October 1, 2023 • 32 mins
Control Center is nothing more than a budget, this is the easy way to create and update the control center every week so knowing what happening in finance is current. Starting with the most simple budget for those who are struggling to pay down debt.
Article Link:
https://www.nerdwallet.com/article/finance/budget-worksheet By Lauren Schwahn
Please support the show by subscribing, can cancel at any time. Thanks for the support.
- Subscription page: https://www.buzzsprout.com/961804/support
- Contact: ReduceDebtIncreaseWealth@Gmail.com
- Wanting Budget Spreadsheet Place Spreadsheet as Subject
- https://Happygiraffe.org/live
- https://www.shopfinancial.com/lantianbaiyu/
All other inquires place topic into Subject.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Unknown (00:04):
Hello, I'm your host, Mr. Chuck, I retired accountant
turned truck driver, I reduce mydebt in a relatively short
period of time, debt reductionto achieve financial freedom
takes commitment, confidence,determination.
(00:24):
Starting control center controlcenter is nothing more than a
budget. This is the easy way tocreate an update to control
center every week. So knowingwhat's happening in finances
current, starting with the mostsimple budget for those who are
struggling to pay down debt, I'mfocusing on those people who
(00:48):
have a big debt problem. Andthey hadn't done anything in the
past. And you're working towardstrying to get your debt under
control. So you first thing youdo is start tracking all
everything you're doing throughyour checking account, your
(01:10):
savings account, all your creditcards, at the bare minimum, you
need to be doing that, and Italked about that in the last
episode. So now we're gonna workon creating a budget or a
control center. I call it acontrol center, because that's
where you can see in real time,what's happening in your
(01:34):
finances. And you can catchwhere you're spending too much
money immediately, correct itbefore it gets out of control.
So we start with tracking. Andonce you've got that done for at
least 30 days, and if you wentback and put in last 30 days or
(01:57):
so worth of information fromyour check in and all your
credit cards and your savingsaccount. Or if you don't have a
savings account, you need to setone up. Because by doing this
simple budget, and having acontrol center, you're gonna
free up some money that you canget that emergency funds started
(02:19):
and get a build up to thatminimum of $1,000. If you find
this episode useful, he cansubscribe to my channel by going
to my show notes and click himon my subscription page. I also
have links in there to thearticle I'm referring to and
it's from the nerd wallet. Andit's a free budget planner tips
(02:42):
for getting started. I'mfocusing on those people who
have never ever done a budget inthe past, or those people who
had tried to do a budget and wasnot successful. So what is a
budget planner, a budget planneris a tool such as a worksheet
that you can use to design yourbudget. Assess successful budget
(03:07):
planner helps you decide how tobest spend your money while
avoiding or reducing debt.
And then a nerd wallet wallet,they recommend the 5030 20
budget if you don't know that isI'm not going to talk about it.
They do in the article. I don'tlike it, because it's too
(03:28):
general. And we need to be morespecific. You need to look more
into what you are doing. So ifyou've been tracking for at
least 30 days, you need to gointo your app and do a report by
category for the 30 day rains.
Hopefully it's from thebeginning of the month to the
(03:52):
end of the month. That'simportant because that's one
complete monthly cycle of yourspending. You have two
categories. Generally speaking,you have income and you have
expenses. Then when yourexpenses you have needs things
you need to pay every month.
(04:16):
Don't do a budget for a year.
Don't do it first semi annualdon't do it for a quarter. You
do it for each monthly cycle. Soyou want to set up a spreadsheet
where you have January throughDecember and you can keep it
separate for each month and saveeach month.
(04:39):
So you can go back and look atwhat were these categories done
last month, three months ago.
Compare worry Are you today andyou can see if you're making
progress that way. So we do a 12month each one by itself. The
top of theA spreadsheet, you start with
(05:00):
income and you put in all yourincome that you have. And if you
get paid weekly, you need tohave a slot there to put in your
weekly payroll. And you do thatfor you and your significant
other, if you have a part timebusiness where you have regular
income, also include that. Nowyour payroll is the amount of
(05:24):
money you're depositing intoyour checking account, not the
gross, that's after taxes, andafter health insurance or an or
any retirement plans you may becontributed to, we don't need to
budget for those items, becausethey're already been paid. So no
use doing double the work.
(05:47):
That's the reason you start withthe net. A hands on monthly
budget planner isn't working. Ifyou consider one of these budget
apps, most of them sync withyour financial accounts so they
can track and categorizeexpenses for you keep in mind
that some budgeting apps arefree where others charge a
monthly or annual fee. I say usea spreadsheet and do it manually
(06:11):
and do not link anything to yourbank accounts. The more you
hands on you are in thisprocess, the more you're going
to be aware of what's going onin your finances, whether it's
income, which most people haveunder control, because it's only
one or two sources. But yourspending is the important thing
(06:35):
we're going to talk about, inanother episode about a debt
reduction plan or a debtmanagement plan. And what you
need to do in order to keep yourdebt under control to get it
under control. And then the Keepit there. So and the nerd
wallet, they have a budgetplanner here, it's free, you can
(06:57):
print it out, they can use it asa guide, if you want to. And
some guy guy got their income atthe top and then they have needs
rent mortgage insurance,property tax bills. Now if you
have an escrow, and you have amortgage and you're paying your
insurance and your insurancethrough the escrow, you only
(07:19):
need that one line, you don'tneed to account for any
additional thanks. Now I grew mytogether by housing, the under
housing, I include the mortgagepayment, or your rent, all
utilities, which includes yourcell phone, if you want to
(07:41):
include your internet service,you can include that there
because it's connected with thehome.
