Reduce Debt Increase Wealth

Personal Budget Template

January 23, 2022 MIsterchuck Season 2 Episode 97
Reduce Debt Increase Wealth
Personal Budget Template
Show Notes Transcript

New year maybe good time to setup a new budget. Already have budget good time to review and make changes to reflect the changes in life.  Adding new categories, removing old ones is an ongoing process. 

Request a budget worksheet already setup by going to face book page send instant messenger request budget worksheet giving your email address will send. 

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Charles McDonald:

Hello, I'm your host, Mr. Chuck, a retired accountant turn truck driver, I reduce my debt in a relatively short period of time, debt reduction to achieve financial freedom takes commitment, confidence, determination. Personal Budget, the new year may be a good time to set up a new budget. If you don't already have a budget to good time to get started. And if you have a budget and been doing it for a while, then it's a good time to review and change the categories and your budget to reflect the changes in your life. You may be needing to add new categories, or removing old ones, this is an ongoing process. If you want a budget worksheet that's already set up, I've already done one, go to my Facebook page, reduce debt increase Send me an instant messenger request, giving me your email address, and I will send you my template for a budget. It's a 12 month budget. And I have a video on how to use it on that Facebook page. So you can review it, if you just signed it, you want to try and use it, send me your email address, and I'll be more than glad to send it to you and I'm not going to scam you. I'm not going to send you any other information. I'll just get rid of your I'm not keeping any email addresses. I have two links in my show notes for your if you want to take a look at them. And that's referring stats why you should do a budget. For those of you that have been doing a budget and keeping it up to date, you understand the reason for it. But there's a lot of people that are struggling to pay off debt. Maybe they're not saving as much as they want to. And so they're just getting started in trying to do a budget. And I've got some stats here that will help you set to see how you're doing to compare your percentages of your categories to the average person. And the first one is 33% of housing costs go to rent and mortgage payments. The average household spends 56% on their food budget on groceries, and 44% on Dining Out, if you're looking to cut back that 44% dining out you got some room there to make some cutbacks. 40% of transportation costs go to the vehicle such as paying off auto loans 21% goes to gas and oil with the remaining 32% spent on costs such as repairs, your overall transportation cost is around 17%. Scott 33% for housing 17% for transportation 12 and a half percent for fuel 11% for personal insurance 8% for health care, four and a half percent for miscellaneous and 5% for entertainment 3% for apparel, 2% for education, and 3% for task contributions. That's the overall graph of the 17% for your transportation 40% of that goes to your loan or vehicle payment where you're leasing it or buying it outright. That's how that those stats are working. The large amount of money is goes to credit or debt. Here's a breakdown that type of debts and how many people use them credit cards 68% of the people store cars 10% and store credit cards are not a good way to go because they genuinely have a higher rate of interest. Personal Loans 14% paid a title loan 7% home equity loan 1% The home equity loan is probably your cheapest way to go. The payday loan is probably the most expensive way to go. But don't use your home equity to pay off credit cards as a note there. And the debt comes charges and the average consumer pays what percent of interest on their debt 38% has less than 10% That's good 30% pays 10 to 19%. That's mostly credit cards 25% 20 to 29 and 7% 30% only 30% are Americans have a long term financial plan that includes savings and investment goals. You're most likely to have a budget if you make at least $75,000 a year. I don't think that is a true statement, I think you're more likely to have a budget, the lower the amount of money not if you're dirt poor, because you can't, you don't have much to budget. But I'm saying between 50 to 75% 75,000, a year, a year, we're gonna be more likely to have a budget because you're watching your money lot closer. But I could be wrong 19% I have zero to cover emergency expense. 31% of people have less than $500. So that's a total of 50% of the people can only cover up to a $500 emergency. With about half of that not being able to do any 49% of Americans are concerned anxious or fearful about their current financial well being. I wonder what they're doing about it. Interestingly enough, low income is not always to blame for financial hardship. Only one in five people 25% 20% facing financial hardship, fall below the property line and make less than 40,000 a year. One in 10 years 100,000 Or more annually. 28% of the people earn 50 to 99 or 100,000 a year. Interesting. So 10% of the people make at least 100,000 Why are we struggling? stagnant wages was increased expenses, called inflation. take on too much debt, credit cards, loans and the housing. Not financially literacy to keep people out of bad financial situations. People trying to keep up appearances, keeping up with the Joneses. Heavy consumer mentality over investor mentality. Yes, this America, we're mostly concerned about spending and not saving and not making investments. That's why we're in the shape we're in 20% of Americans don't save any of their annual income at all. Even those who are savings are not putting away a lot. Already 40% of Americans has less than $10,000 saved for when they retire. 