Aug. 31, 2008 - Organizing Your Finances: Part 2

Organizing Your Finances: Part 2

In Part 1, I asked you to organize and collect all the details about your debt. This first step is to bring all the hard to face facts out in the open.

In this entry, I want you to collect all the information you have on income coming into your home. If the number you come up with is lower than you know you need, start looking into ways to raise that number for next month. Start making plans now, so that next month isn’t as tight. Sell something, like books at the used bookstore, on eBay, etc, babysit, get a part time job or whatever you can do to bring in extra money. I personally like to sell items in my house that I know I can live without.

 After you identify all sources of income, list out all of your household expenses. These are the budget items that you pay each month to keep your lights on and food on the table. We start with tithe in our home and then follow with mortgage, groceries, gas for the cars, and then the other smaller items. Dave Ramsey’s method says to pay yourself before the creditors.

Household expenses may be the area you have to pick apart and remove some items. You may have to choose between cable and internet service. Or Netflix and neat, but unnecessary features on the house phone. Even if you cut out $20 a month, over a 2 year period of paying down on debt, you will have freed up $480. We gave up all the extra features on our house phone 6 years ago for a savings of about $1080. We don’t notice a quality of life difference without call waiting. Read what others have to say about cutting costs on your home phone. We also choose to have Netflix but not cable TV for a savings of over $3,000! Also, we know that if we had a hard month coming up we could drop the Netflix or suspend our account without penalty. Get creative with what you think you need to have and what you really need.

It will take sacrifice and your friends and neighbors will think you are really weird. I love this article written by a mom who has become intense in her debt repayment. :) But who cares if you are able to pay all of your bills every month and you don’t have last year’s debt hanging on like a deranged monkey! I love living life today and not carrying the burden of my past spending.

Project Organize Your Finances:

1. Collect all the information about your debts and write the details down

2. Tally up your income and write it down next to your debts, also brainstorm how you can increase your income for next month

3. Collect all the information you have on your household expenses, also deciding what you can trim from the budget

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