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Recommitting to your Budget (Your Budget Misses You!)

Recommit to your budget

This is what it looks like when “Life” happens.

 

There are two things you HAVE to know to be successful with money.

1. Your budget is your primary tool for financial freedom.

2. Your budget won’t work unless you do.

It’s only the second week of the year, but by now most folks have already broken their new year’s resolutions.

One thing we’re experts at in this country is failing to follow through on our commitments.

Likewise, the biggest issue most people have isn’t that they don’t know how to budget, they just aren’t doing it.

Life happens.

 

We forget.

Or worse, we get frustrated.

We make decisions based on emotions in the moment rather than on principles that have withstood the test of time.

So let me ask you…

Do you need to recommit to your budget? Did you start strong only to fall off the wagon when life got busy? Did you give up because of an argument you had with your spouse?

Your budget is simply a piece of paper that tells your money where to go. If you don’t tell it where to go it gets lost. So don’t overcomplicate it. Just get started.

Will it be perfect? No.

Can I guarantee it will work? No. But I can guarantee it won’t work if you don’t do it.

Yes I know it’s the last season of The Office (we’re sad too). But get your hiney off the couch and do something that will change your life.

Recommit to your budget.

-Wesley

P.S. You will need to recommit often. We still fall off the wagon and fail to do our budget some months. Oh yeah…we ALWAYS overspend on those months. Hmm…interesting how that works isn’t it?

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Track It Or Lack It

This is Rule #6 of our Managing Your Money series: Track Your Spending Weekly.

 

How many of you have ever written down goals somewhere, only to completely forget about them until months later when you happen to clean out your desk? The same thing can happen with your budget. A budget is nothing more than written monthly goals for your money. But if you create a budget, and fail to look at it until next month, then the chances are high that you’re going to overspend. For financial success, you have to track your spending weekly.

People think tracking their spending is all about finding the right software or app. But the key to tracking your spending is to make it routine. Jim Rohn said, “Motivation is what gets you started. Habit is what keeps you going.” The system or software you use is important, but the first step is to make this a habit that is ingrained in your weekly schedule.

Shoot For Sunday: I have a reminder set-up in Outlook that pops up every Sunday afternoon reminding me to sync my bank accounts with Quicken. I spend about 15 minutes making sure that all of the transactions are categorized correctly (ie, groceries, fuel, etc). This process is short and easy, and it helps us make sure we’re on track with our spending.

Choose Your Spending System: There are several ways that people spend money which affect their ability to track it. No one way is better than the other; it’s simply about what works best for you. Here’s an overview of each system with pros & cons for each.

1. Card Only (no envelopes): This is a no-cash system, which obviously means paying for everything online or with plastic (debit or credit). The pros are that you can track it easily to the penny, there’s always an online record of what you spent, and it’s very convenient. The cons are that you tend to spend more on purchase made with plastic than you do when paying cash.

2. Cash Only (all envelopes): This is rare in our society but there are some folks who do use only cash. The pros are that you spend less when using cash, and that you will typically never overspend. The cons are that tracking your spending is a pain. You always have to get receipts and all data entry is manual. And don’t forget mailing off checks every month for common reoccuring bills.

3. Cash & Card (some envelopes): This is probably the most common system of spending among budget-minded people. You make some payments online (mortgage, bills, Amazon, etc), and withdraw cash each month to fund your offline spending envelopes. This is the system Beth & I use. The pros are that it prevents overspending on the majority of your daily expenses (due to the envelope system). The cons are that you have to withdraw cash every month, and it’s difficult to track your cash purchases without receipts & manual entry.

One way around that is to simply let go of that feeling that you have to track every penny. If you throw $50 a week into your “Restaurant” envelope, then don’t worry about tracking it. When it’s gone just stop eating out until it’s time to refill the envelope. You can track yourself to death…the point here is to know you spent $60 this week on eating out, not $35.83 at  Outback or $3.27 at Starbucks.

