LIVING ON LESS MEANS SAYING NO SOMETIMES. www.LIVEforeclosureFREE.com
Have you determined your needs as compared to your wants? Let’s try this little experiment. This is going to be subjective because what may be a ‘need’ for you could be a ‘want’ for me, but lets give it a try anyway. Make a list of the things you bought just this week and put them in to two categories. If you need more room then use another page. Think back over the past 7 days and be specific. Don’t just put down “food”, or “clothes”. What foods did you get? What clothes did you buy? NEEDS
WANTS
By looking over your list, do you see where you have spent money on things you wanted versus the things you needed? Could you have spent less for those things you wanted? If the answer is yes, then ask yourself, “Could I have put that money into a savings account or applied it to one of my debts?” If you are a hoarder, there are reasons why you choose this behavior. Hoarders stash items away and quite possibly over-spend every month. It is a choice, but perhaps events in your life contributed to this behavior. Maybe you had to go without food or clothing, or maybe someone took something very valuable away from you and now you live in fear of being without. For you, determining needs might be more difficult because you have rationalized hoarding, or stashing, as a necessary part of life. The trick is to
see if you are really lying to yourself and to others around you, by not speaking truth or covering up when you feel the need to hoard. If so, perhaps there is a need for a life change. Ask yourself, what am I thinking and believing about this situation that makes me feel I must hoard or buy more than I actually need. The answers might surprise you. Do you hear yourself say, “We can’t afford it.” Or “I don’t know what happened to the money!” Or maybe you tell your kids you can’t afford something and then turn around and get what you wanted a few days later but you feel a little guilty? If you ‘think’ you are doing fine, but do not know in a dollar amount just how you’re really doing, then STOP what you're doing and start learning. You are not alone, nor is there anything wrong with you so don't allow your brain to go down that road. This is simply a habit that can be broken but it will take your determined spirit to break the habit and learn a better way. If you want to understand why you're having issues keeping money, then you have to begin to understand your money blue print. This is an entirely separate subject and article, so for now, lets just see where your money is being spent. Are you poor with numbers? Did you have a hard time with math in high school and feel incompetent when it comes down to it? Don't care to learn how to balance a check book? Have a spouse you can depend on? These thoughts (excuses) will keep you locked in your bad habits until you unlock your thoughts and bring them into a state of mind that says I CAN learn how to do this if I put my mind to it. I have provided an Expense Sheet at the bottom of this information to help you. It's nothing to be worried about, its only you looking at it. Write down your monthly income, then think about all of your monthly expenses as best as you can and write them down as well. Now, subtract your monthly expenses from your Monthly Income and that is the money you have left over for the wants in your life. If you end with a negative number, then you need to decide what you can cut back on right now. Are you waiting for your spouse to be on board with limiting family spending? Let me say this loud and clear...DON’T WAIT! It took my husband 25 years to agree with me about budgeting and by the time he did agree, we were in major debt. If your spouse refuses to be accountable for their spending, then it’s possible they are fearful of the outcome and would
rather stay in the dark. You can sit down and figure it out by yourself. OH YES YOU CAN! If you don’t have receipts to use or a credit card statement to refer to, include your spouse in the calculations by asking how much he/she might spend on gas each month. Its not a time to get them defensive, its a time to work together so no accusations or blame is allowed during this time. Simply, where did we spend this amount, or how much did we spend on that? Do not make any more excuses! Put your numbers on paper. Getting a clear picture of what you spend your money on is the only way you will help yourself and your family out of any financial hardship. Did you know that if you put away just one dollar each day into a retirement fund at the age of 25, and if you had earned 8 to 9% return, you would have one million dollars (given a stable economy) when you were ready to retire? How hard would that be? Some people call it their ‘Freedom Account”. The more you put in, the more freedom you will have when you need it. Try a NO-SPENDING WEEK……just to see how much money you actually save in that one week’s time. Add it all up and if you did well, do it again and again for one entire month. Let me know if you try this by posting to my blog at www.kelliefrazier.com . If you have a savings account then it is vital that you consider diversifying your savings position. If you are able to save, you will want to consider more than one savings plan such as an IRA or a 401K account. There are many other forms of investing and you can seek the advice of a professional financial planner in your area before making a choice if you feel more comfortable. Another method of diversifying your savings accounts would be to open sub accounts under your main savings. For example; one sub account could be 10% of your savings to spend on a big item like a dryer or major car repair. You could have a “play account” by taking 10% of your total savings and treating your family to a movie each week, or do something fun and exciting once a month. 10% of your total savings could be for charitable donations. Or you could start an education fund for you or your children. Don’t forget 10 % for your Freedom account for investing. Your main savings account would be for your needs. 50% of your savings stays in the account for you to use on gas, groceries, and other living expenses. If you
put your expenses on your credit card, make sure you pay the entire bill at the end of every month. I regularly choose to give a portion of my income to others, such as a local church, or to a charity. This might seem preposterous if you feel you don’t have enough money for yourself. But giving money away has taught my family to be less selfish. We see the results of others being fed, having heat, or putting shoes on a child’s feet. And we have never, and I mean never, gone without our needs being met, no matter how much money we gave away. If you feel giving your money to charity isn’t an option for you right now, you can give your time by volunteering for worthwhile charitable organizations. Spending may be addictive, but so is saving. You CAN DO IT, but you have to stop making excuses for yourself. It isn’t easy, but it is well worth every effort you put into it. Don’t allow your brain to tell you don’t need to do this. It isn’t up to your old brain any longer. It’s that old way of thinking that has told you to keep yourself in the dark about your finances. Start today to train your new brain to tell you to get yourself OUT of the dark and into the light. Use the chart of expenses below to see how much money you are spending each month. When you see the results, make decisions that will empower you to take action steps to improve your finances permanently. Old brain OUT…..new brain IN!
See expense table on next page.
USE THIS CHART TO TOTAL YOUR MONTHLY LIVING EXPENSES www.LIVEforeclosureFREE.com
EXPENSES Groceries Power Gas Sewer/Trash Water Car Insurance Life Insurance 401K Student Loans Entertainment Gasoline Household Items Cell Phone Home Phone Cable Internet Medical Co-Pays Prescriptions Dental Charitable Contributions Investments TOTAL
AMOUNT $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
EXPENSES Child Support Alimony Public School Fees Private School Fees Clothing, Shoes, Kids, etc Home Owners Assoc. Secondary Properties Credit Card Monthly Pymt Maid Service Holiday Fund Vacations Repair Fund Taxes/Insurance Other Other Other Other Other Other Other Other
$ Total Add totals from both columns = $
AMOUNT $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $
Now, Subtract your monthly income $ ____from the total of your monthly expenses $_________ giving you a grand total of $________ If your monthly expenses exceed your income, you are at risk for going into debt each month and will need to cut your expenses way back. If you are still to the good, then you have money to save! Study this sheet and decide where you can cut back by eliminating your wants. Save money and pay off debt.