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Money Inventory Basics
It’s that time again, Tax season. The first quarter of every year is when new resolutions are made, and many people get their tax refund. Tax refund time is the perfect setting to start your financial makeover.
Some years ago, I got fed up with my financial status. I had a good income but I could not keep any of the money I made for any length of time. There had to be a reason I was making a good living but living paycheck to paycheck. Many of us may find ourselves in the same situation.
When you think about your finances and where your money is going, on the surface things may seem ok. A closer look at your finances may be in order. I know you may have heard this all before, but it really is true. Money and resources must be managed. The time is ripe to knuckle down and become your own auditor.
- Grab a piece of paper ( Not your computer or tablet)
- Think – about every and I mean every dollar you spend.
- write down three columns on the piece of paper. Label them Bills – Necessary – Unnecessary.
- Write every dime you have spent in the last three months in bills and spending.
- Separate the items into the three columns.
- List how much money you make per month on the paper.
- Add the total of the columns and play with the unnecessary from the money you make to see how much you can save.
What am I doing
Recording where your money has gone is a start and only a start. The reason for writing down these numbers is to find out how many bills and spending items are on the table. The next action putting items in categories gives you and indication where your money is going while placing priority on those funds.
I did it you can too!
Listing out where my money was going was a sobering act. I started to find my bank account had a trickle in the form of $20 to $100 expenses that were a pure luxury and very unnecessary. Little money vacuums such as subscriptions, dues for things I really did not use and other money ripping items. those were the bills listed in the unnecessary.
Once I had a visual on expenditure, it was easy to see I could get my money in control. It became a game to see how much I could save. When I had a bill that I could not pay off immediately, I developed a time plan by attacking the smallest, then rolling the payments of the paid off debt to the next item on the list. My family thought I was nuts, as they had not had a money mindset change as I had. Actually, my divorce came some time later(go figure). It was imminent anyway. I went nuts, I called credit card companies, closed accounts, got rid of cable channels, started taking car of my own lawn and snow. I was a mad man.
I want to touch on something I may have breezed over. The reason for the 3 moths of bills was to get a good average of items that many not occur every month. Those surprise non-monthly bills can hit you in the face. If you don’t take an average over time of your spending habits, that sudden expense could derail your efforts.
24 Months – The Outcome Over Time
Failure to reach a goal is typically due to unrealistic expectations. 24 months is a good timeframe to make great changes in your life. As you rid yourself of the unnecessary cost in your life, freedom will show up. The goal is to run for the duration and not sprint to the finish line. This is a lifestyle to make living better and more manageable. Freedom of choice will become more dominant as you free up money to be used or invested. The task I have placed before you is really easy. Start with one item per month then use the snowball moeny management method to get your finances in order.
Next time I will show you some free tools to help you budget.
Now go live the Billionaire Lifestyle.
Peace Out Emmitt