Choose Your Software: There are numerous software options for tracking your expenses. I haven’t tried them all, so I’m limited on what I can recommend. Currently we’re using Quicken, which is doing the job for us. I’ve used the paid version of Mvelopes in the past (it’s now free!). I would recommend Mvelopes if you love the envelope system of budgeting. Mint is also a very popular free way to track your spending. I asked my friend how he likes Mint and he replied “Love it. Takes a little time but it’s worth it.”

Every software program has a learnig curve. You’ll enjoy the process much more if you know going into it that it’s going to take 2-3 hours to set up all of your accounts and a couple of months before you feel really comfortable with the software. Make some coffee, turn on some music, and lock yourself in a room for about 3 hours and you’ll be fine.

Comments: Let us know in the comments what software or systems are working (or aren’t working ) for you!

Committed to your success,

-Wesley

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Top 5 Unexpected Benefits Of A Budget

Ever see your bank account dwindle away and wonder where it all went? 

You have to understand this principle about money:

If you don’t tell your money where to go it will get lost.

Welcome back to our Managing Your Money series. This post is on Rule #2: Create A Spending Plan.

Rule #2: Create A Spending Plan

What is a spending plan? Very simply, it’s a budget. It’s telling your money where to go before it wanders off and you can’t find it anymore. And according to Dave Ramsey a budget is the number one tool for getting out of debt.

We’ve done numerous posts on How to Create a Budget. So instead of the “how-to” I want to give you five reasons WHY YOU MUST have a budget every month.

Top 5 Unexpected Blessings Of Having A Budget

1. A Budget Gives You Control.

Drowning in debt feels like you’re out of control doesn’t it? A budget puts you back in the driver’s seat. You start to feel like you can wrap your hand around your finances. It gives you confidence. Even if your budget is a mess, simply having one tells you and your money whos boss.

2. A Budget Brings Unity.

Ever have that “WHAT WERE YOU THINKING?!” experience when you find out your spouse spends money on something completely ridiculous? Creating a budget with your spouse eliminates that once and for all. It forces you to agree on what you will spend your money on every month.

3. A Budget Eliminates Conflict

Statistically, couples who argue more about money are more likely to separate. Why argue constantly when you can schedule one hour each month to get all of your financial arguments out of the way? (Shhh…Beth & I actually enjoy doing our budget together!)

4. A Budget Reduces Emergencies

For an event to be considered an emergency it has to be unexpected. But what most people call “financial emergencies” are actually normal events for which they failed to plan. The car needs new tires, the A/C went out, we have to buy Christmas presents, etc. A budget forces you to “expect the unexpected” and helps you be prepared for them when they inevitably happen.

5. A Budget Saves You Money.

Last but not least, a budget can save you ridiculous amounts of money. But there’s a reason almost 200 million Americans DON’T have a budget. It’s hard…it takes time…blah, blah, blah.

If I offered you $200 to sit down and create a budget in an hour or less you would take it. But what you must realize is a budget will SAVE you at least $200 a month, and every month you follow your budget that number goes up.

What You Manage Grows

Let me be candid for a moment. You know you need a spending plan. The people who don’t aren’t reading this right now. So why don’t you have one? What are your excuses? Time? Fear? Not enough money to manage?

T. Harv Eker says “You must acquire the habits and skills of managing a small amount of money before you can have a large amount. Managing your money is more important than the amount.”

Your excuses will kill your potential. Don’t let them. Take action now.

Committed to your success,

-Wesley

P.S. Do you have a budget? How has it helped you? If you don’t have a budget, what’s stopping you?

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How to Create a Bulletproof Budget – Part IV

Roughly 60% of Americans do not have a monthly budget. Hopefully, this series is helping you make your way over into the 40% of America that does track their income & spending. Today we’re wrapping up our 4-part series on “How to Create a Bulletproof Budget.”

If you need a budget template to help you get started, feel free to download ours here in either the Excel version or the PDF version. Here’s a picture of the budget for a reference as we go through this.

