Hello, I'm your host, Mr. Chuck, a 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. Setting up budget, setting up a control center is easy once tracking has been completed for at least 30 days. Why 30 days? Well to make sure almost all your expenses are included. noname be going into more detail on how to set up categories. And most important subcategories. If you're wondering what a control center is, that's my name for a budget. Tracking is your lifeblood of your personal finances. Your budget is your control center, because it helps you get a grasp on what's going on, and helps you control your finances, whether it's through trying to reduce spending, trying to monitor where your money is going, or just basically trying to figure out how much you can save or how much you can do for future goals and purposes. It's why I call it a control center. Why do I say you had to do tracking for at least 30 days in need a lease 30 days, because that's genuinely a monthly cycle, everybody goes through, you're gonna pay everything you need to pay on a monthly basis. Now there's some exceptions to that. There may be some insurance charges or some other fees you pay once a quarter or every three months, there may be some bills you pay twice a year, such as real estate taxes if you have your mortgage paid off. But if you just getting started trying to set up a budget, you need to know at least the last 30 days, because that will give you all your monthly bills you pay, it will give you an idea how much you spend on groceries, how much you spend on gasoline. And then you need to fill in the blanks, the things you pay once a quarter, twice a year, maybe even once a year. So over time, you'll fill in all the details, you need to have your budget set up completely. Now I'm not telling you to quit spending money at this point. I'm not telling you, you need to cut back on your spending. Because reality we don't know if you if you can even cut back on your spending. Because you don't know how much of your money is going where. So if you track for 30 days, now you have an idea of the money coming into your account and the money going out of your account. But you still may not be aware that you're spending more money than what you have in income. So what's included in the budget, everything that goes through your checking account is included in your budget, and all your credit cards. What you don't include is things that's automatically payroll deducted from your paycheck, could be child support, could be health care, could be retirement contributions. We're not worried about those because they're being paid, and the money is already gone. We're trying to manage the money that gets deposited into your checking account on every payday. If you're one of those persons. That still gets a manual check. You go to the bank and you cash your check in you deposit all but $200 of it. And you keep$200 for slush funds. Well if you have a debt problem, or if you're struggling paycheck to paycheck, you gotta quit doing that. You need every penny you make to be accounted for. No more slush funds guys. Got to let your wife know how much income you're really bringing home. Now that doesn't include any deductions for health care, retirement, child support Whatever you may have automatically deducted. But you gotta be honest up to that point, you can't get your debt under control, if you keep sucking money out of your account, and not using it, to pay your needs first, and then apply it to your debt. So we need categories, when you set up your tracking your, if you use an app, which that's what I highly recommend, you have an item area, that's called categories. That's a starting point for your budget. But that's not exactly how your budgets gonna look, when you do a report is most likely going to come out in alphabetical order with alphabetical order probably make sense, if you don't have them grouped any other way. But we don't necessarily live in alphabetical order of everything we do. We're needing to group all of our categories together. And we can't and we do that by having a heading or a main category. And we're gonna concentrate on needs housing. So you'd have a category called housing, but you do not post any dollar amounts to that. It's more like a heading. And every subcategory that you list within housing is kind of total up to the housing. So if you do a totals only, you know, streamline report, it will have housing in the total, what you what you spent, I have transportation, and the total what you spent, it's not going to show you the breakdown is gonna give you some four basic numbers, that within housing you got you should have subcategories. The subcategories are the where you post your dollar amounts to say you'd have your mortgage payment, which could include your escrow, which be your insurance in real estate taxes, you'd have maintenance, you have utilities. Now, utilities is a subcategory under housing. But under Utilities, each individual utility company is a sub category under Utilities. So you could have the detail of how much you pay for each individual utility. And then that totals up into one number for your total utilities, then that totals up into one number for your total housing costs. It's fairly easy to figure out once you're sitting down and doing it. So if you're doing a spreadsheet, okay, you're gonna have column A is gonna be your descriptions. So you're gonna go down, you got to have your income is gonna be at the top income by spouse, and then by job or career, whatever you're doing. If you have more than one jobs, you list your main job first, and then your part time jobs underneath that by a spouse. If you have any side hustles that you have a