Working to a budget

 Since you’ve just cleaned out your closet, part of getting your life back on track after a break-up is sorting out your finances.  Many of us spend way too much and acquire debt like Paris Hilton acquires designer sunglasses.  Continually getting into debt and abusing your credit card is actually an addictive disorder called Compulsive Debting.  Debt affects all aspects of your life and causes you undue stress.  So if you are sinking in a quagmire of debt, how do you get yourself out? 

First of all you have to acknowledge your debt.  The days of throwing all the bills in the air and only paying the ones that stick to the ceiling are over.  You have to sit yourself down and admit that debt-wise you are in way over your head.  The next thing you have to do, is put all your bills in a nice neat pile and add them all up.  Many of us prefer to not know how much we owe in total, but if you are wanting to get out of the debt trap you need to have a clear idea of the extent of the debt.  Once you have the total, work out your monthly payments and then subtract the monthly payments from your monthly income.  Not looking pretty, is it?

The majority of us don’t plan how we spend our money.  It comes in and then it goes out.  Lack of planning causes debt problems as our lack of willpower in our spending is allowed to roam free.  Budgeting might sound like something only accountants do, and others might think it sounds a little boring, but budgeting is essential.  Get yourself a journal where you can keep good accounts for yourself.  Write down your monthly income after tax.  Then list the monthly payments which are essential, in other words, the things you need in order to survive.  The Gucci handbag you saw at that shop in the mall is not essential for your survival.  Subtract your essential monthly payments from your monthly income, and what is left is what you have to play around with.

Before you go out on a shopping spree with what is left, you need to allocate the money to non-essentials.  Allow a fixed amount for entertainment.  Everybody needs to treat themselves after a hard month of labour and denying yourself entertainment will have an adverse effect on your budget, as you’ll start taking money from essential items to spend on entertainment.  Be realistic, allow for entertainment.  Even if you only save $20 a month, you are developing the saving habit, so allocate some money for saving.  Keep some money for emergencies in a slush fund and choose one debt that you’ll pay a little extra off each month.  Monitor your actual spending next to your budget, so you can make adjustments the next month if necessary.

If you are struggling to pay off creditors, you need to talk to them and discuss your situation with them.  Just keeping silent is taken as a sign of you being unwilling to pay.  If you communicate your dire circumstances with them, most will work out a special payment plan for you.  You need to prioritise your debts and try and pay your high-interest ones off first.  Don’t take on any new debts while you are trying to pay off existing ones.  Borrowing from Peter to pay Paul is going to send you up shit creek without a paddle very quickly.

With all these financial crises hitting us it might be a good idea to look at ways to cut down on our spending.

·         Don’t give up on eating out, but choose to eat out at breakfast instead of dinner as breakfasts are much cheaper.

·         Don’t go to beauty salons for beauty treatment, buy the do-it-yourself kits from the supermarket and treat yourself in the comfort of your own home.  You can even turn it into a fun day, invite over some girl friends and you can wax each other’s legs.  What a great way to spend a Saturday afternoon!

·         Don’t buy take-away for lunch at work, rather invest in some small plastic containers and take left-overs from the night before or make your own sandwiches.

·         Don’t drive in to work alone, put an ad in the paper looking for someone to carpool with you, or ask around at work if someone lives in your area.

·         Don’t spend your hard-earned cash buying friends birthday gifts, rather bake some cookies and package them nicely with a big ribbon.

·         Don’t drive just because you have a car when you can walk.

·         Don’t text message all your friends just because you are bored or lonely.  Only message them when you have a good reason to.

·         Don’t draw small amounts from ATMs as you pay for each withdrawal and the bank charges add up.  It’s how the banks make their money.

·         Don’t speed when you know there are speed cameras.  In fact, just don’t speed, period.  Speeding fines are a waste of money.

·         Don’t spend every weekend clubbing, try and limit yourself to once a month.