As you recall, Step One is to determine your monthly income. Today we’re going to finish Steps Two & Three! We’re picking up where we left off in Part 3, which is in the Debt section. Let’s get started!

Step Two: Determine your Monthly Expenses

Debt: Our hope for you is that your hatred for debt and your desire for freedom will eventually eradicate this section from your budget. We weren’t created to live in debt, regardless of how accepted it may be in our culture. For now, consider this section in your budget as a temporary necessity that will eventually go away as you pay off your debt. While this section is very self-explanatory (simply fill in the section with the amount you owe each month), we recommend reordering your debt in one of two ways:

  • Debt Snowball: This is the approach recommended by Dave Ramsey. Basically, you start by paying down your smallest debt while paying the minimums on everything else. Once that debt is paid off, you take the amount you were paying on that debt and put it towards the next smallest debt, and so on. The benefit of this is more psychological than fiscal; by paying off your smallest debt first, it keeps you motivated and encouraged by making quick progress.

  • Debt Avalanche: In this method, you pay off your debt starting with the highest interest rate first and working down towards the lowest interest rate. This method makes the most financial sense as you can save hundreds or thousands of dollars over the long run, but it does take some emotional discipline as you won’t always get the shot of motivation of paying off a loan fast.

Beth & I actually used a combination of the two methods. We started with the snowball method, because we had several small debts (less than $2000) that we just wanted to pay off quick so we could focus on the bigger ones. After eliminating these smaller debts, we switched our strategy to the avalanche method, and began paying down the debt with the highest interest rate, which happened to be a Citibank credit card.

We found a spreadsheet online which allowed us to order our debts in various ways to see how long it would take us to pay them off and how much interest we would lose or save by using the different payoff methods (snowball vs avalanche). We were able to calculate that we would save over $2000 in interest by switching to the avalanche method. Click HERE to go to Vertex42 where you can download their Excel debt reduction spreadsheet (it’s free), which is the same spreadsheet we used.

Step Three: Determine what to do with the Leftover Amount

Budget Totals: If you’re using the budget template in Excel, than the budget totals section should already be filled in with the correct amounts, showing you the total monthly income, expenses, and any leftover amount. Hopefully the leftover amount is a positive number. If it’s negative, it means your expenses exceed your income, and you’ll need to figure out how to either generate more income, or cut your expenses.

Assuming that the leftover amount is a positive number, then this final step is to determine what to do with that amount. There are really only five possible options:

1) Emergency Fund: If you don’t have an emergency fund of at least $1000, then any leftover amount should go towards this. If you have a bigger family, I would suggest a higher emergency fund.

2) Pay off Debt: Once you have an emergency fund in place, we suggest using any leftover amount to pay down your debt, either using the snowball method or the avalanche method.

3) Save: Once the debt is paid off, we suggest you save up 3-6 months of living expenses. This is a safeguard to cover any bigger emergencies, such as health or loss of income issues. After you have this reserve built up, you can begin to focus on saving for other investments, retirement, etc.

4) Invest: Too many people start building the house (investing) before they have the foundation ready (savings). I’m sure some will disagree with this, but we encourage people to hold off on saving for things years down the road until you have 3-6 months of living expenses saved up. Sadly, most of us know people who have had a financial setback or emergency and had to pull money out of their retirement fund because they didn’t have enough in savings.  Build your foundation first.

5) Spend: Most of us are experts at spending, so not much explanation is needed here. One encouragement though would be to not lose sight of generosity. We encourage generosity, even when you have debt. Giving is a powerful tool that helps break the power that money can have over someone’s life. More on this to come in later posts.

Date Night!

We like to end our Weekend posts with a few thoughts you can take into your date night with your spouse. Since this post is a little longer than normal, we’ll just leave you with a couple of quick thoughts to discuss with your spouse:

1) What is the best payoff method for our situation (snowball vs. avalanche)?

