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. Budget maintenance, keeping a budget up to date is key to keeping debt under control. Using good information on a timely basis is key to finding and fixing problems. before they become a problem. I'm gonna talk not about how to set up a budget, but what you do once you have your budget set up, and some of the common mistakes people make. So you can avoid that, I have two links to two articles in my show notes. And if you're interested in the software that I personally use to reduce my debt, there is a link and my show notes of shop financial, I believe it is the fairly bottom one, you're going to have to copy and paste it because it doesn't automatically do anything, as far as I know, at least at this time. So let's get into this. I'm assuming that you're already doing some stuff, and maybe you have some sort of budget. If you've been following my podcast, you know, you should be tracking. And you use your reports from your tracking app to create your budget. So that is gonna help you avoid some of the common mistakes. Because the first common mistake is not writing your budget down. And if you don't write it down, you basically don't have a budget. So what's the problem? Or what's the, what's the use of doing them. And two is not tracking your spending? Well, you're already doing that, because you use your tracking software to create your budget, it's much easier to do it that way. Instead of starting with the budget, and making a bunch of mistakes and given up and say it don't work and all those type of things. So the already got the two basic problems solved. You got your budget in writing, because you've got it on a spreadsheet, you're tracking because you got your tracking app, and you're doing good. But you got to be careful, you don't set unrealistic or unrealistic budgeting goals. Your budget is only a tool to help you reach your goals. But the tool can only do what you tell it to do. If you set your savings or expense limits too low, it may cause you to be too stretched. And too financially thin later. I don't know what they're talking about. Setting goals too high can cause you to get discouraged with your budget. Okay, what's her goals? One is to pay off debt. And how you do that? Well, you need a plan. And the plan is tracking, budgeting, what to do once you got that done, what to do with your money, we know that maybe you are spending too much. So tracking is going to help you keep your spending under control somewhat. But do you actually know what your monthly expenses are? Are you aware that you pay things every month no matter what? Rent mortgage? Car payments, credit card payments, all your loans, all your utilities, food, gas, groceries, those things you pay on a monthly basis? Do you know how much that is? Any clue? Most people probably don't. If you have a budget, you know, you can keep an eye on thanks. That is the beauty of having the budget grouped in categories. That all makes sense to you. I know I say I group mine by housing, transportation, food, savings, debt. Let's the five basic ones. You can do it any way you want. I'm grouping them together because those are needs what I need to pay on a regular basis. My wants are things I want. I don't necessarily need to have it. But I want to have it. That's how you can understand what's going on in your personal finances. And here's a big thing. If you've been doing this for only a month, or maybe even six months. Maybe you're forgetting to track one time expenses. I have some expensive subscriptions to some streaming services I pay once a year. I know how much they are. And I know when I got to pay them, do you have things set up like that? I set it up yearly, because it's cheaper than monthly or any other way to pay it. But do not forget those one time things or quarterly expenses that come up, they need to be a part of your budget, it may take you some time to discover all this, that that's why one you're tracking and two over time, you'll find them. And then, too, you're setting up a budget. And while you're setting up the budget, you need to tell you to think to yourself, is there anything else do I pay that's not included here that I might pay once a year, twice a year, four times a year. And insurance is a big thing. Subscriptions could be a big thing, especially for anti virus software, could be a expense that you have on a yearly basis. Five not planning for emergency expenses. But we have that covered. Because we're using the emergency fund, you're setting up an emergency account, to put our money in to build up our savings. So we can use it to apply to debt. When you get your debt paid off, you still gonna have that you're gonna still be putting money into your emergency fund. In fact, you should be building that up even bigger. Don't plan for emergency, I am emergencies emergency, it's some unforeseen event that happens sucks gonna cost you some money. Whether it's an accident, you have x a car wreck, that's what insurance helps pay for part of that, or at least for the car and your hospitalization. But then you have to maybe there's some additional expenses you have to pay. That's why you set aside money and your savings account called an emergency fund, and you have it. And the main reason is, so you don't have to create more debt. You don't get farther into debt. But that even goes if you're debt free, it's the same principle a bit you will have more, so be less likely you'll have to go into debt. And forgetting