well i read story after story of heartbreaking loss of home and livelihood. one constant that appears in each case is what i want to address today, in my first entry. how to live within ones' means.
of course, every situation is a unique one, but i'll stick to the basics.
what does it mean to live within one's means? most people think they know the answer, but it's become rather obvious allot of people do not. it means to set up your life so that your priorities are set in stone. it means finding shelter that you can not only afford on one income, but even if you had to take a pay cut. it means not keeping up with the jones. it means learning to resist the temptation to spend on things you do not need. it means saving for disasters that may or may not pop up. it's all about setting up a budget and living with in it.
i stated some of the basics...but i'll add some more as i go. your first priority is your job. forget about if you hate it or feel you deserve better, etc. without a job, living is impossible. in this market work can be the first problem. i won't go in to how to find a job...there is plenty of info on that out on the web. i'll stick to how to keep your job. first thing no matter how bad you've been at your job if you still have one it is salvageable. in this market to stay employed in a business that isn't folding, but is cutting back..you need to be the best there is. which means, the first to show up in the morning. the last to leave at night. the go to person who knows how to get stuff done. you need to work on understanding your place in the workplace and how what you do interacts and effects others. you have to understand how other people around interact with your job. never call in sick or take hooky days off. if they send you home for being sick, so be it, but make sure it's known you are a company person and you put the company before yourself. even if that isn't true...do your best to make it look that way. always be honest to everyone. never participate in the blame game. rather be the first to jump in and work towards the solution instead of pointing the fingers at every other department. in meetings don't bring just problems to the table, bring solutions with it. (thanks to robert b. for that tip.) limit your vacation time to work best for your employer. you need to work on cross training yourself, so that if someone is sick and stuff needs to be done in another department...you are going to be the person who can get it done.
the other thing is the dreadful office politics. this is a touchy subject and you have to play your hand very carefully. it's best to be liked and appreciated by all your supervisors and their supervisors and up. as well as your co-workers and those under you. never burn any bridges. you never know when someone you are over and hate might become your boss. stay out of political discussions. stay neutral when you need to. take sides when you have to. play the game. in other words if all things are equal when it comes to layoff time. you are going to be the person who not only can do what everyone can or better, but they like you better. there is no guarantees when it comes to layoffs, but the more you stack in favor for yourself the better your odds are at retaining that job. it also can't hurt when promotion time comes. now keep in mind this is a continued effort. it's not something that pays off in a week or month or even 6 months. it takes years without slack. not an easy task...but remember without a job you cannot survive.
now i put work as your number one priority and in reality it should be your family, but without work your family isn't fed, sheltered, or taken care of, so if need be make them a tie for number one with a lean towards work.
number two priority is a workable budget. i know everyone hates budgets, even me. they are hard to setup and harder to maintain. think of it this way. once you set it up, you will have to make adjustments. no one does it perfectly the first time. so set up one and run with it and change it as you need, to include bills you forgot about, etc. in budgets the first priority is your housing. never ever go above one income. i know this sucks. you might not be able to live in the hot spot of town or in as big a house or with as big a yard or in an apartment with as many rooms and a pool, etc as you want. the key here is survival. playing smart pays off during not only boom economies but busts like the one we are in, as well. my strategy has always been to pay off a mortgage as soon as possible. fixed rates, no adjustable. the lowest years you can afford under one income. now use common sense here. if your wife/husband makes 150k a year and you make 25k a year and they lose their job...well your income isn't going to support the big home you purchased. so go with the lower income or use a formula to figure half of each. whatever works to give you the most bucks, but also can be maintained under hard times. do not forget to include property taxes, insurance, hoa fees and/or any other bills.
hard times will come. it's not a matter of if it's only when. cars break, roofs need replacing, people get sick, parents need help....stuff happens. so plan ahead.
the next priority is your food and gas budget. food pricing are rising fast. it doesn't mean you have to eat romon noodles though. plan out meals to fit your set budget. forget about frozen and other convenience foods. whole bags of rice and good cheap cuts of meat are far cheaper and feed more and are healthier. each person eats different stuff, so buy what you and your family will eat, but make a shopping list and stick with wholesome foods that can feed allot for less than frozen stuff and other quickie items. do not variate from your list. resist all temptations to grab that snack item not on your list. a couple bucks may not seem like allot at the time, but money has a way of adding up quickly. don't be afraid of generic brands. breaking the brand name grip can be very liberating and truth be told allot of the generics come out of the same factories the brands come from. there will be things you can't compromise on like for me sodas. i like coke. and rc. i can;'t find rc anymore, and i hate pepsi and the generics so i won't compromise on that, but when it comes to canned foods and meats...you can bet i pass over doles and tysons for generics. on fuel whether diesel/gas/bio diesel/electric/ng, whatever you vehicle runs on. set a budget based on need distances. which include work, kids soccer trip, whatever. stick to your budget on fuel. do not give in to added trips that you want, but don't need. if you drive your kids to school now consider the bus. you pay for it in property taxes. if it saves you fuel you could use to take the kids to put put golf or whatever it's worth it. i rode the bus my whole life and it's good for kids. it teaches them independence and timeliness and not mention a sense of pride and accomplishment. forget about stranger danger. the odds are a family member friendly neighbor or close family friend would be the one to kidnap molest your kid(s). not some stranger. the odds are very, very low. stop watching cable news and letting them scare you to death. the world is much safer than we realize.
next priority is putting some aside for disasters. this is a hard one to budget for. no one knows when disaster will strike or how much it will cost, but trust me having a pile of money no matter how big or small will make that disaster less stressful than it needs to be on the financial side. my advice is to stock away as much as possible. you can always allocate it to other areas down the road such as a new car down payment or whatever. so it's not wasted, it's smart.