That's a good idea. The secondcategory would be
transportation. And then undertransportation would be you can
break it down by auto. If youhave two autos each one
(08:04):
separately, you can have theloan, you can then have
maintenance, gasolinemaintenance would be oil change,
stuff like that. Maintenance,oil change, gasoline, and any
major repairs you might havecoming up you can budget for for
future by replacing your tires,and insurance.
(08:30):
He always include the loan andthe insurance that's related to
that item in that particularbudget category. And then we
have food which would begroceries dining out deliveries,
you want to break those outseparately, because that way you
can see if you're spending toomuch money in a particular area,
(08:54):
such as dining out, or such ashaving food, prepared food from
restaurants delivered to yourhome, which I never do, because
it's pretty expensive. We'refocusing on trying to reduce our
spending and keeping ourspending under control. After
that, we have savings which is aneed because you need emergency
(09:19):
fund and you need to set moneyaside to pay or apply to your
debt later on. Once you have asignificant amount of money. And
then we have debt, which needsto be paid every month. And then
any other insurance you mighthave that's not in any other
(09:40):
category, such as lifeinsurance, disability insurance,
whatever type insurance youhave, then you can put that
there. Everything else would bea once your clothing,
entertainment. He can even havea want for dining out if you
don't do it.
that often you can say we go outand go out once a month or once
(10:04):
a couple times a month, you canmake that a want and that
necessary and need under food.
So once you have that set upsetting up your spreadsheet, CZ,
you got Column A or the firstcolumn would be a description of
everything that we just talkedabout. Column B, or the second
column is where you put in thepast history of what you spent
(10:26):
in those categories. And that'swhy you printed out the report
by category for the last 30days. The third column is the
actual spending you're doing andthe current month you're looking
at, then you have the fourthcolumn would be the difference
(10:48):
between your budget and youractual that way you can see at a
glance, if you've gone over thebudget, or getting close to the
budget, or how much more youhave left to go for that
particular month. And then thevery last column would be money
that you allocate, this issomething fairly new, I've
(11:11):
learned this and the new Need ABudget app, I don't use it, they
don't pay for me, and I'm notpromoting, and I'm just telling
you where I've learned this. Andwhat that does is all the money
that is deposited into yourchecking account, you're gonna
give it a job, you're gonnaassign a lot of money that's
(11:34):
going to be used to pay acertain need, whether it's
applied part of it to yourmortgage, let's say you get paid
weekly, your mortgage do once amonth, so you put, you know,
120 5% of your mortgage in thereevery pay. So when your mortgage
comes due, you know, you havethe money in your checking
(11:58):
account, to pay for thatexpense. At the top of that
column, where the income wouldbe, you'd put in your current
bank balance at the bottom, youjust do the math, every month,
all the money you assign, youtake your bank balance, you
(12:18):
subtract everything out thatyou're assigned, and then the
bottom should come to zero. Ifit's a positive number, that's
money that you have left in yourchecking account. So if you want
to keep, say, a $300 balance inyour checking account, you don't
assign that last $300, you leaveit in your checking account, so
(12:40):
you never overdraw your checkingaccount. So those are tips and
tricks that you do to make yourfinances easier. It's not all
that difficult. The next step,once you have all that setup is
copy and paste it 12 timesbefore you put any numbers. And
(13:02):
if any, you could put formulasin there. So that you don't have
to put them in later. But youcopy and paste it 12 times. So
you can go six cross and thendown and six as what I prefer to
go all the way out to June, andthen you go back on January and
you put July out to December.
(13:26):
That way, he can move aroundfairly easy, you know about
where the months are, you canjust scroll around. And when you
get to June, that's done, youcan go back all the way to the
left, go down a little bit, youknow, scroll go down a little
bit. And you're right there atJuly. Now, we have it set up.
The first step is taken thatfirst 30 days information
(13:50):
because that's basically he maybe have a little more than that.
But let us assume you got 30days plus a week, you go back,
you do the report for that firstmonth or the first 30 day
period. And that's the amount ofmoney you're going to assign to
your budget column.
Granted, some of thesecategories may be little
(14:13):
overstated, because you'recutting back your spending. But
that's what happened. These areactual numbers, which are
important because it gives youcloser to real time of what's
happening and your budget. Andthat tells you how things are
(14:34):
going at that point in time. Andwe're working on our first
month. So we're not going toexpect it to be perfect because
this is a process that you'regoing to be tuned in up over
time as you reduce your spendingspending and cut out for the
things you don't need thatyou've been paying for. And you
(14:57):
maybe negotiate some new termsLike on your cell phone or your
internet bill to get lowercertain costs on your service,
those numbers are on a change,which then would increase the
amount of money that you shouldbe putting in your savings if
everything goes good. So that'sour starting point. Now we're
(15:17):
the first pay per, I'm assumingyou're getting paid weekly. Even
every two weeks doesn't muchmatter. But your first pay and
the new month, you do anotherreport by category, from the
beginning of the current month,to the current date. Now you do
that after you updateeverything. So your tracking
(15:42):
information is all up to date. Ialways did it on payday began, I
enter my payroll, I put in allthe bills, all the spending have
done, it's up to date, mychecking account has been
reconciled. I know everything iscorrect. So I got good
(16:02):
information. And now you cango ahead and put in the needs
once that as you go. And thismight take a little bit longer
at the beginning, because youmay not have a category setup
for it. But you can scan throughthat report and find out the
(16:25):
different needs or wants. Andyour wants is everything that
you do not have to pay for everymonth. And that would I don't
know, hobbies, buying somethingon your credit card like I
bought a grill that is a wantand not necessary and need.
