Reduce Debt Increase Wealth

Manuel Budget

December 24, 2023 MIsterchuck Season 4 Episode 197
Reduce Debt Increase Wealth
Manuel Budget
Reduce Debt Increase Wealth +
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Show Notes Transcript

Why do a Manuel budget will an automated budget be faster and better. Having to do the inputs keep the information fresh in mind thus better understanding the budget.

Links:
https://www.youtube.com/watch?v=qRNrXnSrLWc
https://www.youtube.com/watch?v=XYkwa1D1AC4
https://www.youtube.com/watch?v=XYkwa1D1AC4

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Hello, I'm your host, Mr. Chuck, I retired accountant turned truck driver, I reduce my debt in a relatively short period of time, debt reduction, to achieve financial freedom takes commitment, confidence, determination. Manual budget, why do a manual budget will an automated budget be faster and better having to do the inputs, keep the information fresh in mind, thus better understanding your budget. When I say a manual budget I'm talking about or at least I'm thinking about using a spreadsheet, whether it's Excel, Google, whatever spreadsheet you have, Google is free, Excel, you had to pay for it, maybe I'm not sure anymore, what's going on. But whatever spreadsheet your work and know how to use that spreadsheet, you should be using that I have links in my show notes to three YouTube videos that go over some of this information, and they do have templates that they have in to download associated with these videos. It's important you watch the video first before you download the template and tried to use it. But before you can do anything related to doing a budget, you have to know some numbers. What's your income? What's your expenses? For a least a month? That's where your tracking apps gonna come in? Because if you're not tracking anything you're just making and somewhat of a guest. Yes, you can go back into your checking account and look, how much do they pay for gas, electric for the house, how much they pay for gas for the house, how much they pay for water and sewer, but you're gonna miss something. And those are just one item one month, a numbers and you're not going to get a good average, like groceries, if you look at one number, it could have been the time we went to grocery store and bought very few things. Or it could be at a time where he went and bought a lot of stuff, and may not be a good average. So you need to go through for groceries, add up all your groceries, at least for the last 30 days, the longer period you use, the better average you're gonna have, and the better number you're gonna have for your budget dollar amount. Now one of the videos they called it plan, I don't know why they're using that. But a called how much you plan to spend that particular month, which is maybe the actual dollar amount for your rent, your loan payments, your car payments, your mortgage, and maybe some of your utilities are the same every month or close to the same. But they're calling it plant, I call it budget. And because that's the amount that you say, a month to spend every month no matter what is what I budgeted my money. So what we're talking about here is he have money coming in and you have money going out, that tracking is gonna let you know how much it's coming in, and how much is going out and what category it's going to. So once you have a 30 day period, longer, the better you can always after 30 days, do it to get started, go back 30 Days to a report by category. And that will give and then total them up by category. And that will give you the numbers you need in order to do a budget. And that's where I talked about changing categories and rearranging them so they're in order fine. What you want to do your budget like because I do need first which is housing, transportation, food, other debt, that's not anywhere else credit card debt, personal loan debt savings, maybe some insurance, other miscellaneous insurance like disability insurance, life insurance, that's the things you need to pay every month. Anything other than that would be once the type of clothes how much clothes you buy you that's what you want. Food you need, because you have to eat every month you have to pay for your rent every month. You have to have a place to live. And you have to have a transportation at least in the United States to go to and from work. So you have an income which is the top part of your budget. Your budget is just two parts income, less expenses, expenses, you're gonna categorize them needs and once but then can you just kind of one number at the top, you can show it as every pay period. If you get paid weekly and you're not on a salary, anything, you can have four to five pay periods per month, give yourself room for four or five pay periods that you can enter in there for your income. And don't forget your spouse, don't forget any side hustles hobbies, or any place where you have money coming to you, you total that up, that's the first part of your budget shouldn't be more than four or five, eight lines, maybe with your total of 10 lines. And then below that you have your expenses, I always start with housing, and I group housing everything related to the house as we're grouping. So housing would be my total category that earnings totals to and then under that, as a subcategory of it have my mortgage payment, my line of credit payment, if you have one of those or two mortgages or however many you have, and then I have utilities. And then under Utilities, I'd have sub accounts I would total into utilities would be the natural gas, electric water and sewer trash, whatever else you might have for utilities, internet. And I also include cell phone, I include phone with the house, because I'm old school, the house used to phone used to be wired to the house. So that's the only place it ever would be. And that's a good place to leave your cell phone or your phone service is included with your housing. Now when we're talking about numbers and percentages, the percentages based on your gross income is the total amount of your mortgage. So what's what's your mortgage payment in relation to your monthly income, that should not be more than 