How to Stop Living Paycheck to Paycheck

 I hate debt. It keeps our cash tied up. It prevents us from being able to spend for our future, because we're paying for the past. So, how do we get rid of it? We pay it off. But with a plan. And that plan is called the "Debt Snowball". You may have noticed that there was a category in the budget, under debt, called "Snowball". What's it for? It's for getting ride of debt. I set our Snowball amount to $100 - I'm pretty aggressive that way - but whatever you can allocate extra to throw towards debt, is good. Here's why - Let's look at those credit cards -  I have a $30 payment for my Macy's card - that card has an interest rate of 29% (ouch!), and I'm carrying a balance of $640. With my minimum payment of $30/month, it will take me 57 months to pay that balance off, and I'll have also paid over $430 in interest. My Citicard is a bit better with interest - it's 17%. But I have a balance of $1000. It will take me 60 months to pa...

 Our budget, how to spend, and the day-to-day of Zero-Based-Budgeting - you've heard me mention Zero-Based-Budgeting before - but what is it exactly, and how is it different than regular "budgeting"? Well, get ready for a deep dive, grab your favorite relaxing beverage, and read on. Traditional Budgeting is more accurately called "Forecasting". What were we taught to do? Write down our income, and then list our expenses, make sure our expenses aren't bigger than our income, and then spend accordingly. Easy, right? Then why do we fail at it? Because our standard budget might be a good blueprint, but it doesn't guide our day to day spending decisions. Me know our rent is due in two weeks, and we've got $1900 in the bank. I can afford that plate of BBQ and a few beers right now. $300 later, and then some gas to get to work, and some groceries for the week, and we're below our $1200 that we need. And payday isn't until after the 1st! What's t...

By now, we should have a complete, or near complete list of everything we spend our money on, including not only monthly, but also semi-annual, annual, and infrequent expenses we need to save up for. Let's take a look: Well, there's everything, and we can see that we're spending more than we take in - our monthly income that we established back in "Getting a Grip on Finances" was $2946. We're $169 over our budget. How do we handle that? This is where you think long and hard about what matters most to you, and you design your budget around those priorities. We have our necessities - Rent, food, etc - those are pretty much non-negotiables. But, can you refinance your house at a lower interest rate? Can you be more aggressive at couponing, meal planning, and strategic shopping to reduce the grocery bill? What about insurance, can you negotiate a lower rate? Can you reduce your gift spending, and maybe hand-make something, or offer to spend time or cook a meal in ...

 What's Fun Money? It's what we call money you give to yourself, to spend on whatever you want, no questions asked. It is absolutely up to you. Because everyone's situation and priorities are different, that amount is going to vary between person to person. For my own situation, my wife and I get $100/month to do with what we will. Some months it's all spent, other months anything left over will carry to the next month - sometimes I'll want something that's more than $100 - in that case I wait, safe up some money, and then buy it when I can afford it - I don't use credit anymore. I avoid it at all costs. So here's what our fun money and etc looks like: I've also Included subscriptions, and listed each as a separate category. You could lump them all in to one category called "streaming", or even include that gym membership and the Amazon Prime Category we had in "True Expenses", but I like to be able so see exactly where the money ...

 If you have any debt, such as Credit cards, Student Loans, Store Cards or other revolving lines of credit, I highly recommend attacking it as strongly as possible. Debt is borrowing against the future for something you've used yesterday. Unless it's for something of appreciable value, such as real estate, the value of that expense is almost immediately lost after you've purchased it. Homes can, an usually go up in value. Some cars can appreciate in value, but most drop by thousands immediately after you've driven it off the lot. That fancy dinner, those groceries you bought, or that gas you filled the car with? You can't resell that at all. I understand having to use a credit card in an emergency to buy groceries or gas. But we're going to break out of that hand-to-mouth, paycheck-to-paycheck cycle, so we don't have to use our credit cards any more. First, we have to get a handle on our debt situation - for a mortgage, I include that in my True Expenses, ra...

 In the last post, we took a look at what was coming in, vs what was going out. You may have seen expenses you didn't realize or think about. You might have seen unexpected emergencies such as a vet visit, or new tires for the car. In this post we'll take a detailed look at what our true expenses are, and how to incorporate them into a plan to make our money work for us, rather than the other way around. When we looked at our monthly expenditures, we knew pretty quickly what we needed to survive. Our rent/mortgage, utilities, food, transportation. But we also realized there are other monthly expenses such as gym memberships, subscription services, association fees, entertainment expenses, clothing, pet costs, insurance etc. We not only need to allocate money towards what we need to survive, bur also what we need to fund our lifestyle. On top of all that, we know there are going to be larger, more infrequent expenses. Annual car registration, occasional Dr or Vet visits, care re...