August 6, 2023 • 30 mins
Once tracking has been done for the last 30 plus days, now it time to start a budget or control center. The tracking will make the control center easier to setup and to maintain. Vacation time and how that affect the tracking and budgeting process.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Charles McDonald (00:04):
Hello, I'm your host, Mr. Chuck, I retired
accountant turned truck driver,I reduce my debt in a relatively
short period of time, debtreduction to achieve financial
freedom takes commitment,confidence determination.
(00:24):
Setting up a budget, oncetracking has been done for the
last 30 plus days, now it's timeto start a budget or control
center, that tracking will makethe control center easier to set
up and to maintain vacation timeand how that affects the
tracking and budgeting process.
I'm gonna start out with thevacation time, I just got back
(00:47):
from a trip from overseas, I wasgone about six weeks, when I got
back, I had to update mytracking program, I actually use
two of them. So it took a littlebit longer. Six weeks and not
updating everything, even thoughI had very little transactions.
Going through my checkingaccount. And my credit card
(01:13):
because my wife was paying foreverything. Only thing I paid
for was airfare there and back.
So the wife was taking care ofall the expenses, which is nice,
because she was in her hometown. She got good deals, she
enjoys that she wants to takecare of me, Oh, I'm fine with
(01:36):
that. But I still had all myutilities from the house had
real estate taxes, I had a paywell, I was gone. So I set all
that to be automatic payments.
So I didn't have to worry abouta bill not getting paid, become
overdue, and all those type ofthings. Most of that was already
set up. So it wasn't thatdifficult. I just had to make
(02:00):
sure I had enough money. And mychecking account, in order to
pay all the bills that werecoming out. That's the only
thing I really had to beconcerned about. And I took care
of that three or four daysbefore I even left. But when I
got back, I had to enter about45 days worth of transaction. It
(02:22):
wasn't too bad, but it stilltook more time than it normally
does. But I got it all up todate, I got all my income in
there. And it's important. Nowif I was unable to do the
tracking app phone app because Iwas overseas, and the app did
(02:44):
not work in the country where Iwas located. So it was blocked.
You can guess where I was I'mnot going to say but it was
somewhere that don't likeAmericans and or Americans
application and social medias,just put it that way. So it took
some time to get everythingcaught up and up to date. But it
(03:06):
wasn't too bad. He got to stayfocused. If you're vacationing
when inside of the UnitedStates, and you're gonna be gone
for a week. Your is apps you canhave on your mom or phone so
that when you buy things, youcan enter it in there. And it
makes it a lot easier becauseit's already in there to update.
(03:29):
Maybe you have to put in someincome where you got some check
direct deposits, and you're setto go. And of course you need to
reconcile with your bankaccount. So you know that you
have everything in there andeverything's up to date. But my
first article or my article onmy show notes is mapping your
(03:50):
future.org money budget.
Establishing a budget and stickinto it is not easy. But it's
the best way to be in controlyour finances and make sure your
money is going towards theexpenses that matter most to
you. Now the expenses thatmatter most to you are mostly
(04:13):
likely gonna be your home, yourhouse payment, your car
payments, your second line ofcredit, all your credit cards
because you want to keep a goodcredit rating. That is what
you're trying to keep control.
That is why you're trying toplan for in the future. So you
(04:33):
always have the money availableto pay for the needs of your
life and lifestyle. Once is anextra opportunity. A lot of
people get in trouble withcredit cards because they spend
a spend money using their creditcards on once and not
(04:56):
necessarily Look forward totheir needs, they get the credit
cards charged up too far. Andthen they take some more money
out of their budget to make theminimum payment or to make
payments on those credit cards,that cuts and to your needs. So
it's just a matter of stayingfocus, organize and control of
(05:20):
your money, you control yourmoney, don't let the money
control you. And once you get abigger savings account, he can
put your money to work for you.
I know that the local banksdon't pay much in interest, but
(05:41):
you have high yield savings, youhave money market accounts, to
online banks, were I thinkthey're paying close to 5% 4.8,
I believe, is what I saw. Soit's really reasonable, make
that money work for you, you'rehard, you worked hard to earn
(06:02):
that money, hold on to as muchof it as you possibly can. So
you have it available to pay forthings you want in the future.
And don't use credit to pay foreverything. Because you're gonna
get yourself into trouble,you'll be paying a lot more in
(06:22):
interest, and you'll graduallyget farther and farther behind.
Now my article in the shownotes, it says they make a list
of your values, write down whatmatters to you, and then put
your values in order. Well, theorder of your values should be
housing, transportation, food,credit cards. Of course, when I
(06:44):
say housing, transportation, I'malso saying the loans that are
associated with those food,credit cards, clothing, school
for your children. So write downyour goals and what you're
trying to achieve, then you wantto determine your income. Do not
include any overtime pay,because it may not be on a
(07:05):
regular basis. If you get thesame amount of overtime every
week, and it's prettyconsistent, then you might want
to include it. But if it's asprat sporadic or occasional do
not include overtime pay. Thendetermine your expenses.
