You know what you earn, what you spend and what your financial priorities are -- now put them together to create a budget and I'll explain how.
Finally! NOW we'll do a budget. Budgeting isn't hard, but I wanted to establish a foundation for why you're doing a budget and how to do it. Wax on, wax off Daniel-san.
Remember, we defined a budget as "the amount of money that is available for, required for, or assigned to a particular purpose." A budget is how you plan to use the money you have earned and/or that is available to you to live your life. Without a plan, you will either wind up in debt or spend that money on things that really don't make your life easier or more enjoyable.
A budget is not a list of things you aren't allowed to spend your money on. Its point is to help you set priorities. So a budget helps you figure out what to spend money on. A budget need not be complicated. Heck, it doesn't even need to be called a budget! Call it your spending plan, your spending allowances, your fiscal plan, whatever makes you feel more comfortable starting it and sticking with it.
Five Steps to Create a Budget
1. On a piece of paper (preferably use a spreadsheet program or an online service such as Mint.com), write down your NET income per month. What's Net income? Your gross, or total, income minus taxes.
2. List your savings goals -- how much money do you need to save each month to save 10% for tithing, or to build a $1,000 emergency fund or to save three months of living expenses? List each thing you plan to save for and how much each month you need to put away.
3. Add up your monthly savings goals and subtract the total from your net income.
4. Now, list all your fixed expenses -- these include rent, mortgage, utilities, debt repayment (remember, if you have debt, especially high interest debt, your number one financial priority is to pay it off), loans, car insurance, public transportation, etc. Add up your fixed expenses and subtract that total from the amount you got in Step 3 (DON'T start again with your net income).
5. If there is a positive number left after Step 5, CONGRATULATIONS! This is your spending money for whatever you need and want. If there is a negative number after Step 5, then you've got some problems (and a clearer picture of why you might be going into debt or running short each month).
If you have a negative number after Step 5:
Look at your biggest expenditures and see what can be cut. Perhaps your savings goals or your debt repayment plans are too aggressive for your current situation. Maybe you're paying a lot more in rent than you can afford. Maybe your cell phone bill can be reduced. Look to cut fixed expenses first, because that's where you'll save the most money. If you can't, then you need more income. If, for some reason, that's not possible, then you may have to eliminate your savings goals until you pay off debt (not to keep paying for a lifestyle that's above your means).
If you must cut your savings goals until you can pay down debt, still contribute to your 401k if your employer is offering a match. Also, try to save $1,000 in a mini-emergency fund to protect you in the event of unforeseen expenses.
If you have a positive number after Step 5:
This is where you lay out your spending priorities and use your spending record (see! yet another reason you kept it!) to determine just how much you spend on those things. Start subtracting those monthly expenses from the remaining amount. When you hit zero, that's it, no more money.
Are you already rubbing your temples and saying "Debt Hater, I ain't doing all of that!" Well, tsk tsk. I think this is much easier than trying to keep your head above water while you go broke! But, still, there is a quick and dirty way to do this too, but you still have to do some math. I happen to like Ramit Sethi's Conscious Spending Plan allotments in his best-selling book "I Will Teach You To Be Rich." Basically, you take your net income and divvy it up this way:
Fixed expenses (including debt repayment): 50% - 60% of net income(60% if you own a home)
Investments (401k, 501c3, IRA): 10%
Savings (vacations, gifts, holidays, home downpayment, wedding, unexpected expenses): 5% - 10%
Spending Money (whatever you want!): 20% to 35%
Take your net income and see what these percentages add up to. If it turns out that your fixed expenses are 70% of your income and your spending money is 30%, then you see where you have a problem! You've left nothing for savings and investments. Start chopping down your fixed expenses and cool down the spending until you get your proportions on track.
Me personally, if you're in debt or have expensive purchases (like a car or home) you want to make, you should bump savings to 15% and lower spending money to 15%. Remember, it's about priorities AND time.
Any questions? Please leave them in the comments, I'd be happy to answer any that I can.
Debt Hater is a personal finance blogger who paid off nearly $16,000 in credit card debt (not including a car loan!) in four years, just like she planned. You can visit her blog at www.debthatersblog.com.
Monday, November 8, 2010
Friday, October 22, 2010
Do We Budget Now? Set Some Goals First
Budgets are hard to follow.
Or so says popular belief, but I disagree.
Budgets are not hard to follow if you have a good reason for following them. I know how much I struggled to stay on budget when I was doing it just for the sake of doing it. I was much better when I had a goal.
I will be honest, I am not the goals super woman. I can mercurial (look that up, it's a good word) about my finances -- intensely interested one week, then not at all the next. So, it takes me a while to set real goals that motivate me to save or stick to my budget.
Last week, I asked you to think about your priorities and come up with a financial mission statement. Your financial mission statement should help you make decisions about your money -- everything you do should be in step with your mission.
So, before you start with the budget, what would you like to accomplish?
If you're a debt hater like me and reading these posts, you probably want to pay off your consumer debt! Good! Of course! But, uh, how exactly do you do that? If you knew, you probably wouldn't be reading this.
You need to figure out EXACTLY how much you owe, to whom and what the interest rates are and add it all up. Now, how soon do you want to pay it off? Tomorrow? Yeah, nice try. Start with a debt repayment calculator (there are many online, just Google it).
A good calculator will take into account how much you owe and the interest rates, then show you how long it will take to pay off if you only pay the minimums. You should be able to change the variables. Say, you want to pay it off in six months, the calculator should tell you how much money you'd have to pay monthly to accomplish that. Or if you knew you could afford to pay a certain dollar amount monthly, the calculator will tell you how long it will take to erase the debt paying that amount.
