Why the title Broke vs Budget?
Difficult time in life are not a illusion, especially around money. How to do, if we don’t have enough money just to stay current with the bills, the house ,the car and all the rest?
See the breakdown on how it is possible to save on a really tight budget and even pay some debt at the same time. This is great but the magic word is: Commitment! No commitment ,no success. Let’s start…
What is your financial situation today? Do you have a full time job, part time, contractor, self employed, making a lot of money or barely having money left at the end of the month!
Try to identify your expenses, on a piece of paper, excel sheet or any document , software you may think will help you gathered this information properly and in a clear way. Categorize your spending from the last year or so to give you a clear idea on your spending habits.
Do you have spending issue blocking you in achieving certain goals or commitment? Let’s say you want to save for a new car but it is difficult because you love spending money on shoes but in the long term when looking… At your excel sheet you do see and understand ,there is a issue regarding your spending habit on shoes (Example: 1000$ on shoes last year) and need to find a solution.
Spending = Goodbye
Let’s find a way to cut on expenses so we could have more in our pocket to put toward debt, buy a new car or any other item needed.
One of the major factor would be to downsize our lifestyle… For every household there is 2-3 cars park in the front, without counting, the 4 wheelers, motorbike,scooters or any drivable machine fitting on the driveway or the garage.
Is there any items we could leave without or downsize to help us achieve our goal quickly to spend less to have more.
- Vacations (Try to go to a location closer to home, this is a great option to save)
- Cars (Do we really need 2-3 cars… Why not remove one from the fleet and save on insurance , repairs)
- House (Downsizing the house could be a good option but again it imply a lot of variable.
- changing location
- If it’s a old house, considering repairs and upgrade
- Change of insurance cost
- More or less taxes
- Calculating the difference in commuting to work (Traffic or not)
- mortgage fees to be considered
Frugality should be your best friend when facing with almost no money at the end of the month.
Learn how to be creative around meals
- Recipes marathon to save
- What you have left in the fridge is what you need to cook with (easier said than done)
- Don’t waist food but do a mix of two meals into one
Do the Work yourself.
- Quick repair on your car (so many videos on how to repair your car online)
- Have a house cleaner, do the work yourself to save
- House maintenance, fix any items in the house yourself
- Negociate your mortgage rate or rent with the lender
To be frugal doesn’t mean to be cheap but to become someone that is more aware of the money spent wisely. We become at the end,more in control.
Understand your debt could be one of the best option to tackle the crazynest of money wasted on interest rate.
Once we have all the numbers on the table, we have to understand how to break down the debt in a way that it will be more easier and simplier than we think.
We could start by attacking the lowest debt first. By starting with the smallest debt you will see this thing disappear right away from your mailbox. After the smallest one is gone ,lets start with the second one because now you have money coming from your “done paid” first debt and you will assign to your second debt. Total of two amount to be put toward your second debt.
We call it the Snowball effect or the Debt Snowball method brought by Dave Ramsey.
See below a simple explanation compare to mine ,how easy it is to put in action.
“Copyright Dave Ramsey”
“Here is, How the Debt Snowball Method Works
The debt snowball method is a debt reduction strategy where you pay off debts in order of smallest to largest, gaining momentum as each balance is paid off. When the smallest debt is paid in full, you roll the money you were paying on that debt into the next smallest balance.
It looks something like this:
Step 1: List your debts from smallest to largest.
Step 2: Make minimum payments on all your debts except the smallest.
Step 3: Pay as much as possible on your smallest debt.
Step 4: Repeat until each debt is paid in full.”
Reducing Credit Card Interest could be a excellent option to save money.
Take the time to call the credit company and ask ,if there is a way to lower the interest rate on the credit card.If they see, you have a good record and are always on time, they will assist in any positive way.
- If you take a credit card with a interest rate of 20% per year and lets say you get approve for a interest rate of 15% per year on a 5000$ credit card, this is a saving of 250$ for the year. Small changes could be beneficial at the end of the year.
Always be careful when dealing with companies offering their services or approaching you, to have a magic solution to help you reduce your interest rate but will request a fee for the services.
- Payment Plan extention is another way to help us free up some money.
- By having a extention on your payment plan, you will have access to more funds per month to put toward a urgent debt that need to be paid.
- Always remember that you will pay a little more to your creditor at the end of the term. It is a helpful way to get out of debt quicker but have to be aware of all the numbers.
Have a Plan
Mr Budget will come into plan for this point. Having a clear information in hand is really important because we know exactly what we have to do and what we cannot do.
- Keep it real when it come to establishing your budget,stay on your lane don’t try to imitate someone else budget but work with your numbers,what your comfortable with.
- Follow your heart when working with a tight budget, we all know once we have to cut on certain things and are not use to it. We may hit the wall once in a while.
- Always have some play money even if it’s not much, try to have some fun. Maybe once a month go see a movie, this is 20$ out of your budget including the popcorn to have a awesome night with friends and family.
“Wikipedia Copyright Source”
“A plan is typically any diagram or list of steps with details of timing and resources, used to achieve an objective to do something. See also strategy. It is commonly understood as a temporal set of intended actions through which one expects to achieve a goal”
Decide on how long it will take you to tackle your debt and have it paid off completely. By having this information you will know, how much money need to be put toward the debt repayment plan and finaly have more in your wallet.
Increasing your income is one of the best way to stay out of the Brove vs budget system and have more money than you need to pay your debt and enjoy life. What should you do?
- Get a extra job
- Ask for a raise (if you know how to negociate ,why not)
- Sell some items in the house
- Overtime at work
- Use your Car as a Uber driver
- Many more options…
We have to seize the opportunies sometime when it is presented in a way that will put money in our bank account. There is a question about Time: Don’t have time to do it, after work going to school, working 12 hours a day, full time student at the University, crazy shift for the nurse and many more jobs title.I understand, it could be really difficult.
If you only have one hour available per week, take this chance and put your time into money to help you achieve your goal.
It is interesting to understand our situation prior to attack our debt, to be broke or have no money left at the end of the month is not the greatest feeling. But with faith, some imagination, courage, participation from the immediate family … It is possible to achieve our goal to have the chance to breath at the end of the month and not feel stress at every 25th of the month.
Believe in your possibilies.
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