You’ve added up everything: house, car, electric, water, insurance, credit cards. Everything! You look at your paycheck, and there should be enough money to make ends meet, but it’s not working. You are still coming up with more month than money. You’re not alone. Victims of the Walking Debt will tell you, Vampires are out there draining the life out of your bank account. They are Budget Killers!
Expenses you don’t see, or plan for, are the real Budget Killers. It’s the stuff of legend: $3 today on a tasty treat from the corner coffee shop. Tomorrow, you drop another $4.75 for a rad mag with a hot pic of Angelina and Brad on the cover. Spend like that every day of the month, and all of a sudden, you’ve just spent $200 – $400 on STUFF. That’s what the average family spends every month on unplanned, non-essential, JUNK. However, you have power to take out those Budget Killers!
First, you need to know what your spending habits and spending patterns look like. So run, don’t walk, to your Walking Debt toolbox and grab three key items: A calculator, pen and paper. Your mission: Have each and every person in your household (come on honey, you too) keep a journal for one month, writing down each and every expense, each and every day for 30 days. At the end of the month, look over your journal (also known as a tracking sheet) and spot patterns. Is your sweet tooth kicking in every day at 2 o’clock, causing you to rush to the store for soda and chocolate? $3 times 30 days is $90. Surely there’s a cheaper way to get your sugar fix. (Buy in bulk, for example, at the warehouse store). You can also gift yourself, and cut that expense altogether, and watch the pounds drop along with that evil, stressful Budget Killer!
Beware: There is another Budget Killer lurking! Periodic expenses, which are expensive items that pop up when you least expect it. These are car and house repairs, gifts, urgent medical problems and more. However, you can arm yourself so you’ll be ready when one of those Budget Killers rears its ugly head.
Start thinking about stuff you know will come up. How many oil changes per year do you expect? Will you need new tires in the next 12 months? Christmas is another big one. We act like Christmas is a big surprise. “OMG, where am I going to find money for gifts?” (You’ve had about 2,000 years to plan for it, so do it!)
Figure out how much you will spend on periodic expenses over the next 12 months, divide by 12, and start setting that money aside each month.
Consider the alternative. If you put $2,000 on a credit card at 18% interest, then pay the minimum payment, it will take you 30 years to pay off. So, if you put Christmas on a credit card, pay the minimum payment, you won’t have it paid off before the next Christmas rolls around. Then, you’ll add that Christmas on a credit card, and so on until all your cards are maxed out (along with your stress level). The debt just builds over the years. By setting the money aside now, when Christmas arrives, you can borrow from yourself and repay it before the next holiday season arrives.
Your resolve, combined with a pen, paper and calculator, will build the armor you need to battle those Budget Killers and WIN!