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Make a Budget

: Image by r.lovewell via Flickr

In the past, I’ve gone through a detailed series of budget lessons demonstrating how to make a budget and showing my personal budget spreadsheet template. If you weren’t here to see them develop, you probably haven’t seen them at all. I’ve never built an actual index for those posts.

This is the master index of my budget planning resources. As I develop more, this will grow.

Budget Lesson #1 – In this lesson, I go over how we handle discretionary income and I explain our modified envelope system. The discretionary budget contains things like our grocery bill, or the clothes we buy. We have near-total discretion over what is purchased, hence the name.

Budget Lesson #2 – Lesson #2 contains the details of our monthly bills. These are the ones that are consistent, predictable, and actually due each month. Most people take these for granted as the bills they have to pay, but it’s not true. You can get almost all of your regular bills reduced just by asking. You would also be surprised what you can do without, when properly motivated.

Budget Lesson #3 – This is where I explain how we deal with the non-monthly bills. That is, the bills that have to be paid, but are not due on a monthly basis. I also share the personal budget spreadsheet template I developed. I am working on a few sample templates to match various imaginary scenarios. If you’d like to be an anonymous case study, and get free help setting up a budget, let me know, please.

Budget Lesson #4 – In this lesson, I describe our “set-aside” funds for things that will need to be paid eventually, but not on a set schedule. Sometimes, they are never actually due. We set aside money for the parties we throw, for car repairs and for a number of other things. A few of these items are outright optional, but they are part of what makes life fun. You can’t make a budget without including some of the extras.

Budget Lesson #5 – This is the companion piece to lesson 2. Learn how I’ve reduced–or attempted to reduce–each of these bills. For the better part of two years, I called Dish Network every few months to ask for a discount. For almost 2 years, it was granted. Then one, day, they told me they were putting a note on our account to keep us from getting any more discounts, so I canceled. 100% discounts help us save more.

Budget Lesson #6 – This is the reduction companion to lesson 3. These bills are harder to reduce. Have you ever successfully gotten your property taxes lowered?

Budget Lesson #7 – This is the reduction companion to lesson 4. Notice a pattern, yet?

Budget Lesson #8 – Here, completely out of order, is the reduction companion to lesson 1. Watch as I magically reduce–or rationalize–our discretionary budget.

So, dear readers, what part of budgeting should I address next?

Debt Burnout

Finance

You’ve got a budget. You’ve got a debt repayment plan. You’ve been paying off your debt. You’ve even paid off a few of your smaller debts. Now you’re staring down the barrel of your big debts: your mortgage, a $30,000 credit card, maybe a car payment. You’re looking at months of payments with no quick wins; no more watching your debts die every few months. You’re in the middle of a very long slog.

All of the easy milestones have been reached and the next one is a year or more away. This is when debt repayment gets hard. How can you avoid getting burnt out doing the same thing, month after month, with no major visible progress?

1. Keep your eye on the prize. Try focusing on the end result, while ignoring the time it takes to get there. Do you have a reward planned for when you pay off your debt? If not, consider that to be your new shining goal-post. My wife and I plan on taking an Alaskan cruise when our debt is repaid.

2. Ignore the prize. If #1 doesn’t work for you, try focusing on just the current month’s progress. How much did you pay off this month? Was it more than last month?

3. Make micro-goals. Try breaking the long slog into bite-sized pieces. How fast can you pay off the next $1000? How many months will it take to pay off that TV you bought last year? Sometimes, meeting a smaller goal can make the whole works feel like it’s going by faster.

4. Take a snowball vacation. For just one month, take every dollar you would normally apply to your debt–except your required payments–and have some fun with it. Take a weekend trip, have a fancy dinner, or pick up that video game system you’ve been eying. Something. Anything to take your mind off of your repayment plan for a while. Be careful not to make this a habit or you will never get out of debt.

5. Start a blog to share your pain.

A debt snowball is a long, intense process. If you’re not careful, you can burn out and let the whole thing collapse. How do you avoid burnout?