An example: Let's say you have $10,000 in credit card debt at 12%. You are 28 and want to pay it off before you turn 30. You punch your numbers into the calculator and, just like that, you have a goal! If you pay $470 a month on your consumer debt, you'll pay it off in less than two years!
What makes a good financial goal?
A good goal, any goal, should be S.M.A.R.T.:
Specific: I want to completely pay off my consumer debt before my 30th birthday in 2012.
Measurable: I know I'll be done when I pay all $10,000.
Achievable: I can afford to pay off my debt if I manage my money properly.
Realistic: I have steady income and enough money available for bills, savings and spending money.
Timely: I can definitely do it in two years if I always pay $470 a month or more.
The same thing works for saving to buy something. What do you want and why? When do you want to buy it? How much money will you have to put aside each week or month to make that happen? Do you actually have that money available each week or month? What changes could you make to have that money available?
When you know what you're trying to accomplish, you plan your budget around it (which is why I still haven't gotten to the nuts and bolts of a budget). It'll keep you honest and make it easier to track your progress -- as you get closer to your goals, you're more motivated to stick with it (trust me! Watching my debt fall and my savings rise, as slowly as it happened, helped me suck it up when I just wanted to blow a wad a cash. I had a REASON to be good!).
Now, once you sit down and create a budget, you may realize that some of your goals are not realistic. That's ok! When you know what you're working with, you can fix them so that they are.
Each little bit, builds on the last. Next, week, I promise, we'll build your budget -- the budget that's going to lead you through 2010 and into 2011 with a clear financial picture and plan!
DH
Debt Hater is a personal finance blogger who paid off nearly $16,000 in credit card debt (not including a car loan!) in four years, just like she planned. You can visit her blog at www.debthatersblog.com.
Or so says popular belief, but I disagree.
Budgets are not hard to follow if you have a good reason for following them. I know how much I struggled to stay on budget when I was doing it just for the sake of doing it. I was much better when I had a goal.
I will be honest, I am not the goals super woman. I can mercurial (look that up, it's a good word) about my finances -- intensely interested one week, then not at all the next. So, it takes me a while to set real goals that motivate me to save or stick to my budget.
Last week, I asked you to think about your priorities and come up with a financial mission statement. Your financial mission statement should help you make decisions about your money -- everything you do should be in step with your mission.
So, before you start with the budget, what would you like to accomplish?
If you're a debt hater like me and reading these posts, you probably want to pay off your consumer debt! Good! Of course! But, uh, how exactly do you do that? If you knew, you probably wouldn't be reading this.
You need to figure out EXACTLY how much you owe, to whom and what the interest rates are and add it all up. Now, how soon do you want to pay it off? Tomorrow? Yeah, nice try. Start with a debt repayment calculator (there are many online, just Google it).
A good calculator will take into account how much you owe and the interest rates, then show you how long it will take to pay off if you only pay the minimums. You should be able to change the variables. Say, you want to pay it off in six months, the calculator should tell you how much money you'd have to pay monthly to accomplish that. Or if you knew you could afford to pay a certain dollar amount monthly, the calculator will tell you how long it will take to erase the debt paying that amount.
An example: Let's say you have $10,000 in credit card debt at 12%. You are 28 and want to pay it off before you turn 30. You punch your numbers into the calculator and, just like that, you have a goal! If you pay $470 a month on your consumer debt, you'll pay it off in less than two years!
What makes a good financial goal?
A good goal, any goal, should be S.M.A.R.T.:
Specific: I want to completely pay off my consumer debt before my 30th birthday in 2012.
Measurable: I know I'll be done when I pay all $10,000.
Achievable: I can afford to pay off my debt if I manage my money properly.
Realistic: I have steady income and enough money available for bills, savings and spending money.
Timely: I can definitely do it in two years if I always pay $470 a month or more.
The same thing works for saving to buy something. What do you want and why? When do you want to buy it? How much money will you have to put aside each week or month to make that happen? Do you actually have that money available each week or month? What changes could you make to have that money available?
When you know what you're trying to accomplish, you plan your budget around it (which is why I still haven't gotten to the nuts and bolts of a budget). It'll keep you honest and make it easier to track your progress -- as you get closer to your goals, you're more motivated to stick with it (trust me! Watching my debt fall and my savings rise, as slowly as it happened, helped me suck it up when I just wanted to blow a wad a cash. I had a REASON to be good!).
Now, once you sit down and create a budget, you may realize that some of your goals are not realistic. That's ok! When you know what you're working with, you can fix them so that they are.
Each little bit, builds on the last. Next, week, I promise, we'll build your budget -- the budget that's going to lead you through 2010 and into 2011 with a clear financial picture and plan!
DH
Debt Hater is a personal finance blogger who paid off nearly $16,000 in credit card debt (not including a car loan!) in four years, just like she planned. You can visit her blog at www.debthatersblog.com.
Wednesday, October 20, 2010
Habits....Let's Try This Again!
The power of social media....one of my Twitter friends called me out my abrupt end of updates on the 30-day challenge, AFTER DAY 2! Good grief! Yes, I've been busy but I need to stick to a plan. So here I go again....send positive vibes y'all!
This time, I will include the tasks for seven (7) days and will post comments on my progress....
Day 1 Habit - Make A To Do List
What you write down gets done. Start with a blank piece of paper and write your to do's for the next seven days. Be sure the list is inclusive (work, family, home, and YOU)!
Day 2 Habit - Pick The Three Most Important Items On Your List
Choose and mark the most important three tasks on your to do list today. Be sure to puth them in rank order of importance. Now go cross those three things off your list! No procrastinating....GO!
Day 3 Habit - Cross Something Off Your List
Let's lighten the load. Cross off any non-critical item from your to do list. Be ruthless! If you aren't, those items will just take up mind-space with a nagging "hey, what about me?" and distract you from what REALLY needs to get done.
