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.
Friday, October 22, 2010
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!
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