Three Alternatives to a Budget

Finance

the envelope system: day one — Image by J. McPherskesen via Flickr

Budgets aren’t for everyone. For some people, the very idea of trying to track where their money going is painful. And that’s just the idea of tracking the money. It gets far worse when you’ve got $10 budgeted for coffee, $12 for fast food, $66.50 for gas, and $0.75 for entertainment. It’s can be hard to follow a strict budget for long.

If you know you need to track your money, and you also know that a strict, zero-based budget won’t work for you, what can you do? Luckily, there are alternatives.

1. Hope and Pray. This is otherwise known as the “Call my bank everyday and see how close I am to over-drafting” system. To fully embrace this system, you need to not only abandon a written–or even organized–budget, but you should also throw your checkbook register in the garbage. Make sure you’ve got a good overdraft protection account attached to your checking account and let your money take care of itself. This is the ultimate zen of personal finance. Don’t stress or worry, just hope for the best. This system works best if you make more money than Oprah and have modest tastes. For those of us who have to watch our money a bit to make sure the month outlasts our money, this probably isn’t a great plan.

2. The Envelope System. To implement this system, you do need to create a basic budget so know what you are obligated to pay. Once you have that done, take a stack of envelopes and label them for each item you have to pay. Add another envelope for food, another for entertainment, and another for miscellaneous because there is always a miscellaneous. Divide the money among the envelopes. Now for the magic. When you have to spend something, take the money out of the appropriate envelope and spend it. That’s it. If, however, there isn’t enough money in the right envelope, but you still need to spend the money, you have to take it out of a different envelope and spend less on the category that lost money.

3. Percentages. This is the simplest of the non-budget budgets. Take 50% of your money and spend it on necessities, like the mortgage, food, and utilities. The next 30% goes to savings and retirement. The last 20% is for fun or any other thing you want to spend it on. This naturally works best if you are out of debt, but if not, just make sure most of the 20% fun money goes to repaying debt. This system works best if your bills are automated and you will need to set up a basic budget first, so you can make sure your necessities come in under 50% of your income.

Not every budget plan will work for everyone, but there are always alternatives that can still help you manage your money.

How do you track your money?

Money Problems – Day 1: Setting Goals

Finance

Today, I am starting a series, Money Problems: 30 Days to Perfect Finances. The series will consist of 30 things you can do in one setting to perfect your finances. It’s not a system to magically make your debt disappear. Instead, it is a path to understanding where you are, where you want to be, and–most importantly–how to bridge the gap.

I’m not going to run the series in 30 consecutive days. That’s not my schedule. Also, I think that talking about the same thing for 30 days straight will bore both of us. Instead, it will run roughly once a week. To make sure you don’t miss a post, please take a moment to subscribe, either by email or rss.

In this, the first installment, we’re going to talk about goals.

First, we’re going to ask 3 questions.

What is your financial goal?
Why?
How can you get there?

The first question is “What is your goal?” Of course, in this series, on this site, we’re only going to be addressing your financial goals. Losing 300 pounds, growing wings, and flying to the moon may be an admirable goal, but it’s considerably outside of the scope of this project.

So, what is your financial goal? Do you want to retire a millionaire, or become financially independent? Do you want to pay off your debt, or save enough money to see the world? Do you want to learn how to retire by 40?

Your goal does not matter…to anyone but you. To you, though, it is terribly important. Without a goal, how can you measure you progress and see what you have accomplished? It’s easy to get frustrated and give up when you can’t look back and see what successes you have actually accumulated.

Whatever your goal, you have to do two things:

Don’t let anyone tell you it is stupid or impossible. There is a quote that I can’t find attribution for, other than as an old Chinese proverb: “Those that say it can’t be done should get out of the way of those doing it.”
Write it down and hang it up. This lets you see your goal every day. It will be impossible to forget and difficult to ignore. I have Dave Ramsey‘s Baby Steps hanging on my refrigerator where I see it a dozen times per day.

The second major question to ask yourself is “Why?” Why is this goal important to you? Why do you care?

If you can’t answer that, it’s time to sit back and think about it for a while. Without a solid reason to succeed, you’ll lose motivation and fail. Are you getting out of debt to give yourself a secure retirement? Do you want to save to travel the world because you’ve been dreaming about it since you were in diapers? Do you simply want to provide a secure future for your family? Whatever your reason, it is–and should be–uniquely yours.