(16:47):
And that's just some examples.
Now, if you have children, andyou have to take them to a new
take them to daycare, that wouldbe a need. And that should be
included up on your needs underfood before savings, because you
need to pay for it every week,as you go throughout the month.
And you need to know how muchmoney to set aside. So now we're
(17:10):
in the first pay period, you doa new report from the beginning
of the month through the currentdate, everything's up to date,
and you put those numbers andthe actual column. And once you
have that done the spreadsheetsgonna do the math as you go. And
you can see how you're doing ayou paid your rent or your
(17:32):
mortgage. So that comes to zero,you paid some of utility. So you
still have some leftover becausethere's other utilities you paid
low later in the month, and youmade your car payment, maybe,
but he paid you bought some gas,maybe had an oil change done. So
that might come out to zero foryour maintenance. If you have a
(17:55):
little bit left over and yourbudget, that's a good thing,
that means you didn't spend itand you still have the money in
your checking account. And youcan then at a later date, as
that builds up, you can maybetransfer some of it out if you
don't think you need it rightaway, and put it in your savings
(18:16):
account and build up thatemergency fund. So our goal here
is to track our spending so wecan try to keep it under
control, and to build up ouremergency fund. And that's a
never ending process. Even ifyou get all your debt paid off
like I have, you still need todo this. So you can know how
(18:40):
much extra money I'm callingextra money that you don't have
a sign that you can put in toyour savings account and make
the money work for you. That'sthe goal here.
Once you got that done, you canjust look at it and you can see
(19:02):
how you're doing. Maybe you hadyour groceries set at from the
previous month that was $800.
And maybe you've already spentin the first week 400 You're
halfway through? Is that normal?
If you look at some of yourexpenses, you got to think to
yourself, am I spending morethan I have in the past? Or did
(19:25):
I have to buy things I normallydon't buy when I go to the
grocery store, like papertowels, you know things that add
up cost money shampoo, you know,everything you buy at a grocery
store is considered groceries,whether it's shampoo, show,
laundry detergent, whatever itis. I just keep it simple and
(19:48):
put it under groceries. Onceyou've done that and you thought
you so everything seems to bealright, I know the reason why
that was $400 I bought someextra meat because you're gonna
have a cookGotta have some friends over
whatever the case, I'm nottelling you to stop living your
life on this town, you need tobe aware of where your money is
going. Now, let's look at theallocation column, you look at
(20:13):
your bank balance, and you putin your current bank balance at
the top, where would be theincome area. Now, you say you
have $1,000, I'm just keeping itsimple. And you know, your rent
just got paid. So that should bezero.
(20:33):
What other expenses, though, areyou needing to pay in the
current month, and that's whereyou're gonna assign your money.
And you can use the previousmonth or the your budget Toller
amount, in order to use that asa guide to allocate your money
or just assign your money tothat category. So if you get
(20:55):
utilities coming up, and youonly pay 10% of them, you need
to allocate the rest than the90%. There, so the money will be
available when it comes up,maybe you only made one car
payment, and you have to carpet,you need to allocate your car
payment. So this is the firsttime you're doing it. So he go
through there. And whatevermoney you're not allocating, you
(21:19):
can allocate some to thatmortgage for the following month
coming up, maybe 10%, or 20%, or25%. Because we were trying to
get ahead, if you're been livingpaycheck to paycheck, and you've
been struggling to pay off yourdebt, this will help you, you're
(21:40):
starting to get ahead. And onceyou got all that done, did you
leave a little bit left that'snot allocated, say $300. So you
don't overdraw your checkingaccount? Because paying those
bank fees is gonna kill yourbudget, you don't want to pay
any more fees than youabsolutely have to. And if you
(22:02):
have a monthly bank fee. Why isthat? Because you don't keep
enough money in there. Have youbeen overdrawn? And have you
been using the do they have acredit that they loan you the
money? If they do you want topay that off? We're working here
to reduce our expenses. Once yougot that done, you're set, you
(22:24):
wait to the next pay period, youkeep your tracking up to date.
You don't overspend anywhere,you're looking for ways to
reduce your spending.
Maybe you identified yourentertainment category, and it
was $300. And you looked at thedetail. And you found Well, we
(22:46):
have this cable TV service pluswe have the streaming service,
do away with the cable service.
The reason I say that is becauseyou're paying for Internet, and
two, and that's going to be aset amount every month. And what
are you using it for? Are youjust using it to go line online
and maybe do some shopping orlook up something or whatever,
(23:10):
you need to maximize thatservice. And streaming does that
for you. And streaming thosesame channels is a whole lot
cheaper than paying for cableTV. And I want one step farther,
I bought a digital antennahooked up to my TV. So I don't
(23:30):
pay for local channels because Iget them free over the air. Now,
if you live out in the middle ofnowhere, and you can't do that I
understand. But if you're in acity or close to a city and you
can get free TV, absolutely dothat. I watch that all the time,
(23:50):
I don't have any problems. Andthen pick one streaming service
that gives you everything thatyour cable TV was providing.