to plan for fun expenses. Yes, we need to plan for vacations and time off. A budget is not should not be so restrictive, that you can't live your life. It's only a guideline to how you spend your money, and where your money is going, and how much money you have. That's the part of the budget. And once you understand all these concepts, then the budget is important to help you get through life. getting discouraged when your budget isn't working. Well, that's probably because you're still spending too much you're not tracking your needs, you didn't include everything in your budget, and eight not reducing your expenses. That's an ongoing process that you do over time where you look for things that you're still paying for but no longer using. He looked for ways to reduce your monthly expenses, whether it's cell phone service, cable, TV, streaming services, things like that. You have to prioritize why you're trying to build up your savings. They have to figure out why am I doing this to start with? Am I just trying to keep my stuff under control? Do I just want to see where my money is gone? Or am I trying to pay down debt? For listeners Podcast? I'm gonna assume you're trying to pay down debt. So your goal is to pay off some of those credit cards. Why does credit cards get charged up? It's different for everybody. The most common problem is you overspent for whatever reason, that reason doesn't matter. The fact is, you spend too much money that you didn't have at the time you spend it. Therefore you use credit in order to buy whatever it was that got you into some problems. So that's my first article. This is the way you don't do a budget. If you followed my podcast and you started out with tracking first and then you created a budget, you're not gonna have some of these items that I'm going to talk about next. But if you just tried to Do you maybe some I said, create a budget and do a budget. And you looked online, and you just learned about what a budget is how to set one up income at the top, it lists all your expenses, whatever, you have no particular order, put them in half, but what whatever, three columns, what you budgeted what you're spending and the difference. And then you went through there and you say, Well, my rent, I pay rent, and it's like, $800 a month. So you put in Haiti on their doors, my utilities, well, I got electric, and last month, it was 75 bucks. So you put in$75, and then you went down the line. And you really don't know what your true costs are. And then you did a budget and you're way out of whack. And you saw others say working, is not working, because your starting numbers weren't correct. He didn't use or maybe it was good that month. But then went from fall to winter. And your utilities changed, because now you're paying more because you're eating more. So a one up, he didn't use a good average. So now your numbers are off. He's the one was budgets not working. It's not doing anything for me. Because you started backwards. He started at the end, and you're trying to work your way towards the front. Forward, you started with the end result, and you're trying to get to what's causing that. And you have no clue. Because one, you never tracked anything to the the things that are different every time you pay for him, you don't have an average, you don't have a good average, because that's always getting updated over time. Because things go up things go down. Season might be some seasonal you spend more or less. There's all kinds of things that affect it. That's why I say use four months, five months figure in average for your groceries for your gasoline for your car, once you know what you've been doing in the past. Now you can look for ways to save money. Well, every time I go to the gas station I fill up and I go there every week no matter what. Sometimes I get a quarter of a tank sometimes I get a half a tank, sometimes I get a three quarters of a tank and instead of putting all your money into the gas tank, this is how I think How far are you gonna drive and then next week, how many miles What's your mileage per gallon on your vehicle about how many gallons are you gonna use and then add those many that many gallons plus one or two more that way you have a little extra how I put in $30 instead of $70 Don't put all your money in your gas tank. I only put in enough gas in the car to keep it at least a half a tank. I don't spend a whole lot of money here because I'd like fill up the car it might be a month before I fill up again because while I don't go to work no more I'm retired. I don't have to go anywhere. In fact, today I have a flat tire and I can't even go get a new tire because nobody stalks these things. I have to wait till next Tuesday. So I got that donut tire on my car that you knowing supposed to put 50 miles on his hurry got 150 miles on it from the last time I had a flat tire. I don't know. I like to plan ahead for hitting new tires. But I hit a pothole and without tire some things you can't control. And then your number two is leaving out expenses we already talked about that don't forget insurance payments, all the different types of insurance, home repairs, even if you don't do it on a regular basis. Put a number there on your home repairs and maintenance $50 A month$10 A month whatever account for it. You don't have to spend it but put a number there case when you do something and have an expense in that category. You already have it covered. Me see annual subscriptions school tuitions and fee