The third and final question is “How can you make it happen?” That question has an extremely simple answer: read the rest of the series.

Make Extra Money, Part 6: Setting Up a Site

Business, Finance

In this installment of the Make Extra Money series, I’m going to show you how to set up a WordPress site. I’m going to show you exactly what settings, plugins, and themes I use. I’m not going to get into writing posts today. That will be next time.

I use WordPress because it makes it easy to develop good-looking sites quickly. You don’t have to know html or any programming. I will be walking through the exact process using Hostgator, but most hosting plans use CPanel, so the instructions will be close. If not, just follow WordPress’s 5 minute installation guide.

Installing WordPress

Assuming you can follow along with me, log in to your hosting account and find the section of your control panel labeled “Software/Service”. Click “Fantastico De Luxe”.

On the Fantastico screen, click WordPress, then “New Installation”.

On the next screen, select your domain name, then enter all of the details: admin username, password, site name, and site description. If you’ll remember, I bought the domain http://www.masterweddingplanning.net. I chose the site name of “Master Wedding Planning” and a description of “Everything You Need to Know to Plan Your Wedding”.

Click “install”, then “finish installation”. The final screen will contain a link to the admin page, in this case, masterweddingplanning.net/wp-admin. Go there and log in.

Configuring WordPress

After you log in, if there is a message at the top of the screen telling you to update, do so. Keeping your site updated is the best way to avoid getting hacked. Click “Please update now” then “Update automatically”. Don’t worry about backing up, yet. We haven’t done anything worth saving.

Next, click “Settings” on the left. Under General Settings, put the www in the WordPress and site URLs. Click save, then log back in.

Click Posts, then Categories. Under “Add New Category”, create one called “Misc” and click save.

Click Appearance. This brings you to the themes page. Click “Install Themes” and search for one you like. I normally use Headway, but before I bought that, I used SimpleX almost exclusively. Your goal is to have a simple theme that’s easy to maintain and easy to read. Bells and whistles are a distraction.

Click “Install”, “Install now”, and “Activate”. You now have a very basic WordPress site.

Plugins

A plugin is an independent piece of software to make independent bits of WordPress magic happen. To install the perfect set of plugins, click Plugins on the left. Delete “Hello Dolly”, then click “Add new”.

In the search box, enter “plugin central” and click “Search plugins”. Plugin Central should be the first plugin in the list, so click “install”, then “ok”, then “activate plugin”. Congratulations, you’ve just installed your first plugin.

Now, on the left, you’ll see “Plugin Central” under Plugins. Click it. In the Easy Plugin Installation box, copy and paste the following:

 All in One SEO Pack
 Contact Form 7
 WordPress Database Backup
 SEO SearchTerms Tagging 2
 WP Super Cache
 Conditional CAPTCHA for WordPress
 date exclusion seo
 WP Policies
 Pretty Link Lite
 google xml sitemaps
 Jetpack by WordPress.com

Click “install”.

On the left, click “Installed Plugins”. On the next screen, click the box next to “Plugins”, then select “Activate” from the dropdown and click apply.

Still under Plugins, click “Akismet Configuration”. Enter your API key and hit “update options”. You probably don’t have one, so click “get your key”.

Tools

The only tool I worry about is the backup. It’s super-easy to set up. Click “Tools”, then “Backup”.

Scroll down to “Schedule Backups”, select weekly, make sure it’s set to a good email address and click “Schedule Backup”. I only save weekly because we won’t be adding daily content. Weekly is safe enough, without filling up your email inbox.

Settings

There are a lot of settings we’re going to set. This is going to make the site more usable and help the search engines find your site. We’re going to go right down the list. If you see a section that I don’t mention, it’s because the defaults are good enough.

Writing

Set the Default Post Category to “Misc”.

Visit this page and copy the entire list into “Update Service” box. This will make the site ping a few dozen services every time you publish a post. It’s a fast way to get each post indexed by Google.

Click “Save Changes”.