regular monthly income, or a hobby where you have a regular income, regular meaning every couple of months at the bare minimum, then you need to include the gross amount that you receive from that. Then under that you're going to have expenses. Your needs are everything that you pay every month plus what you need to live. So it's going to be housing, transportation, food, clothing, paying your credit card debt, savings, some insurance that's not included under housing or transportation, maybe childcare or daycare. But after that, pretty much everything else that you pay for is going to be a want something that you want to do that you can live without that you don't necessarily need to have an order to get through life as you're going down your column A he got expense, you know expenses and under that let's call it housing. So housing is your main heading. It should be alright to left. Then you want to end debt in one time. And list everything. That's a subcategory, mortgage payment, maintenance, cell phone, internet, utilities, then the utilities yet and then in two times for the list all the individual utility companies you pay, I include cell phone under housing because a phone used to be a landline was connected to your house, he couldn't take it nowhere. So um, this leaving the cell phone, under housing, internet the same way it's connected to your house, you really can't take it anywhere unless it's in your cell phone. But that's your phone service. I'm talking about the internet service that you pay to use at home, when you post numbers to this category, you got housing, you don't post anything to that your mortgage payment is calm to be. If you're doing this in a spreadsheet, and is not necessarily doing a budget, II would it would look similar to it's hard to explain the numbers, you'd go like the first indent and would be in column B. And then the second indent and would be at column C, you just move them over. When you total everything up. For column A, that would be in column B. I mean, everything could be I don't know, he gets a jest of it. If you're using a program that have all that figured out for you, he does need the now when you're doing a spreadsheet for your budget, you can indent on the description. But all the numbers are gonna go in column A for you control numbers, and Column B, Column B free control numbers, Column C for your actual numbers. Okay, I guess I'm getting kinda confusing on my descriptions. Your category starts with a heading. And the heading is to general category like housing. And then within housing, you have subcategories such as mortgage payment, or rent, utilities, which could include your cell phone and your internet under utilities, maintenance, real estate, taxes, insurance. And whatever else may fall under housing, I just looked up in my app. And I use like a one. And I quote a one for everything under housing, and a two for transportation, a three, food and dining. And then my those are my wants. And then my needs repeat. So everything was a b one, b two is all my wants. When I do a report, I go transactions, month to date, totals, income and expense, that way your income is going to be at the top than your expenses or be in alphabetic order below that. Now my alphabetical order is a one than a two than a three. And it shows housing, payment utilities. And it shows all you know it shows the total for housing. But it also shows each individual line. And that's great because that's what you're going to use for your budget. So that's a transaction reports. month to date. That's when you once you got your budget set up. If you're doing your control numbers, that would you you would use your previous month as your report. And you can do a comparison report similar and do previous month to the current month to date. And it will show all the numbers and columns. And that might be easy to look at, you can use a ruler and go down and put it in to your budget spreadsheet. Or you kinda can print it out and save it and use that as your budget numbers or your budget. And you can see what's going on. That's the main thing as long as you can see what's going on in your personal finances. No matter how you do your budget, or your control center. It's going to be helpful. Each app is going to be different. Maybe you have an app where you can't be won't be able to edit your categories, but I'm pretty sure most all of them you can edit categories. So if you can edit categories come up with a system the group area Anything related to housing together, everything related to transportation, they gather everything related to food and dining together, everything related to close together. Now, these are all the different categories that may be on your list, and they're in alphabetical order. So that could be all over the place, we want to group them together by the categories. For your budget report, I don't use the budget in my app, because one, it's kind of confusing, that I don't think it's working correctly. But maybe it's I'm not using it correctly. And I tried hard to do that. If you're a novice, see, I'm sure you're gonna have the same problems I do. That's why I just do the transactions, I do my tracking in there. And then I create a report. And again, it's transactions, totals only income and expense among them to group them by income and expense. That way, it kind of comes out in an alphabetic order, but your incomes can be at the top and then your expenses can be below that it should show each individual line and it should show the total pie category, you can then set up a spreadsheet, and then plug those numbers into it so that you have it. And you can apply other formulas to figure out different percentages of what's