Budgeting 101

I'm starting at the very beginning because I am a slacker when it comes to budgeting, but to get out of debt you HAVE to set up a working budget!!

1.  Get your spouse on board.
It may not be easy but if only one of you is following the budget you will get nowhere. . . fast.
My hubby took a little convicing. Life can sometimes seem happier if you hide your head in the sand.
 I promise you life is better when you can see where you are going.

2. Make a list of your expenses.
Mortgage, car payment, insurance, groceries, medical expeses, savings, donations. . .
Where does your money go?

3. Split your list into bills you pay each month and bills you pay periodically (every other month, once or twice a year). Figure out how much you pay per year and divide this # by 12.

4. Don't forget to add in other annual expeses such as Christmas, birthdays, car and home maintenance, etc. Make your best guess. Then add up these expeses and divide them by 12.

5.  Next, figure out how much money you make. What is your true monthly income. If your income isn't a steady salary, take a look back at your previous paychecks and make your best guess.

6. Stand back and take a look at where you stand. The optimal budget would be perfectly balanced. You would have $0 left over when all is said and done. This isn't easy to do.
If you are spending more than you make, take a hard look at your expenses and see where you can cut back. If you have extra money left over, apply that money to your debts!
If your debts are paid, apply that money to a savings account or investment. (yay!)

7. Now that you have your budget written out, stick to it!
If you are going to make a purchase, make sure it is in your budget. If it isn't, don't buy it, or find a way to move things around in your budget so that it fits.
-This has been the hardest part for us. We tend to be Saturday impulse shoppers. And we are magnets for clearance sections of our favorite stores.
One piece of advice that we are learning to follow: Just because it is on sale doesn't mean you should buy it! You may be saving 80% on that pretty new dish set, or new shoes but if you don't need dishes or shoes you aren't saving anything.