Discussion

Uncheck everything under “Email me whenever…” and hit save. This lets people submit comments, without actually posting the comments or emailing me when they do so. Every once in a while, I go manually approve the comments, but I don’t make it a priority.

Permalinks

Select “Custom structure” and enter this: /%postname%/

Click save.

All in One SEO

Set the status to “Enabled”, then fill out the site title and description. Keep the description to about 160 characters. This is what builds the blurb that shows up by the link when you site shows up in Google’s results.

Check the boxes for “Use categories for META keywords” and “Use noindex for tag archives”.

Click “Update Options”.

Date Exlusion SEO

Check the boxes to remove each of the dates and set the alt text to “purpose” or something. This will suppress the date so your posts won’t look obsolete.

SEO Search Terms 2

This plugin reinforces the searches that bring people to your site. It’s kind of neat. Skip the registration, accept the defaults and hit save.

WP Policies

Scroll to the bottom and click import. We’ll come back to this.

WP Super Cache

Select “Caching On” and hit save.

JetPack

Across the top of the screen should be a giant banner telling you to connect to WordPress.com and set up Jetpack. You’ll need an account on WordPress.com, so go there and set one up. After authorizing the site, you’ll be brought back to the Jetpack configuration screen. Click “Configure” under “WordPress.com Stats”. Take the defaults and hit save.

Contact

On the contact configuration page, copy the code in the top section. You’ll need this in a moment.

Pages

Now, we going to create a couple of static pages. On the left, click “Pages”, then “Add new”.

Name the first page “Contact” and put the contact form code in the body of the page. Hit publish.

Menus

Under Appearance, click “Menu”. Enter a menu name and hit save.

Then, under “Pages”, click the box next to “Contact”, “Disclaimer”, and any other policies you’d like to display. Hit save.

Widgets

Also under Appearance, click “Widgets”. This is where you’ll select what will display in the sidebar. All you have to do is drag the boxes you want from the middle of the page to the widget bar on the right. I recommend Text, Search, Recent Posts, Popular Search Terms and Tag Cloud. In the text box, just put some placeholder text in it, like “Product will go here”. We’ll address this next time.

Posts

We’re not going to worry about getting posts in place, yet. That will be the next installment. However, the steps in the next installment could take 2 weeks to implement, and we want Google to start paying attention now. To make that happen, we need to get a little bit of content in place. This won’t be permanent content. It’s only there so Google has something to see when it comes crawling.

To get this temporary, yet legal content, I use eZineArticles. Just go search for something in your niche that doesn’t look too spammy.

Then, click “Posts”, then delete the “Hello World” post. Click “Add new”. Copy the eZine article, being sure to include the author box at the bottom, and hit publish.

To see your changes, you may have to go to Settings, then WP Cache and delete the cache so your site will refresh.

Congratulations! You now have a niche blog with content. It’s not ready to make you any money, yet, but it is ready for Google to start paying attention. In the next installment, I’ll show you how I get real unique content and set it up so Google keeps coming back to show me the love.

Money Problems – Day 7: Paying Off Debt

Finance

Today, I am continuing the series, Money Problems: 30 Days to Perfect Finances. The series will consist of 30 things you can do in one setting to perfect your finances. It’s not a system to magically make your debt disappear. Instead, it is a path to understanding where you are, where you want to be, and–most importantly–how to bridge the gap.

I’m not running the series in 30 consecutive days. That’s not my schedule. Also, I think that talking about the same thing for 30 days straight will bore both of us. Instead, it will run roughly once a week. To make sure you don’t miss a post, please take a moment to subscribe, either by email or rss.

On this, Day 7, we’re going to talk about paying off debt.

Until you pay off your debts, you are living with an anchor around your neck, keeping you from doing the things you love. Take a look at the amount you are paying to your debt-holders each month. How could you better use that money, now? A vacation, private school for your kids, a reliable car?

If you’ve got a ton of debt, the real cost is in missed opportunities. For example, with my son’s vision therapy being poorly covered by our insurance plan, we are planning a much smaller vacation this summer–a “staycation”–instead of a trip to the Black Hills. If we didn’t have a debt payment to worry about, we’d have a much larger savings and would have been able to absorb the cost without canceling other plans. The way it is, our poor planning and reliance on debt over the last 10 years have cost us the opportunity to go somewhere new.

