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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Are You Financially Fat or Obese?

FMO =Financially Modified Organism

Are you carrying too much financial weight and don't know it?
Are you carrying too much financial weight and don’t know it?

photo credit: AMURICA via photopin (license)

We all have a favorite pair of pants or a shirt that makes us feel great when we wear them. So we tend to cherish those items and not wear them as often. When we do wear those items it tells us we fit the mold of what we were when we bought them.
I have a pair of pants usually slated for me in the spring, but often a little eye-opening moment happens when I try to put those pants on every few years. They don’t fit any longer. I can’t button them and usually just put a belt on without fastening the pants. The reason for my new found situation, I gained weight, because i let things slide. Over the months of not wearing those pants, I put on somewhat feels like a few tons of butt and belly meat.

The simple act of putting on a pair of jeans has told me I have not been paying attention to my weight and physical condition, and I have work to do. This is actually a post about finances but stay with me here.

The very same thing happens almost by magic to us financially. We start taking on financial weight in the form of small debts which can affect out overall and previous lean financial state. Have you ever done an audit of your credit card or debit card spending and try to shed some financial weight?

Credit cards and debit cards are like a financial buffet VIP pass, allowing the holder of these small densely packed financial calories cards to got wild.  I like to think of credit cards and debit cards as the High Fructose corn syrup in your purse or wallet waiting to enter your financial body. Ewe Financial GMO, or FMO Financially Modified Organism.

Have you ever taken and financial inventory of your spending habits regarding your credit and debit cards. The world is our financial buffet with the membership sitting right in your pocket waiting for you to enter the feast. If you have never taken an inventory, it’s time to do so. Here are the steps for your spending habit inventory.

  1. Gather your credit card statements. 3 months worth
  2. Gather your bank statements attached to your debit card. 3 months worth
  3. Look at each transaction and label it(AN) Absolutely Necessary (example, automobile gas purchase, is absolutely necessary, getting a cheeseburger because you were too lazy to make lunch is not.)
  4. If the purchase was for comfort, entertainment, recurring payments for something you don’t use, or laziness label it (UN) unnecessary

Tally up your unnecessary purchases, particularly the recurring payments. If you are not using the recurring item or service you are being billed, the answer is simple CANCEL IT!

Are you a Debt Slave
Are you a Debt Slave

Performing a routine audit and having an action plan can allow you to maintain a manageable healthy financial weight. One practice I have performed since 2004 has been to find a comfortable level of money to work with per month,  no matter what raises or financial increases I get to spend that Set monetary level. I have based my living expenses of $2800 a month give or take a few bucks for the last 12 years. Anything over that $2800.00 amount is slated for going into savings of some sort. Some of that $2800 right into savings as well.   my income, I increase the amount per month directly to my savings account. Now I will not sit here and say that I am a perfect financial guru, I am a human with emotions and emotions can make us irrational, Sometimes I refer to myself as a recovering debt alcoholic with an infrequent tendency for falling off the wagon from time to time personally. Because I pay attention to my finances overall and frequently, I can get back on the wagon and recover without too much mayhem and destruction in my life.

I know a few people with the mindset who constantly rationalize well I’m broke so might as well spend it while I got it. I experience this from the time I was a child, especially from the various peer groups in my life. I too was there in my young adult life, and I now refer to myself as a former Fat Debt Slave. Financial responsibility is a choice and sometimes the choice is uncomfortable for a defined period.

Financial health is equal to physical health, they both have to be monitored and maintained to make the life trip easier for the long-term. Simply adding debt to your budget unconsciously can and will cause discomfort.

Unless you have a financial generation of unlimited proportions, we have to monitor our financial situation constantly. Purchases we find important today may be just a small or medium burden tomorrow. I am not advocating not living your life and not having awesome experiences, but be mindful of where and how your financial resources are allocated and how the bottom line will be affected.

 

Have an awesome day.

The Billionaire Lifestyle.

 

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