39% of Baby Boomers and Gen X have nothing to put away with their golden years. And for baby boomers, you're that certain? You're getting close to retiring. Two thirds of Americans who struggles to scrounge out $1,000 in emergency that's 66% of the people. Now that's a little bit higher than the 50% we talked about a little bit earlier. And go down through Americans who do have savings member 80% of the people do have a savings. The account balance is $5,200. So it's not very big. But yet they can cover an emergency. And maybe their savings account is only 5200. Maybe their investment counts couple 100,000. Who knows. The average American household has 180,000 in saving and retirement accounts. That's that's I don't know why that's contradicting the other people. Only a third, maintain a household budget. I believe that maybe even less 18% of workers earning a salary greater than 100,000 are living paycheck to paycheck. I believe that since we're so focused on spending money and having things we're not putting money away into an emergency find a savings account for in case something bad would happen. So that those are the reasons why you should have a budget. And a budget is just a guideline of what you're spending is. So an easy way to do a budget if you started doing your tracking. I talked about tracking and in the last episode. If you got at least 30 days plus done a tracking where you have your own app where you're putting in everything that you're spending money on you putting in all your income, you're putting in everything you're spending money, everything is coming out your checking account, everything you spend money with credit cards, if you've got multiple credit cards, all that you've been doing that for at least 30 days you now have the basis to set up a budget. A budget is not thing, but making categories for different types of expenses that you have housing, transportation, food, clothing, and insurance, whatever you want to do it, however you want to do it is the categories, and then you lump them together. And then you take and like for housing, you take your mortgage payments. Oh, that's one thing. How much do you pay your mortgage payment every month, we're talking about the minimum payment, the amount you're required to pay not any extra that maybe you're trying to pay. So for housing, you would have your mortgage or rent, you would have utilities, you would have maybe the internet, you can include that on their housing. I don't know insurance for the house. That would be your housing, transportation would be your car payments, gas and oil and repairs for the car and car insurance. Food would be your grocery store and all your dining out. Again, if you're struggling to pay off credit card debt, you need to be eating at home more, it's cheaper to buy food at the grocery store than it is at the restaurant. insurance, personal insurance would be life insurance, disability insurance, health care. Now health care would be he won't have to keep track of it. If it's you're paying it from your paycheck. If you're got health care through your employer, employer, then you're depositing the net amount of your paycheck, you don't have to track health care and your budget because it's already gone. So no use, you know, putting in the gross pay check, and then have to budget for taxes coming out and health insurance and whatever else may be coming out of your paycheck. Start with the net of your paycheck and work down from there. It's much easier cash contributions, entertainment, that could be your streaming, it could be your cable TV, it could be going out to movies, or concerts, whatever entertainment you do. Apparel, that's clothing. That could be a small amount. Because you're not gonna be buying clothes unless you're close, you know, unless you go shopping every day and every week and you've spent a lot of money on clothes, which that's a good way you could cut back and quit doing that. So that the budget you setting up categories, then you go back through the last 30 days and figure out how much you're spending by categories. And you add it up. If you have an app, and you identify these things as you post them or enter them into the app, like the mortgages, mortgage payment clothes, for clothes, food for groceries, or food for dining and entertainment, you can do a report and get those numbers and is plug them into your budget. And that's how you get started. So you have a budget amount with what you have spent 30 days ago in the last 30 days, then you have another column that's an actual actuals what you're gonna spend in the current month. And if it's like all your payments for your loans and your credit cards, and that it should be pretty much close to the same. If not right on, some things are fairly would be your food, maybe gasoline because the price goes up and down so much. So you want to maybe figure out how much you spent last 30 days for gasoline, then maybe add $20 to it. And then you have some little extra leeway. So you may not go in the negative. So you have your budget, you have your actual unit differences a positive or negative. And if the actual is less than you budgeted that should be a positive that's a good thing. If the actual is more than what your budget, it will be a negative. And you need to look at this as compared to your total income. Is your housing roughly 30% of your income? Is your transportation roughly 17% of your income? And look at those percentages. Are you out of whack? Maybe you've overextended yourself on that mortgage, and you may be your housing is 42% or 45% or 50%. And that could be identifying a problem that could help you identify a problem. Now there's not a whole lot you can do about that mortgage other than try to pay it down and then refinance. paying it down is not going to help you until you refinance. But you can identify where you may be overspending, maybe your transportation is 20%. And it should be closer to 17 or 15%. Maybe your food is 30%. And it should be closer to 15%. This little things like that can help identify where you're spending too much money, where you're, maybe you're overspending unless you have a reason for it. And if you have a reason for it, only, you will know. And you can identify that, and then maybe you can look at ways to reduce it. Maybe your housing is so high, because