Do you feel like you have to be Sherlock Holmes to solve the mystery behind your personal budget balance? Are you living a mystery thriller where your realization of “financial independence and security” is a repeating vicious cycle of debt? Don’t be afraid… Somehow you have ended up lost in the “plastic zone”.
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The “plastic zone” is a scary place. But you are not alone. There are millions of people today who live the same mysterious life in the plastic zone. Do you remember green money? You know, that green paper with presidents proudly displayed on them. They have practically disappeared from the “plastic zone”. Is real money a foreign object to you? Is your checking account balance mysteriously stuck at zero? It’s time to solve the mystery.

You don’t need to be a financial wizard to solve this mystery. And you certainly don’t have to be Sherlock Holmes. You see it really is an elementary concept. If you ask any elementary school student, they will tell you that you cannot get 10 out of 5.
There can be no negative integers in this equation. Simply put, you can’t spend more than you have! You have to fit your “life” into your “means”.

For most of us who live in the plastic zone, this means making some serious changes to our spending habits. It seems like an impossible feat to reduce debt and at the same time build a foundation for your financial security and independence. Can be done! And it is “elementary my dear Watson!”

KNOW WHERE YOUR MONEY GOES!

~The first step is Where do you know your money is going? How are you spending it? This requires a bit of registration, but it’s not difficult. Just write down every purchase you make, other than a monthly bill, for at least a week. This includes every check, debit card, credit card, and cash transaction made (if you’re married, your spouse must, too). When you’re done, sort them into appropriate categories to include in your budget later. For example; dining out, lunch at work, groceries, coffee, gas, snacks, well, you get the picture.

~Second networks deal with that debt. The monkey on your back will always insist on being fed until you take control of your money and say NO MORE! Commit to stop using credit. You must make the decision to invest in yourself from now on. Not the credit card companies. Take control by knowing what you owe, what you’re paying, and how much it’s costing you. Make a list. Include the name of the creditors, the amount owed, the interest rate, and the current minimum monthly payment.

Add up all of your current minimum monthly payments. This is your monthly debt reduction payment over the life of the debt. You will pay this constant amount each month until the debt is paid in full. Transfer released money from one creditor to the next as bills are paid. For example: Your pay list includes a visa that you currently have to pay $80 per month. You will make that $80 payment regardless of the minimum due (unless for some reason the payment increases) until the debt is paid off. When it’s paid, you’ll take that $80 and apply it to another creditor’s monthly payment. This is the secret to pay them before you die! And you still have time to enjoy a debt-free lifestyle.

~ Next, you have to Write down regular monthly expenses. Things like the mortgage, the cable, the phone, the electricity, the car payment. Any expenses you pay every month. Insurance payments can be included if you pay monthly payments instead of a lump sum. Some of these expenses may not be the same each month (such as the electricity bill). You should calculate an average monthly amount for these. If your provider offers a budget plan where your payment can be a constant amount each month, this makes budgeting for these bills much easier. So do it!

~Now figure in variable expenses. These are things like car maintenance, home maintenance, property taxes, income taxes, insurance not paid monthly, pet care (vet bills and medications), medical expenses your family (doctor co-pays, deductibles, prescriptions (or co-country). Review your financial records and write down any expenses you can find that did not occur on a monthly basis. When you are done, add up the total amounts for the year, divide by twelve and an estimate of what you should set aside each month to budget for these expenses This is a monthly allowance of variable expenses that should be included in your budget as a monthly expense You set this amount aside each month (perhaps in a savings account or a second checking account).

This is one of the most important steps in the budgeting process. The one step most of us forget to do. The biggest budget busters are these “unexpected expenses.” They are not really unexpected. Most of us have a tendency to treat them as if they were unexpected. You don’t plan for them. therefore, you will not be financially prepared when they need to be taken care of. You know that the car and the house require a certain level of maintenance, but do you really have a plan to pay for that expense? However, when the water heater turns up, you will be forced to enlist the help of the credit card companies. This is what they expect you to do. Of course, property taxes have to be paid. Will you receive the payment when due?

To reduce debt and maintain a successful budget, you must plan for these “variables.” If not, you will inevitably use credit cards to bail out and defeat yourself. Allowing for variable expenses in your monthly budget will allow you to save for these expenses and will be your defense against creating more debt. This is an essential step in building financial security, investing in yourself, and staying debt free.

~ Set a reasonable amount for your monthly savings allowance. This will be an emergency fund that can bail you out in the event of tragic circumstances, such as serious illness or unemployment. Start with 10-15% of your income and go down to 5% if you need to balance the budget. But save some! Something is better than nothing. If you have to start small, as your finances improve, you should increase your savings allowance to reach at least 10% of your income.

Of course, once you have all these figures in place, you may find that I do not have enough money to cover all expenses. You’re not alone. I was surprised at how much more I was spending than I was earning. I finally understood why I couldn’t get ahead. Why my debt kept increasing no matter how hard I tried to budget. This is when you need to start eliminating unnecessary expenses, cutting expenses by using some money-saving strategies, or possibly considering extra income.

It is not always an easy process. It depends on how much of your spending is “unnecessary,” how much you are paying off debt, and how much you want to be debt free and financially independent.

One thing is certain, if you take control of your money and commit to living debt free, you will find success. If you keep doing what you’re doing, things won’t change, but they will inevitably get worse. You will continue to invest in credit card companies, spending money you don’t really have, and have no plan to pay it back.

So start with a good spending plan that eliminates unnecessary spending, keeps bills and monthly expenses to a minimum, and eliminates credit card use. Save money in every area of ​​your budget. Remember, $10 a month doesn’t sound like a lot. But, a savings of $10 per month is $120 per year that you can put elsewhere in your budget.

Every dollar you free up helps balance the budget. It helps you live within your means. Don’t spend more than you have. There is nothing more elementary than that!

Good luck and success! Live debt free to be free. You deserve it!