Maybe not pay for the premiumchannels, the HBO show times the
Disney all those kinds ofthings, or maybe only have one
(24:11):
of those, because we're lookingat reducing your spending. I'll
be back in one moment with myfinal thoughts.
If you're interested in learningabout an online software that
helped myself get out of debt,it does tracking, budgeting, and
(24:32):
keeps track of all your assetsand all your debt. It even tells
you how much and when totransfer money into your savings
account and how much and when totransfer money to your debt and
which debts to pay off in order.
(24:52):
First. It's not cheap. It's aone time payment, but it will
definitely be an investmentSomething in yourself, and an
investment in your personalfinancial life. If you're
interested, send me an email atreduce debt increase
wealth@gmail.com. And I'll sendyou the information about this
(25:16):
online software that workedgreat for me. Okay, I'm calling
this simple because I don't wantyou to put in a lot of detail
for your wants, I want you togroup them up in big categories.
Shopping would be good shopping,general merchandise shopping,
(25:37):
have another sub account withthe hobbies. Keep it simple,
because right now, we want tofocus on what our needs are. And
we want to focus on what thosedollar amounts are. So that we
can determine later on down theroad, leave yourself some space,
(26:00):
when you do your spreadsheet,leave four or five rows in there
at the bottom. So you can put inmore categories if you wish. But
we're need to focus on what youabsolutely have to pay every
month, and how much of your takehome pay that's eaten up
(26:20):
anything after that is what youcould use for needs. After you
put a set amount into yoursavings. That's the goal here,
we're trying to build up youremergency fund a minimum of
$1,000, then we're trying tobuild it up to lease $4,000. So
(26:43):
that every few months, whetherit takes you six months to do
that, or six weeks to do that,then we can use that $3,000 At
the amount of money over thefirst 1000 that we're going to
keep in there at all times asfor your emergency
(27:05):
to pay down your debt. If youlisten to my debt reduction
plan, I've talked about this indetail. So that's the focus
right now, we want to keep thisbudget as simple as possible.
Not too many categories. We havethe categories on our needs
(27:26):
housing. And that would be themain name, housing, then sub
accounts under housing would bemortgage, real estate taxes,
insurance, repairs, utilitieswould be a subcategory. And then
under Utilities, you'd put eachindividual tech, utility, water
(27:47):
and sewer and natural gas orelectric, whatever, you have
trash. And then that totals upinto your utilities, you got one
number there, and then all thosetotaled up into your housing. So
you got one total there. So whenyou collapse all those down, you
got one number, or if you'relooking at a budget in the
(28:08):
spreadsheet, you'll have all thenumbers out
fairly easy, so that they canmatch up with the report that
you're getting from your app. Itook my app that I use for
tracking, and I rearranged it tomatch my budget. That makes life
(28:29):
so much easier when you'retrying to put the money in
there. Your budget, your actualspending in your budget
spreadsheet once a week. And Idid that by either ABC, a for
housing, B for transportation, Cfor food, D for savings, E for
(28:50):
insurance, F for childcare, itcan do it that way. And then
when the report comes out,they'll come out by ABCD. So you
that's the free you put a dashand then housing been dash
transportation. So it comes outa B, it comes out and in that
order, so that if your orderfrom your report is close to the
(29:14):
order of your simple budget, andmakes it much easier to enter
the numbers every week. It'seasy to do. I've done it, it's
not that difficult. Once youunderstand how the app works,
and you never post money intothe heading account housing,
transportation, food, savings,credit debt, you always put it
(29:38):
into the sub account that'sunderneath of it. That way it
all totals up and you got anice, good report. Now the
allocation column. The firsttime you do it is fairly easy.
Then the next week you do it,you may have paid some of those
bills. What you do isWhen you update your balance in
(30:00):
your checking account, you haveto go down when you pay your
utility, what you got paid thatparticular pay period of time
would be the amount of moneythat you take out of the
allocation, because it's nolonger in your checking account.
So you got to look at that,before you update the bank
(30:21):
balance at the top, you go downthrough there, and you take out
all your new dollar amounts thatyou paid from the allocation,
this can be kind of confusing,and it may be a little bit time
consuming, but it's a good toolto keep you from spending more
than what's in your checkingaccount. And then once you have
(30:42):
what you paid out of thosedollar amounts, then you can put
in your new bank balance, andthen you can go in and
reallocate or if you want to,you could probably just zero mo
out, put in your new bankbalance, reallocate again, leave
$300 in your checking account,that might be the easiest way to
(31:07):
do it. If you know that youallocated money, say to your
mortgage, and you didn't pay anyof it, you can leave that dollar
amount in there, because it'sgonna, you're gonna put right
back in, you might increase it,you might allocate a little bit
more than next pay period. Sowhatever works for you, would be
the way to do it, there's alwaysgoing to be a time delay, you're
(31:30):
gonna assign money to a categorythat you're not going to use in
that pay period. So you need toleave that amount of money in
there. And then you might wantto increase it a little bit, you
might want to decrease it, youcan move this allocated money
around to meet the bills thatyou want, that came up that you
(31:51):
wasn't expecting to pay. Or saythat your groceries, you had
budgeted $800 And you're at$1,100 now, so you can allocate
some of that money to groceriesfrom somewhere else, hopefully
not from savings.
(32:11):
So that's how you get a bettercontrol on your money. If you do
this, and you keep it up todate, every pay period along
with your tracking.