to present two income as your housing costs to your transportation costs, which is useful information. As you develop your budget, and you fine tune your control numbers, the difference will be strong noun to ferry minimum amounts, the only time you're going to have a big difference is if there's a big jump and an expense says the real estate taxes went way up or your insurance went way up. Or if there's you don't pay it, for some reason, would be a big difference in in in that budget. But your insurance for your housing should be under housing insurance for your auto should be under autos, and then all other insurance, if it's payroll deducted, you don't have to account for it. Pay if you have disability income insurance, or whatever other type of insurance you may have, you put that under its own categories. See your needs are going to be housing, transportation, food, clothing, credit card debt, or all other debt savings. Maybe take care if you have children, and you both work. And then anything after that would be at once, which would be your hobbies, maybe you can have some dining out as they want. If you'd have a special occasion type thing, birthday parties, celebrations, all that kind of stuff would be under once on their food, you'd have groceries, dining out home delivery, at least those three categories, see see how much you're spending on each one. And that's good way, as over time, the news looking for ways to cut some spending, he can say well, maybe I no longer have home delivery on food on meals. But I'll just go to the grocery store and cook my own. Or maybe I can cut back on my dining out. Last month I spent $500. Maybe I need to reduce that down to $200 is a good way to figure out how to reduce spending so that you can increase your emergency fund quit quicker. So you can apply it to a debt. You have. We talked about tracking, you identified a problem. We're identifying how to solve that problem. You're tracking everything going through your household income and expenses. You've create some sort of a budget, even if you just print that report from your app, and save it for your budget for that particular month. You had the previous month, a comparison report my transaction the previous month, the current month to date. And then once you get the current month and you do it finalize, you can see Did you reduce your spending at all from the previous month to the current month? And if you did you That's good. If you didn't, why not? Where did you go wrong? We need to start looking at where you're going wrong and correcting the problem as you go before you do it. So that you can put more money into your emergency fund, so you can build it up quicker, so you can apply it to your debt sooner. That's our goal here. I'll be back in one moment with my final thoughts are the articles I referred to, in my episodes, have a link in my show notes. If you're interested in checking out the software that I personally use to get my demo control, it's in my show notes under shop financial, you need to copy and paste the link, and it will take you to the website. Any questions, you can just contact me through that particular website. If you value this podcast, and I like to make a contribution, I had a contribution link in my show notes also, give whatever you feel is appropriate for the information I am providing. I thank everyone for listening to my podcast. Next week, we're going to talk about final piece of your puzzle to get your debt under control. And that's a debt reduction plan. And you understand why I say you need to control your spending to increase your emergency fund. And if you don't know what emergency fund is, you're going to learn that next week. And the reasons for it, and how you can make it work to your benefit. But for your control center. Once you get it set up, assuming you're doing a spreadsheet and you got it, you did some type of report, he was able to rearrange your categories. So it comes out close to the order. He set up a spreadsheet, he got the numbers total and income should be at the top of your budget, always with a total line, then your expenses that each category should have its total, and then your total expense. And then your total income less total expenses, your net available or non available money. And that that's negative, that means you're spending more than what you make. And how do you do that? Well, you do that by using your credit card, and then you're making a minimum payment on your credit card, you're not getting ahead. That's why you have to quit using your credit we need, you need to get your spending under control, you need at least start with it in your wants under control and cut back there first, then cut back on your your needs. Where can you reduce your spending on your knees. Our goal here is to keep as much of our own money and our own pocket as possible. And you can only do that by controlling what you spend. You could increase your income. But if you increase your income and you increase your spending, you're no better off. If you increase your income, decrease your spending, you're gonna be better off. If you just decrease your spending, you're gonna be better off. It may take you a while, but you'll be better off overall, because you're living within your means. And that's important to do. Give up those credit cards. Use them for emergency situations only. We're gonna talk about that next week. You'll get all your debt under control a whole lot faster than you think was ever possible. So work on getting your budget set up or doing a budget, printing out that report from your app, study in it and figure out if there's any way you can reduce your spending in any of those particular categories.