Family Budgeting Part 3

While we are on the topic of expenses, I thought I would share another important tip.



Avoid using estimates in your budgets whenever possible.


For example, let’s say that I think I spend about $100 a month on groceries. But, if I was to pull out my checkbook, credit card statements and receipts, I would know that I actually spend $800 a month. If I was to build my budget based on my “gut feel” or what I think, I am going to be way off. And what is the result of such a big miscalculation? Well, it may mean that I spend too much in another area and then find I don’t have enough to pay for food that month. Some of you may have even found yourself in this exact situation which can be very scary and frustrating.


I know it isn’t fun to gather up all of your exact expenses for an entire year. However, the extra effort is going to pay off in the end because you are going to have a much clearer picture of where your money is being spent. In turn, this knowledge is going to help you to make better financial decisions and good decisions are what will put you onto the path of financial freedom!

Family Budgeting Part 2

So, how did you do on your list of expenses? Did you get everything?


I realize your instinct may be to exclude certain things because “they don’t count.” (That’s how I always feel when I list how much I spend on clothes. Yikes!) However, you are only hurting yourself if you do this.



In order to figure out how to get out of a debt situation, you need an accurate and realistic picture of where your money is spent. If you leave things out you will get frustrated in the end when you are still spending more than you make.


Here are a few more items that I forgot to include that you’ll want to put in your list.

• All outstanding loans including second mortgages, home loans, tuition loans, loans to family members, etc.


• Trash Removal


• Home Maintenance (painting, furnance filters, salt, etc.)


• Furniture and Decorations


• Life Insurance


• Disability Insurance


• Veterinarian


• Pet Food & Toys


• Attorney Fees


• Child Support


• Payments on Liens or Judgements


• Dry Cleaners


• More Supplies (Detergent, Fabric Softener, Stain Remover)


• Charities and Donations


• Postage


• Health Club


• Child Care

Please feel free to share any other expenses I may have left out.

Family Budgeting Part 1

So what is the definition of debt? I would say that debt is the result of spending more money than what you have on hand.



Being debt free could therefore be defined as not owing anyone money because you have paid for everything in your possession.


One of the first steps in becoming debt free is to determine what you spend money on. I encourage you to make a list of all of your expenses for the past year. To help you make your list, below are some categories to keep in mind:

• MortgageCar


• Payment 1


• Car Payment 2


• House Insurance


• Car Insurance


• Health Insurance


• Doctor Visits


• Prescription Medicine


• Over the counter medicine


• Groceries


• “Eating out” Expenses


• Education Expenses (tuition, books, supplies, fees)


• Gas for Cars, Lawn Mowers, Snow Blowers


• Car Maintenance (i.e. Oil Changes, tune ups, etc)


• Parking Expenses


• Clothing & Accessories


• All Cards & Gifts (Birthdays, Christmas, Valentine’s Day, Just Because, etc.)


• Household Supplies (paper towels, napkins, food containers, foils and wraps, plastic bags, cleaning supplies, large storage containers, gift wrap containers, etc.)


• Personal Supplies (bar soap, shampoo, conditioner, hair products, feminine hygiene, lotion, deoderant, makeup, toothpaste, tooth brush, etc.)


• Vacations (Airfare, airplane food, hotel, rental car, luggage, gifts, momentos, etc.)


• Utilities (water, gas, electric)


• Phones (landlines and cell phones)


• Cable TV


• Internet


• Purchasing Checks from Bank


• Haircuts, Manicures, Pedicures


• Tithes and Offerings


• Subscriptions (magazines, newspaper, internet)


• Entertainment (movie theater visits, movie rentals, car shows, museums, concerts, special events, concession purchases, books, CD’s, DVD’s, etc.)


• Recreational Toys (motor homes, snowmobiles, sleds, skis, four wheelers, motorcycles, campers, boats, trailers, maintenance fees, storage fees, etc)

Please note that the little things add up and can really put you over the edge so don’t forget items such as your morning coffee from Starbucks, the daily newspaper you grab from the checkout lane, and your afternoon snack at the vending machine.

Which Debt Do I Pay First? (Part 2)

The last post gave a basic loan example to get us started. Let's make it more realistic today with the following example.


Loan 1 - $15,000. 10% interest. $15,000 x .10 = $1500 in interest payments each month.


Loan 2 - $5000. 5% interest. $5000 x .05 = $250 in interest payments each month.


Loan 3 - $5000. 20% interest. $5000 x .20 = $1000 in interest payments each month.




