Spring Clean Your Finances – Show Your Goal

Action Tip:  Once you write down your Debt Snowball, use your imagination and create a goal poster to pay it off. Put it somewhere you and your family will see it. Mark off triumphs and celebrate successes reaching your goals! It will help keep you motivated, stay on target and get back on track if you start to stray off.

Live below your means for a richer life.

Spring Clean Your Finances – Do You Know What You Owe?

Action Tip:  The weather is warm and the new feel of spring in the air is invigorating. It’s the perfect time to reinvigorate your finances. Over the next few days, let’s spring clean our finances.

Do you know what you owe? Are your debt-free or fearing the monster in the closet? Open the closet door and turn the light on. Uncover the monster. Make a list of everything you owe. Get rid of the fear of not knowing and gain power in knowing.

Live below your means for a richer life.

Visual Budget and Spending Map, Part 7 of 7

This last post in the series is wrapping up the visual budget to map your spending. Here are a few last tips when using it.

Life Happens and Will Change Your Plan

Step Seven is to expect and account for change. This is just a plan. It came from your mind and you drew it onto paper. Life happens and will mess up your plan. When life happens that’s different from your budget, don’t throw your budget out and say, “This thing doesn’t work.”

Your visual budget is simply a map. You have different roads you can take to your destination. Like a GPS, recalculate your route. Reconfigure your spending. Change your budget, while still keeping it zero-based and move on.

Acknowledge the Details, But Don’t Get Lost In Them

While you do your visual budget and change it, acknowledge the details, but don’t get lost in them. You don’t need to account for every penny and color code in fragments or offshades to account for dollar differences or income splits.

Loosen up and be free with it. For example, I make a game at the end of each day for my son and I. I pull out all my change and sit with my son and he puts it in a big change jar. I’m not counting that change up to account for it in my budget.

As long as you know in broad strokes what you are doing, the colors are a guide. They will keep you from spending more than you make and get you to your overall goal.

Don’t Get Lost Coordinating Your Budget, Accounts, Cash and Cards

Don’t get lost and confused coordinating your visual budget, checking account, spending cash and credit cards.

Use your visual budget when you pay bills online or write a check. Mark off what you paid on your budget. I found it helpful to pay all bills at once when I receive my income. That way, bills are paid and there is no temptation to use any of that money on spending.

For categories that you spend money on frequently, take the budgeted money out of your checking account and use cash. After you pay your bills with your checking account, debit card or checks; go to the ATM. Get out the cash you’ll use for those categories. Mark the amounts down on the envelopes. Gas – $36, Groceries, Household, Toiletries, etc – $75. Check off on the budget that you got the cash and forget about the budget for those categories. Go by the cash in the envelopes from then on as you spend. Simplify your life and spending. There’s no need to double-track your spending.

I recommend not using credit cards or debit cards for everyday spending. Use cash. Credit cards tempt you to spend more than you planned. After all, “It’s not really money is it?” Debit cards tempt you to spend more than you planned, too. They both tempt you to spend more than you planned and blow your budget out of whack. It’s confusing to then account for and balance your budget, your cash, and your cards. You can confuse yourself into stopping.

Make it simple. Use cash. You’ll spend less. You’ll be more in tune with your spending. You aren’t unsophisticated if you use cash. You aren’t a simpleton. You aren’t someone who can’t control her impulses if you use cash. You are wise to use cash. The richest people I know use cash. I do what rich people do so I can become rich. Rich in spirit and in money.

A Review of How to Do the Visual Budget

Step 6 - Map Your Spending and Color In Your Visual Budget_Page_1

Step 6 - Map Your Spending and Color In Your Visual Budget_Page_2

Step One is list the months across the top and your income in the order you’ll use it. Group your income by the money you’ll use for that month’s bills.

Step Two is to list your number one goal that you will focus on. This is your North Star. It will always be at the top as a reminder. It will always keep you going in the right direction. Make sure your goals are in a financially healthy order.

Step Three is to list your non-debt bills including your mortgage if you have one. List them in the order they are due.

