Budgeting Money Tips

Balance Budget Balancing TipsNow that we’ve done our Pre-Budget Reality Check and actually built our budget, it’s time to look at some budgeting money tips to help it balance.

This can be tough sometimes and often takes some careful planning, creative thinking, and even gaining wisdom from other people.

But that’s okay. We’re in this together, and together we are going to look at some practical ways to help bring that budget to a proper balance and get that total left over to ZERO.

WHY ZERO?

It’s very important that our budget is balanced and has ZERO left over at the end. But why?

Well, for one if we have a deficit at the end we are spending more than we are making. That’s one of the ways we end up getting stuck in this trap. Don’t feel bad, we’ve all been there. Some of are still there and are working our way back to center.

When you get to the point where you are working with a surplus that’s what generates what I like to call your financial attack power! It’s what get’s applied to your debt list.

So, for example, if you have a $45 surplus you need to add that to the minimum payment of the debt on the top of the list. For that month, instead of the $25 minimum payment, you are going to make a $70 payment instead. The budget is balanced and you just made some great headway on knocking out that first debt.

That’s how you start to build your momentum to help you break free! The trick to doing this quickly is finding ways to maximize that surplus. So, with that being said, let’s answer the 2 most critical questions for anyone trying to break free and overcome the debt trap.  What can we trim, and how can we maximize our income?

WHAT CAN WE TRIM?American Dream Budgeting Money Tips

We tend to fall into 1 of 2 categories. We either like our current standard of living or we want to see it improve. Let’s be honest, we love being comfortable. However, in our quest to obtain the “American Dream” we have fallen into an all-out nightmare. So, let’s cut back a little bit for a short time, pay off our debt, then we can enjoy those comforts and luxuries without having the panic attacks afterward trying to figure out how to pay for them!

VACATION PLANNING:  I know, “the kids HAVE to go to Disney World this year or they will die.” Listen, Disney will still be there when you are free from the debt trap and you will be able to enjoy it much more. Vacationing with no debt is MUCH more enjoyable!

I’m not saying that you shouldn’t take some time away from work and do something memorable with your family.  But start getting creative and look around for some free or less expensive ways to make it magical for them.  Honestly, it might even be more rewarding and memorable anyway.

ENTERTAINMENT:  I’m a huge fan of streaming services such as Netflix and Hulu and they are great options to finally dump that expensive cable bill. My wife and I talked about cutting the cable for years.

My main hesitation for keeping the cable as long as I did was my love for Ohio State Football! I certainly didn’t want to miss a game. But I got sick of the insanely high cable bills to keep it going. So I had to make a sacrifice. We dropped the cable and kept only the internet. It cut our bill by more than half!

If you are going to use Hulu, I recommend you keep the commercial option for the time being.

The same goes for the audio streaming services, you should definitely stick with the free versions of Spotify, Pandora, iHeartRadio, etc. until you are at a place where you can afford the $10 a month or so to pay for the premium options.

Commercials aren’t that bad. If it means getting out of debt faster, then you can definitely listen to a few commercials now and then and throw that extra $120 or so a year towards lowering your debt. Every little bit helps!

For some, you may be able to cut out the internet altogether if you have a decent data plan. It really depends on your situation. You may absolutely need the internet for your business or other reasons. Just find the lowest bandwidth possible that you can get away with.

Tip: Check with your cable company or internet service provider and ask if they have any promotions around back to school time, they normally offer discounts for college students and sometimes non-college students can get them as well. My wife and I were able to do this by simply asking!

SAVINGS: Just about every financial advisor under the sun is going to tell you things like, “pay yourself first, you need to be investing and saving, etc.”

It’s not that I don’t agree with those things. I understand them completely. But we also need to look at OUR current reality. The reality is we are sick of drowning in debt! You can save and invest all of the money in the world and when it comes time to retire you get to use it to pay off your debt!