43% of your monthly income. If it is you're going to have hard time borrowing money and you're going to be struggling. I assume that everybody that's listening to this podcast has some type of issue with trying to pay off debt because that's what I talk about the most. And that's what I was most successful in doing in my personal life. These are the things that I did personally to get my debt under control to get serious watch my spending, cut back wherever I could, you got to know what's going out first, before you can have a plan to know what to do. The first part is your tracking. The second part is creating the budget so you can look at it. You don't need a whole lot of detail and your budget. If you just have one number for housing, one number for transportation, one number for food, one number for savings, one number for debt, that's fine, as long as you have it in your tracking app, or you can do reports to get those numbers that is good at all depends on what you want to do and how much detail you want to see in your monthly budget to see what's going on. If you want to loot list all your credit card separately under debt, so you can see the balances and how much you owe who. And then you can decide which one you want to pay down next, or work on towards next, that's fine, you have to do this, that way that he makes you comfortable and gives you the best information possible. So that's the reason why you enter everything manually. Now once you have your budgeted or plan amount or money assigned amount, whatever you want to call it. And then over time throughout the month, I would do it every pay period, because you're going to one add income to your budget amount to your actual column, you're going to add your next your paycheck, and then you're gonna update all your tracking, for everything that you spent for them from last pay to the current pay. Then you're gonna do a report by category from the first on the month to the current date. Now, when you first started, the first time you did from the first of the month to the end of the month of the previous month to get your planned or budgeted dollar amounts. Now we want to know what you're actually spending and not in real time in the current period. So it's always the first of the month to the current pay period, or the current date you're setting that and make sure everything's up to date. Then you go into your actual column and you plug in the new numbers. If there's numbers already in there, you just want to override them put in the new numbers. Sometimes you might have to remove it, whatever, it's easy this for you to re enter the new number, and you get the new result. The first pay if you're paid weekly, the first pay second pay even the third pay, you should always be to the positive, you should always the actual should be under the budgeted amount. If you paid your rent, it should be zero, it should be the exact amount. Because if you don't know how much your rent is, when you planned it or budgeted, you're in bad shape, because it's probably the same every month. Now some of them, you might have to adjust over time, once you get through the first month. That's why I would set this up like for by month, January, February, March and he keep them and save them in the same spreadsheet, move across the spreadsheet as you go, you can copy and paste your setup in your formula is not that difficult. You can download templates. But you want multiple months. So you can go back and look. What did they do two months ago compared to today? How am I doing? Well, my plan them out was a lot more than what it is now. So that means I cut back on some spending, I did away with some things, I got some cheaper prices on some stuff, whatever it takes to maximize your money to save the most. So you can apply it to your debt is what we're trying to achieve here. And the next episode, I'm going to talk about a debt reduction plan. And what do you do, and some of these YouTube videos I have, they talk about the fundamentals of personal finance, what do you need, all you need an emergency fund, you need to do it, you need to track all your income and your expenses, you need to have a budget. And if you're struggling to pay down debt, you need some type of debt reduction plan. And he asserts bashley need that if you are really have a lot of high interest debt, which means credit card debt, credit card debt, personal loan debt, even now, car loans are fairly high rates of interest, eight and three quarters percent for a new car 12 or 13%. For a used car, that it's fairly expensive. So that's gonna limit you on what you can afford to buy. He has to plan all this. And the best way to plan is knowing what's going on in your life before you go out to make a major purchase. Before you spend some money and get farther in debt before that's planning. And in the real world. If you know, three months in advance what's coming up, so you can save money for it for me, and first of the year, January, I have half of my real estate taxes are due. And then June, the other half do. And then in March, I have insurance due and September, I have a lot insurance too. So I know what's coming up. So I can set some money aside today and not spend it. So I have it available to pay for the bills when they come up. And there was no surprises in my personal finance life. I'll be back in one moment with my final thoughts. If you're interested and learning about an online software that helped myself get out of debt, it does tracking, budgeting, and keeps track of all your assets and all your debt. And even tells you how much and when to transfer money into your savings account and how much and when to transfer money to your debt and which debts to pay off in order. First. It's not cheap. It's a one time payment. But it will definitely be an investment something and yourself and an investment in your personal financial life. If you're interested, send me an email at reduce debt increase wealth@gmail.com. And I'll send you the information about this online software that worked great for me. I'm not going to go through and tell you how to do this spreadsheet. There's lots of 10 mil templates out there, find one you like download