Step Four is to list your debt payments with the dates due. List them in order of smallest total amount to largest. If you have a tax bill or an inter-family loan that is bothering your relationship, list them first. If you have a cosigned loan, include it,as well, last. If the person isn’t paying the loan and the loan is on an item, like a car, that you can take back, do so and sell it.

Step Five is to plan all your spending. Do your best to project what you will need to do that month. You don’t have to fill in something for every category.

Step Six is the fun part. Color in your income to match your spending.

Step Seven is to recalculate when life happens and changes your plan. It’s to keep it simple. Pay all your bills at once when you get paid and use cash for the rest. Forget credit cards and even your debit card for everyday spending. Let your money match your reality. Use this as a tool to live below your means so you can live your dreams.

Thank you for taking this seven step journey with me through the visual budget to map your spending. We’ll revisit it every month to keep us on track. The response has been so positive I’ll incorporate this all and more into an e-book available later this year. Again, thank you for your readership and support. I hope the visual budget helped you as much as it’s helped me.

Live below your means for a richer life.

Visual Budget and Spending Map, Part 6 of 7

Map Your Spending with Color

Here we get to the fun and beautiful part of the visual budget. We map our spending with color!

Remember in Step One, where we listed our income and then picked colors for each one? Well, now we get to use those. Color in each bill and spending item that you will use that money on. You instantly know what each check goes to and you don’t have to think about how you are going to pay things.

Step 6 - Map Your Spending and Color In Your Visual Budget_Page_1

Step 6 - Map Your Spending and Color In Your Visual Budget_Page_2

For example, the blue income $1701.06 will pay the car insurance, rent, some groceries, some gas, some baby and personal items.

We have one more day left. Tomorrow, we’ll go over some spending tips and how to coordinate your visual budget with your cash, checking account and credit cards so you don’t feel overwhelmed and confused balancing them all.

I really hope you find this helpful because it allowed me to gain control over where my money goes. I truly hope it can for you too.

Live below your means for a richer life.

Visual Budget and Spending Map, Part 5 of 7

Today we get to the meaty part of the visual budget. Once we get through this, tomorrow we’ll start with the beauty part.

Below what we did yesterday, list everything you want to spend on. Feel free to use the categories below. Don’t feel like you have to put something in every category. When you’re finished, total it up and subtract it from your income. It should equal zero.

Step 5 - Add in Spending_Page_1

Step 5 - Add in Spending_Page_2

Oops, here looks like it doesn’t. Wow, almost $700 over budget here. Time to make some changes until it works. Change what you have to change. Cut what you have to cut. Get it to zero.

Step 5 - Add in Spending to Zero_Page_1

Step 5 - Add in Spending to Zero_Page_2

That’s better. Zero. Put a big smile at the bottom when you get to zero.

Tomorrow we start the beauty of painting in our spending map and putting this visual budget to use!

Live below your means for a richer life.

Visual Budget and Spending Map, Part 3 of 7

Drawing Our Financial Picture One Step at a Time

In Step One, we listed the months across the top and wrote our income underneath. We put the dates we receive our income, first to last. We picked colors for each piece of income.

Step Three - Non-Debt and Non-Medical Bills plus Mortgage

January Doesn’t Mean Only the Money You Get In January

Please note the first income says 31st and the second 1st. That’s because I use my December 31st check to pay for January bills. That last check of the month always pays the next month’s bills. This is a simple but powerful shift in thinking. Use checks you actually use instead of trying to pay this month’s bills with this month’s checks. This made budgeting sane for me. You know how your checks flow and what you usually pay with each check. Don’t feel constrained by “that month’s checks” which every budget I ever saw tried to do.

In Step Two, we declared our highest goal and added the date, first to last. This is the one goal we will focus on until it’s done and we made sure it was in financially healthy order.

Now, here in Step Three we start to understand what all of our bills are. We begin to capture everything we’ve obligated ourselves to that we get a bill for.