You're gonna get your financesunder control. You're gonna know
(32:31):
where your money's gone, you'llbe able to see it you'll be able
to spot trends, where you mayhave started overspending and
then realize it for whateverreason, and you can fix it right
away before becomes a problem.
Hello, I'm your host, Mr. Chuck, I retired accountant
turned truck driver, I reduce mydebt in a relatively short
period of time, debt reductionto achieve financial freedom
takes commitment, confidence,determination.
(00:24):
Starting control center controlcenter is nothing more than a
budget. This is the easy way tocreate an update to control
center every week. So knowingwhat's happening in finances
current, starting with the mostsimple budget for those who are
struggling to pay down debt, I'mfocusing on those people who
(00:48):
have a big debt problem. Andthey hadn't done anything in the
past. And you're working towardstrying to get your debt under
control. So you first thing youdo is start tracking all
everything you're doing throughyour checking account, your
(01:10):
savings account, all your creditcards, at the bare minimum, you
need to be doing that, and Italked about that in the last
episode. So now we're gonna workon creating a budget or a
control center. I call it acontrol center, because that's
where you can see in real time,what's happening in your
(01:34):
finances. And you can catchwhere you're spending too much
money immediately, correct itbefore it gets out of control.
So we start with tracking. Andonce you've got that done for at
least 30 days, and if you wentback and put in last 30 days or
(01:57):
so worth of information fromyour check in and all your
credit cards and your savingsaccount. Or if you don't have a
savings account, you need to setone up. Because by doing this
simple budget, and having acontrol center, you're gonna
free up some money that you canget that emergency funds started
(02:19):
and get a build up to thatminimum of $1,000. If you find
this episode useful, he cansubscribe to my channel by going
to my show notes and click himon my subscription page. I also
have links in there to thearticle I'm referring to and
it's from the nerd wallet. Andit's a free budget planner tips
(02:42):
for getting started. I'mfocusing on those people who
have never ever done a budget inthe past, or those people who
had tried to do a budget and wasnot successful. So what is a
budget planner, a budget planneris a tool such as a worksheet
that you can use to design yourbudget. Assess successful budget
(03:07):
planner helps you decide how tobest spend your money while
avoiding or reducing debt.
And then a nerd wallet wallet,they recommend the 5030 20
budget if you don't know that isI'm not going to talk about it.
They do in the article. I don'tlike it, because it's too
(03:28):
general. And we need to be morespecific. You need to look more
into what you are doing. So ifyou've been tracking for at
least 30 days, you need to gointo your app and do a report by
category for the 30 day rains.
Hopefully it's from thebeginning of the month to the
(03:52):
end of the month. That'simportant because that's one
complete monthly cycle of yourspending. You have two
categories. Generally speaking,you have income and you have
expenses. Then when yourexpenses you have needs things
you need to pay every month.
(04:16):
Don't do a budget for a year.
Don't do it first semi annualdon't do it for a quarter. You
do it for each monthly cycle. Soyou want to set up a spreadsheet
where you have January throughDecember and you can keep it
separate for each month and saveeach month.
(04:39):
So you can go back and look atwhat were these categories done
last month, three months ago.
Compare worry Are you today andyou can see if you're making
progress that way. So we do a 12month each one by itself. The
top of theA spreadsheet, you start with
(05:00):
income and you put in all yourincome that you have. And if you
get paid weekly, you need tohave a slot there to put in your
weekly payroll. And you do thatfor you and your significant
other, if you have a part timebusiness where you have regular
income, also include that. Nowyour payroll is the amount of
(05:24):
money you're depositing intoyour checking account, not the
gross, that's after taxes, andafter health insurance or an or
any retirement plans you may becontributed to, we don't need to
budget for those items, becausethey're already been paid. So no
use doing double the work.
(05:47):
That's the reason you start withthe net. A hands on monthly
budget planner isn't working. Ifyou consider one of these budget
apps, most of them sync withyour financial accounts so they
can track and categorizeexpenses for you keep in mind
that some budgeting apps arefree where others charge a
monthly or annual fee. I say usea spreadsheet and do it manually
(06:11):
and do not link anything to yourbank accounts. The more you
hands on you are in thisprocess, the more you're going
to be aware of what's going onin your finances, whether it's
income, which most people haveunder control, because it's only
one or two sources. But yourspending is the important thing
(06:35):
we're going to talk about, inanother episode about a debt
reduction plan or a debtmanagement plan. And what you
need to do in order to keep yourdebt under control to get it
under control. And then the Keepit there. So and the nerd
wallet, they have a budgetplanner here, it's free, you can
(06:57):
print it out, they can use it asa guide, if you want to. And
some guy guy got their income atthe top and then they have needs
rent mortgage insurance,property tax bills. Now if you
have an escrow, and you have amortgage and you're paying your
insurance and your insurancethrough the escrow, you only
(07:19):
need that one line, you don'tneed to account for any
additional thanks. Now I grew mytogether by housing, the under
housing, I include the mortgagepayment, or your rent, all
utilities, which includes yourcell phone, if you want to
(07:41):
include your internet service,you can include that there
because it's connected with thehome.
That's a good idea. The secondcategory would be
transportation. And then undertransportation would be you can
break it down by auto. If youhave two autos each one
(08:04):
separately, you can have theloan, you can then have
maintenance, gasolinemaintenance would be oil change,
stuff like that. Maintenance,oil change, gasoline, and any
major repairs you might havecoming up you can budget for for
future by replacing your tires,and insurance.
