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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The Devil = Personal Credit Cards

 

Credit Card Are The Devil, I Say!
Credit Cards Are The Devil, I Say!

We all have them. Little sheets of plastic tether made to corrupt our very souls. I’m referring to credit cards. The evil unleashed upon the masses in the 1980’s from places like Delaware and South Dakota to make purchasing goods easily affordable and accessible to the general public.

It is my honest opinion concerning credit cards, the world would be a far better and healthier place if they did not exist, or at least had realistic applications. Once upon a time in America having a revolving credit line of $1000 -$100,000 or more on your person hidden in a little coded piece of plastic, was unheard of and simply crazy, a thing for the rich.

I can actually remember my first “Credit Card”, my mother applied for a credit card for Mervyn’s department store in my name Taylor, Michigan. She sure did, thanks MA! The credit line was maybe $500. This little action was the start of my addiction to plastic credit and slow demise for several decades.

Ya see, before the early 1980’s you had to be well off to even own a credit card. Which means they were A) Not Easy to obtain and B) not available to the masses. Then the credit card political lobby persuaded several states to loosen thing up a bit with the usury rates.

The interest rates credit card companies and banks provide is out of control. Imagine paying 19%-35% APR on $40,000. Yes this can happen to you, because it did to me. They start with a small allotment and work their way in like a virus, is what credit cards and lines of are made to do.

I have had them all except American Express:

  1. Visa
  2. Visa Platinum
  3. Discover
  4. Mastercard
  5. Hudsons
  6. Appliance store card
  7. Audio Chain Card
  8. Marshalls
  9. Best Buy
  10. Open lines or revolving credit.

You name a credit card, I had it. I still have a few, but they play a different role in my life. At one point in my history while making less than $50k I had approximately $35,000 – $70,000 of credit open, WTF was I thinking. No More, No, No, No,No, No!

Here is a quote from a PBS Frontline article from Bill Janklow was governor of South Dakota from 1979 to 1987 and from 1994 to 2003. He and his state played a key role in helping the credit card industry take off in the 1980s:

” It was called the Marquette Bank decision [Marquette National Bank v. First of Omaha Services Corp. (1978)]. The Marquette Bank decision was a U.S. Supreme Court decision that said forget where the bank is chartered; wherever the credit decision is made, in whatever state locality the credit decision is made — the “lex loci” rule — that’s the place where you can apply interest wherever you make the loan. In other words, let’s just say that if South Dakota had a 5 percent ceiling on interest, and that’s where the decision was made, the bank couldn’t charge more than 5 percent, even if they loaned the money to somebody in Florida. But if South Dakota had a 25 percent ceiling, then you could charge 25 percent, even to a loan in Florida. 

There is a great PBS Frontline televised show related to the quote The Secret History of the Credit Card ,

The credit card is the Devil, El Diablo, Satan and we are kind of stuck with it unless you have cash. Many places will not do business with you if you don’t have a credit card on file with them, or doing business is really difficult.

Due to the ease of issued credit cards and credit line to the American public we are suffering and borrowing against our future and well being, yes there are some positive aspects to credit, but how it has been presented is a Pandora’s box upon those who don’t understand how the system works.

Banks and lending institutions offer Credit cards that  prey on the weak and unsuspecting, promising everything will be great you have nothing to worry about. You have nothing to worry about as long as you can make the minimum payments.  If you know how the banking money system works ( Later Post  FYI) you would be shocked. If you or I would loan money in the same method as banks we would be put in jail for loan shark activities, racketeering and about five other crimes.

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Here is where the evil come into play. Bank provide you with a credit card and a manageable limit let say $500.00. You immediately or within a short time span use said card because you don’t have the cash. Soon you make a few small payments and think that’s not so bad. Then something happens in you life where you need more money than you have in the bank and you think to your self “Self why don’t I use the line of Credit”. Which of course you can’t pay off at the end of the month. Now the banks have got you if your close to your credit limit. Why do they have you by the short hairs? They have you because, the interest will put you over the limit and maybe cause a spiral of debt.

The second scenario is you make the grand purchase or purchases and are close to your limit, then ask for more credit or a Credit limit increase. That increased credit limit will make you a slave for years to come because credit is addictive and easy. Honestly most credit card owners are not versed enough concerning these little creations of evil to manage them responsibly.

I have witnessed more than a few people in my life go to bankruptcy not once,but several times because of the access to credit card, and lines of credit. The little buggers have even cause me some problems in my own life until I made the decision, Credit Cards will be tamed and used for my benefit. It is my driving force to never pay interest charges on Credit Card again.

Credit cards have become a staple in modern society along with their kissing cousins the Debit Card. It’s a really simple equation, banks and lending institutions are here to separate you from a very valuable resource, your future earnings.

There are very responsible method to use these little demons for your benefit, which I will describe in an upcoming post, but we all must be very careful and diligent. I treat my credit cares a an enemy walking beside me with a gun, I never take my eye off of them and give pay constant attention.

It was so bad after the 2008 financial crash, it  was mandated to make it harder for college student to obtain credit cards without the proper credit standing and method of repayment. The reason for the change was due to the easy with which a college student could get credit without having the proper qualification.

The reason its is or has been so easy to obtain credit is because these institutions of lending are making money from nothing. They loan you money they don’t actually have and everyone else is in on the scheme. It all play a part in the Rational Reserve system.

Maybe you can tell Credit Card are not my favorite financial vehicle, but we should hall be wary, because the devil of easy credit lurks very near at any moment, waiting for you weakened emotional state of temporary poverty.

 

My Rant is done.

Emmitt

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