on that note car payments. i always keep a portion of my income towards covering car payments. even after the car is payed for. my reasoning is cars break down. cars need to be replaced at some point. by keeping it in my budget i am able to not take that dreaded cars busted what am i going to do now routine i see so many go through. i can use it to fix the cars i own or use it for a down payment to lower my car payment when i replace them. another way car payment or repairs never really go away. so it's smart to keep it in your budget. once again, you can always allocate it to another area if need be. so it's never wasted.
bills...well i go through them quarterly and decide what i need and don't need. for example on personal note. last quarter i reviewed my bills and singled out my land line phone and my netflixs. i like both, but i realized i didn't use my land line and didn't need it. so i cut it adding another $65 bucks to my budget. my netflixs...i love movies, but i realized i only really watch a handful every few months and i do have movie channels on cable...so i decided to cut it adding another $15 bucks to my budget. i now have $75 bucks to apply to whatever i need/want. i decided to sue it on entertainment since it kind of came from that area anyways. so now i go o0ut to eat with these funds and i don't have to put those charges on a credit card to make minimal payments on. so do the same review your checkbook quarterly or monthly and look for stuff you can cut. lawn service is always a good one. pool service is another good one. there is sometimes more than you realize, so it's smart to review what you are paying monthly for and need or don't need.
savings. this is the hard one. i like the idea of 6 months of survival money. meaning all luxuries like cable tv cut off and phone, just eating, electric, water, etc. not an easy amount to reach...but remember you don't have to hit that mark tomorrow. if you're lucky you'll never need it...if you are not you'll be glad you have it. once again it can be combined into the disaster funds or run separate, and if you want to cut it back you can allocate it to other areas. it's never wasted. to clarify i am not talking about 401k saving at work. this would be above and beyond that like a roth ira or an ira or whatever investments for retirement. also used as layed off looking for work but still be able to make mortgage payments and feed the family.
now let's variate and talk about credit cards. this is maybe the worst form of financing there is. you need to understand financing and how to find the right form for the task at hand. credit cards are great to use on purchases like fuel and food and pay off in full at the end of the cycle or monthly. they are terrible to use as financing on buying things you can't afford like a plasma tv, car down payment, kitchen remodel, etc. there are much better loans for these activities. ones that first have an end date and second a fixed interest amount that is manageable. never ever use credit cards as a rescue line or way to float yourself through a bad time. the interest is calculated monthly on these cards and is quite high. you can get a fixed credit line at a bank with a much lower interest rate and an end date to pay it off in full. there is allot confusion on credit cards and how they work. first and foremost forget about the minimal payment amount. to simplify it so you get it.... that dollar amount pays just the interest on the loan on the card, not the principal. the interest is money you pay on the loan. for example a $1000 tv on a credit card. each card is different so i'll make up number to give you an idea of how it works...by no means is it exact. first month the minimal payment is $15 bucks. so you think okay 15 bucks a month. i can afford that. i can buy more. stop right there. no you can't. you would just be mostly paying the interest on that loan on the card...not applying almost anything towards the $1000 you borrowed. the rule of thumb on using credit cards is this simple. if you don't have the cash in your pocket, you cannot afford it. if that seems a little too harsh for you then use this rule...if you can't pay it off in three months time then think again. credit is misleading. just because you are approved for 5k in credit...you need to stop and think can i afford to pay back 5k and interest?
okay so i've bantered on about budgeting and ideas that i actually use...back to the original statement. living within your means. it means this if you are living paycheck to paycheck you are setting yourself up for stress and disaster. it will affect your marriage, relationships, health, you name it. this is not within your means.
i know what you are thinking...that's easy if you make big money, but i don't. how can i save for disasters and car payment s for cars i don't have, and the like? i have the answer but you are not going to like it. you are going to have to downscale your life. add a second job. if your wife is a stay at home mom, see if she can get a work at home job. whatever it takes. nothing done right is ever easy...but mark my words you won't be sorry. when your house is paid for and you can afford to live there on a burger king job and your neighbors are being foreclosed on and pulling their hair out..well you look back and think about all the trendy gadgets like the ipods you neighbors bragged in your face about and you won't regret missing any of that junk. look the key is you have to live life and have some fun, but it takes a balance. you can't eat your cake and have it too...but you can set up your life to enjoy financial security and have some of the finer things in life as well. ultimately...it's never a waste as if things are going great for you, you can always upgrade, just don't forget about the core principles of a budget and living within one's means and you won't find yourself being foreclosed on and wondering what do i do now.
i found some free budget forms to help setting up your own budget. normally this is the ahrdestpart trying to remember everything. i can't endorse this guy's products as i haven't researched him...but his free budget forms i reviewed and i think thye are great starting tools. worth a try....
this one is the basic budget form. the one i'd try first.
http://www.daveramsey.com/media/pdf/fpu_qbudget.pdf
this one is the monthly cash flow. a little more advanced, but just more columns really.
http://www.daveramsey.com/media/pdf/fpu_monthly_cash_flow_plan_forms.pdf
this one is for those work jobs with fluctuating income such as servers, bar tenders, sales people, and the like.
http://www.daveramsey.com/media/pdf/fpu_monthly_cash_flow_plan_forms.pdf
now the forms are not that advanced with is a good thing and you can alter to fit your own needs better, but for starting out these can't hurt. what i also like about this guy (who is selling stuff, so do your own research beofre you decide you want his products) is he does a nice intro to help you on your way to utilizing these forms. once again a warning i cannot endorse his products as i never have purcashed one or tried it, but i think these free forms are a useful tool to start with since it costs you nothing. always do your own complete research before purchasing anything.
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