it, see if you can rearrange your categories to get close to what that template is like so that when you print out your report, the entering the numbers become much easier. That's the key thing to remember. To make it easy on yourself don't make it more difficult. So find something that you'd like, and then tried to rearrange your categories that in your tracking app to get close to what that template or the budget setup that you're going to use. There's apps out there, one of my YouTube videos talks about she reviewed like 30, different personal finance, budgeting apps, and she gives you the top five that she liked the most, some of them are free, some of them you gotta pay. And what you need a budget is a very good one. But it could be a bit pricey for some of you, if you don't have the money. If you're struggling to pay off debt, you don't need to be paying out more money than helped to help you do that you need to try to be as frugal as possible. Because the quicker you can get that debt paid down, the better off you're gonna be. And if you can do it with something that you'd like, that is the main thing. There is another way you can go, which they don't say they're doing a budget, but you still need to have your tracking is happy giraffe.org I believe I have a link in my show notes. It's there in every episode, they have YouTube videos on how to use it. And they have two really good spreadsheets. One, they call your happy figuring out you're happy money, you put in your income you put in your expenses, and it gives you the dollar amount you have available to spend on the weekly basis. That's a good number to know. Because if you can stay under that dollar amount every week, you're not going to overspend. And you're always gonna have money in your checking account, and you'll be able to pay your bills, that's important. And then they have another one that help you pay down your debt that tracks your debt and does that it's fairly decent, I kind of took a quick look at it, I've never used it, but I took a look at it, it works fairly good. And that it's seeing your debt right in front of you by which credit card is which and then you can pick which one to pay that pay down and keep your updated balances going in there. That's good. And now to help you manage your debt, if you are one of those that were just heightened from your debt, and thank God just go away, if you just pay an extra $50 more than your minimum payment eventually go away, well, well, if you got 20 years, 10 years, 15 years is not going away that fast. And you always will be struggling because you're taking the money they might need right away and you're applying it to some debt. And then you come up short. And then we got to do while you can use a credit card again, and you stay in that debt cycle. That's what we're trying to break here and you break it by one you quit using your credit, you build up your emergency fund, you make the minimum payments, until you have enough access and your emergency fund to make a big lump sum payment. That's my debt reduction plan. I'm gonna go in detail my next episode. But in a nutshell, that's pretty much everything you need to know if you automate your budget, so it does it for you automatically, like download all your transactions from your checking and your credit cards and this and that you're gonna lose track of what's going on. You'll see numbers in front of you, but are they good? Maybe they are, the totals are good, that maybe they're not categorized correctly. If you're gonna take the time to go in and categorize them, you might as well be doing it in your own app, and do it and as you go so that you can do reports when you need them love them. And you'll be much better off and you don't have to worry about maybe when you pull it in the second time you're duplicating, you're pulling in the same thing again. And now you have two identical transactions are this what you only really have one in real life, but it's shown it up twice. So subtract and now there's all kinds of things that go wrong. I know that they're built to go come some of these problems, but I don't trust them. And if you link to your checking account or your credit cards and somebody hacks into that account, they might get access to your checking account information so don't put it out there. That's another good reason why you manually do things because you don't want your personal information out there if you can avoid it. This is a short video I'm not boring, too much detail. I just want to impress on the my listeners that you need to watch them YouTube videos, find some templates for your spreadsheet that you like, and then try them out. If you don't like them, I have to try them out. And by using the template, they got the math and formulas set up, or you can create your own if you want to, they'll take a little bit longer at first. But it's always out there as an option. Or you can do an app that does it kind of for you, but tried to do as much of it manually as possible and are in your transaction manually. And doing your budget manually, is gonna keep you aware of what's going on and your personal finances. And that's the most important thing, because you're probably worn unaware of what was going on. Maybe you just check your bank balance to see how much money you had been no, you had no clue maybe had some expenses, dude in two or three days, but you're already spent the money. So now you're behind. So you had to pay for something with a credit card that you really didn't need to. So it's all about planning for the near future and the not so near future. That's what personal finances is all about. And if you keep it under control and keep track of everything, and you can identify where your money is going, where you're overspending and make adjustments on these items, then you can always have enough money to pay for what is needs to be paid, and maybe increase your savings and your investments. That's what it's all about. You're not going to retire early if you don't have any money. And because what are you going to live on? So this keep everything under control. Find something you'd like, learn how to use it and stick with it. Be glad you did so