Being in debt stinks. For real.
I know. For years I lived with credit card and automobile debt, worried and frustrated. So, one day, I decided to do something about my debt.
I hit the brakes.
I stopped – took a look at where I was – and decided to go in a whole new direction.
No Credit Needed was born and my life changed – forever.
I think it’s time for a new series here – one I’m calling Hit the Brakes – Get Real. In it, I’ll explore the steps necessary for analyzing one’s current financial situation and then go over some ways to move forward. I’ll follow this series with another series – Hit the Gas – Get Moving. It should be fun.
Today, let’s talk a bit about expenses. Why? Because, in the next article, I’m going to write about creating a budget, and it’s impossible to create a budget without first having a list of expenses. So here we go.
Create a list of next month’s expenses:
List fixed monthly expenses – This list should be relatively easy to compile. Generally, theses expenses would include items like rent, mortgage payments, monthly subscription costs, monthly fees, satellite or cable bills, etc. Include all fixed payments to creditors.
List variable monthly expenses – This list may be a bit more difficult to compile. Generally, these expenses would include items like groceries, fuel, electricity, etc. Include any variable payments to creditors. Remember such budget-busters as eating out and entertainment.
List any annual, semi-annual, not-simply-month-by-month expenses due next month – This list is extremely important. These expenses could include insurance premiums, taxes, etc. When creating a budget, it’s these types of expenses that can really trip us up. In a perfect world, we want to budget, each month, for annual bills, dividing the bill by 12, placing that amount in savings, and so-forth. However, we have to deal with reality – and if we haven’t been saving for that annual bill along-and-along, well, we have to budget for the whole thing next month.
Now let’s work through our list, finding expenses that we can reduce. I haven’t mentioned income. I want us to focus on reducing expenses – simply because it’s smart to reduce expenses. At this point, it would be awesome, for those who are married, to go through this list with our spouse. Oh the fun we’ll have!
Again, I haven’t mentioned income – or savings – because I really want us to focus on reducing expenses. There are literally, thousands of articles and tips on saving money, so I won’t try to do that here. Instead, I’ll simply encourage you to actually DO some of those things listed in some of those articles.
Debt is insidious. Getting into it is so easy – and getting out can be so hard. It takes real decision making, and after years of making poor financial decisions, making smart decisions can be difficult. So, start by stopping. Make a list of expenses and then get to reducing.
Rewrite your list of next month’s expenses. This list will become to center-piece of you budget.