(08:30):
He always include the loan andthe insurance that's related to
that item in that particularbudget category. And then we
have food which would begroceries dining out deliveries,
you want to break those outseparately, because that way you
can see if you're spending toomuch money in a particular area,
(08:54):
such as dining out, or such ashaving food, prepared food from
restaurants delivered to yourhome, which I never do, because
it's pretty expensive. We'refocusing on trying to reduce our
spending and keeping ourspending under control. After
that, we have savings which is aneed because you need emergency
(09:19):
fund and you need to set moneyaside to pay or apply to your
debt later on. Once you have asignificant amount of money. And
then we have debt, which needsto be paid every month. And then
any other insurance you mighthave that's not in any other
(09:40):
category, such as lifeinsurance, disability insurance,
whatever type insurance youhave, then you can put that
there. Everything else would bea once your clothing,
entertainment. He can even havea want for dining out if you
don't do it.
that often you can say we go outand go out once a month or once
(10:04):
a couple times a month, you canmake that a want and that
necessary and need under food.
So once you have that set upsetting up your spreadsheet, CZ,
you got Column A or the firstcolumn would be a description of
everything that we just talkedabout. Column B, or the second
column is where you put in thepast history of what you spent
(10:26):
in those categories. And that'swhy you printed out the report
by category for the last 30days. The third column is the
actual spending you're doing andthe current month you're looking
at, then you have the fourthcolumn would be the difference
(10:48):
between your budget and youractual that way you can see at a
glance, if you've gone over thebudget, or getting close to the
budget, or how much more youhave left to go for that
particular month. And then thevery last column would be money
that you allocate, this issomething fairly new, I've
(11:11):
learned this and the new Need ABudget app, I don't use it, they
don't pay for me, and I'm notpromoting, and I'm just telling
you where I've learned this. Andwhat that does is all the money
that is deposited into yourchecking account, you're gonna
give it a job, you're gonnaassign a lot of money that's
(11:34):
going to be used to pay acertain need, whether it's
applied part of it to yourmortgage, let's say you get paid
weekly, your mortgage do once amonth, so you put, you know,
120 5% of your mortgage in thereevery pay. So when your mortgage
comes due, you know, you havethe money in your checking
(11:58):
account, to pay for thatexpense. At the top of that
column, where the income wouldbe, you'd put in your current
bank balance at the bottom, youjust do the math, every month,
all the money you assign, youtake your bank balance, you
(12:18):
subtract everything out thatyou're assigned, and then the
bottom should come to zero. Ifit's a positive number, that's
money that you have left in yourchecking account. So if you want
to keep, say, a $300 balance inyour checking account, you don't
assign that last $300, you leaveit in your checking account, so
(12:40):
you never overdraw your checkingaccount. So those are tips and
tricks that you do to make yourfinances easier. It's not all
that difficult. The next step,once you have all that setup is
copy and paste it 12 timesbefore you put any numbers. And
(13:02):
if any, you could put formulasin there. So that you don't have
to put them in later. But youcopy and paste it 12 times. So
you can go six cross and thendown and six as what I prefer to
go all the way out to June, andthen you go back on January and
you put July out to December.
(13:26):
That way, he can move aroundfairly easy, you know about
where the months are, you canjust scroll around. And when you
get to June, that's done, youcan go back all the way to the
left, go down a little bit, youknow, scroll go down a little
bit. And you're right there atJuly. Now, we have it set up.
The first step is taken thatfirst 30 days information
(13:50):
because that's basically he maybe have a little more than that.
But let us assume you got 30days plus a week, you go back,
you do the report for that firstmonth or the first 30 day
period. And that's the amount ofmoney you're going to assign to
your budget column.
Granted, some of thesecategories may be little
(14:13):
overstated, because you'recutting back your spending. But
that's what happened. These areactual numbers, which are
important because it gives youcloser to real time of what's
happening and your budget. Andthat tells you how things are
(14:34):
going at that point in time. Andwe're working on our first
month. So we're not going toexpect it to be perfect because
this is a process that you'regoing to be tuned in up over
time as you reduce your spendingspending and cut out for the
things you don't need thatyou've been paying for. And you
(14:57):
maybe negotiate some new termsLike on your cell phone or your
internet bill to get lowercertain costs on your service,
those numbers are on a change,which then would increase the
amount of money that you shouldbe putting in your savings if
everything goes good. So that'sour starting point. Now we're
(15:17):
the first pay per, I'm assumingyou're getting paid weekly. Even
every two weeks doesn't muchmatter. But your first pay and
the new month, you do anotherreport by category, from the
beginning of the current month,to the current date. Now you do
that after you updateeverything. So your tracking
(15:42):
information is all up to date. Ialways did it on payday began, I
enter my payroll, I put in allthe bills, all the spending have
done, it's up to date, mychecking account has been
reconciled. I know everything iscorrect. So I got good
(16:02):
information. And now you cango ahead and put in the needs
once that as you go. And thismight take a little bit longer
at the beginning, because youmay not have a category setup
for it. But you can scan throughthat report and find out the
(16:25):
different needs or wants. Andyour wants is everything that
you do not have to pay for everymonth. And that would I don't
know, hobbies, buying somethingon your credit card like I
bought a grill that is a wantand not necessary and need.
(16:47):
And that's just some examples.
Now, if you have children, andyou have to take them to a new
take them to daycare, that wouldbe a need. And that should be
included up on your needs underfood before savings, because you
need to pay for it every week,as you go throughout the month.
