Another Christmas has come and gone. You promised yourself this year, you were going to stay within your budget. You weren’t going to use your charge cards to purchase gifts and you were not going overboard. But the sales were too good to be true and things you just had to have, now sit in your living room. After all, you can start fresh next year, turn over a new leaf- stick to a plan. Next year is going to be different, better than ever. Next year you will gain control of your finances.
Does this sound familiar? Have you ever had this conversation with yourself in the past? Do you ever stick to your commitment? Well this year can and will be different. The reason why you didn’t fare well in the past was because you didn’t maintain a strategy. If you continue to do the same thing expecting different results, you are destined to repeat the past. However, this year you have support. Together we will travel on a journey to become financially free. We will hold each other accountable for our spending habits and we will challenge each other to reach and obtain goals. We will share our success stories and learn from the pitfalls we will definitely encounter. But at the end of this road trip, most of us will be satisfied with the progress we made. Let’s look at this year as an opportunity to build a solid foundation. Now some of you will cheat on yourselves but at some point, you will get tired of the debt building, being broke, and not being able to fulfill your destiny. Don’t worry, we will be here to catch you when you fall, chastise you and tell you to shake off the past and don’t look back.
Now that you’re excited about new possibilities, I know your next question is “How do I get started?” So I want you to fill in the blanks. It’s not for anyone else, just for you. You can’t truly appreciate where you are going unless you can fully understand where you are coming from.
Magazines/Newspapers Federal Income TaxState Income TaxSocial Security/Medicare TaxPersonal Property taxPetsMiscellaneous Expense
|CATEGORY||MONTHLY BUDGET AMOUNT||MONTHLY ACTUAL AMOUNT||DIFFERENCE BETWEEN ACTUAL AND BUDGET|
|EXPENSES:||Mortgage or Rent||Telephone||Home Repairs/Maintenance||Car Payments||Gasoline/Oil||Auto Repairs/Maintenance/Fees||Other Transportation (tolls, bus, subway, etc.)||Child Care||Auto Insurance||Home Owners/Renters Insurance||Computer Expense||Entertainment/Recreation||Groceries||Toiletries, Household Products||Clothing||Eating Out||Gifts/Donations||Healthcare (medical/dental/vision, inc. insurance)||Hobbies||Interest Expense (mortgage, credit cards, fees)|
|NET INCOME (INCOME LESS EXPENSES)|
Helpful hint, just check your last two months statements to gather some of this information. Do you have any money left over? Did you realize you are spending entirely too much money in one particular area? What about savings and retirement? As you can see, it’s not listed on this budget. Are you contributing to the retirement vehicle on your job and did you ever research to see if the company matches your contributions?
Now that we know where we stand, let’s determine how much can we save realistically. How much money would you like to save by December 31, 2006? Take that number and divide it by twelve. That’s how much you should save per month. Do you get paid weekly, every two weeks, or twice a month? However you get compensated, take that number of paychecks and break down your total goal to a per paycheck amount. I’m certain that figure seems more obtainable. After all, this objective is to ensure we can achieve our goals together. So my personal philosophy is to subscribe to the “10-10-80” method. 10% of my earnings belong to God, 10% of my earnings belong to me, and the remaining 80% belongs to the expenses you see listed above. Until I gained self control, I contributed the entire 10% of my earnings into my retirement plan so I wouldn’t spend the money.
So I think that’s probably enough for the day. Stay tuned for our next step. But just in case you have some questions you’d like me to answer, you can reach me at email@example.com. Until then…..
Author of “Planning for A Reason, A
Season, and A Lifetime”