Expenses is everything thatcomes through your check resor,
(07:27):
credit cards, payments, storereceipts, and more. Where is
your money really going? Fixedexpenses such as rent auto and
student loan payments are easyto determine. Flexible expenses
such as food, clothing, andentertainment vary from month to
month. That's where I say, ifyou're keeping track a few have
(07:48):
a tracking app, you can go backover time and get it report by
category for three months. Andyou could figure out an average
of these flexible expenses asfood, clothing and
entertainment. He also has goneto help you identify where you
(08:09):
may be spending too much money,maybe you're gone too much on
entertainment. Now it could beseasonal. Maybe you go to
concerts more in the summer,than in the winter. Got family
picnics and other things whereyou buy more food. But all that
needs to be taken intoconsideration when you're doing
(08:31):
a budget, and then create yourbudget. Pay yourself first, be
careful with credit cards andcheck your budget on a regular
basis. That was in my shownotes. You can read that
article.
I'm gonna now talk about how Iwant you to do a budget. You may
(08:54):
be thinking, well my trackingapp says it does a budget. You
don't want to use that. You canif you want. But it's difficult.
It takes more effort to do itthrough your tracking app, than
if you just do it on a piece ofpaper or use a spreadsheet.
Because you're gonna go in thattracking. That's why you need at
(09:16):
least 30 days and perfect ifit's the beginning to the end of
a particular month. If youstarted a little bit before the
beginning of the month, andyou're now past the end of the
month, it's perfect. You got a30 day period, where you have
almost everything that you pay,you can get a 30 day average on
(09:41):
those flexible accounts, yourfood, your grocery, your
entertainment, your yourclothing, whatever it may be.
Now he got to keep in mind themonth that you're doing that. He
has to think to yourself, isthis a low month or maybe a high
month And do I spend my moneymore on food in the summer,
(10:04):
because I'm going to picnics andgrill them out more often. So
I'm buying more expensive meatsthan they would in the winter.
Those are the type of things youneed to consider your control
center, I call it a controlcenter, because it helps you
control your spending. It showsyou where your money is going.
(10:31):
And when it's going, so you havecontrol of your money. It's not
just okay, I get paid on Friday.
What do I owe? Oh, I gotutilities, gas, electric and
cell phone and I got my rentpayment due and I'm $100 short,
what do I do? Well, if you had abudget before this, you would
(10:55):
have known that those items werecoming up, and how much you
would have, you could have cutback somewhere. And you could
have made up that $100. Withouttaking it out of your savings
account, maybe you would haveseen, I usually put $200 in my
savings account. But I'm goingto be a little short, I'm going
(11:17):
to put $100 in my savingsaccount this time, because I
know I need it for my rent,utilities, and some food and the
next pay period, you have tothink about your budget and
terms from paycheck to paycheck.
(11:37):
If you get paid weekly, it'sweekly, you get paid every two
weeks is bi weekly, semimonthly, or monthly. How that
all is determined on how oftenyou get paid. If you're bi
weekly, that means you're gonnaget 26 pays a year, you're gonna
(12:00):
have two months a year where youhave three paychecks instead of
two, you have to plan ahead. Ifthe Falls perfectly were the
first of the month, you can paythat month's rent and
everything. And then the end ofthe month, you can pay the next
month's rent, okay, it workedout good. But you know that in
(12:21):
advance, that is the reason youhave a control center, your
tracking is your lifeline, ittells you every where your money
is going. It's very important todo both of these all the time,
every week on a regular basis.
So that you know you havecontrol of your money. Now let's
(12:46):
How are you going to do it? I'massuming that you've been
tracking for like 35 days or soyou can go back and create a
report and your tracking appfrom the first of the month to
the end of the month, at least a30 day period. It doesn't
(13:06):
necessarily have to be from thefirst of the month, end the
month, as long as you get a 30Get all the bills that you
normally pay from month tomonth. If you get all captured
and know about them. That's whatwe're looking for here. I'm
assuming that you use aspreadsheet, they're not hard to
(13:27):
learn. If you don't have aspreadsheet application on your
computer. I think Google has aspreadsheet you get some free V
ones and they've gone work fine.
You go into your tracking appand you do a report by category
(13:47):
for a 30 day period from thefirst of the month to the end of
the month would be ideal so thatyou have a starting point. So
let's say it's July you're gonnado a budget for the first time
you've been you won back in youput in all your June
(14:11):
transactions and your trackingapp. You have it reconcile to
about July 4, because theholiday July 3 And you want to
set up your budget so you knowwhat's going on July but we're
working with June so let's do aJune budget first. So in there,
(14:37):
at the top, we're gonna make itJune the year. It's gonna be
about four or five columns.
First column is description.
Second column is a budget dollaramount. third column is actual.