The only way to regain the ability to take advantage of future opportunities is to get out of debt, which tends to be an intimidating thought. When we started on our journey out of debt, we were buried 6 figures deep, with a credit card balance that matched our mortgage. It looked like an impossible obstacle, but we’ve been making it happen. The secret is to make a plan and stick with it. Pick some kind of plan, and follow it until you are done. Don’t give up and don’t get discouraged.

What kind of plan should you pick? That’s a personal choice. What motivates you? Do you want to see quick progress or do you like seeing the effects of efficient, long-term planning? These are the most common options:

Debt Snowball

Popularized by Dave Ramsey, this is the plan with the greatest emotional effect. It’s bad math, but that doesn’t matter, if the people using it are motivated to keep at it long enough to get out of debt.

To prepare your debt snowball, take all of your debts–no matter how small–and arrange them in order of balance. Ignore the interest rate. You’re going to pay the minimum payment on each of your debts, except for the smallest balance. That one will get every spare cent you can throw at it. When the smallest debt is paid off, that payment and every spare cent you were throwing at it(your “snowball”) will go to the next smallest debt. As the smallest debts are paid off, your snowball will grow and each subsequent debt will be paid off faster that you will initially think possible. You will build up a momentum that will shrink your debts quickly.

This is the plan I am using.

Debt Avalanche

A debt avalanche is the most efficient repayment plan. It is the plan that will, in the long-term, involve paying the least amount of interest. It’s a good thing. The downside is that it may not come with the “easy wins” that you get with the debt snowball. It is the best math; you’ll get out of debt fastest using this plan, but it’s not the most emotionally motivating.

To set this one up, you’ll take all of your bills–again–and line them up, but this time, you’ll do it strictly by interest rate. You’re going to make every minimum payment, then you’ll focus on paying the bill with the highest interest rate, first, with every available penny.

DOLP

This is the plan promoted by David Bach. It stands for Done On Last Payment. With this plan, you’ll pay the minimum payment on each debt, except for bill that is scheduled to be paid off first. You calculate this by dividing the balance of each debt by the minimum payment. This gives you an estimate of the number of months it will take to pay off each debt.

This system is less efficient than the debt avalanche–by strict math–but is better than the snowball. It give you “quick wins” faster than the snowball, but will cost a bit more than the avalanche. It’s a compromise between the two, blending the emotional satisfaction of the snowball with the better math of the avalanche.

Snowflaking

For each of these plans, you can give them a little steroid injection by snowflaking. Snowflaking is the art of making some extra cash, and throwing it straight at your debt. If you hold a yard sale, use the proceeds to make an extra debt payment. Sell some movies at the pawn shop? Make an extra car payment. Every little payment you make means fewer dollars wasted on interest.

Paying interest means you are paying for everything you buy…again. Do whatever it takes to make debt go away, and you will find yourself able to take advantage of more opportunities and spend more time doing the things you want to do. Life will be less stressful and rainbows will follow you through your day. Unicorns will guard your home and leprechauns will chase away evil-doers. The sun will always shine and stoplights will never show red. Getting out of debt is powerful stuff.

Your task today is to pick a debt plan, and get on it. Whichever plan works best for you is the right one. Organize your bills, pick one to focus on, and go to it.

Assuming you are in debt, how are you paying it off?

Search Results for: three-alternatives-to-a-budget/budget-lesson-part-5/subscribe-by-email/debt-burnout/budget4/budget-lesson-part-2/contact-me/573/budget-lesson-part-1/money-problems-day-1-setting-goals

Installing WordPress

Configuring WordPress

Plugins

Tools

Settings

Writing

Discussion

Permalinks

All in One SEO

Date Exlusion SEO

SEO Search Terms 2

WP Policies

WP Super Cache

JetPack

Contact

Pages

Menus

Widgets

Posts

Debt Snowball

Debt Avalanche

DOLP

Snowflaking