If I had extra money to put against the principle on a loan, which one would I want to put it against? My initial reaction would be to say loan 3. The reason is that I am paying the most in interest for each dollar I borrow on that loan. How do I figure that?


Loan 1 1500/15000 = I pay 10 cents per dollar borrowed
Loan 2 250/5000 = I pay 05 cents per dollar borrowed
Loan 3 1000/5000 = I pay 20 cents per dollar borrowed

Of course, another way of looking at this is to pay down Loan 1 because you are paying the most each month on that one.


Another option to consider is to use a lower interest rate loan to pay off the higher interest rate loans. You just need to make sure that there aren't any "set up fees" or other charges that will end up costing you more.







God is the ultimate "get out of debt" solution. I invite you to visit my website www.OverflowLiving.com where I offer an online Bible study, verses by topic, faith confessions and much more. My goal is to help you step out into the good life of abundance and overflow that God planned for you!

Deciding Which Debt To Pay First

Recently I heard someone on a talk show ask which debt to pay off first. This made me realize that everyone may not understand the impact of paying interest on a loan. I like examples so let’s use one for this.

Debt 1 - Owe $10,000. 5% interest rate. $10,000 x .05 = $500 interest payment every month.

Debt 2 - Owe $10,000. 10% interest rate. $10,000 x .10 = $1000 interest payment every month.

Debt 3 - Owe $10,000. 20% interest rate. $10,000 x .20 = $2000 interest payment every month.

Did you notice that the higher the interest rate, the higher the monthly payment? I used the same loan amount so that you could plainly see the affect of different interest rates on what you have to pay each month.

So, let’s say the $10,000 loan was for a car. On top of paying off the $10,000 which was the cost of the car, you are also going to have find an extra $500 a month at a simple 5% interest rate. But, if you have a 20% interest rate, you now have to find an extra $2000 a month. Ouch! At that rate you will have paid $10,000 in interest after only 5 months. That’s what the car costs!

Hopefully these little examples have given you a clearer picture about how interest rates affect what you pay on a loan. Check back soon for more tips.

Debt Free Living Starts With Your Thoughts

If you are serious about getting yourself out of debt, you need to take a serious look at your mindset. How you think will determine what you do. If you believe that your family has always been in debt and will always be in debt . . . well . . . you have pretty much sealed your own fate. Your actions will follow what you think.

For example, let’s say you are an earth lover and think that SUV’s are evil. They guzzle gas and polute the atmosphere. Well, if that’s what you believe (i.e. think) then I highly doubt you are going to go buy an SUV tomorrow. That action would go against what you think.

It’s the same with debt. If you think that you can’t get out of debt, then you won’t act the way it’s necessary to get you out of debt. It’s really that simple.

So how do you change your thoughts?

First, figure out what you think about the most. If you are constantly worrying about debt then worry and fear are foremost in your mind. Did you know that worry is fear about something that may never happen? Don’t waste time worrying about debt. Let’s start doing things to take charge of our lives and break free from that curse.

Let’s try something. Make a list of what your life would look like without debt. How would you feel? Relieved? Set free? Would you sleep better at night? Would your health improve? Remember that picture because you want to use that as motivation to do the next step.

What is the next step? Starting making decisions that line up with that picture. You get to choose whether you want to stay under the burden and pressure of debt and financial obligations or if you want to live in freedom. The control is in your hands and only you can make it happen.

Thanks for letting me share my thoughts. I’ll expand further on this area in another post. Please take a minute and share your thoughts with us!

Freedom From Debt
http://www.keepinglifesimple.net/Freedom_From_Debt.html

Simplify, get organized and learn to live the good life that God planned for you!
www.OverflowLiving.com

Intro to Christian Debt Free Living

Have you ever said any of the following?

“I wish I could go further into debt.”

“I love the pressure of knowing I can’t pay my bills this month.”

“I enjoy having collection agencies call my house.”

“I love living paycheck to paycheck with never enough to get ahead.”


I’m going to go out on a limb and assume you said no. So why do so many people fall further into debt?

I’m not a financial analyst nor do I have a degree in finance, but I believe a big reason is lack of knowledge and poor decisions. Of course there are other things that also factor in such as illness, job loss, etc., but even then you shouldn’t have to live in poverty.

I look forward to sharing with you practical tips and Biblical solutions that will help you to get out of debt and also get ahead. Money cannot buy happiness but it can give you opportunities to be a blessing to someone else. My goal is to give you some suggestions that will allow you to rise above your situation and be a blessing to others!

Talk with ya soon!