The fourth column is thedifference and the fifth column
(14:58):
is I'll think about it later. Soat least that at the bare
minimum, so yeah, if you gotyour report by category, it's
most likely gonna be inalphabetical order. You want to
group them together by needsfirst needs, while your incomes
(15:20):
at the top and income at thetop, your salary, your paycheck
your wife's through yourspouse's pay check anything you
get on a regular basis as incomeat the top. If you get a part,
if you have a part time job, ora side, hustle, hustle, and you
(15:41):
do it on a regular basis, thenput that in there also, maybe
you put that in there once amonth, maybe you put it in twice
a week, but your paycheck isweekly, your paycheck might be
weekly, your spouse's might besemi weekly, set it up for what
is going on in your life. Whatyour thing is, so your top is
(16:05):
income, you total it up, youwant to put it in by going down
the rows, the number of paysthat you're going to have in a
month. So if it's weekly, youshould have four to five pays.
If it's semi weekly, you shouldhave at least three because you
got two months out of the year,where you get three checks. And
(16:25):
then your side household, maybeevery couple of weeks semi
monthly, or even monthly doesn'tmatter as long as you have a
number to put in there. And it'shappening on a regular basis.
Then below that you total thatup total income, you're all set
and done. The income part is nottoo difficult. The expense part
(16:47):
is where it's gonna get morecomplicated. You have it in
front of you, you print out yourreport by categories in
alphabetical order. And you justgo you want to group it together
by needs, then once needs ishousing, and you will put
(17:08):
everything related to housingtogether. So you have in your
housing, then you have mortgage,one mortgage to maybe line up
credit, all the utilities, andyou can total those up into one
number.
I mean, you show each utility,but in the spreadsheet, you can
total it down to one number andbring it in as one number, or
(17:32):
separately, it doesn't reallymuch matter. Insurance, real
estate taxes, if you don't havean escrow, if you're paying your
taxes insurance through thebank, it's called an escrow,
then it's this your mortgagepayment, etc. Then the second
category would betransportation, your car loans,
(17:55):
you can break it out by vehicleif you have more than one
vehicle, your car loan forvehicle a gas, oil change,
repairs and maintenance, tires,something like that for each
vehicle. And then you would havefood, groceries dining out,
(18:16):
dining out could be partlyentertainment or it could be
partly food, depending on yourlifestyle. If you consider
dining out as entertainment andyou only do it every once in a
while then put it inentertainment, it's not a need
that more of a want. If it'ssomething you do on a regular
(18:36):
basis, and that's way you getyour food, then it's a need so
included under your needs ontheir food. You should have
groceries, food, dining outcoffee shops, you can break it
out as little as much as youwant. Then credit cards, these
(18:56):
are loan payments, these are allloan payments that you have to
make that's not associatedanywhere else is not part of
your housing. And that's notpart of your automobile. Maybe
you got a personal loan to buyfurniture for the house could be
part of housing. But if youmixed it up and bought other
stuff, maybe you need not bepart of housing but put it in
(19:20):
here as loans and credit cards.
Put in all your credit cards.
The minimum payment is whatwe're putting here for now. And
student loans. Put that there.
After that you have savings. Payyourself first and remember the
articles told you that if youhave money and set aside on a
regular basis, try to set asidemoney on a regular. If you don't
(19:45):
think you have any money, putfive bucks there $10 $10 of pay
and try to save it as the onlyway you're gonna know if you can
do it to set it aside. If youknow you're going to be short,
don't put it in your savings.
This All right, if your actualdon't meet your budget, if it
(20:07):
comes up a little short, fine,now we know where we can work.
If it goes over your budget,fine. Now we know where we need
maybe to cut back on somespending, that's concern Control
Center helps you control yourmoney, then your wants,
entertainment would be a want.
Maybe more clothing would be awant children's education. I
(20:31):
don't know. Whatever it ishobbies, boating, a motorcycle.
Whatever you do for fun, orwhatever you do for
entertainment, it would be Iwant. Now, some of you
entertainment, like yourinternet service should be part
(20:54):
of housing, I always put mystreaming service and housing,
because I only have a couple ofthem. And it's not a whole lot.
I've been streaming for a longtime now. And my, my payments
are like $15. And twice, I thinkhe's not a whole lot, I think 30
(21:14):
or $40 a month. And I watcheverything I need to see that by
the way, if you're paying forcable TV, and it's more than
$100 a month, you definitelyneed to switch over to streaming
but that we're not about that.
In this will help you then Ktake that put in your
(21:39):
description. And you put in thenumbers under the budget amount.
For June, era, no the actualexactly the same as your budget.
So everything comes to zero. Istill can't remember what that
other column was for ourplanning ahead, I believe, is to
set money aside so that you haveit available to pay that
(22:07):
particular expense. And I can'tremember what I call it. But you
need a budget app. I've talkedabout it in the past. Basically
what that app does in theirbudgeting process. It helps you
plan ahead, and you assign moneyto say rent. And then when you
(22:31):
rent to it comes out of thereand you're never come up short
and your checking account,because you took the money
theoretically out your checkingaccount, he set it aside. And
when rent comes to is there, hetake it out and you pay it, it
actually stays in the checkingaccount the whole time. But it
helps you not spend the money.
