Budget 101 Your Money Inventory

100 dollar bill in the light

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Budgeting money first steps
GET YOU MONEY ON TRACK!

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.

Where do I start: Budget – Money  – Inventory

Steps

  1. Grab a piece of paper ( Not your computer or tablet)
  2. Think – about every and I mean every dollar you spend.
  3. write down three columns on the piece of paper. Label them Bills – Necessary – Unnecessary.
  4. Write every dime you have spent in the last three months in bills and spending.
  5. Separate the items into the three columns.
  6. List how much money you make per month on the paper.
  7. Add the total of the columns and play with the unnecessary from the money you make to see how much you can save.

100 dollar bill in the light
100 dollar bill in the light

photo credit: torbakhopper transparency with ben, scott richard via photopin (license)

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.

Hardcore

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

 

 

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Emotional Roller Coaster Buying A House (spewing baby rant)

I made a post a few weeks ago how Money is Flowing out of Banks back in May 2016. Since then my lining situation has grown. Which means I have purchase a home. When obtaining a mortgage I was utterly shocked at the percentage rate I received, considering not too long ago we were in one of the illest financial times in recent history. I seriously had a WTF happy moment at the home closing. This should have been nothing new as I saw it coming after applying for a frequent flyer credit card for perks and was floored at the staggering amount of open credit I received. BTW, I cancelled the credit card because they had an annual fee of $99.00. That’s another story of which I blogged about recently.

I found a house suiting my needs.  Notice I said need instead of want. What was amazing to me was how easy the process was actually, considering I was in the financial danger zone a few years ago, but thanks to some diligent positive financial practices, and taking inventory of needs vs wants, the process of getting FICO back to good standing was rather quick.

Let me just say, I am not a fan of the banking system, since I have witnessed it do serious harm to the lives of people in the last 8 years. Nonetheless, I chose a bank that was local to the area, as we say promote and purchase local. For several reasons I almost lost the bid on the house because of the human factors and only communicating via email when changes happen of the bank needed something. It was not for being out bid , it was the initial contract was expiring. What ever happen to let your fingers do the walking and picking up the phone.

Anywho, I got the house, after getting pre-approved some two months earlier.

To those buying a house without some form of financial assistance it can be a daunting task even with the required deposit. Especially if you’re moving from the worry free world of apartment living.

  • Inspection – $500.00
  • Earnest money deposit – $1000.00
  • Inspection – $495
  • Appliances – $5000.00
  • Final down payment – and closing cost $9k -$12K ( I finally was much lower than that but for some time I had no real clue to the exact amount.)
  • Misc fees and charges – $1000.00
  • Actual moving cost $500.00 (DIYer) on the hottest weekend of the year.

The hardest part was not spending any money for almost three months. So I could be prepared for the unexpected. I was a total miser and still racked up some debt. The last homestead I purchased was so much easier. The shocker for me was the 3.25% interest rate, which made me damn near jump out of my skin with blissful joy. My previous homestead was more than 2x that rate being conservative, It made me wonder. If the bank is loaning this money to me at this rate, then the FED is basically giving money away. Considering the last time I purchased a home my credit score was 50 plus point higher.

We I have the home and even though the company who remodeled everything did an awesome job, Home Depot has been my new Pimp. In the scheme of things it was not feasible to rent as the ratio of outgoing payments would have cost me at least $500 – $800 more per month with nothing to show for it years later.

Here is one of the important lessons I have learned about finances and home ownership:

  • If it is not costing you money or a hazard use time to save the money you need to make changes. Yeah you may have a busted looking facility for a while but it saves you from going further into debt.
  • Saving money is a trade-off as there are plenty of little projects to do once you have a house, no time for going out. Now you can invite friends over and have them crash on your comfy couch.
  • There is nothing like cooking in your own kitchen.
  • Nothing says family like a house you where you cut the grass.
  • Every house has its own quiet noise when you wake up at night.
  • If you don’t like your neighbors, too bad they are like family you’re stuck with them for a while.
  • Just because the space is empty, you don’t have to fill it.
  • If you do it correctly, you have an asset in the end.

If you have never purchased a home before, investigate your options and be as smart as possible. Look at paying off your home in less than 15-20 years. The one thing you have to expect is there will be out-of-pocket expense upfront which have nothing to do with down payment and closing cost, and they can be steep. take your time and do it safely.

 

Now go live the billionaire lifestyle.

Emmitt

 

 

 

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