Bills, Bills and More Bills

Here in Step Three, capture every bill you pay for that month except for debt payments like credit cards and loans. All debt payments besides a mortgage we’ll do in tomorrow’s section. Write down what you pay for shelter, for instance your mortgage or rent payment. Write down your utilities, like electricity, cable, internet. Write down your cell phone, insurances and childcare. Add in taxes, DMV/registration and subscriptions. I like to add in car repair, too. That’s an important bill you will get, but have no idea of when it will come. 

Forgot Something?

You’d be so surprised at what you forget. Think of what you pay every other month or quarterly. What do you pay twice a year or annually? Do they fall in this month? If so, write them down. Do you have subscriptions to warehouse stores or websites on autopay that you forgot about? Speaking of that, I forgot one.

If you are behind, add in where you are behind so you can account for it.

Lastly, add in the dates that each bill is due and put them in order of due date, first to last.

This right here was a gigantic step in creating your financial picture. Having your bills in order of due date is key for the visual budget. The visual budget has a calendar like approach which I found was much more helpful and relevant than a list type budget.

Tomorrow we’ll attack debt if you have any and develop a plan for payoff. I have a fresh idea on debt repayment that I’m excited to share with you. See you tomorrow and hey, thanks for taking this little journey with me. I appreciate your readership.

Live below your means for a richer life.

Visual Budget and Spending Map, Part 2 of 7

Become a Financial Artist. Create Your Masterpiece.

Yesterday. we started our visual budget. We listed the months across the top, then the income down below. Today, right underneath that, put your number one goal. Is it to save cash for when your car needs repair? Is it to have cash when a crisis happens? Is it to pay off debt? Is it to save for a house? Is it to save for college? Save for retirement? Are you financially sound and you want to give more? Whatever your first goal is, put it here and focus all your effort on it.

Step Two - Put Your Goals At The Top

Here are some helpful tips on goals if you don’t know what to do first.

Pay Off Debt First or Save?

Save at least $500 to $2,000 before paying off debt. Otherwise, you will just reuse paid off credit cards or keep going back into debt when a crisis happens.

Invest or Save First?

If you don’t have at least 3 – 6 months of savings to cover your expenses, you’re not ready to invest. You don’t need to be investing. You need to save for your own good. This is especially hard to accept if you don’t have savings and want to invest. If you have no cash, you will blow up your investments every time a crisis hits.

When Do I Buy a House?

Have an emergency fund of 3 – 6 months of expenses before you buy a house. And, buying a house isn’t an emergency. This is another hard thing to accept. Save at least 20% of a down payment and use a fixed rate mortgage, preferably 15 years. Roughly, an affordable mortgage wouldn’t be more than twice your salary and your home value would be around three times your salary. Otherwise, honestly, you can’t afford the house. This is another difficult thing to accept because you know what, “I want it now and I don’t care what I can afford or what I should be doing. I want it right now and don’t want to work too hard to get it.”

Do I Give Before I Save and Invest?

Pay your bills first. Don’t give and then can’t pay your rent. You may want to give 10% for religious reasons, but can’t pay your bills, save or invest. Work to lower your bills and increase your income so you can give. Give something and give of your time until you can do more. Remember, a tithe is to a church, not to a person. Don’t confuse codependent, enabling with real giving.

I Want a New Car

Honestly, your car and your car payment may be killing you financially. Do all you can to stay out of car loan debt. Save for a car.

My Kids Come First and I Want Them To Have More Than I Did

Save for your retirement first which you do after you have an emergency fund and a house. Then and only then save for your children’s education. This is extremely difficult to accept, especially for Mama Bears like me who want “the best” for my son. If you are like me and pay a lot for daycare, feel good knowing you can probably cash flow instate tuition if you can pay for infant daycare.

Life Comes in Seasons and Harvest Comes After Planting

The reason why so many of us are messed up with our finances is because we’re doing things out of order. We want a harvest without planting. We think a season is a lifetime. Order your goals and focus on one at a time. Striving for conflicting goals is almost worse than working on no goal because you aren’t getting anywhere. You’re just getting frustrated and frazzled. Focus. Focus on one at a time with all your might. Remember, life comes in seasons and harvest comes after planting, watering and tending.

Live below your means for a richer life.