And I can't remember what Icalled that. I'll be back in one
(22:55):
moment with my final thoughts.
If you're interested in learningabout an online software that
helped myself get out of debt,it does tracking, budgeting, and
keeps track of all your assetsand all your debt. And even
tells you how much and when totransfer money into your savings
(23:21):
account and how much and when totransfer money to your debt and
which debts to pay off andorder. First. It's not cheap.
It's a one time payment. But itwill definitely be an investment
something and yourself and aninvestment in your personal
(23:42):
financial life. If you'reinterested, send me an email at
reduce debt increasewealth@gmail.com. And I'll send
you the information about thisonline software that works great
for me. Your spreadsheet foryour budget should be five
(24:04):
columns and as many rows as youneed for your category. For your
income, you'd have one row foreach weekly or each pay period
behalf. He can't get paidweekly, you need at least four
or five every month. If you fivebecause depending on how the
(24:29):
month falls. If your spouse getspaid weekly now you need at
least 10 rows. If you have aside hustle you need one or two
rows, it depending on how oftenyou're going to enter your
income. Then your expenses wouldbe whatever the might how many
(24:49):
categories you want to set up.
I group them together housingtransportation, food, credit
cards and loans. orentertainment, hobbies, whatever
else you might have childrenclothing, it's up to you. And
then you have a row for everyindividual item that you want to
(25:13):
track. I recommend to keep it asbasic as possible. If you overdo
it here, you will not get a lotof good information. But you
would lose track, he wouldprobably give up, and may be
something that you're putting inthere, that you only spend money
(25:37):
on once a quarter or a coupletimes a year. So kind of group
it together trying to keepbigger groups. So you have less
things to track and keep trackof, okay, you have five columns,
a description of what it is thatyou're doing b, the budget
(25:57):
amount, see actual D, thedifference between budget, less
actual F that goes negative, youmean you overspent your budget,
so you may need to review whatyour budget is. And then the
fifth column allocationdeposits. It's also referred to
(26:20):
allocation of your income, butyou don't allocate it until it's
money deposited in your checkingaccount. I call it allocation of
deposits. And what is that it'smoney that's in your checking
account, they recently gotthere, and you're gone to give
(26:40):
it a job, assign it a use, areyou gonna if you get $1,000 a
week, maybe you're gonna put a$300 every week into for rent,
another $100 for gas for thecar, maybe $50 for insurance,
whether it's your car insurance,or whatever type in your sign in
(27:05):
your deposits, a job and youonly do it after the money is in
your checking account, do not dothat in advance. Then when you
make the payment, like you payyour rent, you subtract out the
amount of rent you paid from theallocated dollar amount is a
(27:26):
manual thing you have to do. Sosay your rent is $800 a month,
you already allocated $900 Youpay your rent. So you reduce
your allocated amount from 900to 100. Because you subtracted
800. From that, now you have$100 allocated for the next
(27:51):
month rent, you're kind ofgetting a little bit ahead. You
do that for all your categories,the allocated dollar amount, you
can move around, you canallocate it to clothing. But
then if you come up short inanother category by 10 bucks,
you can take some out clothingand put it in where you came up
(28:11):
short. This way, you'll neveroverdraw your checking account,
this money is still in yourchecking account. It's just a
tool to help you see where yourmoney's going and advance, so
you don't spend your money. Soin your spreadsheet, what I
(28:32):
would do is put your bankbalance at the top of that
column. Then at the bottom ofthe column, put your adjusted
bank balance is where youallocate your money. So if you
have $3,000, in your checkingaccount, and you've allocated
3100, you'll have $100 Negative,you've trying to spend more than
(28:56):
what you have, you got to gothrough there and make an
adjustment it should never gobelow zero. If it has a positive
balance. That means you havemoney in your checking account,
you have an allocate it, maybeyou keep a minimum balance in
your checking account of 200 or$300. That would be good. So you
don't overdraw your checkingaccount. It's a tool, try using
(29:20):
it. I've talked about it in mypast episodes. When law more
detail. It's something fairlynew for the manual budgeting
process for your control center.
But I saw a app that does thatand it seems to work fairly good
within their app. And why not?
(29:41):
You need a budget is the name ofthe app. If you can afford it, I
highly recommend it. If you wantto do it on your own then give
it a shot. Keeping track of allyour expenditures is step one,
and then doing a budget and abudget. should be reviewing on a
(30:01):
regular basis and may beupdating. Maybe you put in $500
a month for food, and it'scoming out in the last three
months it was only $435. So whydon't we adjust that down to 475
and put that extra $25 in yoursavings? To put it in savings to
(30:26):
pay yourself first. It's a neverending process. Sometimes you
gotta adjust your budget up.