Day 4 Habit - Set Deadlines For Your To Do List
Prevent to do list procrastination! Assign deadlines to the things on your list. Set times by which you must make phone calls, arrive places, or submit things. For more general to do's, make a note as to whether or not the task must be done the same day.
Day 5 Habit - Pick A Problem Room & Identify The Pinch Point
The pinch point is the one thing that prevents everything from running smoothly when it's not in order. So, if the laundry room is your problem area, look for the source of the problem (one big pile, no detergent, etc) and tend to that first. Once you eliminate the pinch point, you'll be amazed how quickly everything falls into place.
Day 6 Habit - Fix The Pinch Point
See it. Fix it! If the pinch point in your laundry room is clothing buildup because you're out of detergent, then keep your soap out where you can see it. Visual reminders help keep your necessary tasks top of mind, so they'll be fixed faster.
Day 7 Habit - Set Up A Mail Center
Mail's here! To keep things organized, set up a mail center in the foyer or hallway right by your mailbox. First, get rid of all that junk mail by setting a stylish recycling bin beside your mail center. In the hallway or by your mailbox, try a wooden mail depot with different compartments for each family member, plus a separate compartment for magazines and catalogs.
This time, I will include the tasks for seven (7) days and will post comments on my progress....
Day 1 Habit - Make A To Do List
What you write down gets done. Start with a blank piece of paper and write your to do's for the next seven days. Be sure the list is inclusive (work, family, home, and YOU)!
Day 2 Habit - Pick The Three Most Important Items On Your List
Choose and mark the most important three tasks on your to do list today. Be sure to puth them in rank order of importance. Now go cross those three things off your list! No procrastinating....GO!
Day 3 Habit - Cross Something Off Your List
Let's lighten the load. Cross off any non-critical item from your to do list. Be ruthless! If you aren't, those items will just take up mind-space with a nagging "hey, what about me?" and distract you from what REALLY needs to get done.
Day 4 Habit - Set Deadlines For Your To Do List
Prevent to do list procrastination! Assign deadlines to the things on your list. Set times by which you must make phone calls, arrive places, or submit things. For more general to do's, make a note as to whether or not the task must be done the same day.
Day 5 Habit - Pick A Problem Room & Identify The Pinch Point
The pinch point is the one thing that prevents everything from running smoothly when it's not in order. So, if the laundry room is your problem area, look for the source of the problem (one big pile, no detergent, etc) and tend to that first. Once you eliminate the pinch point, you'll be amazed how quickly everything falls into place.
Day 6 Habit - Fix The Pinch Point
See it. Fix it! If the pinch point in your laundry room is clothing buildup because you're out of detergent, then keep your soap out where you can see it. Visual reminders help keep your necessary tasks top of mind, so they'll be fixed faster.
Day 7 Habit - Set Up A Mail Center
Mail's here! To keep things organized, set up a mail center in the foyer or hallway right by your mailbox. First, get rid of all that junk mail by setting a stylish recycling bin beside your mail center. In the hallway or by your mailbox, try a wooden mail depot with different compartments for each family member, plus a separate compartment for magazines and catalogs.
Monday, October 11, 2010
Day 2: Change & The Power of Habits
Day 1 Recap:
I did it! I created a week of To Do's. I decided to use my Google calendar, because it has a task element as well. The tough part was trying to remember all of the things I needed to do.....thus the reason for WRITING a list huh?! Then as the To Do's began to roll through my mind, I couldn't get them to stop and had to remind myself....what needs to get done THIS WEEK. But, nevertheless....I DID IT! Whew!
Habit Former - Day 2: Pick The Three Most Important Items On Your List
Description: Choose and mark the most important three tasks on your to do list today. Be sure to put them in rank order of importance. Now go do what you need to do to cross those three things off your list! No procrastinating...GO!
I did it! I created a week of To Do's. I decided to use my Google calendar, because it has a task element as well. The tough part was trying to remember all of the things I needed to do.....thus the reason for WRITING a list huh?! Then as the To Do's began to roll through my mind, I couldn't get them to stop and had to remind myself....what needs to get done THIS WEEK. But, nevertheless....I DID IT! Whew!
Habit Former - Day 2: Pick The Three Most Important Items On Your List
Description: Choose and mark the most important three tasks on your to do list today. Be sure to put them in rank order of importance. Now go do what you need to do to cross those three things off your list! No procrastinating...GO!
Sunday, October 10, 2010
Change and The Power of Habits
I tend to think BIG, and give little thought to the details of life. Yet I know that taking care of the small things will allow the BIG things to manifest and flourish. Now keep in mind, I said "I know"....not that "I do" take care of the details.
As I think about this.....I wonder how much time and money have I lost due to my resistance to the little mundane (yet necessary) things in life. How much stress have I caused myself and others by forgetting? Being late? How many opportunities have I missed?
At different times I have tried to re-invent myself into a person that is all about the details. You know the type....the person that has a list for EVERYTHING, doesn't take a step without a detailed plan, ALWAYS on time & prepared w/extra to share....essentially the "Type A" personality.
I would have a little success, but it was not sustainable as a part of my lifestyle. For me, trying to create this "Type A" persona was too much of a change....it simply is not who I am. For a while, I allowed myself to believe that I was destined to be a person that would need to be comfortable with a quiet simmer of chaos in life while doing the BIG things.
Now I realize that the simmer of the little things left undone, can come to a intensifying boil. So, I am choosing to live differently. There are so many wonderful things on the horizon and I will not allow the little things to diminish or detroy them. I am inspired by the Autumn season....it is the season of change and transformation. This is the time to do things in a new way. I am also motivated by my aspiration to want to close 2010 on a strong & positive flow to create momentum for 2011.