During the worst of my debt struggles, I was so worried about making sure I was doing all of these things that it actually kept me in shackles longer. I was so worried about making sure my emergency fund was full that I was going into more debt trying to keep up with things like living expenses. Then I would USE the emergency fund for things that really wasn’t an emergency at all. It was a vicious cycle and it took me awhile to realize that my focus needed to be on paying off my debt! THEN I can do the other stuff.Emergency Fund Budget Balancing Tips

If you want to keep an emergency fund that’s perfectly fine. But, I highly recommend letting a trusted family member or friend hold on to it. Why? For accountability. Tell them to ask you the hard questions if and when you go to ask for it. Sell some stuff to establish it quickly then move on. Your budget needs to be focused on debt payoff at this point.

As far as the 401(k) or 403(b) contributions go, only contribute what your company will match until your debt is paid off. It’s senseless to throw away free money. So IF they are offering to match 3%, then, by all means, contribute 3%, but don’t go above the match at this point. You’ll have plenty of money to invest later once you aren’t using it all to pay off your debt.

Tip: Make sure you review your contributions each year. I know of several companies that will automatically try and “help” you by increasing your percentage each year.

RENT:  If you pay rent and not a mortgage, consider your monthly payment.  If you are near the end of your lease you should check around and see if there are some better rates elsewhere.  It never hurts to check and you could knock out some serious debt with the extra money you’ll be saving.Home For Sale Budget Balancing Tips

If you have a high mortgage payment, it might be time to look at your options. Most of the time it makes sense to be investing in a home and not “throwing away money on rent”. But, only when you can afford to do so. Maybe a smaller house is a better option?

CHILDCARE:  Nowadays it’s nearly impossible to get through without some childcare costs. Both parents have to work, right?  While that’s usually the case there are some ways to get around it.

Consider asking a retired family member to watch the kids or switching to opposite shifts for a short time while you are knocking out your debt.

Plus, you and your family get to be the one’s who raise your child, not the nanny!  That, in and of itself, is priceless! Obviously, this can’t always be avoided but it’s worth a second look to see if there are any options that present themselves. Always be thinking of new ways to save money!

FOOD:  Stop eating out! Save it only for the special occasions. I’ve been the person who has tried to justify that eating out is better and/or cheaper than going to the store. WRONG! It isn’t.  Especially when you factor in tips, delivery fees, etc.Grocery Store Budget Balancing Tips

Even fast food isn’t going to cut it. Think about it. Your “value” meal at your favorite fast food restaurant is probably going to cost you over $5 easily. With that money, you could buy a loaf of bread, a jar of peanut butter, and a bag of salty snacks that will last you an entire week for your lunch! That’s just one example.

You may need to tweak your grocery shopping habits to bring down your total at the checkout but it will save your wallet and not to mention your health in the end.

Take the time to plan it out.  Make sure you go in with a list, a calculator, COUPONS, and be willing to put things back if you start to go over.

UTILITIES:  Even the simple things can start to add up. Get in the habit of shutting the lights off when you leave a room. Take shorter showers. Turn down the thermostat. You’ll be surprised at how fast your bills will start to go down with just a few simple adjustments. There are even some great products you can buy that will save you money each and every month.

“I’VE TRIMMED EVERYTHING I CAN AND IT’S STILL NOT ENOUGH!”

Once we have trimmed out every possible thing from the budget that can be trimmed, we need to start looking at other ways to balance that budget. Even if it IS balanced we actually want to create the biggest surplus we possibly can so we can pay off our debt at a rapid pace and get back to enjoying our life again. Peanut butter and jelly will get old in a hurry!

So now we need to focus on maximizing our income. For some of us, it’s as simple as asking for some overtime at work. You may need to look for a second job or even dust off that resume to find a better-paying one. Regardless, I highly recommend you head over to my Maximize Your Income page and check out some great options and reviews including a way to start working from home in your spare time!

Click here to find out how to MAXIMIZE your income!

NOW IT’S ALL ABOUT THE FOLLOW THROUGH

Once we have our plan in place, or at least the start of it, it’s time to do the second most important part of getting on track. We must follow our plan!

You can and will edit, tweak and sometimes make major changes to your plan many times throughout your journey.

But regardless you need to actually start following it! Not following it is most likely what led you into this mess, to begin with.

Click here for some tips on How To Stick To A Budget

What kind of balancing tips have you discovered?  Leave them in the comment section below.

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