Sometimes you just somecategories down. It's keeping
control of your money is themost important thing you can do,
and you'll be glad you did. So
Hello, I'm your host, Mr. Chuck, I retired
accountant turned truck driver,I reduce my debt in a relatively
short period of time, debtreduction to achieve financial
freedom takes commitment,confidence determination.
(00:24):
Setting up a budget, oncetracking has been done for the
last 30 plus days, now it's timeto start a budget or control
center, that tracking will makethe control center easier to set
up and to maintain vacation timeand how that affects the
tracking and budgeting process.
I'm gonna start out with thevacation time, I just got back
(00:47):
from a trip from overseas, I wasgone about six weeks, when I got
back, I had to update mytracking program, I actually use
two of them. So it took a littlebit longer. Six weeks and not
updating everything, even thoughI had very little transactions.
Going through my checkingaccount. And my credit card
(01:13):
because my wife was paying foreverything. Only thing I paid
for was airfare there and back.
So the wife was taking care ofall the expenses, which is nice,
because she was in her hometown. She got good deals, she
enjoys that she wants to takecare of me, Oh, I'm fine with
(01:36):
that. But I still had all myutilities from the house had
real estate taxes, I had a paywell, I was gone. So I set all
that to be automatic payments.
So I didn't have to worry abouta bill not getting paid, become
overdue, and all those type ofthings. Most of that was already
set up. So it wasn't thatdifficult. I just had to make
(02:00):
sure I had enough money. And mychecking account, in order to
pay all the bills that werecoming out. That's the only
thing I really had to beconcerned about. And I took care
of that three or four daysbefore I even left. But when I
got back, I had to enter about45 days worth of transaction. It
(02:22):
wasn't too bad, but it stilltook more time than it normally
does. But I got it all up todate, I got all my income in
there. And it's important. Nowif I was unable to do the
tracking app phone app because Iwas overseas, and the app did
(02:44):
not work in the country where Iwas located. So it was blocked.
You can guess where I was I'mnot going to say but it was
somewhere that don't likeAmericans and or Americans
application and social medias,just put it that way. So it took
some time to get everythingcaught up and up to date. But it
(03:06):
wasn't too bad. He got to stayfocused. If you're vacationing
when inside of the UnitedStates, and you're gonna be gone
for a week. Your is apps you canhave on your mom or phone so
that when you buy things, youcan enter it in there. And it
makes it a lot easier becauseit's already in there to update.
(03:29):
Maybe you have to put in someincome where you got some check
direct deposits, and you're setto go. And of course you need to
reconcile with your bankaccount. So you know that you
have everything in there andeverything's up to date. But my
first article or my article onmy show notes is mapping your
(03:50):
future.org money budget.
Establishing a budget and stickinto it is not easy. But it's
the best way to be in controlyour finances and make sure your
money is going towards theexpenses that matter most to
you. Now the expenses thatmatter most to you are mostly
(04:13):
likely gonna be your home, yourhouse payment, your car
payments, your second line ofcredit, all your credit cards
because you want to keep a goodcredit rating. That is what
you're trying to keep control.
That is why you're trying toplan for in the future. So you
(04:33):
always have the money availableto pay for the needs of your
life and lifestyle. Once is anextra opportunity. A lot of
people get in trouble withcredit cards because they spend
a spend money using their creditcards on once and not
(04:56):
necessarily Look forward totheir needs, they get the credit
cards charged up too far. Andthen they take some more money
out of their budget to make theminimum payment or to make
payments on those credit cards,that cuts and to your needs. So
it's just a matter of stayingfocus, organize and control of
(05:20):
your money, you control yourmoney, don't let the money
control you. And once you get abigger savings account, he can
put your money to work for you.
I know that the local banksdon't pay much in interest, but
(05:41):
you have high yield savings, youhave money market accounts, to
online banks, were I thinkthey're paying close to 5% 4.8,
I believe, is what I saw. Soit's really reasonable, make
that money work for you, you'rehard, you worked hard to earn
(06:02):
that money, hold on to as muchof it as you possibly can. So
you have it available to pay forthings you want in the future.
And don't use credit to pay foreverything. Because you're gonna
get yourself into trouble,you'll be paying a lot more in
(06:22):
interest, and you'll graduallyget farther and farther behind.
Now my article in the shownotes, it says they make a list
of your values, write down whatmatters to you, and then put
your values in order. Well, theorder of your values should be
housing, transportation, food,credit cards. Of course, when I
(06:44):
say housing, transportation, I'malso saying the loans that are
associated with those food,credit cards, clothing, school
for your children. So write downyour goals and what you're
trying to achieve, then you wantto determine your income. Do not
include any overtime pay,because it may not be on a
(07:05):
regular basis. If you get thesame amount of overtime every
week, and it's prettyconsistent, then you might want
to include it. But if it's asprat sporadic or occasional do
not include overtime pay. Thendetermine your expenses.