So I am filled with inspiration and motivation, and then thought...."Yikes! Now I have to create a detailed plan TO DO IT!" I knew I would need a jumpstart to get me on the right track. So I purchased these cards called Habit Formers (http://www.organize.com/habit-former-trade-buttoned-up-reg.html). The purpose of these cards are to provide you with a specific tasks to do each day for thirty (30) days. Then at the end of the thirty you should be off to a good start of a more organized life!
So, I'm going to do it! Join me if you like!
Habit Former - Day 1: Make A To Do List For The Week
Description: What you write down gets done. Start with a blank piece of paper and write your to do's for the next seven (7) days. Be sure the list is inclusive (work,family/home...and don't forget you personally!)
Whew, I already have some anxiety just thinking of everything that I need to do. Sigh, but I guess the key here is not to get overwhelmed by EVERYTHING that needs to be done. I simply need to determine what needs to be done this week. Ok, I CAN DO THIS! Send positive vibes my way!
As I think about this.....I wonder how much time and money have I lost due to my resistance to the little mundane (yet necessary) things in life. How much stress have I caused myself and others by forgetting? Being late? How many opportunities have I missed?
At different times I have tried to re-invent myself into a person that is all about the details. You know the type....the person that has a list for EVERYTHING, doesn't take a step without a detailed plan, ALWAYS on time & prepared w/extra to share....essentially the "Type A" personality.
I would have a little success, but it was not sustainable as a part of my lifestyle. For me, trying to create this "Type A" persona was too much of a change....it simply is not who I am. For a while, I allowed myself to believe that I was destined to be a person that would need to be comfortable with a quiet simmer of chaos in life while doing the BIG things.
Now I realize that the simmer of the little things left undone, can come to a intensifying boil. So, I am choosing to live differently. There are so many wonderful things on the horizon and I will not allow the little things to diminish or detroy them. I am inspired by the Autumn season....it is the season of change and transformation. This is the time to do things in a new way. I am also motivated by my aspiration to want to close 2010 on a strong & positive flow to create momentum for 2011.
So I am filled with inspiration and motivation, and then thought...."Yikes! Now I have to create a detailed plan TO DO IT!" I knew I would need a jumpstart to get me on the right track. So I purchased these cards called Habit Formers (http://www.organize.com/habit-former-trade-buttoned-up-reg.html). The purpose of these cards are to provide you with a specific tasks to do each day for thirty (30) days. Then at the end of the thirty you should be off to a good start of a more organized life!
So, I'm going to do it! Join me if you like!
Habit Former - Day 1: Make A To Do List For The Week
Description: What you write down gets done. Start with a blank piece of paper and write your to do's for the next seven (7) days. Be sure the list is inclusive (work,family/home...and don't forget you personally!)
Whew, I already have some anxiety just thinking of everything that I need to do. Sigh, but I guess the key here is not to get overwhelmed by EVERYTHING that needs to be done. I simply need to determine what needs to be done this week. Ok, I CAN DO THIS! Send positive vibes my way!
Friday, September 17, 2010
Before You Create A "Budget," Set Your Financial Priorities
Why do you want to more money? Why do you want to be debt free?
You spent some time tracking your spending, then going over the data you compiled to get more insight into what it is you're doing with your money.
"Ok," you're thinking,"now you're going to tell me to make a budget."
Nice thinking, but it's premature.
What is a budget?
Strictly speaking, a budget is "the amount of money that is available for, required for, or assigned to a particular purpose."
With that definition in mind, I'd say a budget is how you plan to use the money you have earned and/or that is available to you to live your life. Without a plan, you will either wind up in debt or spend that money on things that really don't make your life easier or more enjoyable.
That's why I don't think the next thing you need to do is a budget. The next you need to do is figure out what your priorities are.
Your Spending Record Indicates Your Financial Priorities
What do you want out of life in general and day-to-day? What do you spend your money on?
Experiences matter to me. I like to go to nice restaurants. I like to try cooking gourmet meals or desserts. I like to visit my family and close friends often. I like to take big trips whenever I can. I like going to the movies. I also like the comforts of home -- TV, movies, stocked fridge, cushy couch, comfy bed, big thirsty bath towels. I also like trying new things: canoeing, rafting, surfing, trampoline, pole dancing, something novel, something fun.
I also like to give to worthy causes, which I still consider an experience -- I'm just granting a good experience to someone else.
If you look at my monthly reports, you'll see I am always spending a lot on food, clothing and travel. I also "tithe," so I give money away.
I try to spend most of my money on the things that matter to me and AS LITTLE AS POSSIBLE on the things I don't care about!
Being Debt Free Is Your Top Priority
If you're in debt, then getting out of debt should be your singular priority. It's going to be hard to spend your money on the things that matter to you with debt weighing you down and costing you money without providing you with ANY benefits whatsoever.
It may turn out that what you spent your money on is NOT what you prioritize. Then it's good that you went through the spending record exercise, because now you KNOW that and can now do something about it.
Discover What Matters: Your Financial Mission Statement
So what should you do now?
Write down what matters to you. Come back to it in a day or so and read it aloud. You're trying to drill down to the true essence of what matters to you. Once you get that, write it down again and formulate your financial mission statement:
I want to be out of debt so that I can______________.
OR
I want to be rich so that I can _______________.
Fill in the blank.
Mine is: I want to be debt-free and build wealth so that I can live a life full of worthwhile experiences and know that I helped others do the same.
My saving, investing and spending should reflect what matters to me.
Don't try to sound all noble in your mission statement. Be HONEST!
Maybe your statement is:
I want to be rich so that wherever I go, I am the baddest dressed chick on the scene, ALWAYS!
Fine! It doesn't mean that paying bills or taking care of the kids are not important. It just means that once you take care of your responsibilities, it's all about your wardrobe. Whatever does it for you baby.