2) Out of the five possible options we can choose, what is the best decision for how to use our leftover amount?

Well friends, we hope you’ve enjoyed this series! As always, please drop us a line below in the comment section! If you’ve benefited from these posts, please help us spread the word on Facebook & Twitter.

Committed to your success,

-Wesley

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How to Create a Bulletproof Budget – Part III

Hello and welcome back! Today we’re continuing our series about creating a bulletproof budget.

If you haven’t downloaded the budget template yet, you can download it here for free, either as an Excel document (recommended) or a PDF document. Here’s a photo of the budget you can reference as well as we go through this.

Excel Budget Template  PDF Budget Template

If you’ve been tracking with us, then you’ll recall that there are only three simple steps to creating a budget: 1) Determine your Monthly Income, 2) Determine your Monthly Expenses and subtract this amount from your Monthly Income, and, 3) Determine what to do with the leftover amount (savings, giving, investment, debt snowball, etc).

We’re in the middle of step 2, and today we’re going to pick up where we left off on Monday, which is by going through the sections on the right column of the budget. Let’s jump right in!

Step Two: Determine Your Monthly Expenses

Living & Heath: You’ll notice that most of the budget is comprised of bills that involve your stuff (car, house, etc). This section focuses more on the expenses that involve taking care of you, such as food, clothing, personal money, etc. Here are some tips for navigating this section:

  • Grocery: When people try to make budget cuts to save money, they usually start with their grocery budget. We would actually caution against this, and here’s why: You will either pay for your health now, or you will pay for it later. Cheap = Unhealthy. If you shop cheap and buy junk because you “can’t afford healthy food” you just need to realize the incredible hidden costs to that decision and perhaps add a new line item to your budget for future medical bills.

  • Restaurants: If you really want to cut expenses (and some extra pounds), then here’s your chance to go crazy. Most people, especially those who don’t track their expenses, spend way too much money eating out. When we do our budget, we set aside $60 a week for eating out, which includes coffee therapy (Starbucks).

  • Entertainment/Dates: We budget enough each month for us to have a date night once a week. Right now, that’s $40 a week so we can eat out somewhere nice and not have to worry too much about price. When we were aggressively paying off our debt, we had an “eating out” budget of $30 a week, which included restaurants, date night, Starbucks, etc. Some people cut “eating out” completely out of their budgets so they can make more progress on the debt. But for the health of your marriage, we absolutely never suggest cutting out a weekly date night. Get creative and you can find some amazing free & romantic things to do every week.

  • Salon/Hair/Toiletries/Makeup/Clothing: These are all pretty self-explanatory, but here’s where some understanding and good communication is needed as gender differences will tend to creep up and cause tension.

    First a word to the guys: Your wife is designed by God with a deep need to feel beautiful. You’re not. Therefore, it isn’t appropriate for you to expect the same clothing or hair allowance as your wife. Sure, we should all make sacrifices when it comes to dumping the debt, but just understand that it is completely okay, and some would even argue needed, for your wife to spend more than you on these items.

    With that said, ladies, don’t go crazy. If you’re buried in debt, you don’t always need a pair of shoes to feel beautiful. Sometimes insecurity in both genders can lead to overspending in these areas. If you can understand that you’re wired differently, and you’re both willing to make some sacrifices, you can find the right balance on every one of these line items.

  • Personal Money: We’re going to skip the next three rows as they’re pretty self-explanatory, and jump to personal money. Having a personal budget is one of the secret keys to resolving financial stress in your marriage. Even if you’re buried in debt, we still recommend a small personal budget (maybe $10), just so you can maintain a sense of control and freedom, knowing that you can go out and buy something you want without needing an agreement from your spouse. For an in-depth explanation about this, check out our first post titled Three Ways a Budget Eliminates Stress and creates Freedom in your Marriage.