Expenses is everything thatcomes through your check resor,
(07:27):
credit cards, payments, storereceipts, and more. Where is
your money really going? Fixedexpenses such as rent auto and
student loan payments are easyto determine. Flexible expenses
such as food, clothing, andentertainment vary from month to
month. That's where I say, ifyou're keeping track a few have
(07:48):
a tracking app, you can go backover time and get it report by
category for three months. Andyou could figure out an average
of these flexible expenses asfood, clothing and
entertainment. He also has goneto help you identify where you
(08:09):
may be spending too much money,maybe you're gone too much on
entertainment. Now it could beseasonal. Maybe you go to
concerts more in the summer,than in the winter. Got family
picnics and other things whereyou buy more food. But all that
needs to be taken intoconsideration when you're doing
(08:31):
a budget, and then create yourbudget. Pay yourself first, be
careful with credit cards andcheck your budget on a regular
basis. That was in my shownotes. You can read that
article.
I'm gonna now talk about how Iwant you to do a budget. You may
(08:54):
be thinking, well my trackingapp says it does a budget. You
don't want to use that. You canif you want. But it's difficult.
It takes more effort to do itthrough your tracking app, than
if you just do it on a piece ofpaper or use a spreadsheet.
Because you're gonna go in thattracking. That's why you need at
(09:16):
least 30 days and perfect ifit's the beginning to the end of
a particular month. If youstarted a little bit before the
beginning of the month, andyou're now past the end of the
month, it's perfect. You got a30 day period, where you have
almost everything that you pay,you can get a 30 day average on
(09:41):
those flexible accounts, yourfood, your grocery, your
entertainment, your yourclothing, whatever it may be.
Now he got to keep in mind themonth that you're doing that. He
has to think to yourself, isthis a low month or maybe a high
month And do I spend my moneymore on food in the summer,
(10:04):
because I'm going to picnics andgrill them out more often. So
I'm buying more expensive meatsthan they would in the winter.
Those are the type of things youneed to consider your control
center, I call it a controlcenter, because it helps you
control your spending. It showsyou where your money is going.
(10:31):
And when it's going, so you havecontrol of your money. It's not
just okay, I get paid on Friday.
What do I owe? Oh, I gotutilities, gas, electric and
cell phone and I got my rentpayment due and I'm $100 short,
what do I do? Well, if you had abudget before this, you would
(10:55):
have known that those items werecoming up, and how much you
would have, you could have cutback somewhere. And you could
have made up that $100. Withouttaking it out of your savings
account, maybe you would haveseen, I usually put $200 in my
savings account. But I'm goingto be a little short, I'm going
(11:17):
to put $100 in my savingsaccount this time, because I
know I need it for my rent,utilities, and some food and the
next pay period, you have tothink about your budget and
terms from paycheck to paycheck.
(11:37):
If you get paid weekly, it'sweekly, you get paid every two
weeks is bi weekly, semimonthly, or monthly. How that
all is determined on how oftenyou get paid. If you're bi
weekly, that means you're gonnaget 26 pays a year, you're gonna
(12:00):
have two months a year where youhave three paychecks instead of
two, you have to plan ahead. Ifthe Falls perfectly were the
first of the month, you can paythat month's rent and
everything. And then the end ofthe month, you can pay the next
month's rent, okay, it workedout good. But you know that in
(12:21):
advance, that is the reason youhave a control center, your
tracking is your lifeline, ittells you every where your money
is going. It's very important todo both of these all the time,
every week on a regular basis.
So that you know you havecontrol of your money. Now let's
(12:46):
How are you going to do it? I'massuming that you've been
tracking for like 35 days or soyou can go back and create a
report and your tracking appfrom the first of the month to
the end of the month, at least a30 day period. It doesn't
(13:06):
necessarily have to be from thefirst of the month, end the
month, as long as you get a 30Get all the bills that you
normally pay from month tomonth. If you get all captured
and know about them. That's whatwe're looking for here. I'm
assuming that you use aspreadsheet, they're not hard to
(13:27):
learn. If you don't have aspreadsheet application on your
computer. I think Google has aspreadsheet you get some free V
ones and they've gone work fine.
You go into your tracking appand you do a report by category
(13:47):
for a 30 day period from thefirst of the month to the end of
the month would be ideal so thatyou have a starting point. So
let's say it's July you're gonnado a budget for the first time
you've been you won back in youput in all your June
(14:11):
transactions and your trackingapp. You have it reconcile to
about July 4, because theholiday July 3 And you want to
set up your budget so you knowwhat's going on July but we're
working with June so let's do aJune budget first. So in there,
(14:37):
at the top, we're gonna make itJune the year. It's gonna be
about four or five columns.
First column is description.
Second column is a budget dollaramount. third column is actual.