Think about your priorities. Then we'll put your money to work for you.
DH
Debt Hater is a personal finance blogger who paid off nearly $16,000 in credit card debt (not including a car loan!) in four years, just like she planned. You can visit her blog at www.debthatersblog.com.
You spent some time tracking your spending, then going over the data you compiled to get more insight into what it is you're doing with your money.
"Ok," you're thinking,"now you're going to tell me to make a budget."
Nice thinking, but it's premature.
What is a budget?
Strictly speaking, a budget is "the amount of money that is available for, required for, or assigned to a particular purpose."
With that definition in mind, I'd say a budget is how you plan to use the money you have earned and/or that is available to you to live your life. Without a plan, you will either wind up in debt or spend that money on things that really don't make your life easier or more enjoyable.
That's why I don't think the next thing you need to do is a budget. The next you need to do is figure out what your priorities are.
Your Spending Record Indicates Your Financial Priorities
What do you want out of life in general and day-to-day? What do you spend your money on?
Experiences matter to me. I like to go to nice restaurants. I like to try cooking gourmet meals or desserts. I like to visit my family and close friends often. I like to take big trips whenever I can. I like going to the movies. I also like the comforts of home -- TV, movies, stocked fridge, cushy couch, comfy bed, big thirsty bath towels. I also like trying new things: canoeing, rafting, surfing, trampoline, pole dancing, something novel, something fun.
I also like to give to worthy causes, which I still consider an experience -- I'm just granting a good experience to someone else.
If you look at my monthly reports, you'll see I am always spending a lot on food, clothing and travel. I also "tithe," so I give money away.
I try to spend most of my money on the things that matter to me and AS LITTLE AS POSSIBLE on the things I don't care about!
Being Debt Free Is Your Top Priority
If you're in debt, then getting out of debt should be your singular priority. It's going to be hard to spend your money on the things that matter to you with debt weighing you down and costing you money without providing you with ANY benefits whatsoever.
It may turn out that what you spent your money on is NOT what you prioritize. Then it's good that you went through the spending record exercise, because now you KNOW that and can now do something about it.
Discover What Matters: Your Financial Mission Statement
So what should you do now?
Write down what matters to you. Come back to it in a day or so and read it aloud. You're trying to drill down to the true essence of what matters to you. Once you get that, write it down again and formulate your financial mission statement:
I want to be out of debt so that I can______________.
OR
I want to be rich so that I can _______________.
Fill in the blank.
Mine is: I want to be debt-free and build wealth so that I can live a life full of worthwhile experiences and know that I helped others do the same.
My saving, investing and spending should reflect what matters to me.
Don't try to sound all noble in your mission statement. Be HONEST!
Maybe your statement is:
I want to be rich so that wherever I go, I am the baddest dressed chick on the scene, ALWAYS!
Fine! It doesn't mean that paying bills or taking care of the kids are not important. It just means that once you take care of your responsibilities, it's all about your wardrobe. Whatever does it for you baby.
Think about your priorities. Then we'll put your money to work for you.
DH
Debt Hater is a personal finance blogger who paid off nearly $16,000 in credit card debt (not including a car loan!) in four years, just like she planned. You can visit her blog at www.debthatersblog.com.
Tuesday, September 14, 2010
10 Things My Parents Taught Me...(and they still hold true today)
As I keep refining my life, I often find myself trying to create new ways of doing things. Yet lately I am finding that so many of the things my parents taught me can help me create my lifestyle remix. Here's 10 of my favorites!
1. Make your bed before leaving the house
2. Pick out your clothes the night before
3. Change your sheets when you wake up on Saturday
4. Turn off the extra lights in the house
5. Listen to good music
6. Pack your lunch
7. Don't ever say "I can't"
8. Always save some of your paycheck
9. Don't be lazy, take care of business
10. Take care of what you have, before you ask for something else
Hmmm...so simple, yet so powerful. So thankful for my parents...their love and wisdom is the essence of my lifestyle remix!
Reconnect with the life lessons you were taught back in the day...I'd love to hear about them!
1. Make your bed before leaving the house
2. Pick out your clothes the night before
3. Change your sheets when you wake up on Saturday
4. Turn off the extra lights in the house
5. Listen to good music
6. Pack your lunch
7. Don't ever say "I can't"
8. Always save some of your paycheck
9. Don't be lazy, take care of business
10. Take care of what you have, before you ask for something else
Hmmm...so simple, yet so powerful. So thankful for my parents...their love and wisdom is the essence of my lifestyle remix!
Reconnect with the life lessons you were taught back in the day...I'd love to hear about them!
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Sunday, September 12, 2010
Life Is Happening!
Today was different...its difficult to describe. I woke up from my cozy bed without an alarm clock. I put on my clothes and smiled at my reflection in the mirror. I was on time....NO, I WAS EARLY for a brunch appointment. I enjoyed and savored my meal. I was inspired by the business brainstorming conversation, and surprised by my passion as I discussed my vision. I took time to stroll the National Harbor. I blushed & said thank you to compliments of my presence. I explored shops and chatted with owners. I bumped into a friend and we made plans to get together. My ATM card that I lost was returned to me. I got a call confirming the reinstatement of my drycleaning delivery service. It was a day filled with simple pleasures.
I felt alive....different! I am changing my life!
I felt alive....different! I am changing my life!
Friday, September 10, 2010
Where Is Your Money Going?
You've tracked your spending for a week. Were you surprised by where your money was going? Random spending isn't the only place where we lose money. This week, we'll look at other places you may be bleeding money including account mistakes, overdraft fees, finance charges and impulse buying.
You kept all your receipts or wrote down what you spent, on what and when. You created a spreadsheet to help you add it up.