holiday shopping. Membership Dues those things are due on the regular day holiday shopping you know is in the fall for the holiday schools is September August, you know maybe three times a year. membership dues are annual that they could be throughout the year because there's whenever use lined up. And the third problem here is not tracking spending, which we're starting with that you didn't have to guess on your costs, you're not leaving out any major expenses, because you're been tracking. Don't forget savings. Plan for your savings, I that's one of the needs, you need to set aside money on a regular basis for your emergency fund. And if you have too much in emergency fund, that's okay. You don't have to spend it, the more you have, the better off you're gonna be. And if you're trying to pay off debt, the more you have, the faster you can accumulate it, the quicker that debt is going to be reduced. And don't be overly restricted. Down back your discretionary spending can be necessary if you experience a financial emergency, living beyond your means or grape. And with that, but as a long term spending plan, sticking to a budget that's too strict, usually isn't sustainable. In fact, it has the opposite effect and drive you to overspend. Instead, set realistic spending limits, aiming to strike a balance between living within your means and train yourself. From time to time. The way I've been talking about budgeting is we're setting up the budget dollar amounts it what it actually cost, yeah. I'm not saying, okay, my rent is$800 a month, but I'm going to set up a budget, and I'm going to save some money I'm gonna make at $500 a month, how's that gonna work because your rent still gonna be 800 a month, you're not saving anything, because you still got to spend$800 a month and might look good on your budget. But it's not gonna happen. Set your budget to what the actual costs are. And the actual costs aren't what you are actually paying. That gives you the best, clearest picture for whatever. Now, once you know, how much are you spending on a regular basis, maybe one month, two months, three months. Now look for ways to reduce some of those costs. How can you reduce your utilities? Well, in my case, I bought a programmable thermostat and I went I will not home, I lower the temperature down for AC and heating. When I'm home, I bump it bumps up a little bit. And then for AC at night, when it gets dark, I rise set it even lower the cooler house down but I let it get warmer during the day. So the AC not running a whole lot when everybody else's AC is running. That's how I control my electric bill. Same thing was my gas bills. I got new windows installed double pane that was the best thing I ever did. But it was the last thing I did. The first thing I did was put insulation in the attic. All these little things you can do to help you save money in the long run is what you got to do and how you think about thanks. I want quit paying for cable TV, I want to streaming services I got I've been on streaming so long on grandfather in on the lowest price per month on one of the services and as long as I don't cancel it, I still got that. And it's got everything I watch. Everything I watch except for sports, and news, I could care less about the news sports I watch on over the air. If you have cable TV and you're paying extra for your local channels, you're stupid, cancel that service, get an antenna and get it for free. Don't pay for something when you can get it for free. Another big mistake is planning around gross pay. So you know that you make 20 bucks an hour and you work 80 hours a week. So you 20 times 80 is zero$1,600 He can't spend $1,600 in your budget. Because what's happening, they're gonna take taxes out. Maybe they're taken out health insurance, making they're taken out some child support, maybe something else. Maybe you're making donations to local charity. You need to plan your budget on your net pay the amount of money that gets deposited into your checking account as the easiest way to save it. You cannot spend what's not in there. If it never makes it to your checking account. You can't spend it you can't budget for it. If you're married or have a significant other, you need to work as a team. He can't do this independently. He has to work together because may Maybe one of you is trying to save and controller spending, but the other one is not, and they're just keep on going, you only doing it halfway, it's not gonna work, you got to work together. And you have to work as a team. And you have to agree to everything, it may cause some problems at first, but in black and white, you put it down on paper, and you got 10 credit cards, and you're 5000 or more on 10 different credit cards, it's pretty simple. He got way too much debt, and something's got to stop, we're first thing is quit using those credit cards, which if you can't use a credit card, and you don't have the money in your checking account, because you got to pay all those credit card bills, then you got to stop spending. Be back in one moment with my final thoughts. If you're interested in 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. It 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. Okay, now you know that you're doing things the correct way you're doing your tracking first. And you're keeping that up to date, it is important that every time you do an update to your budget, you have your tracking information, completely up to date. And everything reconciles to your checking