31 Days to Financial Freedom: Interview w/ Successful Budgeter

“Too many people spend money they haven’t earned,

to buy things they don’t want, to impress people they don’t like.” -Will Smith

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I had the chance to converse with someone I consider a supreme budgeter over the holidays.  I’ve learned lots from Samantha R. over the years – she’s motivated, inspired and encouraged me over the years. Many thanks to her for sharing some of her insight and tips with us all.

Why do you budget?
I like knowing where my money’s going. I enjoy my career and make a decent salary – knowing that I’m at a point in my life where I can control where I allocate my funds and still have something left over for savings and entertainment means so much. I struggled for years with money and wasted so much money because I just spent and treaded water to get by.  I don’t want to be in a situation like that again.

I’m surprised that you’ve not always been good with money. You seem so in control and knowledgeable about budgeting  – disciplined is the word I’m looking for.

I definitely have not always been as disciplined as I am now.  Just like you, I had that moment where I said enough is enough and knew I had to make some changes in my finances to for peace of mind.  Lots of trial and error. I read lots of finance books and looked at different budgeting plans. I had to find what worked for me and make it a part of my daily routine.

How do you prepare your budget?

I use an Excel spreadsheet with all of my bills listed out and break out a percentage for charity and savings first.  So each pay period, I put my salary and it automatically calculates based on what I have entered. I save and/or donate 25% of my salary so I’ve learned to live off of 75% of my income. Most of my regular bills (utilities, insurance, etc) are approximately the same each month so that’s easy to account for. I, also, have a set amount set up for household shopping like groceries, cleaning supplies, etc.

I’m still trying to digest you living off of 75% of your salary????!!!???

LOL…believe me, it has not always been that way. But I credit setting up a strict budget, sticking to it and making short-term sacrifices for a long-term pay off. I didn’t eat out for almost a year – no fast food, no Friday night pizza, no happy hours, nothing. But now I’m in a position where I can splurge on those things and not worry about spending money that should be used to pay something else. I can answer an “Unknown” call and not be worried about it being a bill collector.

What’s the number one tip you’d give someone like me that’s working on paying down debt and needs to be more disciplined?

Relax. You’ve taken the first step – realized you need to change your habits and are actively planning to make a change with your relationship with money. You’re not going to change your behavior over night or even within the first month or so.  You’ll slip up and it’s okay. Just be diligent with your plans and budget for small rewards when you reach milestones.

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Do you have a budgeting mentor?
Is there someone that’s taught you an invaluable lesson on budgeting?

31 Days to Financial Freedom: Budget Trimmers

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Yesterday we discussed how to create a budget and touched on the difficulty of eliminating items from our budget to make sure we’re not overspending. I came across this extensive list of ways to trim your budget by CareOne Debt Relief Services.

A few of my favorites:

  • Consider lower-cost options for your “needs”
  • Be honest with yourself and recognize if you have self-control issues impacting your savings goals
  • Start a Spending Diary to track your earnings and spending
  • Use coupons and shop the sales. Purchase necessities on sale and have them on stock in your home
  • Just because it’s on sale doesn’t mean you need to buy it. If you buy something you don’t need and/or won’t use then you’re not saving any money.
  • Take your lunch to work (so simple but so hard for me!!!)

While many budget trimmers are a small amount – those small amounts add up over time and the more of them you implement the more overall savings for your wallet!

What budget trimmers do you work into your budget?

31 Days to Financial Freedom: Budgeting Basics

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Honesty time – how many of us have ever created a true household budget and attempted to stick with it? Bonus points if you implemented it for more than a week!

Let’s be real – if sticking to budgets was easy for me, then this blog wouldn’t even be necessary! I used to think that my biggest struggle with budgeting was lack of funds – WRONG! It’s lack of discipline on my part with saying no and learning how to live within my means.  As I grow, I’m learning that if there’s a deficit in my budget then I need to either find something to cut or find a way to bring in more money.  I know, I know, I know – often easier said then done but it’s all in our attitude and approach.

Let’s look at the basics of creating a budget:

STEP 1 – Add up your income from all sources.

STEP 2 – List all of your expenses and prioritize them. Downloading your transactions from your online bank to Excel helps with this and the following steps. Identify fixed and discretionary expenses.

STEP 3 – Review your discretionary expenses and (sigh!) see what needs to be trimmed and/or eliminated.  Identify where your hot buttons are – dining out, Target, Starbucks, cell phone bill, etc- and make some tough decisions.  This step often is where many stop and continue with business as usual because making changes and sacrifices is not easy at all!

STEP 4 – Review your long-term goals and that list of things you’d do if money was not an object – use that as inspiration to sacrifice for a short period of time for long-term benefits.

STEP 5 – I use a spreadsheet similar to the one below to determine what gets paid when and track how much I have to put aside and pay off additional debt.  I’ll be honest there are lots of week when the final number is negative when I first put everything in and I have to use some creative accounting and just realize that there are some things that just won’t get paid.

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STEP 6 – Budget to reward yourself within reason on a regular basis – monthly or quarterly. You’re working hard and deserve it. Make sure they are economical and reasonable rewards.