Stay tuned for the final post in this series on Friday!We’re going to wrap this series up on Friday by discussing the section about Debt and and going over step three. We’re working on some podcasts and we’re definitely going to cover this topic, so if you’re more of an audio learner then we got you covered!

As always, feel free to post a comment with any feedback, comments, or questions! What are you thoughts on the best way to cut expenses out of the budget? We respond to 100% of our comments!

Committed to your success,

-Wesley

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How to Create a Bulletproof Budget – Part II

Welcome to a new week! As promised in Friday’s post, today we’re going to go step by step through the process of creating a bulletproof budget!

If you didn’t download the budget template on Friday, you can download it here for free, either as an Excel document (recommended) or a PDF document.

Excel Budget Template  PDF Budget Template

As you recall, there are only three simple steps to creating a bulletproof budget.  We have a lot to cover, so let’s jump right in.

Step One: Determine Your Monthly Income

This section is for you to add up 100% of your financial income for the month. We provided four different rows for you to input your income: salary, tips, bonus/dividends, and miscellaneous. Most of you will only need the row for “salary,” and I recommend deleting the other rows if not needed.

Don’t worry (yet) about what to do differently if you get paid twice a month. For now, just add up your total income for the month.We’ll address some of the frequently asked questions later this week. (On a side note, Beth & I get paid twice a month, and we use a budget very similar to the template. We set our budget on the 1st of each month and then revise it as needed on the 15th of each month when we get paid again).

Step Two: Determine your Monthly Expenses

Here’s where the fun begins. You’ll need to go through each section and fill in your anticipated monthly expense for that item. Here’s a breakdown of each section, along with some helpful tips.

First Fruits: I call this section First Fruits based on the Biblical principle of giving God our best and our first.

  • Tithe/Giving: The topic of tithing is really for another post, but I highly recommend continuing to give and cultivate generosity even when you’re paying off debt. It is a monthly reminder of who really is in control of your life.

  • Savings: If you don’t have an emergency fund of at least $1000, then try to save some each month until you do.

  • Buffer: This is a little protection added to the budget to protect you from going over and possibly incurring overdraft fees. We recommend always having a $100 buffer in your checking account.

Home: Most of this is self-explanatory, however, here are some highlights:

  • Taxes/Insurance: These are usually paid yearly, so you’ll need to find out the yearly expense and divide it by 12 to get your monthly expense. If you pay this through your mortgage (escrow), then simply delete this row.

  • Maintenance/Repairs: This is a budget buster. When people don’t budget for home repairs and their A/C breaks, guess who pays the bill? Usually Visa. We recommend setting aside $50 a month for this category.

  • Household Goods: This includes cleaning supplies, light bulbs, toilet paper, etc. We actually group this into our grocery category since Beth buys all of these items when she is grocery shopping, however, a lot of people like to keep it separate, which is why we included it here.

Transportation: You’ll notice we don’t include “car payment” in this section. That is because your car loan is debt and it should be viewed as such. We have a serious problem in America of thinking that a car payment should be a permanent line item in the budget. If you’re serious about freedom, then you have to see your car loan as bad debt and not “normal.” (Remember, normal in America equals being in debt)

  • Insurance: Similar to your home insurance, this is likely paid yearly, biannually, or quarterly. If it is not paid monthly, then you’ll need to do some math to figure out your monthly expense.

  • Gasoline: Have no clue what you spend each month on gas? Look at your bank statements for the last couple of month’s to get a pretty clear picture of what you’re spending.

  • Maintenance/Repairs: This includes tires, oil change, etc. We recommend $50 per month. This doesn’t mean you spend $50 each month…only that you’re saving $50 each month for this item. That way when you need new tires in five months you won’t have to use your emergency fund to pay for them.

To Be Continued…

That does it for the left side of the budget. We’ll cover the column on the right on Wednesday. (We try to keep these posts short enough for you to read in about 10 minutes or less…we know you’re busy…hopefully breaking everything into three parts doesn’t drive you crazy).

