Recently I've had several of my friends talking to me about finances. So that's what I'm going to write about today. I am by NO means a financial expert so if my advice doesn't work for you you can't sue me. That's my disclaimer for the day! To prove I'm no expert I will share a small history with you. As a teen my parents taught me how to balance a checkbook and pay bills. They discussed a budget but I never really adhered to anything. When I first got married my husband and I were both making really nice money. We weren't rich but we lived comfortable. When I had my son we jointly decided I would stay at home. His income was enough to cover the bills and that was great. I decided to continue living the same lifestyle I had before when we had a whole extra income in the house. It didn't take long before I found our finances in a wreck. My husband worked all the time and I handled the money for the most part. Out of fear of what he would think or embarrassment or whatever I decided not to share that we needed to make changes. I continued to try and do things on my own by shuffling things around when and where I could. This worked in the short term but I found myself digging an even bigger whole for the long term. Fast forward to now. I have learned so much about finances by reading blogs, signing up for webinars, and just researching all I could. I want to share a few things I've learned and maybe they will help you some.
The very most important thing I've found is to be honest with yourself (and a spouse/partner if you have one). Start with a simple list. On one side list all your income (what you ACTUALLY bring home at the end of the week/month). On the other side list all your outgoing payments. Now at this point don't get freaked out about listing your total debt (credit cards, student loans, etc). Just list the payments you make each month. This can be tricky though as most people forget to list miscellaneous spending such as RedBox every weekend or Starbucks twice a week. It's helpful to have either your checkbook or past few bank statements in front of you at this time. This helps you see every dollar spent. This can be a bit harder if you are still a die hard cash fan but try your best.
The next list you need to make is your total debt. Log on to your credit card website or look at past bills. You should list the total debt, the interest rate, and the monthly payment for each debt you have. This gives you a good picture for long term payoffs. It's hard sometimes to swallow the amounts we rack up without even realizing it.
Make a budget. I keep my budget in two places. The first place is in my organizer and the second is on my computer. As each bill comes in I immediately write it down in my organizer. Then I start transferring it to my computer list. That is where I write down what gets paid as each paycheck comes in. It took a little while but I am in the position (most times) to where I can pay bills up to two weeks early. Look online and see what is the best method that works for you to budget. My method might not do it for you.
Pay your bills on time every time. This is difficult if you are strapped for money already but it's important to try your best. I had a month several months ago where I was in the hospital on a day I would normally pay a few bills. I was cutting it close with the due date that particular day and I paid four bills a day late. My total late fees were over $100. Granted I called each company and explained the situation and they reversed the fees. This could apply to you though where you just don't keep up with a budget and suddenly remember the ______ bill is late. If you have three credit cards (which the American average right now is 3.7 according to www.creditcards.com ) and you pay each one late for three months in a row you are looking at a potential of late fees of well over $200. Let's say the balance on one of your cards is only $300 to start with. So in three months you've wasted what you nearly could have paid your card off with. Another point along the lines of paying on time is to look at your bills. Companies often have fees that you might not be aware of (such as credit protection) that you might not even benefit from paying.
So far I've given you a lot of information which is why this is Part 1 of "Richie Rich". These are all just stepping stones to getting your finances under control. Part 2 is going to cover getting credit/keeping credit and paying down debt. Until next time...be blessed!!
The very most important thing I've found is to be honest with yourself (and a spouse/partner if you have one). Start with a simple list. On one side list all your income (what you ACTUALLY bring home at the end of the week/month). On the other side list all your outgoing payments. Now at this point don't get freaked out about listing your total debt (credit cards, student loans, etc). Just list the payments you make each month. This can be tricky though as most people forget to list miscellaneous spending such as RedBox every weekend or Starbucks twice a week. It's helpful to have either your checkbook or past few bank statements in front of you at this time. This helps you see every dollar spent. This can be a bit harder if you are still a die hard cash fan but try your best.
The next list you need to make is your total debt. Log on to your credit card website or look at past bills. You should list the total debt, the interest rate, and the monthly payment for each debt you have. This gives you a good picture for long term payoffs. It's hard sometimes to swallow the amounts we rack up without even realizing it.
Make a budget. I keep my budget in two places. The first place is in my organizer and the second is on my computer. As each bill comes in I immediately write it down in my organizer. Then I start transferring it to my computer list. That is where I write down what gets paid as each paycheck comes in. It took a little while but I am in the position (most times) to where I can pay bills up to two weeks early. Look online and see what is the best method that works for you to budget. My method might not do it for you.
Pay your bills on time every time. This is difficult if you are strapped for money already but it's important to try your best. I had a month several months ago where I was in the hospital on a day I would normally pay a few bills. I was cutting it close with the due date that particular day and I paid four bills a day late. My total late fees were over $100. Granted I called each company and explained the situation and they reversed the fees. This could apply to you though where you just don't keep up with a budget and suddenly remember the ______ bill is late. If you have three credit cards (which the American average right now is 3.7 according to www.creditcards.com ) and you pay each one late for three months in a row you are looking at a potential of late fees of well over $200. Let's say the balance on one of your cards is only $300 to start with. So in three months you've wasted what you nearly could have paid your card off with. Another point along the lines of paying on time is to look at your bills. Companies often have fees that you might not be aware of (such as credit protection) that you might not even benefit from paying.
So far I've given you a lot of information which is why this is Part 1 of "Richie Rich". These are all just stepping stones to getting your finances under control. Part 2 is going to cover getting credit/keeping credit and paying down debt. Until next time...be blessed!!
*Photo credit www.bbc.com
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