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Begin at the beginning

Welcome to my new catagory- Financial Bliss.
I want to share with you all that I have learned and am continuing to learn about being a good steward of all that God has given. I have a strong desire to help others not to make the same horrid mistakes I have made financially.

Okay, let’s talk finances and let’s start with the basic, number one thing you need.
A budget.
Not just any budget- but a BALANCED budget (we can do better than the government, people!).
If you have never ever done this before- you need to pull out all your bills from the last couple of months and your checkbook. You need to see where your money is going!
Begin by making a list of all your expenses- all your expenses (if you buy a latte every week with the change from your car’s ash tray- that’s an expense!).Dave Ramsey (hey, what can I say, I like the guy and I’ll be mentioning him a LOT) has a couple of great forms on his website that you can go and get right now- you can either choose the quickie budget or the cash flow plan if you want to go more in depth.
The key to beginning a budget is to be realistic- truly realistic. Nothing blows a budget worse than not being realistic. If you put $0 in your entertainment category but you go to the video rental store twice a week- you’re not being realistic. If you put that you spend $40 on groceries but are always borrowing $20 from your gas budget column for when you go over- you’re not being realistic.
It may take a try or two or six to really find your actual realistic budget. This is seriously important so stick with it, tweak it and work it until it works! [Side note: the percentages that Dave Ramsey includes with his cash flow plan can be very helpful in finding your right budget amounts].
When I say be realistic, I also mean that you will quickly find the “leaks” in your budget. We all know that even the smallest hint of a leaky water pipe can cost you big time when the water bill comes. Think of that latte I mentioned earlier- if you paid for it with your money then it comes out of your budget- period. Now is not the time to kid yourself. Allow me to state again- be realistic. Go through your checkbook- where do you write the most checks (or use your debt card the most)? What do you buy there? Do you keep your receipts? [Note: I keep my receipts in envelopes I recycle from those evil credit card companies- I just write the month and year on the front and put the corresponding receipts in there- rubber band the whole parcel of envelopes together and keep them in a file. But if you are more tech-savvy than I am- you may quickly find all this info in Quicken- ‘course if you have Quicken or the like you’ll also have a budget in place already and not need this post to begin with!]
Okay- STOP. If you are truly clueless- you may need to track your spending for a month before you can actually produce a realistic budget. If this is the case, the simplest thing for you to do is begin saving your receipts and one more thing. That one thing is to keep a daily total of what you spend- you can simply make a little notation in that day’s box on your free calendar from your insurance guy (don’t we all have at least one of those?). I don’t care if all you did that day was dig through your ash tray for that latte- write that amount down! Write down when and where you’ve made purchases online, what you paid at the grocery store, the post office and your library fine! You MUST keep track of every single penny for this to work right!
Alakazam! It is now a month later and you are ready to go through those receipts and get your budget down in black and white. What did you spend at the grocery store for the month? That is your realistic monthly expense for groceries. What did you spend on clothes? (If you shop at Wal-mart for both of these big ticket items you’ll need to go back to the receipts to separate it all.) So now you have a piece of paper that lists what you spent, where you spent it and what you spent it on for one month- you are now ready to make your budget.
Your budget includes your income (Dave Ramsey has an excellent form for those that have irregular income) which is simply our salary times 4 (or two if you are paid every two weeks). Okay, your income points out how much you can realistically spend in one month. After you’ve written down your income, list all your expenses with corresponding amounts. Now add up your expenses. If your expenses are more than your income you obviously need to do some trimming- this is where I screwed up. Our expenses exceeded our income- not by much (but even if its only $1 that is too much). This is where my credit card troubles began in earnest- I couldn’t make ends meet paying for everything out of pocket so I used plastic instead. Obviously this is a big mistake; I knew it then but ignored it. I also knew that when I began using the credit card to pay for groceries, that we were in trouble in a bad way. You should never EVER use a credit card to pay for perishable, necessary items like groceries that come into your home one minute and leave it the next. Think about it, by the time the credit card bill comes the next month those perishable items you put on it are no longer around. Bad investment when you think you are now paying interest on groceries you ate last month.

Next Financial Bliss Post:
What to do when your expenses exceed your income.

Untitled Comment

11:00 AM, 2008-Jan-31 .. Posted by gabbie427

I have to admit I cringed when I stared reading this was about money and budgeting. LOL Who wants to talk about this and is exicted about it??? NOT ME! But I did recently buy Dave Ramsey's book and sat down last weekend with a budget approved by the hubby. I haven't been to the website, but sounds like I need to!!!

Thanks for sharing such a squeamish subject. We all need to deal with it!!!! Get over the squaemishness girls and get a hand on those finances!

God's Blessings,
Amy Jo

Untitled Comment

11:03 AM, 2008-Jan-31 .. Posted by Isabella

Amy, Great Blog. Some people just don't know the basic information or just need a reminder. I just don't understand how we (as a people) got into a have to have it no matter what mentality. This is a hard habit to break (us) but it can happen. I talk to everyone about Dave Ramsey. When I went to the insurance office, I talked to my insurance agent about his plan. He asked me did it really work, I looked at him and said that I am in here 3 years early changing the insurance on our van from the bank to us. Yes, it really works.Have a blessed day. I PS Dave Ramsey is on Fox Business 359 at 8:00PM (Directv)

Dave's Show

12:00 PM, 2008-Jan-31 .. Posted by YPAmy5

I try to catch Dave’s show when I’m at my parents as they have direct TV. I enjoy watching it very much.
Thank you!
Amy