you set your thermostat on 75 degrees in the wintertime, and you live in the northern climate, and you're spending a lot of money a heat in your house, well turn the thermostat down, set it for 70 degrees and wear a jacket or wear a sweatshirt, there's ways you can cut back without doing a whole lot. He just got to identify where your problem areas are, and figure out ways to reduce it. Now, once you do have the budget, and you have all these different categories, is there anything there that you no longer use that you can get rid of? Is there anything there that you can maybe call and get a better plan, say it's a cell phone, maybe you had the same cell for playing for last five years, and you got limited text and data. While you could probably get a better plan, with unlimited everything, and probably paying a whole lot less than what you're paying, the cell phone company is not going to tell you if you're paying too much. But they will definitely want to keep you as a customer. If you call them and tell them that you're paying too much for your cell phone, I'm sure they'll find a plan, that's gonna save you some money and give you a better service. And the same thing with streaming, don't stream five or 10 different things. Keep it under control. One or two, identify the channels you watch the most, and all in stream for those channels, and get rid of cable TV. Nowadays, even what used to be cable TV, they're only providing Internet service. And they no longer provide cable TV because it costs so much. And then you can just stream it all. So there are ways around this. And keeping up your budget, the first of the year is a good time to review your budget. Look over where you're spending. Look at your percentages, is your housing under 40% Is your transportation under 20% Is your food under 15%. There's places you could probably save money on by just changing your lifestyle a little bit. I'm not saying you have to change a lot. I'm just saying a little bit. Like if you're dining is 60% of your food, maybe you need to make that 40% of food. I'm not saying that not go out, then dine all the time I'm saying don't do it as much. Or maybe go to places don't cost as much. Maybe like high end restaurants, well, maybe you need to cut back a little bit. If you're struggling with credit card debt. If you're struggling with any type of debt, you need to cut back and watch your spending, every little bit adds up. And every little bits gonna cost you money, and it's gonna hurt you when you're trying to get out of debt. No matter what kind of debt it may be. Or it may hurt you when you're trying to increase your savings, or trying to increase your investments. This is not only for people trying to get out of credit card debt. If you're trying to increase your retirement savings, then reducing your credit card debt definitely is gonna help. It's going to free up more money so that you will be able to say more money, invest more money, therefore have more money in the future when you need it the most. I'll be back in one moment was my final thoughts. If you like this podcast, please leave a review on whichever app you're using. Now if you know somebody that could benefit from listening to this podcast, please refer them. I really appreciate it. And thank you for your time in doing so. The first of the year is a good time to review your budget if you've been keeping a budget and look over your categories or some of the categories you're no longer using. There's zero in there, but get rid of them and use new categories. Maybe you need to re category some of your expenses to make it easier to identify and to track. So whatever. If you have been struggling in the past to do a budget, you've been trying too hard, it's not that difficult. The first thing you need to do is start tracking all your income and all your expenses. And you can use an app to do that any application I use count about, it's online, you don't download anything into your computer, you just sign up in an account, it's $9.95 a year, I believe. So it's less than $10 A year is well worth the money. And you can put in your checking account, multiple credit cards, multiple savings accounts, even multiple checking accounts. And it's got all your categories set up for you, you just need to ship pick and choose the ones you want to use. Maybe go back 30 days and enter all your transactions for your checking account, maybe enter all the transactions on the credit card, they use the most. Start there. Once you get that done and create a report, now you have the numbers you need for your budget. If you need a template to use, so you don't have to go to that trouble, I have one, go to reduce that increase Facebook page, I have a video on how to use it. If you decide you want to try it, send me your email through instant messenger. And I will send you the file so you can try to use it's that simple. A budget is nothing more than keeping track of your spending, identify how much you spend in a particular month. And that's your starting point. And then, in the future, you do look for ways to reduce your spending, take things out that you no longer need or use, get better prices on services you're using. And it's gonna help you even if you reduce your spending by $1 a month, that's 12 bucks a year. It all adds up. And you need to keep track of it so that you know what you're spending and where you're spending your money. And identify your problem areas. You may be spending 20% on clothing, which should be 4%. You may be spending 60% on housing, it should be 40% or less 35% would be what I would recommend. You may be spending 30% on transportation, it should be 17% It's a bunch of little things that's gonna all add up. And if you're struggling to pay off debt, whether it's credit card debt, personal loans, payday loans, or you're trying to increase your savings for retirement, or trying to increase your investments, for whatever you're going to use it for and all adds up. It all makes a difference. So create a budget. Keep a budget, update your budget, keep it current, and you'll be happy you did so