Jumping into the Oven!
At the age of 24, I moved out of my mom’s house and bought my first home. My house hunting journey took place in 2004, when the housing market was in a full swing sellers market. This was also during the time when banks were freely handing out all of their goodies; offering interest only, adjustable rate, and stated income loans to desperate couples, families, and singles like myself, trying to live the American dream. Those first few years were rough, and I knew having a budget plan (and sticking to it) was the only thing to keep me from sinking into the foreclosure red zone so many others fell into. Below are a few of my personal budgeting strategies that helped me survive the tough times and still continue to lead me toward financial freedom!
Balance Your Checkbook
I know this sounds obsolete in the now modern times of mobile banking, visa debit cards, automatic payments, Paypal, etc. However, with such convenience, also comes greater responsibility. I just recently decided to give e-banking a try, and while yes, I do agree it has greatly reduced the time I used to spend writing out checks, logging the checks in my check book, and comparing the withdrawals made on my account balance to those in my check ledger. This checks & balance routine, however, is still an important step in managing your budget. It allows you to be fully aware of where your money is really going. Remember, the easier it is to spend money without tracking it, the quicker you are able to spend outside your budget, and by the time you realize it, it may be too late!
It’s OK to Say No
Whether you are the “go-to” person when someone wants to borrow money, even when you are struggling to make ends meet yourself; or the person who has their finances under control but others attempt to talk you into financially helping them out because you “got it”, don’t let people play on your emotions and guilt you into loaning them money. You have only one obligation; to take care of yourself and those for which you are responsible. For people outside of your realm of responsibility, you don’t need to give any explanation on why you don’t want to hand over your hard earned money. Whether you need the money to pay a bill or you finally saved enough “extra” to go on that vacation, you have a right to keep your funds for you.
Out of Sight, Out of Mind Savings
I took a risk when I purchased my first home, as I knew I was going into a paycheck to paycheck situation with the salary I had at that time. I did, however, take such a risk based on my planned future income. When those increases occurred, I didn’t in turn “increase” my spending. Instead, I placed any “extra” into a savings account and continued to budget as if I did not receive any salary increase at all. I also applied this concept to any tax refunds, monetary awards, gift money, rebates, etc. It’s amazing how much you can save if you start with money you didn’t initially have in the first place.
Plan for the Routine, Emergency, Project, and Addiction
One task I have found helpful in budgeting is to make several lists. One list should include items that MUST be paid, (i.e., mortgage, utilities). Homeowners should have a project list for things you want to do to improve or enhance the home. Emergency lists can include things such as your HVAC unit failing , car maintenance, or even worse-case scenarios like losing your job. The last, and in my opinion, most important is your addiction list. I think a lot of people make the mistake of not budgeting for things they like the most. When you try to ignore these non-essential items, and talk yourself out of splurging because you have other bills to pay, it eventually results in an unplanned spending spree. Feeding your addiction, at least every now and then, is the only way to keep it under control and within budget.