Please post a comment below including any questions you may have so far which we can address in the upcoming posts! We respond to 100% of our comments!

Committed to your success,

-Wesley

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How to Create a Bulletproof Budget – Part I

Have you ever seen news coverage about a sinkhole? Usually they show pictures of some huge hole that opened up, swallowing vehicles & buildings.

Here’s the funny thing about sinkholes…they don’t happen overnight. Sure…the collapse happens overnight. But the actual erosion of the earth which caused the collapse has been occurring for weeks, months, and even years, often hundreds of feet below the surface.

While sinkholes are sometimes a surprise, they usually leave clues. Cracks in the tile floor, a leaky pool, and stair-steps in the stucco are all little signs of a possible sinkhole, which most people confuse as simply settlement.

Most homeowners ignore the cracks and the leaky pool. It’s easier to assume it’s just a little settlement than a sinkhole. In the same way, most people avoid creating a budget. They don’t really know where the money’s going, they just know they never seem to have enough. So they slowly sink further into debt, not realizing it’s just a matter of time before the collapse.

If your finances are a mess, and you’ve never created a budget before, you may be in for a little dose of reality. It may be painful. It will probably be ugly. But…the truth will set you free. So summon your inner courage, grab a calculator, and let’s go!

First Things First: Download the Debt To Life Budget Template

The easiest way to explain this is for you to actually complete each step as we go along. To help you do this, we created a very simple, yet comprehensive budget which you can download for free and fill out as we go along.

We created two versions for you, one in Microsoft Excel, and one as a PDF document which you can save and/or print. I recommend the Excel version because it does all of the calculations for you. It is also very easy to edit and customize. (Don’t have Excel? Download Calc, which is Open Office’s free version of Excel; visit Open Office for more info). Click below to download the budget template.

Excel Budget Template  PDF Budget Template

 The Nitty Gritty

As we go through this process, the temptation is to over complicate everything to make sure we don’t miss anything. Remember the first quality of a bulletproof budget? Simplicity. Resist the urge to make this harder than it should be.

There are only three steps to creating a budget. We’ll go through them in depth in Monday’s post, but here they are in all their glory:

#1: Determine your Monthly Income.

#2: Determine your Monthly Expenses and subtract this amount from your Monthly Income.

#3: Determine what to do with the leftover amount (savings, giving, investment, debt snowball, etc).

If there isn’t any “leftover amount,” figure out a way to revise #1 or #2 so that you are at least breaking even. We’ll address later next week what to do if your expenses continually exceed your income.

In the meantime, go ahead and download the budget spreadsheet. We’ll go through it in detail starting Monday, so over the weekend it would be good to review it and make sure you have all of the needed financial information in order to fill in the correct amounts next week.

Date Night

It’s Friday, and that means date night’s coming! There’s nothing more romantic than whispering sweet nothings to each other about budgets and balance sheets! This weekend’s Date Night is pretty straightforward. Simply print out two copies of the budget above (or your own if you have one), and review it with your spouse. As you do, try to think of creative ways to earn extra income, make extra cuts out of the expenses, or quickly knock off some of the debt.

We’d love to hear from you! Please post a comment below about your thoughts on creating a bulletproof budget! We respond to 100% of our comments!

Committed to your success,

-Wesley

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Four Qualities of a Bulletproof Budget (Part Two)

Welcome back to our “Bulletproof Budget” series! We truly hope you are having an excellent week so far!

As promised, today’s post is about the final two qualities of a bulletproof budget. In Part One, we mentioned the first two qualities, which are 1) Keeping your budget simple and, 2) Making sure you and your spouse agree on the budget.

Without further delay, here are the final two qualities of a bulletproof budget.

A Bulletproof Budget Is…

3. Comprehensive

There is no such thing as “unexpected” when it comes to a truly comprehensive budget. Notice…I didn’t say “complex.” It is possible to have a budget that is thorough and accounts for everything yet is still simple and easy to understand. If you create a budget, yet still find “unexpected” expenses popping up throughout the month, then your budget is not comprehensive.

