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Welcome together, we're gonna explore our personal finances and figure out how to improve them. Whether you're just getting started in life on your finances, or you may already have a home and a car payment and you're struggling to get credit cards under control, are you getting a later start in life on saving for retirement, reduce debt, increase wealth.com is a podcast to educate those to improve personal finances, whether it's eliminating debt, or making smart investments. So let's now get started.

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budgeting how to do it. I'm going to try to give you a more detail than I did earlier. It's a very important part of achieving your debt reduction and financial freedom. I know you don't like to do it, nobody does. It's not that difficult. So, I'm going to try to explain a better detail on my method, but I have an article first. So start with that. This week's article is I found on the internet, Dave Ramsey website. And it's budgeting 15 practical budgeting tips. I don't think it was written by him. I'm gonna read it. Say eight minute read by Rachael Cruz. The dreaded B word budgeting. Unfortunately, that word budget has gotten a bad rap. When all boils down a budget is basically just a plan for your money. Budgeting means you're spending with a purpose before the month begins.

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Many people view a budget as a straitjacket though keep them from doing what they want. But that couldn't be further from the truth. A budget doesn't limit your freedom, it gives you freedom. It's really all about being intentional with where your money goes. How can budgeting help me a budget it's going to give you an action plan and a clear picture of where your money is ending up each month. Budgeting will help you achieve the goals you're working towards. Whether that's getting out of debt, saving for retirement or just keeping your grocery bill from getting out of hand. When you see planning a budget simply spending your money and potentially you can actually find more freedom to spend. Once something has been budget for you be able to spend money without feeling guilty. Many people even say find extra money after they create a realistic budget budget and stick with it. How amazing is that? 15 budgeting tips for your daily life.

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Ready to get started here are the top 15 budgeting tips. One budget to zero before the month begins. This means before the month even starts, you're making a plan and giving every dollar a name. It's called a zero based budget. Now, that doesn't mean you have zero dollars in your bank account, it just means your income minus all your expenses outcomes equals zero to do the budget together, if you're married, sit down once a month and have a family budgeting night. Make it fun, grab some of your favorite snacks and put a good play list. To help you focus. You need to get on the same page with money. So set goals together and dream about what the future would look like. Remember that till you are one, your bank counts should be one two. It's no longer your money or my money. It's our money. And if you're single find someone who can act as your accountability partner and help you stick to your goals three every month.

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is different. Some months you have budget for things like back to school expenses, supplies or routine car maintenance. Other month you'll be saving for things like vacation birthdays and holidays. Regardless of the occasion, make sure you prepare for those expenses in the budget. Don't let those special occasions sneak up on you when Christmas is in December again this year guys, be sure to adjust your budget each month as things change. Make a savings fun you can stash cash in with throughout the year. When you don't have a plan, you're going to be stressed and that takes all the fun of giving and celebrating no one wants that. For start with the most important categories first.

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Giving and saving are at the top of the list and when it comes the four walls food, shelter, utilities, basic clothing and transportation. Once your true necessities necessities are

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taken care of, you can fill in the rest of the categories in your budget. Five, pay off your debt. If you have debt paying it off needs to be top priority. Use the snowball method and the baby steps to get rid of debt as fast as you can attack it. Get mad at it. Stop letting debt rob you of everything that helps you win with money your income. Six. Don't be afraid to trim the budget. Brace yourself. It might be time for some budget cuts in your life and things are tight right now. You can save money quickly by canceling your cable dining out less and shopping at discount clothing and grocery stores. Remember your budget cuts are only temporary. You can always make adjustments later down the road. Seven, make a schedule and stick to it. While you're making a budget part of your monthly routine. Why not pick specific dates for other expenses set up auto

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drast out of your checking account to pay bills, and buy your groceries on this set a set day every week or twice a month. When you know what to expect and when to expect it you can take a lot of stress and potential potential pitfalls out of the pitcher. Eight. Track your process. It's important to check your process from time to time if you're married, track your spending and purchases together. So you both keep your goals in sight. Look back at earlier budgets see how far you come and don't forget to celebrate small wins. Pro Tip one key getter Gauri to keep a close eye on is your grocery budget. I bet you're spending significantly less on groceries on a budget. Nine. Create a buffer in your budget. Put a small amount of money aside for unexpected expenses throughout the month later this year miscellaneous category in a budget. That way when common on something comes up you can cover it without taking away money you've already been

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Put somewhere else. Keep track of expenses that frankly end up in this category. Eventually, you might even want to promote them to a permanent spot on the budget rest roster.

