the internet, cable, cell phone, insurance, etc. These are ones that won't be paid off like the ones from your first list.
Create a saving/spending plan. Once you are finished with the first step above, you will now have a perfect idea of how much your monthly bills are. Now I want you to figure out how much money you make in a month. Subtract the bills from above to that amount. For instance, let's say all of your bills total $2,000. And you make $3,000. You will then want to figure out how much money you want to save and how much you want to spend. If you are an avid Dave Ramsey follower, like myself, you will want to get your $1,000 in your emergency savings fund before you start going hard into paying off your first list of bills from the first point. So let's say you need $400 for food, gas, spending money, eating out, etc. per pay period; and you have two pay periods in one month. That means with your extra $1,000 that you make in one month, you are using $400 per pay period, leaving you with $200 per month. If you do not have any savings and want to get your $1,000 emergency fund replenished, then you will need to save your extra $200 per month for the next five months. Then once that is setup, you can start putting that extra $200 per month to your extra bills, but we will talk about that here soon.
Use cash! This is a very important one, and also a very difficult one to follow. How freakin easy is it to just swipe your credit card or your debit card?! And, there is absolutely no emotional connection when you use it. You just swipe, and will figure out your bank balance later. Well, it doesn't always work like that. One swipe leads to two, then three, then next thing you know you are sitting at home after a full day of shopping and are feeling such regret on everything you purchased that you thought you had to have. Now, picture using cash. It's so much harder to break that $50 or that $100. Because once it is broken, it's pretty much gone. Dave Ramsey has this really great envelope system that you can find on his website here. I have the basic one, and I use it too. I'm much more aware of how much money I spend at the grocery store, or how often I go out to eat. Because once my money is gone, I can't use any more until I get paid again and can replenish the funds in that envelope. More often than not, this is extremely difficult. But, it really helps keep me on check.
Don't use credit cards. This is also sometimes a touchy subject. Especially if you truly believe that you cannot live without credit cards. Right now, every single one of my husbands and my credit cards is locked up in Bank of Texas in our safety deposit box. I think my husband has one he has out for emergencies, but all others are in there. Right now we are in the process of paying off our debt. If we cannot afford to pay for something in cash, then we don't really need it. And, we have enough in our savings to help pay for any emergencies, such as fixing our car if need be. There is no reason for us to put more money on our credit cards, when we are already in the process of paying them off.
Snowball your debt. I briefly mentioned this above. This is the Dave Ramsey Total Money Makeover step that my husband and I are on. We are currently in the process of paying off all of our bills (mainly credit cards and student loans). We have an excel spreadsheet which lists all of our bills from smallest balance to highest. Yes, I do have a column for the interest rate, but we do not take that into account right now. We have 20 non-student loan bills. This year, we plan to pay off 4 of them. Yes, having over $100,000 in bills can be stressful, but because we have a budget and a plan for our money, there is absolutely no reason to stress. Stressing does not make money grow on trees, although I wish it did! I cannot wait until we have all of our debt paid off. We are not even going to know what to do with ourselves.
Negotiate or look around. This one doesn't necessarily have to do with budgeting, but it does have to do with potentially saving money. When Dustin and I moved to our new apartment, we knew we would be paying quite a bit more for rent. But, we also knew that we would be going down to having one car (it happened 3 months after we moved), which meant lower insurance. We were also saving money on our internet and cable (nearly $80 per month). And, the main point, we had a budget that we were sticking too. It didn't matter that our rent was a bit more. Because we have a line item in our budget for absolutely everything, we aren't surprised by anything.
Find your budget. You can Google different types of budgets, but the only one I want to talk about is the zero based budget. It is the one that D and I use, and I swear by it. It pretty much is what it says, you budget for your entire pay check until you have zero dollars. Every single penny has a place. For us, we have our main monthly bills (rent, electricity, cable, internet), then our snowball bills (credit cards, student loans, etc). Then we have our allotted savings amount. Anything extra goes to a snowball bill. We have one shared bank account, then we each have our own as well. The shared one houses the majority of our savings, and is where we pay all of the bills from. We hardly ever have any money in that checking account since that is the account that is the one for our bills, and we work off of the zero based budget. It works well for us. We both get paid twice monthly. So our check register, as in the binder I keep with all of our financial information, has the same bills paid on the 15th of the month and the same bills paid the last day of the month. It actually works out quite nice.
I could probably go on for days about money, and budgeting and getting out of debt. I have probably talked my husbands ears off one too many times. But the fact that we have so much debt, and I love talking about it shows that having debt doesn't have to be stressful. Figure out a plan, and get to it! I promise you will feel much better about your finances once you do. If you ever have any questions, about getting out of debt, Dave Ramsey, or just want to pass along some comments, I always welcome them.
I just hope that some of this information was helpful to you!