Have you ever felt overwhelmed by debt or just the daily expenses in your life? I have. It feels like everything is out of control and out of my hands. Why is it that there sometimes just doesn’t ever seem to be enough money left over to pay everything in full each month? I have worked with many clients to deal with this exact issue.
An effective strategy is to set up a repayment budget. When you are in over your head and too stressed to even make one payment because you feel overwhelmed by not being able to pay the other 10 payments that are due, this strategy will help.
Let’s say that you have your monthly expenses covered and something out of the ordinary happens like your car breaks down. You have to do the repair which could cause you to decide what expense you will not be able to pay this week or month. What happens next? Do you have an emergency fund set up to help you out? Or do you decide that you have to skip your cable bill this month and try to catch it up next month? So many people deal with this stress each and every day!
Your living expenses shouldn’t eat up your whole salary! If you haven’t taken a close look at your average monthly expenses, you should do it soon. You need to
know realistically how much you are spending on housing, utilities, food, entertainment, transportation, etc. By knowing these numbers, you can plan and budget for savings and future goals. A good rule of thumb is 30% housing and utilities, 15% savings, 10% food, 10% family fun, 15% transportation, 15% debt repayment. These can be altered but it is a good place to start if you have no idea where to begin.
To keep you on track, you can set aside the cash in envelopes on payday. You can have a cash envelope for food and another for fun. When the money from the envelope is gone, that is the budgeted limit until your next payday. Or you can set up individual bank accounts for each category and transfer the budgeted funds there to keep costs in order. By strategizing your expenses, you will be in control of your saving and spending habits and will be in a less stressful situation.
If you don’t strategize your money, you may end up spending more than you
realize. Setting up the individual categories will focus your expenses in a positive direction. Be realistic about the income you have to deal with and make it work for you.
The 15% debt repayment category will help you dig out of debt and eliminate late payments and fees. Use this amount to pay a little towards each debt. By focusing your thought on a debt repayment category, you won’t have to worry about living with debt forever. The secret is time, patience and commitment. Once you have your last debt paid in full, the 15% can go towards saving and investing for your retirement. We will have to do that one day so the sooner you get a handle on your expenses, the wealthier you will be!
I would like to see all of us keep more money than we spend. Budgeting out your income will help you set aside enough for a rainy day or a holiday! When you have conquered your budget, you can teach it to your kids and save them from debt stress and give them the knowledge they need to be savers with big bank accounts!
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