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10 cut up your credit cards. If you're really committed to sticking to a budget and getting out of debt you need to debt ditch those credit cards for good stop using them, cut them up, shred them, or even make a crap project out of them. Whatever you do, get them out your life. Have a no credit card debt with me no minimum payments to add to the budget. Zero hassle was fees are high interest rates and much less stress and worry, stick to using your debit card and even cash and dumped those credit cards like your ninth grade flame. You know that? The great thing about a debit card is the money comes straight out of your bank account. There's no middleman charging you 15% interest 11 use cash for certain budget categories that trip you up if you're constantly overspending.

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On your grocery budget for fun money, cash out those categories and use envelope system to hold you accountable. Just go to the bank and pull out the cash. Amount your budget for that category. Once a cash runs out, stop spending it. It's the ultimate accountability partner 12. Try an online budget tool. If pen and paper or spreadsheet aren't your thing, it's time to join the 21st century and use a budgeting tool like every dollar. You can focus on planning a budget and track your spending from the comfort of your smartphone. Plus, you can sync up your budget with your spouse, which is great for keeping that communication open 13 big content and quit the comparisons. You have much more than you realize don't compare your situation to everyone else. Comparison when only rob you of your joy but also your paycheck. Keep moving forward and doing what's right for your family. 14 have goals whether you're paying off student loans, building up your emergency fund or

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paying off your mortgage, you need to focus on your why that's the reason you make any sacrifices

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15 give yourself lots of grace, it usually takes three to four months to get a handle on this whole budgeting thing and it won't be perfect the first time or the second but you'll get there budgeting tip for inconsistent income. Good news guys you can budget was inconsistent or irregular income a girl good rule of thumb is to budget based on what the low earning month would look like for you. This would be your budgeting income. All you need to do is make a list of things you'd put in a normal budget giving savings for wall etc. Then ask yourself if he had a horrible month we only had enough money to do one thing on this list. What would that be? Put a one next to that item. Then list your second priority and go on through your budget that way, make an item's marking items by importance Be sure to take care of the necessary necessity.

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First. That way, when you do get paid you know exactly where your money is going.

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How can I make a budget quickly? One of the quickest ways you can do a budget is by using our free budgeting tool every dollar and map out next budget and as little as 10 minutes, streamline the process and even more using our premium version, every dollar plus which connects to your bank account so you never miss another transaction. When you realize the whole purpose of budget isn't limited to your freedom, but gives you freedom. You'll be on the road to loving your life in your bank account. That's what we call winning with money about Rachael Cruz. Rachael Cruz is a seasoned communicator. And number one New York Times bestselling author helped them people learn the proper way to handle money and stay out of debt. You can follow Rachael on YouTube, Facebook or Rachael cruz.com. For those of you who are struggling to project your finances forward to figure

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out what you're going to owe and how much money you're going to have in your checking account moving forward from paycheck to paycheck and a note again, the farther forward ahead you can project it, the better off you are. But if you're not computer savvy, don't have the time or don't want to take the time then I have a solution for you. I have a software I've found a software that does that for you plus much, much more. So go to my website, reduce debt increase wealth.buzzsprout.com upper right hand corner, there's a little folder right next to the heart, don't click the heart, click on the folder. It will take you to a website where you can watch some videos and learn more about this great software that I've been using since April of 2017. Thank you for supporting the show. Okay, they are go ahead some good information in it. So I'm going to give you more about how I did it. And you can use whatever works for you. But if you've been projecting you

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your expenses forward from paycheck to paycheck. If you had done that for you know, multiple weeks now, then you got your budget almost done. So what you want to do is make up some categories, utilities, home improvements, entertainment,

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groceries or living expenses, living expenses, I would call anything would be like groceries, auto expense.

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I expense would be gasoline, repairs

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insurance category so you can put your car insurance, your home insurance, your life insurance, your health insurance, all the different types of insurance I've just put that under an insurance category, and auto everything you pay to maintain at auto but do not include any loans.