How do you feel?
You may have felt like it was a pointless exercise (no it wasn't, as I'll explain) or that you didn't learn anything new about your spending patterns or you were blown away by where your money goes in just a week.
Why are you doing this? Chances are, you've never done it before. You may be struggling with debt, or struggling to save for the things that you want or simply struggling to pay for anything at all. Maybe you aren't struggling with any of those things, but you're often hit with expensive surprises at the end of the month -- Not quite enough left in checking to cover the rent next week? Suddenly missing $100 that you don't remember spending, but it sure isn't in your account? Getting an e-mail about your account being overdrawn?
You track your spending to look for the obvious holes. Once you see the obvious holes, you can get better at spotting the less obvious ones, which we'll talk about in this post. The longer you track your spending, the more accurate a picture you have of your overall finances. The more accurate your picture, the better planning you can do for your finances. The better your financial plan, the LESS you'll have to do the tedious work of tracking every penny. If your plan is tight, there won't be any surprises! That's why this is not a pointless exercise.
But you also must walk before you can run.
Here are five places to look to save money that you may not normally look:
1. Bank and credit card statements. Banks are not infallible. Banks make mistakes with YOUR money. Check your statements and make sure you weren't charged any erroneous fees or that someone else hasn't gotten a hold of your information and is shopping on your dime. If you have a questions or suspicions, CALL YOUR BANK. You might be the one mistaken, but it's better to get it straight than to assume everything is fine. The same goes for any other bills including your cell phone, utilities, etc.
2. Monthly fees vs. annual costs. Why do you think car dealers ask you "How much are you looking to pay a month?" when you are looking to buy or lease?
The CORRECT question is "How much do you want to pay for this car and how long do you want to pay on it?"
Why do they ask the first question and not the second one?
Because by getting you to think only about the monthly fee for that car, they can get you to pay way more for it than it may be worth.
It's the same with any other monthly fee -- a low fee may seem like a bargain, but multiply by 12 and see how much money you may be losing on something in a year.
Look at your bills and bank statements and see what things you're charged for each month (besides your rent or mortgage). Multiply that monthly charge by 12 -- that's what it costs you each year. Do you really want to spend that much on whatever it is each year? Could you possibly spend less on that same service?
3. Your cell phone. Of course you need it, but could you potentially spend less on it each month? Are you using all those minutes? If not, can you roll them over? If not, can you get fewer minutes for a lower price? Are you paying per text message and frequently go over the limit?
Many cellular providers' websites allow you to "analyze" your bill. You punch in your information and then it lets you know if you're actually using everything you're paying for. If you aren't, you may want to cut back on your services or options and save some cash.
4. Your friends and family. Are you the one always covering somebody, helping a sistah out, bailing out a brother, or footing someone else's bills? Maybe it's just $20 here and there, but how often do here and there call you asking for money?
5. Your vices. Cigarettes. Alcohol. Ice cream, and lots of it. These are all things that may be hurting more than your wallet! Have you lost $100 and gained 10 pounds this month and don't quite know how? Look here. Your indulgence in these things may also be costing you indirectly -- does your company benefits plan charge additional fees if you're a smoker, drinker, or significantly overweight?
Right now, I'm not asking you to start or stop doing anything. I'm just asking you to take notice of these things that you probably never spend time thinking about.
Once you recognize your patterns, you can do something about them -- channeling that same brain power to help you instead of hurt you.
Spend this week checking on where you money goes and seeing if there are places where you can stop the bleeding. Once you identify those areas, close them up!
DH
Debt Hater is a personal finance blogger who paid off nearly $16,000 in credit card debt (not including a car loan!) in four years, just like she planned. You can visit her blog at www.debthatersblog.com.
You kept all your receipts or wrote down what you spent, on what and when. You created a spreadsheet to help you add it up.
How do you feel?
You may have felt like it was a pointless exercise (no it wasn't, as I'll explain) or that you didn't learn anything new about your spending patterns or you were blown away by where your money goes in just a week.
Why are you doing this? Chances are, you've never done it before. You may be struggling with debt, or struggling to save for the things that you want or simply struggling to pay for anything at all. Maybe you aren't struggling with any of those things, but you're often hit with expensive surprises at the end of the month -- Not quite enough left in checking to cover the rent next week? Suddenly missing $100 that you don't remember spending, but it sure isn't in your account? Getting an e-mail about your account being overdrawn?
You track your spending to look for the obvious holes. Once you see the obvious holes, you can get better at spotting the less obvious ones, which we'll talk about in this post. The longer you track your spending, the more accurate a picture you have of your overall finances. The more accurate your picture, the better planning you can do for your finances. The better your financial plan, the LESS you'll have to do the tedious work of tracking every penny. If your plan is tight, there won't be any surprises! That's why this is not a pointless exercise.
But you also must walk before you can run.
Here are five places to look to save money that you may not normally look:
1. Bank and credit card statements. Banks are not infallible. Banks make mistakes with YOUR money. Check your statements and make sure you weren't charged any erroneous fees or that someone else hasn't gotten a hold of your information and is shopping on your dime. If you have a questions or suspicions, CALL YOUR BANK. You might be the one mistaken, but it's better to get it straight than to assume everything is fine. The same goes for any other bills including your cell phone, utilities, etc.
2. Monthly fees vs. annual costs. Why do you think car dealers ask you "How much are you looking to pay a month?" when you are looking to buy or lease?
The CORRECT question is "How much do you want to pay for this car and how long do you want to pay on it?"
Why do they ask the first question and not the second one?
Because by getting you to think only about the monthly fee for that car, they can get you to pay way more for it than it may be worth.
It's the same with any other monthly fee -- a low fee may seem like a bargain, but multiply by 12 and see how much money you may be losing on something in a year.
