MInTheGap

One of the hardest things about easy credit is not spending money.  Somewhere, lurking in the back of your mind is a voice that only speaks when they see something that they want and that you cannot afford.  It tells you that there’s extra money in an account.  It helps you justify going against your better judgment.  And judging by just how much debt the average American carries it is very persuasive!

The problem is that the more we listen to this voice, the further behind we get and the more we end up spending for a particular item.  You see, few actually think (in that moment when they’re having the debate with the voice) of how much the interest on a given item might be over time.  No, the voice convinces us that we will make the monthly payment, or that we’ve got a 0% deal or some sort of logic to get us out of trouble.

That’s why it’s imperative that you have a budget.  I would suggest a zero sum budget.  What does that mean?

List Your Income

Basically, sit down with a spreadsheet or a piece of paper and start out at the top listing your income.  For me, I’m paid bi-weekly so I have each paycheck listed there. 

Pay the Bills

I then go down the left listing each thing that I must spend money on—bills, church, etc.  After that, I have a list of how much I’m willing to spend on household necessities like groceries, toilet paper and the occasional ice cream run.

Don’t Forget the Snacks!

Yes, I actually budget money to go out and eat, to do impulse buying with, and for babysitting.  Of course, I’m not to sure how well I’ve done with those numbers since it seems that we always run out before the end of the month, but we try.

You Should be Saving at least 10%!

Then I list my savings—towards my emergency fund, retirement, and big expenses like medical bills and automotive repair, etc.

It should equal Zero

At the end of the column I have a total where I subtract all the expenses from the income and I make it equal zero.  There, I’ve spent it all on paper. 

Now, I put things in place to help me keep this goal.  I get cash out for those things that have the tendency to inflate when I get there so I have a tangible idea of how much I have left.  I put in automatic payments at my bank or use Electronic Funds Transfers (EFTs) from the places I owe were possible.

What if I Don’t Have Enough?

Two things for you to do, my friend…

1. Cut back – smaller Cable package, can the cell phone, go on fewer vacations, switch to generic brands, stop going out to eat, sell something.
2. Get another job – Rather than continuing to dig a hole, find a way to fill in the hole instead.  Plan to do it just for a short period of time.  You’ll be happy you got out.

Anyone need me to go into some details or examples?

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