Are your finances in order??

Many Americans out there have no idea how much they are spending on a monthly basis. Many live month to month and some wonder why they are going down the financial spiral. It’s because there is no budget in place. Most people have no clue, or are too busy to make a budget, but it should be a necessity in everyone’s life, or it may eventually lead you to bankruptcy. Let’s explore why a budget is good, and how you can determine what to do if finances are out of control.

A budget is simply a guideline and map for your money. You need to know how much you have, and where it goes in your life. It is not meant to restrict you from having a social life.  Here are a few traits on budgeting before we get into a simple budget.

A POSITIVE Attitude: Don’t focus on the dull-drums , it will discourage you and turn budgeting into a chore. Instead, think of what can you achieve? Can you get out of debt faster, go on that vacation you always wanted, or simply put more towards retirement? These all outweigh the time invested in making a budget, and will reap great rewards and happiness in the end.

Stay MOTIVATED: This builds upon the previous topic. How does one stay motivated? By reward. I don’t mean whipping out that credit card, or rewarding yourself every time you’re ahead of schedule, instead, reward yourself by achieving that goal that much faster, such as paying off a credit card. After you achieve that goal, then you can reward yourself with something bigger.

Keep REALISTIC Expectations: Remember, life is a marathon, not a sprint. The same goes for budgets and achieving your goals. If you set the bar too high and miss, you will become discouraged and won’t believe in the word “Budget”. Instead, take baby steps.  We do that with every other part of our life, why can’t you do it with a budget? Don’t feel bad when you feel that you are starting low, it’s starting, and that’s more than most people. You can snowball to bigger goals eventually.

Those are all mindsets that you must keep. They will help you out a lot. Now if you see that you’re spending way more than you think, then you may need to pick up a second job, sell your belongings, or maybe even declare bankruptcy. While bankruptcy is not a bad thing, look at all the famous people declaring bankruptcy, it’s certainly not where people want to end up. So…BUDGET!

Let’s look at a simple budget, hopefully it makes sense and inspires you.

Bob Joe’s Monthly Budget

Gross Income: $2000
Net Income: $1700

Rent: $700
Utilities(water, electricity, trash): $55
Household expenses(Food, maintenance, etc…) $350
Car Payment: $320
Insurance: $150
Cell Phone: $60
Internet: $35
Credit Cards: $130<
Entertainment: $100

Grand total: $1900
DEFICIT of $200

As we all can see, he is over-spending.  We all know that means one is in debt. He also has credit card bills, which means he is paying for stuff now, with interest, that he enjoyed in the past. Think of it as losing the fat now, for all the McDonald’s you ate 7 months ago. It’s not healthy! This means that his payment in his budget is going to go up, which will affect something else, and he may possibly be using his credit cards to extend his budget, which is more overspending.

This guy has a few options he can consider. He can get a second job, which in this economy, is not so easy to come by. He can sell his car, which would reduce his insurance premium as well, or his belongings. The last option is that he can declare bankruptcy. This would definitely get his budget back in order, but would have lasting effects. You can call us and determine which is best for you, or simply make a budget and determine which you feel most comfortable with. Hope this helps. Happy Budgeting!

This is for informational purposes ONLY. We are not providing legal advice. For information specific to your case, call for your free consultation TODAY!

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