Look at your bills and bank statements and see what things you're charged for each month (besides your rent or mortgage). Multiply that monthly charge by 12 -- that's what it costs you each year. Do you really want to spend that much on whatever it is each year? Could you possibly spend less on that same service?
3. Your cell phone. Of course you need it, but could you potentially spend less on it each month? Are you using all those minutes? If not, can you roll them over? If not, can you get fewer minutes for a lower price? Are you paying per text message and frequently go over the limit?
Many cellular providers' websites allow you to "analyze" your bill. You punch in your information and then it lets you know if you're actually using everything you're paying for. If you aren't, you may want to cut back on your services or options and save some cash.
4. Your friends and family. Are you the one always covering somebody, helping a sistah out, bailing out a brother, or footing someone else's bills? Maybe it's just $20 here and there, but how often do here and there call you asking for money?
5. Your vices. Cigarettes. Alcohol. Ice cream, and lots of it. These are all things that may be hurting more than your wallet! Have you lost $100 and gained 10 pounds this month and don't quite know how? Look here. Your indulgence in these things may also be costing you indirectly -- does your company benefits plan charge additional fees if you're a smoker, drinker, or significantly overweight?
Right now, I'm not asking you to start or stop doing anything. I'm just asking you to take notice of these things that you probably never spend time thinking about.
Once you recognize your patterns, you can do something about them -- channeling that same brain power to help you instead of hurt you.
Spend this week checking on where you money goes and seeing if there are places where you can stop the bleeding. Once you identify those areas, close them up!
DH
Debt Hater is a personal finance blogger who paid off nearly $16,000 in credit card debt (not including a car loan!) in four years, just like she planned. You can visit her blog at www.debthatersblog.com.
Sunday, September 5, 2010
The Dating Experiment
Those of you who really know me, know that I love to do things in an alternative or creative way. Earlier this summer I was inspired by a piece in Essence magazine where the relationships editor participated in a summer dating challenge....did y'all read that? Well, anyway....she created a circle of trusted friends (including her MOM!) to put her on blind dates! Check out essenceonline.com
I thought it was an interesting approach to the dating game, and wondered if I could incorporate it into my NeoSoul Lifestyle. And, guess what?! I did!
So here's how I remixed it for me.....
I invited a circle of women to my home for brunch to interview me about my dating life and what I hope to experience from this experiment! I selected women that I KNOW have a true appreciation for love, marriage, and relationships.....most importantly THEY KEEP IT REAL! You can follow them on Twitter at:
@ChasingSoul
@PolishedImage
@OriginalNajeema
And if you're not already...follow me @NeoSoulAlterEgo !
These ladies will also help me to spruce up my online dating profiles too...I think they are in for a shock to really see what the single life is all about these days!
After our brainstorming session, these ladies...which I will now refer to as "The Counsel" will set me up on blind dates in September. And of course...I'll be blogging and tweeting along the way!
Oh....and keep an eye on my friend Rosetta @happyblackwoman or www.happyblackwoman.com because she is doing an Extreme Online Dating Experiment!
So send me positive vibes y'all! The NeoSoul Lifestyle remix is in full effect!
I thought it was an interesting approach to the dating game, and wondered if I could incorporate it into my NeoSoul Lifestyle. And, guess what?! I did!
So here's how I remixed it for me.....
I invited a circle of women to my home for brunch to interview me about my dating life and what I hope to experience from this experiment! I selected women that I KNOW have a true appreciation for love, marriage, and relationships.....most importantly THEY KEEP IT REAL! You can follow them on Twitter at:
@ChasingSoul
@PolishedImage
@OriginalNajeema
And if you're not already...follow me @NeoSoulAlterEgo !
These ladies will also help me to spruce up my online dating profiles too...I think they are in for a shock to really see what the single life is all about these days!
After our brainstorming session, these ladies...which I will now refer to as "The Counsel" will set me up on blind dates in September. And of course...I'll be blogging and tweeting along the way!
Oh....and keep an eye on my friend Rosetta @happyblackwoman or www.happyblackwoman.com because she is doing an Extreme Online Dating Experiment!
So send me positive vibes y'all! The NeoSoul Lifestyle remix is in full effect!
Friday, August 27, 2010
Track Your Spending for A Week, Then A Month, Then A Quarter
Tracking your spending is the first step to understanding where your money goes. You can't make substantial changes to your financial life until you understand what your financial life looks like right now.
What's stopping you from getting out of debt? From saving for a home, college education, retirement or a fantastic vacation?
Many people are waiting for a windfall:
"As soon as I hit the Lotto, I am going to take care of everything!"
"When I get my bonus, I am going to take care of everything!"
"When I get a higher paying job, I am going to save like I should!"
"When my great aunt kicks the bucket, she'll leave me everything and then I can get it together!"
Ok, maybe you're not waiting for a relative to die, but you're probably waiting for more money. If you had more money, then you could pay down debt or save or do both.
You have more money than you think.
You've heard and read about the "latte factor," how you're 4x-a-day Starbucks habit is robbing you of hundreds of dollars a year. Well, how about your "vending machine factor," or your "overpriced auto insurance factor," or your "club hopping factor?" What small things are you dropping money on over and over that you never notice until it's time to pay a bill?
One of the first steps to getting a true picture of your fiscal health is determining just what you spend your hard-earned money on.
To do this right, you have to do it the hard way -- keep all your receipts and write every expenditure down.
"WHY?!" You may be shrieking. "I don't have the time or patience to keep track of all those little pieces of paper. What's the benefit?" The benefit is that you may discover hundreds of dollars you are losing each month and don't even realize it.