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payments,

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we want to keep those separated. So your, your mortgage payment, your line of credit, all your credit cards, car payments, payday lands, do not include that in these categories.

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Those are what I call accounts. And you want to set those up separately. So for now, we're working on budget. So we're looking for budget categories. You know, you'd might have a category called shopping on your shopping, you could say, groceries, clothes, home improvements, home maintenance, you know, whatever, you know, whatever Good for you. Whatever you can remember what's in the different categories. That's the most important thing. Then let's start with the category utilities.

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Go back to the you know

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Few weeks that you've been

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projecting ahead, look at what you've written down and list all your utilities you paid. And if you go back to three months, you can add them all up, divide it by, say three for the last three months, and that's your average. That's the amount of money you want to put electricity. Your average is $100 a month you put $100 in there, that don't mean you're gonna pay $100 every month, that just means that's your average. So much might be $90, some might be 110, but your average is 100. So we want to use the average of everything that you've been paying. So you do it for your electric for the home, natural gas for the home, water and sewer trash. I also include internet service,

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because I consider that a utility nowadays.

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And add them up and put them in there, figure out your average, add up all your averages, that's your total monthly utility cost. A nice number to know you get an idea what you're spending where you have a better idea where your money's going to okay utilities, I average $475 a month.

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I also another category is telephone, you can have your home line. If you still have one. Your cell phones. Yeah, put your telephone in there. As I do that as phone expense or telephone. It's a different category. It could be a utility also. And you do that for all your different categories. And then you do this little subtotal so you know how much my utilities are a month, my average my average telephone per month, my average car expense for the month. My average

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shopping trips for the month, which is groceries, clothes, whatever you're spending on. And you can start your average. And then when you have a month where your your spending is more you can look and see why. So let's say your average for shopping is $400 a month, hundred dollars a week.

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And you look back last month and it was $800 oh man went way over twice as much What happened? Oh, I went back to school clothes for the children, you know, new suit for myself. wife bought some dresses or you know clothes or clothes for herself. So you have an idea why that is not that big of a deal. It doesn't mean that you overspent maybe it did. Maybe you did and that's up to you. But if you cannot make that decision at the time you're spending the money at least you can look

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back and say, Where did I go wrong this month? Where What did I do wrong. And by having a budget and amount in that budget, it does two things. It gives you a guideline of what your average is. I'm not saying you cut back, I'm not saying that you starve yourself or, you know, really reduce it, but you need to only spend the money that you actually have in your checking account no more. So there's gonna be times where you're gonna spend more than what you have, and there's going to be other times where you are not going to spend as you know that much. So, over the long term is going to even itself out, but it's only a tool to help you keep track of your spending and to give you a barometer of what's going on in your life, as far as your financial money. That's important member one of the

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Tip last week 19% of the people are not doing it, that you can help improve your financial situation is knowledge. So the more knowledge you have, the better off you're gonna be. And that's the idea was setting up budgets and keeping track of it. It's important to project things forward. So this for example, you got it's in the fall, your children can re go back to school, your wife likes to go buy school supplies, maybe new clothes, shoes, you know, those types of things. So you know, that's coming up. So as you project your budget for your, you know, from last pay than the next pay, you know, if you go multiple pay periods or a month or two months, or three months like I did, then you can start plugging in those things. Okay, well, here's September. Coming up.

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Know that we're going to spend extra $300. And you can put a line in there and, and, and budget for $300, you know, for back to school stuff. So you can put that in there. And now you know, you're gonna have enough money in your checking account, so you don't have to use that credit card. So you're trying to quit using debt, quit using those credit cards. The only time I use a credit card is I pay for something,

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then that credit card gets paid off either on a monthly basis or weekly basis. The more you're struggling, the faster you need to pay that off, the shorter time, you need to have that because you don't have a lot of leeway. So you got to treat that credit card as cash. So if I buy something on Wednesday, I gotta pay that credit card off the next payday or the next next month. But that

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What you're paying for should already been in that projected Ford amount, you shouldn't have to use a credit card. Now you can use it because if you buy stuff online, it's safer. He can go, you know, even at a store nowadays, it's not all that safe to use your debit card from your checking account, because somebody might steal it. So you know, I understand that. So I'm just saying that if you're doing that to be careful, or you're earning some rewards, which I have an opinion on that too, but I'm not going to tell you what it is. But if you use rewards and you're building up, he still got to pay that credit card, we want to have a zero balance. You don't want to be carrying a balance. So that's the main thing.