account, your savings account that every credit card statement, that doesn't have to be a paper statement, but your online account to make sure that you have everything entered and the proper dollar amount. And even that you have him in the correct categories. When you're doing a budget, I find that you don't want to put a whole lot of detail into it, you want to keep it pretty basic housing, the only thing you want under housing is your mortgage payment, maybe one one line mortgage payment, and that would be all your mortgage payments. If you have a line of credit and a first mortgage or two more, whatever should be one number, or you can break them out each individual loan might be better. That way you can match them up. If a loan or dollar amount changes, you'll see that if you have a line of credit, it could change with interest rates going up, or your balance coming down. Your utilities could be one number, or you could break it out by each individual utility. If you keep it one number, you can get the detail in your tracking app. So you really don't need it in your budget app, you just need that one number that you can print off from your tracking app maintenance, everything else car car loans, gas, you don't have to put each individual transaction in your budget, you're just putting a total dollar amount for a given period of time. So the simpler you can keep it the easier it's gonna be to update. And I'll give you a quick response. So let's say that you have a couple of months done and you're entered in and you're in your food category, and you put in your current results for the first three weeks of the particular month. And you're way over budget, you're way over. And you know that you used an average for two or three months and you're still way over. But you have to thank you. So what has happened? Why is that the case? Is there a holiday for you spend more money or food? Would somebody visit? Yeah. Or did you go on vacation where you ate out more? If there's a reason of what happened? You probably already know it. But if not, you can go back to your tracking app, look at the detail for that category. And and find out where you've gone wrong. Maybe you went out to eat four days in a row where your budget is only doing once a week. So you're starting to fall in the old habits so you You need you caught it. Now you need to fix it by not doing it anymore. But over time your dollar amounts are going to change on the Mount you're using for your budgeted amount. So you started out and over the first three months is pretty close. But over that same period of time, you've been cutting back on your spending, you've been finding the way to reduce your costs on your utilities may be changing your, your cable TV subscriptions, and maybe canceled some stuff, and now is starting to flow through. So now you're spending a whole lot less, we need to look at the actual based on what you budgeted amount, which is the match should be an average of your actual spending. And if your actuals gone down for a month, change the budget amount to reflect your new actual, because you don't need the budget for something you're not going to spend. In this particular case. Now, if you're have home maintenance, you may be budgeting for something you're not spending. But that's just so you have it covered. Because you never know when you need to go out and buy some light bulbs or a breaker for your fuse box or a new plug for something, you know, it's ongoing process. So keeping everything as current as possible is number one, and updating your budgeted dollar amounts is number two, so that they reflect your current expenses, the more accurate you are, the better off you're gonna be Deacon sleep at night, you'll know I'm gonna transfer $200 my savings account. And you know that you're not gonna have to transfer any of it back into your checking account to cover an expense because you have everything covered. You've accounted for everything, you know, everything that's going on. Now, maybe occasionally in the first year, something might pop up that you've forgotten about. Okay, well add it to your budget. Now you know about it? Is it something you're still using? Or is it something you're not using? Remember, if you bought a new computer, your subscriptions to move to that new computer, you don't have to buy a new subscription, he can just take it off the old one and put it on the new one. Maybe you still have computers allowed where he can add it. Because you still you're allowed to have up to five computers, but you only have three cover. Now you got four, that when you get rid of the old one, you can take it off that or so that the program knows that you no longer using that computer. Whatever the case you have to do, I don't know I don't really remember. But you get an appoint. You're always reviewing, you're keeping everything up to date, you're reviewing your budget, as some numbers are looking crazy wherever your actual is way lower, or way higher, then you need to investigate and figure out what happened. Maybe it's lower because you reduce some spending and you need to lower your budget $1 amount, maybe his way higher because of an event that happened. The holidays for example, or a vacation or some visitors something out of the norm has happened and you spent more money in that particular category, which is fine. That's called life. Keep your budget under control up to date and you'll be much better off on your personal finances and you'll be glad you did so