For One Week, keep the receipts for every purchase you make. If you don't get a receipt, immediately write down what you bought, the date and how much it cost (I use an app on my smart phone called Cashbox). If you use debit or credit cards, write it down anyway. Use the statements to double-check your notes.
At the end of the week, open a spreadsheet (yes, that little green X thing on your computer -- it's called Excel). In Column A, type in the dates you made your purchases. In Column B, type where you went shopping. Column C, type in what you bought (groceries, cosmetics, bank fee is sufficient; don't catalog every item). Finally, in Column D, type in how much it cost.
When you're done, add up Column D. Take the sum of Column D and multiple it by 4.
That new number shows you what you spend each month, not including your bills or your debt. Just on stuff.
Now, subtract this number from your monthly take-home pay. If this number is negative, you're going into debt every month.
You may be thinking, "I just had an off week." Maybe you did. Now that you know you have the discipline to do this for one week, do it again for two. Then do it for a month. Do it for a quarter (that's three months).
Look for patterns. Is latte listed 80 times? Did you go to the grocery store repeatedly? Did you stick a lot of change into a vending machine?
This will give you a more accurate picture of what you do monthly. It will help you plan for your money.
In the coming posts I will explain how to take that information to begin transforming your financial situation. One step at a time to financial freedom!
Monday, August 9, 2010
And The Winner Is......
Thank you all for making the the first NeoSoul Lifestyle Experiment a success! I appreciated your insights and learned alot.....and there's one more business item to take care of!
The winner of the $25 SpaFinder gift certificate is.....KIM!
The winner of the $25 SpaFinder gift certificate is.....KIM!
Saturday, August 7, 2010
NeoSoul Experiment - Day 7
Today is the last day of the experiment! I can't believe it! As I tried to incorporate each of the components at times it seemed that the days were moving so slowly! Yet each day I grew more motivated, and now I can't believe the experiment has come to a close!
Friday, August 6, 2010
NeoSoul Experiment - Day 6
Two more days to go......I'm already starting to think about which practices I want to keep working on for the rest of the month!
NeoSoul Experiment - Day 5
Is there one practice in the experiment that you haven't done yet! I encourage you to focus on that practice and plan to do it!
Tuesday, August 3, 2010
NeoSoul Experiment - Day 4 Reflection
What is your favorite practice of The NeoSoul Lifestyle Experiment? How do you FEEL about the process so far? Is the experience what you thought it would be?
NeoSoul Experiment - Day 3 Reflection
Are you starting to catch a rhythm? Are you finding it difficult to stay on track? Did you think it would be easier?
As for me........
I am realizing that I an experiencing quite a bit of stress, and that creating self-care rituals is critical to my well being. Today was a roller coaster ride. I had an important meeting at work and gave it 100%! It was a success, yet I was drained the rest of the day and found it difficult to stay focused.
I wondered why I was feeling lackluster, then I realized that I had only gotten a little sleep the night before, minimal water, and no time for meditation. Yikes!
Creating my NeoSoul Lifestyle, is serious y'all.....so glad this experience is enlightening me. I realize that the evolution will truly be a journey.
As for me........
I am realizing that I an experiencing quite a bit of stress, and that creating self-care rituals is critical to my well being. Today was a roller coaster ride. I had an important meeting at work and gave it 100%! It was a success, yet I was drained the rest of the day and found it difficult to stay focused.
I wondered why I was feeling lackluster, then I realized that I had only gotten a little sleep the night before, minimal water, and no time for meditation. Yikes!
Creating my NeoSoul Lifestyle, is serious y'all.....so glad this experience is enlightening me. I realize that the evolution will truly be a journey.
Monday, August 2, 2010
NeoSoul Experiment - Day 2 Reflection
How are things going in Day 2? Did you focus on the same practices? Did you try new ones? Are you finding the experience difficult? easy? uncomfortable? What are your intentions for Day 3? Share your comments!
NeoSoul Experiment - Day 1 Reflection
Take a moment to reflect on yesterday (8/1), the FIRST day of The NeoSoul Lifestyle Experiment! Did you jump right in on the practices? Did you pick a few to focus on? Did you forget? Share your comments!
As for me......I didn't hit it on all cyclinders yesterday.
Restoration:
I was attending a concert last night and as usual I was rushing to get dressed! (Unfortunately you have to try on half of your closet to see what fits when you've put on more than a few pounds! But I digress.....) So, I didn't make my bed for my return later in the evening. Once I did get home, I talked to a friend on the phone until I drifted off to sleep for about six hours. But I didn't fall alseep on the sofa!
Detoxification:
I got in less than 1/2 of my water intake. I took out the extra shoes, work folders, and bags in my car. I also cleaned my bathroom and gave it a few spa-like touches!
Flow:
I felt very relaxed most of the day....yet my quiet time wasn't planned so I thought about a lot of things, yet need still need to write down specific goals.
Karma:
I intentionally sent my friend a thank you text for inviting me to a concert. After the concert, I complimented both the artist and promoter on their show.
As for me......I didn't hit it on all cyclinders yesterday.
Restoration:
I was attending a concert last night and as usual I was rushing to get dressed! (Unfortunately you have to try on half of your closet to see what fits when you've put on more than a few pounds! But I digress.....) So, I didn't make my bed for my return later in the evening. Once I did get home, I talked to a friend on the phone until I drifted off to sleep for about six hours. But I didn't fall alseep on the sofa!
Detoxification:
I got in less than 1/2 of my water intake. I took out the extra shoes, work folders, and bags in my car. I also cleaned my bathroom and gave it a few spa-like touches!
Flow:
I felt very relaxed most of the day....yet my quiet time wasn't planned so I thought about a lot of things, yet need still need to write down specific goals.
Karma:
I intentionally sent my friend a thank you text for inviting me to a concert. After the concert, I complimented both the artist and promoter on their show.
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