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If you're still getting your utility bills or all your bills in the mail,

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then hold on to them for two, three months. That way you have it in front of you, you can put them in order. Put them together what they are, you know, they're saying

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ones all together and then you can categorize them by like utilities, put them in one pile and, you know, keep receipts from the grocery store the, you know, he can, you know, separate them out and keep hold on to them. And you can use that as a paper trail to come up with your average monthly amount or average amount you're going to be paying. So as just a little tip there that it may or may not work. I didn't do it because I thought it was too much of a hassle and I don't actually get my statements in the mail anymore. So I just go online, I just, I kept my checking account, you know, like quick and so I could go back and do a scan and type in whichever one I happen to be looking for. And it gives me a whole list of them. I could just pick out the last three or four. So it was easy for me because I had it in a program where I was able to access that

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Data the way I wanted to do it. So with that said, That's that works fairly well. My next part of it now I mentioned earlier about accounts

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and you want to make a separate list or a different page of all the loans that you're paying. And

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you're just doing so you have it handy and easy to see. So you know, your mortgage.

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Who your pan When did it start? How much did you initially borrow? What's your monthly payment, what's your interest rate

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and unpaid balance

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and do that for everything. I know that like a line of credit doesn't really have an end date, but has got a start date. And you know, you know how much he got on there today or whenever you

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You start doing this and you know what your minimum payment is, which could go up if you keep using it or could go down if you pay down on it. And the interest rate, definitely going to be higher than that mortgage, I can tell you that and do that with all your credit cards. Now your credit cards, if you get a statement, keep those

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in loan for your car loans, you know, you probably got paperwork for that he could check your glove department, that's where I normally keep mine. I don't know why but that's where they are. So everybody does something different. Some people are, you know, got really good files and you can just open up a drawer and find it and other people don't keep track of nothing. I was an accountant, you know, so I told everybody keep track of stuff and I did it for work, but I never did it personally for myself like the plumber with a leaky toilet, same thing.

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So he got the account set up that should be one page you need to total them up, you know, you know, you'd have a column for your monthly

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How much all your monthly payments are, your unpaid balance should have another column for that.

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Whatever works for you, but that's the information that you need to keep the interest rate is important. So you can just look at it, which, which one has the highest rate, which one's got the lowest rate? Because remember,

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when you go to pay off your debt, as you build up your emergency fund, and you get extra money in there extra money that you've budgeted, you know, you worked on your budget and you freed up some money and you transfer it to your savings account. You got your 1500 or $2,000 emergency built up now or three 4000 above that. Now you can transfer that extra money and pay on a debt. Well, which one do you pay off first? As I talked about earlier, there's multiple methods and doing

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He has a snowball method which you concentrate on paying off in the lowest amount do order. So your one credit card has a $2,000 do on it, pay that one off, rest on the next lowest one do you use that method that makes it feel like you're accomplishing something and you're gaining, but that's not gonna reduce your interest because you're not paying as much interest on a smaller balance. So, the avalanche method is you concentrate on your highest rate of interest loan, pay that one first and then work your way down based on which one has the high highest rate of interest that will help you pay off your principal and it helps you pay less in interest which then helps you pay more principal I

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said a few weeks ago that I kind of use a mix.

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I paid off a credit card, I had a small balance on it too. So I could have a credit card paid off, so I could use it as cash.

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Then I started paying off my debt that has the highest rate of interest. And then I stick to that. And I did that. And as you can see my numbers from last week, I reduced my interest by $30,140 with interest I did not have to pay, because that's the way I did it. So there's a purpose to everything. Knowledge is key. The more you know, the better off you're gonna be. And that pretty much brings this week to an end. So that's all I have about budgeting and setting up budgets and accounts. That's the end of another episode. I hope you found it useful and if

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You'd like to share this episode with your friends please do so. I'm open for any suggestions for improvement or for information that you'd like to talk about in future episodes. You can go to my Facebook page and leave me a message more than glad to comply. To find my Facebook page go to reduce debt, increase wealth calm and click on the Facebook icon to go to my Facebook website.

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Go to show notes to find links to articles. Transcribed by https://otter.ai