And you need to know how muchmoney to set aside. So now we're
(17:10):
in the first pay period, you doa new report from the beginning
of the month through the currentdate, everything's up to date,
and you put those numbers andthe actual column. And once you
have that done the spreadsheetsgonna do the math as you go. And
you can see how you're doing ayou paid your rent or your
(17:32):
mortgage. So that comes to zero,you paid some of utility. So you
still have some leftover becausethere's other utilities you paid
low later in the month, and youmade your car payment, maybe,
but he paid you bought some gas,maybe had an oil change done. So
that might come out to zero foryour maintenance. If you have a
(17:55):
little bit left over and yourbudget, that's a good thing,
that means you didn't spend itand you still have the money in
your checking account. And youcan then at a later date, as
that builds up, you can maybetransfer some of it out if you
don't think you need it rightaway, and put it in your savings
(18:16):
account and build up thatemergency fund. So our goal here
is to track our spending so wecan try to keep it under
control, and to build up ouremergency fund. And that's a
never ending process. Even ifyou get all your debt paid off
like I have, you still need todo this. So you can know how
(18:40):
much extra money I'm callingextra money that you don't have
a sign that you can put in toyour savings account and make
the money work for you. That'sthe goal here.
Once you got that done, you canjust look at it and you can see
(19:02):
how you're doing. Maybe you hadyour groceries set at from the
previous month that was $800.
And maybe you've already spentin the first week 400 You're
halfway through? Is that normal?
If you look at some of yourexpenses, you got to think to
yourself, am I spending morethan I have in the past? Or did
(19:25):
I have to buy things I normallydon't buy when I go to the
grocery store, like papertowels, you know things that add
up cost money shampoo, you know,everything you buy at a grocery
store is considered groceries,whether it's shampoo, show,
laundry detergent, whatever itis. I just keep it simple and
(19:48):
put it under groceries. Onceyou've done that and you thought
you so everything seems to bealright, I know the reason why
that was $400 I bought someextra meat because you're gonna
have a cookGotta have some friends over
whatever the case, I'm nottelling you to stop living your
life on this town, you need tobe aware of where your money is
going. Now, let's look at theallocation column, you look at
(20:13):
your bank balance, and you putin your current bank balance at
the top, where would be theincome area. Now, you say you
have $1,000, I'm just keeping itsimple. And you know, your rent
just got paid. So that should bezero.
(20:33):
What other expenses, though, areyou needing to pay in the
current month, and that's whereyou're gonna assign your money.
And you can use the previousmonth or the your budget Toller
amount, in order to use that asa guide to allocate your money
or just assign your money tothat category. So if you get
(20:55):
utilities coming up, and youonly pay 10% of them, you need
to allocate the rest than the90%. There, so the money will be
available when it comes up,maybe you only made one car
payment, and you have to carpet,you need to allocate your car
payment. So this is the firsttime you're doing it. So he go
through there. And whatevermoney you're not allocating, you
(21:19):
can allocate some to thatmortgage for the following month
coming up, maybe 10%, or 20%, or25%. Because we were trying to
get ahead, if you're been livingpaycheck to paycheck, and you've
been struggling to pay off yourdebt, this will help you, you're
(21:40):
starting to get ahead. And onceyou got all that done, did you
leave a little bit left that'snot allocated, say $300. So you
don't overdraw your checkingaccount? Because paying those
bank fees is gonna kill yourbudget, you don't want to pay
any more fees than youabsolutely have to. And if you
(22:02):
have a monthly bank fee. Why isthat? Because you don't keep
enough money in there. Have youbeen overdrawn? And have you
been using the do they have acredit that they loan you the
money? If they do you want topay that off? We're working here
to reduce our expenses. Once yougot that done, you're set, you
(22:24):
wait to the next pay period, youkeep your tracking up to date.
You don't overspend anywhere,you're looking for ways to
reduce your spending.
Maybe you identified yourentertainment category, and it
was $300. And you looked at thedetail. And you found Well, we
(22:46):
have this cable TV service pluswe have the streaming service,
do away with the cable service.
The reason I say that is becauseyou're paying for Internet, and
two, and that's going to be aset amount every month. And what
are you using it for? Are youjust using it to go line online
and maybe do some shopping orlook up something or whatever,
(23:10):
you need to maximize thatservice. And streaming does that
for you. And streaming thosesame channels is a whole lot
cheaper than paying for cableTV. And I want one step farther,
I bought a digital antennahooked up to my TV. So I don't
(23:30):
pay for local channels because Iget them free over the air. Now,
if you live out in the middle ofnowhere, and you can't do that I
understand. But if you're in acity or close to a city and you
can get free TV, absolutely dothat. I watch that all the time,
(23:50):
I don't have any problems. Andthen pick one streaming service
that gives you everything thatyour cable TV was providing.
Maybe not pay for the premiumchannels, the HBO show times the
Disney all those kinds ofthings, or maybe only have one
(24:11):
of those, because we're lookingat reducing your spending. I'll
be back in one moment with myfinal thoughts.
If you're interested in learningabout an online software that
helped myself get out of debt,it does tracking, budgeting, and
(24:32):
keeps track of all your assetsand all your debt. It even tells
you how much and when totransfer money into your savings
account and how much and when totransfer money to your debt and
which debts to pay off in order.
