Alright sports fans, to pick up where we last left off. In debt but full of hope. Do you know what the big joke is overseas about Americans?
The only reason a great many American families don't own an elephant is that they have never been offered an elephant for a dollar down and easy weekly payments.
When we are done, that will apply for most Americans, but not us.
Our next step to getting out of debt is establishing a budget. In order to do this successfully you should ease into it. Remember, baby steps. Any change that is too drastic becomes hard to maintain for the long haul.
When establishing your budget, I would seriously look into a programs such as Microsoft Money or Quicken; they are powerful. Some of you have these programs free with your computer but haven't bothered to unleash the powers. The more detail you put into these programs the more useful they become.
Your initial budget should be based on your current spending habits. You should write down all of your household and daily living expenses. Track every dollar that you spend, and every check you write. Millionaires understand their money.
Categorize each expense into the following groups:
After this list is generated monitor your spending and write down how much you spend in each category. Track your expenses for a month. This will allow you to receive bills for each of your monthly billed expenses. Hopefully when you have totaled it all up it is equal to, or less then your monthly paycheck, after taxes. You would be surprised how many people are spending more then they make every month.
Now let's attack each category, and see how you can be thriftier without making large lifestyle changes. The goal here is to get an extra $100 per month that you didn't have before reading this blog. I will just talk about a few of the categories and some of the things I have been able to do, to hit my extra $200 per month that I came up with. Besides my comments, there is a wealth of information on the web regarding household budgets and cost cutting.
Rent or Mortgage:
Usually untouchable, you must live with it. Yeah you could get a smaller place, but that's too drastic.
A necessary evil for me, but for most people, you might not watch HBO until the next season of the Sopranos. Do you need to pay for it the 26 months in between each season. That is the biggest Scam going today. Get you hooked on a show, and have 12 months in between each season. Pure marketing genius.
Believe it or not running the washing machine at full load actually saves a chunk, and makes sense. I know...just by an extra pack of "fruit of the loon" and you will be alright. Also, do you really need to use the dishwasher. That is an electricity hog. Get down and dirty on the dishes the old fashion way. You probably still rinse them out of the dishwasher anyway. During the summer months, don't let it get to hot in your house, you will use more electricity running the AC to get the temp back down, then if you would have maintained a slightly warmer climate. Ask you utility company if they have the program that let's you take your previous years bills, and charges you a fixed monthly rate. This is very useful. If they don't, then budget in your highest bill for that item.
You could probably refinance, for a cheaper interest rate. You will read this in a lot of books, but it's a pain in the a$$ an hardly anyone ever does that. If you got the patience, Knock yourself out.
People at my job spend an incredible amount of money on lunch everyday. It's unbelievable. We have a cafeteria, and you will find people spending $7.00 a day, and then pumping an extra $2.00 in the vending machine. This is their kids college fund. My Budget for lunch is $4.00, and I rarely go over that. What happens if I go out and eat, I use the money I saved from the day before. I barely break $20.00 a week for lunch. When I am a certified millionaire, this will still be true, unless I'm entertaining a client, at which my job will happily pick up the tab. If all else fails, go to Subway. Cheap, fast, & healthy. Jared ain't lying.
I save the most on groceries because I buy the store brand. A high percentage of the time the store brand is made by the name brand company. You aren't just paying for the advertising but the prestige of not having to purchase the generic product. However generic is not always cheaper or equal in quality. Some companies sort good and bad quality items and package the bad items under the generic labels. You must experiment to see where it's worth saving. Also consider that brand names have sales, where it's almost impossible to find a generic item on sale. Eat before you shop or while you shop, and try and have a list. I cut my grocery bill by two thirds with these tips
Stop being a baby. You don't need the $6.00 pack of Twizzlers and "Big A$$" popcorn when you go to the 8.:00 show. Try a matinee, and go to Blockbusters to buy your movie foods. They are on sale there everyday. Twizzlers, Goobers, Rasinets, you name it. Eat out for lunch not dinner. Typically the same items are offered with similar portion sizes but prices for lunch are much lower. When going out for two, try splitting one appetizer and one entree. You will find that to be just enough food for you and your date to enjoy, without feeling the guilt of eating too much. Go old school and pop some popcorn at home, and play scrabble. Watch TV. TV is great these days. By making a big deal out of it, it becomes a big deal. Watch a movie, like your at the movies. Set up the popcorn and Twizzlers, turn off the phone, turn down the lights and snuggle up. You won't know the difference.
When your budget is completed, and your $100 is secured, we will be ready for the second step in the process to becoming a millionaire.