I’m writing this about two weeks after a team of Navy Seals killed Osama bin Laden. Speaking about the planning for the raid, one commentator stated that they had contingency plans for every possible scenario, and then they had contingency plans for their contingency plans. Likewise, your budget is literally your spending plan. No budget = no plan. Inadequate budget = inadequate plan.

Studies show that the most common cause of major debt is unexpected emergencies. Obviously, you can never fully expect a car accident, or a sudden job loss. But you can prepare financially for the unexpected by allocating funds in your budget for these items.

Most “emergencies” are really smaller issues which should already be included in the budget as a line item, such as vehicle maintenance. The real emergencies are typically weathered by having an emergency fund, which starts around $1,000 and should eventually be built up enough to cover 3-6 months of living expenses.

4. Personal

Your budget is your budget. We highly suggest customizing any online template or form you may find so that it fits your needs and even your style.

Even though I’ve looked through dozens of different forms and templates, the budget Beth & I use was created by us from a blank Excel document. Why? Because it gives us the flexibility to make changes. I even change the colors and layout every so often just to give it a sense of newness. Sometimes I’ll add a scripture or quote to the budget. The point is, your budget needs to fit YOU. The more “U” that’s in your budget, the more you will enjoy it and take ownership of it.

That’s it. Simple, Agreed-upon, Comprehensive, and Personal. If these four qualities exemplify your budget, then you have something solid, err…bulletproof, that you can work with.

Comments

Please post a comment or question! Which of these four qualities does your budget need the most? We respond to 100% of our comments.

Committed to your success,

-Wesley

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Four Qualities of a Bulletproof Budget (Part One)

Hello & welcome back to Debt To Life! This week we’re excited to jump into the process of creating a bulletproof budget.

Today and Wednesday is all big-picture stuff (defining a bulletproof budget, parts one & two). On Friday, we’re going to help you create a bulletproof budget, step by step. Let’s jump right in by defining exactly what we mean by bulletproof!

A Bulletproof Budget is…

1. Simple

If you’ve never created a budget before, simplicity is the name of the game. Less is more. You can find hundreds of downloadable budget forms and spreadsheets online, however, most offer way too many features which often serve to overwhelm more than they help.

If you’re just starting out, you don’t need line items in your budget for retirement, investments, children’s college fund, etc. What you need is a simple budget that tracks your monthly income & expenses.

You can always add these items into your budget down the road, after you have established a track record of following your budget for a few months. What is important now is to create a habit of following your budget, and this will be difficult if your budget is complex and hard to understand.

Here are some tips to keep it simple:

  • Limit it to one page. If you’re using Excel, try to keep it where you can see 100% of your budget on one screen without having to scroll.
  • Omit items that don’t immediately apply. This is especially true if you’re trying to pay off debt. It’s pointless to save for your toddler’s college fund while carrying credit card debt. Pay off the high interest debt, then start saving for the college fund.

2. Agreed Upon

This is commonsense, so I won’t belabor this point. If your spouse doesn’t agree to the budget, it is far from bulletproof.

This also should go without saying, but a budget can’t be agreed upon when there are hidden expenses. You should never have income or expenses which are hidden from your spouse. No hidden credit cards, tax bills, subscriptions, expenses, etc. You get the picture. The only exception would be a surprise, such as saving for a surprise gift or trip. But even then I would err on the side of transparency.

What’s the easiest way to agree upon the budget? Simple. Create it together. We’re going to start talking about the process of creating a budget step by step in Friday’s post. But since we’re in the middle of the month, now is the perfect time to start planning and budgeting for next month.

If this is your first time to create a budget with your spouse, I would suggest that you schedule a couple of kid-free hours together in the next week or so (before the beginning of next month) where you have access to all of your financial information and a computer and can hash out a budget together.

More to come!