The fourth column is thedifference and the fifth column
(14:58):
is I'll think about it later. Soat least that at the bare
minimum, so yeah, if you gotyour report by category, it's
most likely gonna be inalphabetical order. You want to
group them together by needsfirst needs, while your incomes
(15:20):
at the top and income at thetop, your salary, your paycheck
your wife's through yourspouse's pay check anything you
get on a regular basis as incomeat the top. If you get a part,
if you have a part time job, ora side, hustle, hustle, and you
(15:41):
do it on a regular basis, thenput that in there also, maybe
you put that in there once amonth, maybe you put it in twice
a week, but your paycheck isweekly, your paycheck might be
weekly, your spouse's might besemi weekly, set it up for what
is going on in your life. Whatyour thing is, so your top is
(16:05):
income, you total it up, youwant to put it in by going down
the rows, the number of paysthat you're going to have in a
month. So if it's weekly, youshould have four to five pays.
If it's semi weekly, you shouldhave at least three because you
got two months out of the year,where you get three checks. And
(16:25):
then your side household, maybeevery couple of weeks semi
monthly, or even monthly doesn'tmatter as long as you have a
number to put in there. And it'shappening on a regular basis.
Then below that you total thatup total income, you're all set
and done. The income part is nottoo difficult. The expense part
(16:47):
is where it's gonna get morecomplicated. You have it in
front of you, you print out yourreport by categories in
alphabetical order. And you justgo you want to group it together
by needs, then once needs ishousing, and you will put
(17:08):
everything related to housingtogether. So you have in your
housing, then you have mortgage,one mortgage to maybe line up
credit, all the utilities, andyou can total those up into one
number.
I mean, you show each utility,but in the spreadsheet, you can
total it down to one number andbring it in as one number, or
(17:32):
separately, it doesn't reallymuch matter. Insurance, real
estate taxes, if you don't havean escrow, if you're paying your
taxes insurance through thebank, it's called an escrow,
then it's this your mortgagepayment, etc. Then the second
category would betransportation, your car loans,
(17:55):
you can break it out by vehicleif you have more than one
vehicle, your car loan forvehicle a gas, oil change,
repairs and maintenance, tires,something like that for each
vehicle. And then you would havefood, groceries dining out,
(18:16):
dining out could be partlyentertainment or it could be
partly food, depending on yourlifestyle. If you consider
dining out as entertainment andyou only do it every once in a
while then put it inentertainment, it's not a need
that more of a want. If it'ssomething you do on a regular
(18:36):
basis, and that's way you getyour food, then it's a need so
included under your needs ontheir food. You should have
groceries, food, dining outcoffee shops, you can break it
out as little as much as youwant. Then credit cards, these
(18:56):
are loan payments, these are allloan payments that you have to
make that's not associatedanywhere else is not part of
your housing. And that's notpart of your automobile. Maybe
you got a personal loan to buyfurniture for the house could be
part of housing. But if youmixed it up and bought other
stuff, maybe you need not bepart of housing but put it in
(19:20):
here as loans and credit cards.
Put in all your credit cards.
The minimum payment is whatwe're putting here for now. And
student loans. Put that there.
After that you have savings. Payyourself first and remember the
articles told you that if youhave money and set aside on a
regular basis, try to set asidemoney on a regular. If you don't
(19:45):
think you have any money, putfive bucks there $10 $10 of pay
and try to save it as the onlyway you're gonna know if you can
do it to set it aside. If youknow you're going to be short,
don't put it in your savings.
This All right, if your actualdon't meet your budget, if it
(20:07):
comes up a little short, fine,now we know where we can work.
If it goes over your budget,fine. Now we know where we need
maybe to cut back on somespending, that's concern Control
Center helps you control yourmoney, then your wants,
entertainment would be a want.
Maybe more clothing would be awant children's education. I
(20:31):
don't know. Whatever it ishobbies, boating, a motorcycle.
Whatever you do for fun, orwhatever you do for
entertainment, it would be Iwant. Now, some of you
entertainment, like yourinternet service should be part
(20:54):
of housing, I always put mystreaming service and housing,
because I only have a couple ofthem. And it's not a whole lot.
I've been streaming for a longtime now. And my, my payments
are like $15. And twice, I thinkhe's not a whole lot, I think 30
(21:14):
or $40 a month. And I watcheverything I need to see that by
the way, if you're paying forcable TV, and it's more than
$100 a month, you definitelyneed to switch over to streaming
but that we're not about that.
In this will help you then Ktake that put in your
(21:39):
description. And you put in thenumbers under the budget amount.
For June, era, no the actualexactly the same as your budget.
So everything comes to zero. Istill can't remember what that
other column was for ourplanning ahead, I believe, is to
set money aside so that you haveit available to pay that
(22:07):
particular expense. And I can'tremember what I call it. But you
need a budget app. I've talkedabout it in the past. Basically
what that app does in theirbudgeting process. It helps you
plan ahead, and you assign moneyto say rent. And then when you
(22:31):
rent to it comes out of thereand you're never come up short
and your checking account,because you took the money
theoretically out your checkingaccount, he set it aside. And
when rent comes to is there, hetake it out and you pay it, it
actually stays in the checkingaccount the whole time. But it
helps you not spend the money.
