living on a budget getting out of debt. a budget is people telling their money where to go instead...
Post on 19-Dec-2015
215 views
TRANSCRIPT
A budget is people telling their money where to go instead of wondering where it went.
Budgeting is about choices – choosing how to make money and choosing how to spend it.
The #1 key to success in managing your money is a WRITTEN PLAN.
The Budget
Lets you control your money instead of your money controlling you.
Reduces your anxiety of not knowing whether you have enough money to pay your bills when they are due.
Helps you prepare for your future.
What does a Budget do for me?
1. Get Organized!• Have a specific place for your
bills.• A budget box is wonderful,
but even a basket will work.• Open all your bills
How do I make this work?
2. Track your daily spending habits.
• Write down every purchase. Keep a check register or notebook with you at all times and write in it every time you make a purchase.
• If you use a debit card, you can look at last month’s bank statement.
3. Know Your Budget Busters!• Budget Busters are small items that add
up throughout the month and can bust your budget.
• Common Budget Busters:• Pop• Cigarettes• Coffee• Candy Bar• Lunches• Lotto Tickets• Chewing Tobacco
If you want to be in control of your money, you must understand where your money goes.
Communication is KEY!Determine what spending you can cut back on.
Understand what Fixed and Flexible Expenses are.
Gaining Control Over Your Money
Fixed vs. FlexibleFixed Expenses
• Amounts that do not change from month to month
• You do not have any control over how much you pay.
• Examples:Rent or MortgageCar PaymentInsuranceLoan Payments
Flexible Expenses• Amounts that often
change from month to month.
• Things you do can affect the cost.
• Examples:Turning the heat
down in the winter saves on heating cost.
Driving less uses less gas.
Turning the lights off saves on electricity.
Odd jobsAssistance that you may be eligible for:• Food Stamps• Medicaid (difficult for adults to be
eligible)Advanced Earned Income Tax Credit• If you have been eligible for the EITC in
the past, you qualify to have a portion of it credited to you in your paychecks throughout the year.
Find Ways to Increase Income and Decrease Expenditures
Helps you plan in advance when you will pay your bills.
Lets you record in advance when you will receive income to pay those bills.
Monthly Payment Schedule
Income Expenses/Bills
Pay/Due Date
Amount Due
Paid
Job 1 April 1 $700
Child Support
April 8 $800
Job 1 April 15 $700
Job 1 April 29 $700
Savings April 2 $100
Mortgage/Rent
April 2 $400
Food April 2 $100
Personal April 2 $50
Gas April 2 $50
Car April 9 $300
Phone April 9 $100
Credit Card April 9 $200
Food April 9 $100
Monthly Payment Schedule
Sunday Monday Tuesday
Wednesday
Thursday Friday Saturday
1 $700Pay Day
2 Mortgage: $400Food: $100Savings: $100Gas: $100
3
4 5 6 7 8 $800Child Support
9Phone: $100Credit Card: $200Food: $100
10
11 12Car: $400
13 14Phone: $100
15 $700Pay Day
16Food: $200Gas: $100Cable: $100
17
18 19Internet: $25
20 21Visa: $100
22 23Discover: $100
24
25 26 27Car Insurance: $75
28 29 $700Pay Day
30
Monthly Payment Calendar: April
Use different color ink for Income and Expenses
When you have paid a bill, cross it out or put a checkmark next to it.
Do a new schedule each month.
How to Make the Schedules Work for You
Make an envelope for each expense category• Online envelope systems also
availableWhen you receive income, divide it
into the amounts to cover the expenses listed on the envelope
Pay bills right away so you’re not tempted to spend the money on something else.
Envelope System
A small box with dividers for each day of the month
When you receive a bill, check the due date and place it behind the divider that represents the bill’s due date.
As you receive income, pay all bills that are due.
Budget Box System
Pay Essentials First!
1. Food2. Mortgage/Rent3. Utilities
* After you have paid for these things, then you can pay your other creditors.
What happens if I can’t make all my payments?
Talk with your creditors. They are usually very willing to work
with you.All Credit Card companies have
hardship departments. You can’t just ignore the problem. It
only makes it worse.Seek HelpThere are a lot of community
resources out there to help you through this difficult time.
Seek Credit Counseling
Credit cards don’t help, they just make the problem worse. All they do is get you deeper into debt.
The more you charge, the higher your minimum payments go until pretty soon you’re drowning.
Cut them up and quit using them. If you keep using them, you’ll never get your head above water.
AVOID Credit Cards
http://www.youtube.com/watch?v=sLZJ5Fza8bg
Never buy with: No Payments, No Interest until…
PaydayCash AdvanceRent-to-Own
They are NOT there to help you!!They charge over 100% interest
• Example: You write a $225 check dated one week from now which will be payday – you’ll get $200 for only $25 – only the $25 represents 650% interest annually! And what makes you think you’ll be able to repay this loan on payday?? By then, you’ll need that money for something else and then, when you can’t pay, the interest and fees will really kick in!
NEVER, NEVER use these types of loans:
If you’re getting a big tax refund soon or just got it. • Pay all your bills up current• Save $1000 if possible so that you
have money to fall back on. • Save $500 if you can’t save $1000• Save more, if possible, for those
short months when you never have enough money.
Get Caught Up
If you have some money saved, you have something to fall back on if you have a hard time instead of charging things on credit cards.
If you find it nearly impossible to save try:• Getting rid of Cable/Satellite• Lower your phone plan• Sell your cars – get rid of those big payments• Sell your stuff
• Have a garage sale• Sell on E-Bay• Sell on Craig’s List
SAVE: Emergency Fund
Mr. and Mrs. Clark sit down to pay their bills and expenses at the end of the month. They have been holding off paying their bills because they know they do not have enough money to cover everything. But finally, Mrs. Clark insists that they have to start paying some of them, or their situation will get even worse.
The Clarks have five credit cards. Three of them have an interest rate of 24 percent. The other two cards have an interest rate of 13 percent. Two of the high interest rate cards and one of the lower interest rate cards are 15 days past the due date. Looking over the credit card bills, Mr. Clark is amazed to see that his wife spent $200 last month on shoes. Mrs. Clark is amazed to see that Mr. Clark bought yet another power tool and spent $385 for it. “No wonder we don’t have any money!” each says to the other. Mr. Clark also confesses that he stops off at the coffee shop on his way to work every morning and spends $5 on a cup of coffee, then eats lunch at a restaurant near his office. Mrs. Clark admits that she gets a pedicure and manicure twice a month.
The Clarks want to make sure that they have enough money for rent, utilities, the car payment, and food. But if they pay these bills first, they will have only enough money to make the minimum payment on three of their five credit cards.
What has caused these financial problems for the Clarks?
What can they do to resolve their problems?
The ClarksWhat has caused
these financial problems for the Clarks?
Overuse of Credit Cards
Personal expenses are too high
What can they do to resolve their problems?
Immediately call the credit card companies for the cards that are past due to see if they can work out an arrangement to bring the accounts up to date.
Set aside money for rent, utilities, the car payment and food.
Call a halt to “splurge” buying on credit.
Cut back on personal spending.
Get credit counseling to help them create and implement a budget they can follow.