Thursday, January 5, 2012

2012 Debt-Free Financial Plan - Budget, Budget, Budget


STOP! 
Before you even start rolling your eyes & have a panic attack, let me reassure you the budget process is not nearly as scary as we make it out to be!

What you're afraid of are these things:
  • You'll find out you're spending more than you make?
  • You won't be able to buy what you want?
  • You may need to find extra funds?
  • You may need to cut back activities you enjoy?
  • You can never get out of the hole you're in?
OK, so, those are legitimate fears. And the answer is YES!
You may find out:
  • You're spending more than you make
  • You may have to cut back on WANTS and focus on NEEDS
  • You may need to generate extra income
  • You may need to learn to enjoy activities that are less expensive or free
  • BUT..... You CAN get out of the hole you are in!
How are you going to do that?
You are going to start with a BUDGET!

So, suck it up buddy. Grab the pen and paper or program (links at the end). Grab your significant other if you have one. Get out your pay stubs. Put on your big boy/girl underwear and get to work!

  • Be HONEST with yourself and your partner - this means you are going to have to come out with those purchases you've been hiding. 
  • Focus on RESPECT - Be careful that you do not turn into the money police. Work TOGETHER! This isn't one person controlling the money. Budgeting will teach you mutual accountability. If you're single, ask a friend to go this journey with you!
  • Be COMPLETE - Don't leave anything out! Include EVERYTHING! This means EVERY trip to McDonalds, the five dollars you send the kids to school with, every gas fill-up, soda machines, etc!
  • EXPECT CHANGES - As you proceed with your budget, you will start to tweak it as you realize you are spending or saving more than you thought. This is OK. This is a learning process.
  • Be CONSERVATIVE - Set your income LOWER and your expenses HIGHER. This allows for flexibility and room for error.
  • Develop a CASH CUSHION - Because life always has little surprises (yes, we've all been stuck on the side of the road or the heat went out) you want to start setting up a cash cushion. This is NOT for you to spend. This does NOT exist. The cash cushion is for EMERGENCIES! Also, in addition to your cash cusion, it's a great idea to begin banking 3-6 months salary... just in case.  
  • Make a family PACT - Include the whole family. This doesn't mean you have to give the kids specifics, it just means that every member knows that there's a game plan to improve the family's financial well-being. This also helps reduce the shock of that first "No" when the child wants their 150th action figure.
  • Be CONSISTENT - Check your budget often... TOGETHER! Each of you should be aware of where your budget stands TODAY!
  • Work on SAVINGS - Once you have that cash cushion for emergencies and 3-6 months salary established, allocate an account specifically for savings. Savings is set aside for a specific goal, (ie:  house downpayment, education, investments, retirement).
  • Look at and FOCUS on the FREEDOM! A budget isn't a form of punishment it's a form of future security! I recommend setting goals for what you want to achieve. Do you want to pay off debt? Great! What happens after that? Are you trying to buy a home? A car? That dream vacation? What will it take to achieve those dreams? Set your game plan in motion.
Start however you want weekly, monthly or yearly.
Our family went for the yearly budget, and I'll explain why.
  1. We have long-term goals
  2. The first month looked pretty bleak, I wanted to see the light at the end of the tunnel.
 
What we found as the year went on:
  1. We were able to remove some payments as we paid off debt
  2. We saw an increase in savings
  3. We saw a decrease in debt
  4. We saw how our dreams were closer to achievement


How will you budget? This depends on you!
Here's some tools that you can use that will help you:

Printable Hard Copy Worksheets: 
DollarTimes Family Budget: (Download Excel Form Here)
Christian Professional Finance Budget: (Download Excel Form Here)

Online Printable Worksheets:

Free Online Budgeting Services:


Good luck! You can do it! Need a cheerleader? Let us know!



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