Stay tuned for the final two qualities of a bulletproof budget on Wednesday! As always, please post a comment or question below; we’d love to know if there’s any way we can better serve your specific needs! We respond to 100% of our comments.

Committed to your success,

-Wesley

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Mythbusters: Busting the Top Five Budget Myths That Keep You Broke (Part Two)

Happy Friday everyone! Today, we’re wrapping up our Mythbuster series, and we’re débuting our new weekly installment called “Date Night.” Now for the final two budget myths (if you missed Part One, click here)!

Myth #4: A Budget Will Constrain Me

Truth: A Budget Will Set You Free

In essence, a budget is the natural outcome of you taking control of your spending, rather than letting circumstances or emotions control your spending. When you set a budget, you are literally assigning a name (such as food, gas, fun, etc) to every dollar you spend. A budget puts YOU back in the driver’s seat. Contrary to popular belief, a budget gives you control. It is the exact opposite of losing control.

The reason people relate a loss of control with having a budget is because a budget brings transparency to their spending. No longer can you just go out and spend blindly. But again, this isn’t losing control…this is gaining control…control over the crazy part of you that thinks buying things will satisfy emotions (shopping therapy anyone?).

Myth #5: My Spouse Won’t Agree to Follow a Budget

Truth: You’re spouse probably doesn’t understand the budget.

When a spouse doesn’t agree to a budget, it typically means that he or she doesn’t understand the budget. This is often the case when one spouse gets on a financial fitness kick and creates the budget with little or no input from the other spouse, then is hurt and confused when their spouse resists the “new budget.”

The key to this, as in almost every area of marriage, is good communication.

To be cheesy, budgeting is a team sport. To be fully sober, it will be incredibly difficult, if not impossible, to achieve financial success inside a marriage where there is not a sense of “oneness” in the way you and your spouse handle the finances.

We highly recommend that you and your spouse create the budget together. If one spouse is more “financially inclined” (or like me, loves creating spreadsheets), then it is acceptable if one person carries more of the load when creating the budget. However, it is absolutely necessary that both of you fully agree upon the final budget. You’ll know pretty quickly if this isn’t the case, as you’ll end up with resistance, arguments, and overspending.

To recap, here are the top five budget myths that keep you broke:

Myth #1: I Don’t Need A Budget. Truth: If I want financial freedom, a budget is essential.

Myth #2: Budgeting is Hard. Truth: The first 2-3 months are hard; after that it’s basically auto-pilot.

Myth #3: A Budget Won’t Work For Me. Truth: A budget will benefit any income level or financial situation you may find yourself in.

Myth #4: A Budget Will Constrain Me. Truth: A Budget Will Set You Free

Myth #5: My Spouse Won’t Agree to Follow a Budget. Truth: You’re spouse probably doesn’t understand the budget.

Date Night!

As promised, here is our first installment of what we’re calling “Date Night.” At the end of every post on Friday, we’re going to include a few discussion questions that focus on that week’s topic which you can print out and take with you on your weekly date with your spouse.

If you don’t have a date night every week, we HIGHLY recommend it! You don’t have to break the bank every week, but it is vital for the health of your marriage to get some one-on-one time with your spouse away from the kids where you can reconnect (and may even rekindle some of those sparks you used to have when the only time you could see each other was on date night!).

Since this week’s topic is about budgeting, here are a few questions to discuss with your spouse:

If you don’t have a budget:

What are our hesitations or fears to creating a budget?

How would a budget benefit our finances? (5 ways)

How would a budget benefit our marriage? (5 ways)

When would be a good time each month to have a budget meeting?

If you have a budget:

Do you feel that our budget is working? Why or why not?

How could we improve our budget?

If you could make one change to the budget, what would it be?

Upcoming Posts

If you don’t have a budget, you’re in luck. Next week, we’re going to discuss the ins & outs of creating a budget! Be blessed and have a great weekend!

Comments: We respond to every comment! How have you bought into these  budgeting myths?

Committed to your success,

-Wesley

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