Just like when you plan a trip, you need a starting point before you reach your destination. If you are going to follow the path to financial freedom you will never arrive to that destination until you know exactly where you are today.
The best way to get started is to complete a household cash flow worksheet. You can find different types of budgeting tools that are free to download at DaveRamsey.com .
Next you will need to get together a years worth of bank statements and credit card statements. Chances are if your financial life is a mess so are your statements. So you may need to go online and get copies of your statements from your banks. You are then going to average the cost of all your expenses and enter them in the appropriate places.
If you are anything like me and my wife your expenses are probably exceeding your income. That is how you got into debt in the first place. Remember you need to separate your wants from your needs. Once you fill out your budgeting worksheet you should circle every expense that is a "want." If you want to be successful at eliminating your debt you need to be able to decide what your true needs are such as food and utilities from those that are not necessary like: new clothes, DVDs, computer games. gym memberships, etc.
If you do not have a six to eight month emergency fund, not to mention what Dave Ramsey calls "Baby Step # 1" and establishing $1,000 emergency fund, have credit card debt, and have no retirement savings, you have no choice but to reduce your spending and eliminate many if not all of the "wants" you are spending on money right now.
Working on your budget will take some time. Dave Ramsey suggests it will take at least 90 days before you get it right. My wife and I are just about to that point and we are still making changes. The first birthday present we had to buy we thought, "Holy Cow! we didn't budget for gifts." So you will forget things to put on your list. That's why it takes time. Things come and then you remember to add them to the budget.
You are really going to think it sucks, but you are going to have stop spending on what I consider luxuries. My wife hates me for this one, but ladies you may need to cut out the manicures. Without eliminating these types of expenses you are never going to get where you want to go. The more you stop spending, the more money you have to put towards your families financial future.
Your kids are going to hate you for this one, but the $25 a week you shell out on allowance is $100 a month that could go toward a term life insurance policy that will provide for them if anything should happen to you. The $300 or more that you don't have to spend on a second or third car can be going towards your retirement fund every month. If you are able to put $300 a month into an Roth IRA for 20 years you will have more than $157,000 if you earn an average return of 7% a year.
Isn't your families well being enough to get you to started on a budget today and start saving more?
[This post is written and copyrighted by Financial Elite (http://financialelite.blogspot.com/ ).]
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