And I can't remember what Icalled that. I'll be back in one
(22:55):
moment with my final thoughts.
If you're interested in learningabout an online software that
helped myself get out of debt,it does tracking, budgeting, and
keeps track of all your assetsand all your debt. And even
tells you how much and when totransfer money into your savings
(23:21):
account and how much and when totransfer money to your debt and
which debts to pay off andorder. First. It's not cheap.
It's a one time payment. But itwill definitely be an investment
something and yourself and aninvestment in your personal
(23:42):
financial life. If you'reinterested, send me an email at
reduce debt increasewealth@gmail.com. And I'll send
you the information about thisonline software that works great
for me. Your spreadsheet foryour budget should be five
(24:04):
columns and as many rows as youneed for your category. For your
income, you'd have one row foreach weekly or each pay period
behalf. He can't get paidweekly, you need at least four
or five every month. If you fivebecause depending on how the
(24:29):
month falls. If your spouse getspaid weekly now you need at
least 10 rows. If you have aside hustle you need one or two
rows, it depending on how oftenyou're going to enter your
income. Then your expenses wouldbe whatever the might how many
(24:49):
categories you want to set up.
I group them together housingtransportation, food, credit
cards and loans. orentertainment, hobbies, whatever
else you might have childrenclothing, it's up to you. And
then you have a row for everyindividual item that you want to
(25:13):
track. I recommend to keep it asbasic as possible. If you overdo
it here, you will not get a lotof good information. But you
would lose track, he wouldprobably give up, and may be
something that you're putting inthere, that you only spend money
(25:37):
on once a quarter or a coupletimes a year. So kind of group
it together trying to keepbigger groups. So you have less
things to track and keep trackof, okay, you have five columns,
a description of what it is thatyou're doing b, the budget
(25:57):
amount, see actual D, thedifference between budget, less
actual F that goes negative, youmean you overspent your budget,
so you may need to review whatyour budget is. And then the
fifth column allocationdeposits. It's also referred to
(26:20):
allocation of your income, butyou don't allocate it until it's
money deposited in your checkingaccount. I call it allocation of
deposits. And what is that it'smoney that's in your checking
account, they recently gotthere, and you're gone to give
(26:40):
it a job, assign it a use, areyou gonna if you get $1,000 a
week, maybe you're gonna put a$300 every week into for rent,
another $100 for gas for thecar, maybe $50 for insurance,
whether it's your car insurance,or whatever type in your sign in
(27:05):
your deposits, a job and youonly do it after the money is in
your checking account, do not dothat in advance. Then when you
make the payment, like you payyour rent, you subtract out the
amount of rent you paid from theallocated dollar amount is a
(27:26):
manual thing you have to do. Sosay your rent is $800 a month,
you already allocated $900 Youpay your rent. So you reduce
your allocated amount from 900to 100. Because you subtracted
800. From that, now you have$100 allocated for the next
(27:51):
month rent, you're kind ofgetting a little bit ahead. You
do that for all your categories,the allocated dollar amount, you
can move around, you canallocate it to clothing. But
then if you come up short inanother category by 10 bucks,
you can take some out clothingand put it in where you came up
(28:11):
short. This way, you'll neveroverdraw your checking account,
this money is still in yourchecking account. It's just a
tool to help you see where yourmoney's going and advance, so
you don't spend your money. Soin your spreadsheet, what I
(28:32):
would do is put your bankbalance at the top of that
column. Then at the bottom ofthe column, put your adjusted
bank balance is where youallocate your money. So if you
have $3,000, in your checkingaccount, and you've allocated
3100, you'll have $100 Negative,you've trying to spend more than
(28:56):
what you have, you got to gothrough there and make an
adjustment it should never gobelow zero. If it has a positive
balance. That means you havemoney in your checking account,
you have an allocate it, maybeyou keep a minimum balance in
your checking account of 200 or$300. That would be good. So you
don't overdraw your checkingaccount. It's a tool, try using
(29:20):
it. I've talked about it in mypast episodes. When law more
detail. It's something fairlynew for the manual budgeting
process for your control center.
But I saw a app that does thatand it seems to work fairly good
within their app. And why not?
(29:41):
You need a budget is the name ofthe app. If you can afford it, I
highly recommend it. If you wantto do it on your own then give
it a shot. Keeping track of allyour expenditures is step one,
and then doing a budget and abudget. should be reviewing on a
(30:01):
regular basis and may beupdating. Maybe you put in $500
a month for food, and it'scoming out in the last three
months it was only $435. So whydon't we adjust that down to 475
and put that extra $25 in yoursavings? To put it in savings to
(30:26):
pay yourself first. It's a neverending process. Sometimes you
gotta adjust your budget up.
Sometimes you just somecategories down. It's keeping
control of your money is themost important thing you can do,
and you'll be glad you did. So
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