STEP 7 – Find a system that works for you – ledger book, online accounting system, spreadsheets, etc – and use it to help keep you organized and on track with your budget.

What step of the budgeting process is most difficult for you?
What works best for you when creating a budget?

Saving Money Goals

I came across this on Facebook and have seen quite a few blogs that I follow say that their on board. I’m thinking that I really like this idea because it gradually gets you into the habit of saving. Slowly adding an additional dollar a week shouldn’t be too hard, right? I would love to hear your thoughts and whether or not it’s something you’re up to trying – especially for those that have a very hard time saving.

Pretty Girls Rock Dresses®

What will you sacrifice to get what you want?

This was a question that Bishop Bronner posed during Watch Night Service this past Monday. As I sat in that chair I thought about all the things that I have and love. One must be willing to give up a little comfort to reach their goals. I plan on being a lot stronger in my financial decision-making. I came across this really cool picture on LA Lynn’s Accessory Shoppe.

52-week-money-challengeAccording to this plan you can save $1,378.00 in one year if you follow it closely. I noticed a couple of my friends on Facebook talking about this challenge; some are gung-ho while others think that $1,378.00 is not nearly enough money to save as an adult. Granted you can always save more money but I believe this plan is a great start for people who are new to saving or need help setting firm financial goals. I mean…

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31 Days to Financial Freedom: Budgeting Experiences

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It seems like budgeting has always been a part of my vocabulary.  Growing up, I’d often see my mother with her ledger book, checkbook and file folder of bills.  Whenever I’d get an allowance or gift money, it was mandated that I give a portion to church (tithe) and give some to my mother to put into my savings account.

Once I began working at 16 and getting what I thought was a huge amount of money – all that I was taught went out the window.  I worked full-time my junior and senior year of high school and had absolutely nothing to show for it upon graduation.  If I could go back in time and shake myself silly, I most definitely would.

My mother tried her hardest to instill the importance of savings and budgeting in me, but she, also, allowed me to make mistakes with my money.  I’m not entirely sure how I feel about that.  Part of me knows that I was being given a slow introduction to the adult world while still in a safe bubble. Another part of me feels that my financial outlook as an adult would have been a little different if more one-on-one, direct conversations were had about budgeting, savings and being frugal.

Now that I’m a parent, I want to not only show my children how to be financially fit – I want to have conversations with them and show them how and why it will benefit in the long run.

What early experiences do you have with budgeting?
Did they shape how you view finances today or did you take a totally different route?

Welcome 2013!

First, let me sincerely apologize for leaving the blog in limbo for the past couple of weeks. Life happens and it’s truly been taking a toll on my family between sicknesses, accidents, and just plain weariness.  I needed a slight reprieve – a chance to step back, reevaluate my priorities and focus on my goals and action plans.

Tomorrow I will pick back up with the 31 Days to Financial Freedom series.   Today, I will be outlining some of my 2013 financial goals and encourage you to take a moment to think of where you want to be a year from now and what steps you need to take to get there.

2013 Goals

  • Establish an Emergency Fund of $500 by the end of my birthday month (June): My goal is to put aside at least $85 each month and earmarking a 5% of all additional income made to my savings account.  I need to force myself to save. I recognize the importance of having a savings and need to make it a priority for my mental and emotional well-being.
  • Evaluate all outstanding debt and prioritize payoff each.  My goal is to be debt-free within 5 years – a reasonable goal would be to pay down 25% of my debt each year and not accumulate new debt (ie – pay cash and/or go without some extras).
  • Have conversations with my children on the importance of savings and being responsible with their finances. Work out a financial plan with each of them to include savings, giving and spending budgets.

There you have it! 3 simple but important (to me) goals to help me on my journey to becoming debt-free and more financially savvy!

What are your 2013 financial goals?

31 Days to Financial Freedom: Budgeting Divas

To Budget or Not to Budget

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This week we’re going to focus on budgeting.  For many, that’s a 4-letter word! It shouldn’t be.  Budgeting is simply the planned allocation of your money– designating how you’re going to spend the money you expect to come in your household.

Many confuse budgeting with keeping a checkbook register.  This is a key step in creating a budget and sticking to one but is not the same thing.

 Budgeting Pitfalls

  ~Negative attitude (no buy in to the importance)

~Lack of motivation/support

~Unrealistic expectations

~Not willing to change your lifestyle habits

~The belief that you can’t afford to have a budget or don’t make enough money to create a budget

~Not knowing where/what you spend your money on

~Comfortable with living below the line

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Basic Budget Includes:

Total Income

Savings Allocations

Monthly Expenses with due dates

Allocation for groceries, gas, entertainment, etc

Staying On Track

 You will most likely overspend when you first start budgeting – IT’S OKAY

 If you become too frustrated and stringent, you will abandon your budget all together which defeats the purpose.

Allocate rewards for yourself – you’ve worked hard for your money and deserve to enjoy it.  Don’t go overboard! Sometimes the sweetest rewards are the simplest.

Revisit your budget quarterly to see where you can make adjustments – perhaps you’ve paid down a debt and can move what you’ve allocated to that item to another debt or a savings account.

Give yourself a cushion – aim for at least $500 in an account that is inconvenient to access but available if a true emergency arises.