Budgeting Tips from the Cochran Firm
Budgeting is mandatory whether a person is headed toward or coming out of bankruptcy.
Many people are free spirits and don’t like to be constrained. They liken budgeting to getting stung by a wasp or something equally painful. However, not having a budget may hasten bankruptcy and homelessness. Despite its initial pain, like a wasp sting, budgeting becomes less burdensome over time, especially if clear goals are set at the beginning and debt goals are achieved.
1. Determine the amount of money needed each month. Fixed bills such as rent or mortgage, car payments, medicine costs and medical bills are fairly easy to determine. Electric, gas and water bills will vary, but an average can be used for them.
2. Determine discretionary costs such as food, toiletries, clothing and car fuel. If a debit card is used for most purchases then a review of the last six months of bank statements will help determine average spend.
3. As past purchases are perused, some will come to light that obviously were unneeded expenditures. Write them down on a second sheet of paper along with any purchases that could have been put off indefinitely without hurting anything. These will be the first money –saving areas.
4. Once the true necessary costs are written down, subtract that from the income. Hopefully this will be a positive number, but if not, then we know that more tightening of the belt is necessary. In this case, review all of the discretionary expenditures again and remove anything that is not needed to sustain life until the final number becomes a positive.
5. Huge savings can usually be made in the food department. Eating out is an automatic removal as it costs anywhere from double to ten times more to eat in a restaurant than cooking food at home. In addition, prepared food at the grocery store usually costs considerably more than purchasing items separately and using your own recipes. Many fresh vegetables can be exchanged for less costly frozen. Store brands generally are cheaper than national brands. Taking a lunch to work can save about $1200 per year.
6. More savings can be made in the clothing department. The need for name brand clothing is a figment of the imagination fed by corporations with million dollar advertising budgets. Purchase items on sale at the end of the season or at second-hand stores.
7. To further assist in meeting the budget, take the paycheck and cash it. Divide up the money and place it into envelopes according to the needs you determined in steps one through four. Take money out of the envelopes to pay the bills as they come due and only take the exact amount needed to purchase that trip’s necessities when going to the store. Leave the debit and credit cards at home as using a debit card at a store increases the likelihood of purchasing more than what is on the list.
8. Finally, take a large coffee can and fill it half full of water and place it in the freezer. After it is frozen, place your credit cards on top of the ice, put a small weight on top of the cards, then fill the remainder of the can with hot water and freeze it. With the credit cards frozen, you will be more inclined to seriously reconsider before purchasing something that is not needed while you wait for the ice to thaw to get the cards.
If it becomes impossible to turn the bottom line into a positive number, then consider getting another job. Millions of American work two and three jobs on a regular basis. A second option may be bankruptcy and getting out from under some of the debt, however this option does not solve the need for continued budgeting to make sure the cycle is not repeated.
Fiscal soundness is a must in life. Developing a solid budget is the cornerstone of being able to enjoy life without living paycheck to paycheck.
About the Cochran Firm
Recognized as one of the nation’s premier law firms, The Cochran Firm handles cases on behalf of clients seeking a Personal Injury Lawyer, Criminal Defense, Medical Malpractice, Bankruptcy Attorney in Atlanta or Social Security Disability Lawyer. The Firm can be reached at 1-800-THE-FIRM (1-800-843-3476) or visit their website at http://www.cochrannation.com. “Working for You.” Article by Benjamin A. Irwin, Esq.###
163 West Main Street
Dothan, Alabama 36301
Benjamin A. Irwin, Esq.
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