1.05.2013

Start your Budget Diet...

With an overhauled budget of course!
WARNING: This is a long post about how to budget

Making your Over hauled budget. The B word can be scary to face! It means you have to sit down and look at either how well your finances are doing or how well, not so pretty they are. In either case it overwhelming. ( I hope one day I am overwhelmed with having lots of green ;)

So when making your budget do:
  1. Choose a stress free time (no kids screaming and not at 2 am on a work week)
  2. Have whoever pays and contributes to bill paying present
  3. Collect all the information you need before hand, payment due dates, company names, checkbook ect
  4. Use a dedicated notebook or excel spreadsheet  
In order to get the Big Picture of your expensive to include in your budget, I like to get a print out of bank and Credit card statements for a typical month. Not the Christmas season or Vacation season. Maybe February or March. Then use this to calculate your spending that does  not include utilities and necessary payment.

What to include in your budget?In a simple word EVERYTHING! I like to micromanage my budget because I fell like there is 1. less room for no nonsense spending 2. you will know if something went wrong with your budget very quickly. So, what does everything mean?


Rent/Mortgage                   Allowances
Electric                               Gas
Water/sewage                     Groceries
Oil heat                               Husband Spending
Cable                                  Wife Spending
Cell Phones                         Extra Spending(birthdays, anniversaries, ect)
Land Line                           Children Expenses
Student Loans                
Credit Card Payments
Medical Bills
Taxes
Life Insurance
Savings
 
Prioritizing is next. If you are you are trying to save money or put extra towards debt this means that you will have to cut back or even out some area's of your budget. You should always pay your Mortgage and main utilities first! Let's face it there is no need to buy groceries or clothes if you don't have a place to keep them, water and electric to wash them. Now figure up the grand total for those bills and subtract from your total monthly income. With the money remaining move to your second priority.
Credit Cards and personal loans. Making these your second priority and paying them on time are very important. Low or bad credit is crippling in so many ways. If you are trying to add extra to pay off you will want to try and double your payment. This is because when you break down a CC statement most of the money you actually pay go towards interest and other fees. You may even want to call the CC company and pay by phone for the option to put the extra on the principal of the loan. (Beware, they will try to sell you a product but just say no!) I also suggest working at paying off one at a time, chooses the one with the highest interest rate (Tip. if in good standing call and see if you can get it reduced, saying you found a balance transfer with 0% financing usually helps).
Now you have your major bills paid, your credit cards paid, next would be Medical Bills. These can be just as damaging to your credit as lines of credit! So if you have many and they are in large amounts, call the source and set up a payment plan. They are all willing to work with you, now it may be more then what you were expecting at first but be assertive and tell them you can pay this and not one penny more. Make it a reasonable amount. Not 5.00 for a 500.00 bill, but maybe 50. 
Fourth priority is Groceries and Gas. I know you need to eat and to eat you have to have work, so you need gas. Your grocery budget should be 100.00 a month  per person so for a family of 4 = 400.00. Now of course at The Nifty Thrifty Lady I am not going to let you pay that! But to begin with budget about 10 or 15 % of your left over budget for groceries and then another 10 or 15% for gas.
Finally your spending and savings. I like to put a set amount in saving each month because we are still trying to build a savings. Then I like to take the remaining money(which maybe very, very small) at this point and put it towards all other costs. What is left is all the things that don't have to be done, they are luxuries. Going out to eat, the movies, giving the children an allowance. Shopping for new clothes, yes even Vacations. Again, I now things will arise. But instead of going out to the 5 star restaurant, go out to Olive garden or Longhorn, and yes use a coupon! Shop, Clearance or Consignment stores for clothes. Sign up for Groupon and save on day trips instead of paying hotel costs for a Vacation. Or better yet take a StayCation and Visit the history in your town. See if there is an extra fundrasier you can do to help cover the cost of uniforms or warm ups for the children. ALWAYS, ALWAYS ask for a special or discount everywhere you go, they can only say no and in most cases they will have something. If you are Military, student, or senior you are almost golden. Think outside the box for birthday presents, making homemade gift for a year is not going to seem cheap and they might like it more then you think!


At the beginning of each year I like to review, tweak, and overhaul my budget. I also do this for major life changes (Births, job changes, raises,) and new major expenses (New car, repairs, major medical). Making a budget and sticking to it is a must but there are times you need to adjust or things can get really hairy! 2012 was a constant re-do on our family budget! We had:
  • New job
  • Part time job
  • Full time job
  • HELLO Baby #2
  • New Truck
  • Major Medical
  • Single family income
Each time I had to adjust mostly savings and extra spending. However, Making a budget on Jan 1. and sticking to it until Dec 31. is probably not a good idea.

Paying your bills. Choose two times a month if you are paid bi-weekly or weekly. The 1st and the 15th are suitable. Figure which bills can be paid when, then call the companies and ask for then to move the due date to either the 2nd or the 16th. This will give you no room to let a bill linger and the average 24 hrs to process a payment on line. 

Remember your main Goal and make 2013 the year you Budget goes on a Diet!