Ok, so you managed to stumble across budget and are probably scratching your head trying to figure out how on earth to get out from beneath a pile of debt. This problem many people must face but the answer is much easier than putting that answer into action. It is difficult to get debt free, but it CAN be done and I will show you exactly how to get there.
One of the first major steps in becoming debt free is in knowing where you stand financially. Knowing where you stand financially means you HAVE TO create a financial budget. Drawing up a budget is EXTREMELY important to your long-term success. For you to get debt free you need to know what monthly income you have coming in and what monthly expenses you have going out every month. My personal budgets take this one step further; you also must take into account expenses that are likely to occur annually, such as vehicle registrations.
What do you put in a budget? I'll show you what a typical expense budget might look like for the average American.
Rent/Mortgage - $995
Auto Insurance - $120
Auto Loan - $395
Auto Loan #2 - $295
Life Insurance - $65
Water - $39
Electricity - $80
Garbage - $20
Natural Gas - $121
Childcare - $505+
Gasoline - $300
Groceries - $1005
Telephone - $39
Cable - $49
Internet - $51
Cell Phone - $101
Credit Card - $101
Student Loans - $99+
Total - $4385++
Looking at the finances above, each item taken alone does not seem like too horrible an idea. But together things begin to get out of hand. In the above financial budget we have nearly $4400 of monthly expenses, AFTER taxes. In order to BREAK EVEN on this caliber of financial budget you HAVE TO be bringing in approximately $70K per year. Keep in mind this doesn't include children's doctor's visits, and all the other annual crap we haven't even addressed yet, such as enrollment fees, the vehicle expenditures such as registrations and the one off mechanical failures that can cost an arm and a leg. It's no wonder people are up to their necks in debt. Most people don't make $70K,$70,000 and most people have all kinds of one off expenditures that aren't outlined on the above budget. In order to know where you can cut back, you must know what you have.
My assignment to you people out there reading this is to do this very first step. Make a financial budget and BE HONEST - it will do you no good if it is not accurate. Once we get this done we will be talking about such things as debt equity and discretionary spending. Let's get our budgets prepared so we can begin working on a plan to GET DEBT FREE!!!
One of the first major steps in becoming debt free is in knowing where you stand financially. Knowing where you stand financially means you HAVE TO create a financial budget. Drawing up a budget is EXTREMELY important to your long-term success. For you to get debt free you need to know what monthly income you have coming in and what monthly expenses you have going out every month. My personal budgets take this one step further; you also must take into account expenses that are likely to occur annually, such as vehicle registrations.
What do you put in a budget? I'll show you what a typical expense budget might look like for the average American.
Rent/Mortgage - $995
Auto Insurance - $120
Auto Loan - $395
Auto Loan #2 - $295
Life Insurance - $65
Water - $39
Electricity - $80
Garbage - $20
Natural Gas - $121
Childcare - $505+
Gasoline - $300
Groceries - $1005
Telephone - $39
Cable - $49
Internet - $51
Cell Phone - $101
Credit Card - $101
Student Loans - $99+
Total - $4385++
Looking at the finances above, each item taken alone does not seem like too horrible an idea. But together things begin to get out of hand. In the above financial budget we have nearly $4400 of monthly expenses, AFTER taxes. In order to BREAK EVEN on this caliber of financial budget you HAVE TO be bringing in approximately $70K per year. Keep in mind this doesn't include children's doctor's visits, and all the other annual crap we haven't even addressed yet, such as enrollment fees, the vehicle expenditures such as registrations and the one off mechanical failures that can cost an arm and a leg. It's no wonder people are up to their necks in debt. Most people don't make $70K,$70,000 and most people have all kinds of one off expenditures that aren't outlined on the above budget. In order to know where you can cut back, you must know what you have.
My assignment to you people out there reading this is to do this very first step. Make a financial budget and BE HONEST - it will do you no good if it is not accurate. Once we get this done we will be talking about such things as debt equity and discretionary spending. Let's get our budgets prepared so we can begin working on a plan to GET DEBT FREE!!!
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