Saturday, April 20, 2013

1. Make a budget



Ok, so this one is pretty generic, but since it is the most important, I had to put it first.  You have got to know what you are dealing with if you are going to succeed.  If you need help starting out, there are a ton of free budgeting spreadsheets online.  Just google it, you can't miss them.

I know a lot of people who follow the Dave Ramsey plan.  I have never used it, so I can't vouch for it.  From what I gather though, the basic principle is don't spend it if you don't have it.  That seems like such a common sense thing, but it is very hard for some.  Whether you get a high from having new things or you just feel like you deserve something nice, the urge to spend is there. 

Try going without a credit card.  Put all of your budgeted cash in envelopes for each month.  Once you spend it, it's gone.  Always, always have money in your budget for unexpected expenses.  Your car will break down.  Your child will get sick.  Your dishwasher and washing machine will make a suicide pact and die together.  That is just how life seems to go sometimes.  If you have emergencies in the budget and you don't use that month's amount, carry it over to the next month.  

Go through the last 3 or months or so of your bills and find out where your income is going.  You may surprise yourself at some of the areas that you can reduce.  You may not have realized how much your car insurance is or maybe that cup of coffee from your local coffee shop is adding up to huge amounts every month. 

If you are only trying to save in order to have a little extra cash, cut back a little bit for each month and once you are used to that, you can cut a little more--baby steps.  Now, if you are trying to save money because you are in debt or are about to lose your house, there are no baby steps.  Cut drastically and do it now.  As they say, "There is no time like the present".

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