If I approached you and asked, “If I loan you $300.00 next month, will you give me back $2,300.00?”, you would think two things: I am a loan shark of the lowest order, and if you did it, you are one of the most foolish people on the planet. Yet, we do it every month in the form of a mortgage payment!
Do we need a mortgage for a $400,000 house, or could we have learned to be more comfortable in a home that only costs $300,000?
We use plastic today at an alarming rate to satisfy our desires, and we have to have that projection TV today not in three months when we can save up for it you know, operate within a strict budget.
I’m told that for every dollar we spend on credit, we owe the dollar plus four more, so the payback is five times more than the purchase price. If you charge that sub sandwich at Subway for $5.00, it will cost you $25.00 to pay it off. That $100. pair of Nike sneakers will actually cost you $500.00. Would you have paid $25. for the sub up front, or $500.00 for those sneakers up front? I say that to know how much things actually cost to have it now – and pay for it on credit, is a stupid thing to do but we all do it.
In this very tight economy, one has to wonder if there are ways to get out of debt when we have so much debt to get out of. Happily, the answer is yes.
Here’s what I have done, and I am already getting ahead – albeit, slower than I would like.
First, if you have Windows XP or Vista, there is a free software program already in your computer. It is called Microsoft Works Spreadsheet. Go to START, then PROGRAMS and it should be there. Load it, and try to keep your next months’ budget on your desktop so it is always right in front of you.
Next, List your Cash on Hand at the top of the budget under INCOME. Then list all other revenue sources that you anticipate for the month that you plan to start your budget in. If you collect wages, list your take-home pay there. If you receive other income (alimony, child support, rental property income, or odd-jobs that you do on the side), list them under INCOME.
The Works Spreadsheet will allow you to add a TOTAL INCOME column, and there is a greek symbol and dollar sign symbol at the top of your spreadsheet. The Greek looking symbol is there for creating a formula for adding columns up for you to give the total. For instance, your formula will likely be (B3:B8), and this will automatically add up your figures in rows B3 through B8.
Below that, skipping a row or two .you will begin to add EXPENSES. Below that category, list every dime that you spend using your checkbook, or ATM card. These are all of your bank account transactions. Oh, and STOP using your credit cards immediately. Your intent is to get out of debt. Even the Bible tells us that to owe a creditor is to be a slave to that creditor.
List expenses like mortgage, auto payment, auto insurance, gas & repairs for auto, health insurance, medications, Supermarket food, Food-Misc. (this covers coffee, donuts, sub sandwiches, going out to eat at night, etc), electric bill, phone bill, cell phone bill you get the picture. Each month, as you look over your budget to determine if you will be in a negative or positive cashflow situation at the end of the month, you will start adding more things under expenses things that you never thought of as a cost before.
Within three months, you will pretty much have your total, reality-check budget in place. Then, you can start seeing where you can cut expenses or add a little income here and there and over time, you can see those budget reductions, and take pride in the fact that you can whip this debt thing. Continue reading ‘Rise From the Ashes of Debt’ »