(24:52):
First. It's not cheap. It's aone time payment, but it will
definitely be an investmentSomething in yourself, and an
investment in your personalfinancial life. If you're
interested, send me an email atreduce debt increase
wealth@gmail.com. And I'll sendyou the information about this
(25:16):
online software that workedgreat for me. Okay, I'm calling
this simple because I don't wantyou to put in a lot of detail
for your wants, I want you togroup them up in big categories.
Shopping would be good shopping,general merchandise shopping,
(25:37):
have another sub account withthe hobbies. Keep it simple,
because right now, we want tofocus on what our needs are. And
we want to focus on what thosedollar amounts are. So that we
can determine later on down theroad, leave yourself some space,
(26:00):
when you do your spreadsheet,leave four or five rows in there
at the bottom. So you can put inmore categories if you wish. But
we're need to focus on what youabsolutely have to pay every
month, and how much of your takehome pay that's eaten up
(26:20):
anything after that is what youcould use for needs. After you
put a set amount into yoursavings. That's the goal here,
we're trying to build up youremergency fund a minimum of
$1,000, then we're trying tobuild it up to lease $4,000. So
(26:43):
that every few months, whetherit takes you six months to do
that, or six weeks to do that,then we can use that $3,000 At
the amount of money over thefirst 1000 that we're going to
keep in there at all times asfor your emergency
(27:05):
to pay down your debt. If youlisten to my debt reduction
plan, I've talked about this indetail. So that's the focus
right now, we want to keep thisbudget as simple as possible.
Not too many categories. We havethe categories on our needs
(27:26):
housing. And that would be themain name, housing, then sub
accounts under housing would bemortgage, real estate taxes,
insurance, repairs, utilitieswould be a subcategory. And then
under Utilities, you'd put eachindividual tech, utility, water
(27:47):
and sewer and natural gas orelectric, whatever, you have
trash. And then that totals upinto your utilities, you got one
number there, and then all thosetotaled up into your housing. So
you got one total there. So whenyou collapse all those down, you
got one number, or if you'relooking at a budget in the
(28:08):
spreadsheet, you'll have all thenumbers out
fairly easy, so that they canmatch up with the report that
you're getting from your app. Itook my app that I use for
tracking, and I rearranged it tomatch my budget. That makes life
(28:29):
so much easier when you'retrying to put the money in
there. Your budget, your actualspending in your budget
spreadsheet once a week. And Idid that by either ABC, a for
housing, B for transportation, Cfor food, D for savings, E for
(28:50):
insurance, F for childcare, itcan do it that way. And then
when the report comes out,they'll come out by ABCD. So you
that's the free you put a dashand then housing been dash
transportation. So it comes outa B, it comes out and in that
order, so that if your orderfrom your report is close to the
(29:14):
order of your simple budget, andmakes it much easier to enter
the numbers every week. It'seasy to do. I've done it, it's
not that difficult. Once youunderstand how the app works,
and you never post money intothe heading account housing,
transportation, food, savings,credit debt, you always put it
(29:38):
into the sub account that'sunderneath of it. That way it
all totals up and you got anice, good report. Now the
allocation column. The firsttime you do it is fairly easy.
Then the next week you do it,you may have paid some of those
bills. What you do isWhen you update your balance in
(30:00):
your checking account, you haveto go down when you pay your
utility, what you got paid thatparticular pay period of time
would be the amount of moneythat you take out of the
allocation, because it's nolonger in your checking account.
So you got to look at that,before you update the bank
(30:21):
balance at the top, you go downthrough there, and you take out
all your new dollar amounts thatyou paid from the allocation,
this can be kind of confusing,and it may be a little bit time
consuming, but it's a good toolto keep you from spending more
than what's in your checkingaccount. And then once you have
(30:42):
what you paid out of thosedollar amounts, then you can put
in your new bank balance, andthen you can go in and
reallocate or if you want to,you could probably just zero mo
out, put in your new bankbalance, reallocate again, leave
$300 in your checking account,that might be the easiest way to
(31:07):
do it. If you know that youallocated money, say to your
mortgage, and you didn't pay anyof it, you can leave that dollar
amount in there, because it'sgonna, you're gonna put right
back in, you might increase it,you might allocate a little bit
more than next pay period. Sowhatever works for you, would be
the way to do it, there's alwaysgoing to be a time delay, you're
(31:30):
gonna assign money to a categorythat you're not going to use in
that pay period. So you need toleave that amount of money in
there. And then you might wantto increase it a little bit, you
might want to decrease it, youcan move this allocated money
around to meet the bills thatyou want, that came up that you
(31:51):
wasn't expecting to pay. Or saythat your groceries, you had
budgeted $800 And you're at$1,100 now, so you can allocate
some of that money to groceriesfrom somewhere else, hopefully
not from savings.
(32:11):
So that's how you get a bettercontrol on your money. If you do
this, and you keep it up todate, every pay period along
with your tracking.
You're gonna get your financesunder control. You're gonna know
(32:31):
where your money's gone, you'llbe able to see it you'll be able
to spot trends, where you mayhave started overspending and
then realize it for whateverreason, and you can fix it right
away before becomes a problem.
Popular Podcasts
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Therapy Gecko
An unlicensed lizard psychologist travels the universe talking to strangers about absolutely nothing. TO CALL THE GECKO: follow me on https://www.twitch.tv/lyleforever to get a notification for when I am taking calls. I am usually live Mondays, Wednesdays, and Fridays but lately a lot of other times too. I am a gecko.