Budgeting For The Starters

I had a wonderful time with my eldest daughter, Rache, just before she left for a vacation in China. One of the things we talked about was how she will have money ready every time an opportunity to travel presents itself to her. She has realized that she must be serious in her finances from that time on. I am an advocate of having a family budget. I have been telling her to have a budget of her own so she can manage her finances well. I think that small talk we had will change the way she values her money. I have a guest post here about starting to make a budget. It's simple you can easily do it. I am proud of Rache. She will be a millionaire someday if not soon. Here's a guest post from Financially Poor:

Budgeting: For The Just Getting Started

So you have come to the realization that you need to control your finances. Well I’m here to help you get started. Starting a budget is somewhat easy but there are a few steps that can trip you up. What I’m going to do is walk you through the mine field so you can have a budget that you can call your own.

Starting out

What your first step needs to be is make a list of categories of bills that you have every month like rent or mortgage, phone bill, etc.  Here’s what mine looks like:

The reason to list those first is so when you decide how much goes into each category you can get the necessary bills out of the way first and know how much you have left over for the rest of the categories.

Next make a list of all of your monthly variable expenses like this:

If you want to make the categories more detailed go for it. You can make eating out into breakfast lunch and dinner if you want. Customize it to whatever works for you. Don’t worry about making it perfect the first time around though. Budgets tend to evolve over time so just make a first one that will get the ball rolling. The Spouse 1 and Spouse 2 is for fun money for each person FYI. Be sure when you put the two groups together that you add a line for savings between them.

Divvying Up Your Money

After you’re done making categories for your spending it’s time to find out your spending. This step is to find out how much money you spend in each category. There’s a few different ways to do this.

One way is to guesstimate how much you spend in each category. Your regularly monthly bills will be pretty accurate but your variable spending will probably be pretty off. With this method you’ll be adjusting your budget a lot and can be frustrating so I wouldn’t recommend it for most people.

The other way is to track your spending for a few months and fill in the categories with those amounts. If you have a debit card I would use that because then you can see your transactions online and it’s so much easier to keep track of. If you don’t have a card and you just use cash then think about getting a small note pad and writing your purchases down. This isn’t the most fun step but it is the most eye opening experience. When you actually see how much you spend a month you may be very surprised.

At the end of each month put all of your purchases in their different categories. This will give you an idea about how much you spend in each category. Now comes the meat and potatoes part. The point of a budget is to control your money instead of letting it control you. So this is where you decide how much you want to cut back on variable spending. I’d recommend you cut back slowly so that it’s not a big shock and turns you off. If you spent $300 on entertainment try to cut back to $250. If you cut back a lot you might get frustrated that you can’t stay within budget and could cause you to give up. so each month just cut back a little more and eventually you’ll figure out where a comfortable level is for that category.

Once you figured out your budget write it down on a piece of paper or put it in a spread sheet. I write down my budget in a notebook so I can carry it around wherever I want to and work on it. I have mine set up like this:

Another reason I write in a notebook is because I fill out, on the page after my budget, columns with the different variable spending categories and amount budgeted. Then through the month I write down the expenses as they occur in the correct category. This helps me save a lot of time.

That’s pretty much it. Not hard at all. Over time your budget will be customized to your situation. What you just created is a gateway to a better financial life.  This is a tool that’s going to help you get control over your finances.

How was your experience setting up your first budget?

I hope you have made one budget for yourself and your family. 

To your debt-free life,

Jimmy

A Doable New Year's Resolution

Maritess and I had a good talk with our eldest daughter over breakfast today. We had a very light discussion of what lies ahead of us this 2012.

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Topics covered many areas including finance. My eldest is a licensed Architect and works at Architecture Network, a well- known architectural firm in the country today. When asked what her goal for this year is, she readily included taking good care of her financial house, making sure it is in order this year.

I love to hear that kind of goal. I am proud of my daughter and I am sure she will succeed in that area of her life.

Like it or not, finances are one of the most talked about issues this 2012. Many are hoping to earn more, save more, invest more and become debt-free in order to gain financial stability.

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I suggested the following goals for my daughter this year:

1. Try to save more of her income, at least 20%.
2. Monitor her spending patterns for a month, to find out where her money goes.
3. Start creating an additional stream of income.

That was simple and short but doable. One of my goals this year include item # 3.

There will be many opportunities for earning more this year. Are you ready to grab them given the chance? I believe, we can do so if we have the financial resources as a result of controlling our spending habits and saving for the future.

Happy New Year and be happy saving, investing and getting out of debt.

To our debt-free life ahead of us,

Jimmy

How I Saved On This Tour

Our office, Uno Overseas Placement, gave us an advance Christmas treat. We were given a tour of Hongkong, Macau and Shenzen, China.

My wife, Maritess and Del enjoying Hongkong's airport facilities

So off we went on this 3N/4D tour package.

Of course, since this was a pre-Christmas gift, we were also given extra money in advance.

The temptation for me, and am sure for everyone in the team, was the urge to buy gifts and items that are unique for each country we visited. The other side of the coin was the desire to preserve our hard earned money to last till Christmas.

The tour guide giving us instructions and tips

Let me share my two cents worth of idea how I saved during this tour.

1.     Determine and set the budget for the trip – This is the most important decision you need to make. Setting goals and limits causes you to be frugal and careful in spending your money well.

2.    Buy only what you need – There are many good things you will see and the urge to buy them is very high. Knowing what you need will help you know and eventually eliminate the wants. Otherwise, you will bloat your luggage with items you don’t really need and then you will have to deal with overweight baggage. So know what you need and to whom you will give gifts.

3.     Take care that you don’t succumb to any sales pitch by the tour agent– Tours are usually designed to let you enjoy the many amenities and sites of the city you’re in. However, if you’re on package tour, the tour agent usually brings you to places where they can earn commissions when you buy. In Hong Kong, we were brought to the Jackie Chan Jewelry shop. It was very tempting to buy an item for my wife. But because it wasn’t in our goal, I avoided the expense. After all, I still have some watches I have not been using, which are of the same quality they offer.

4. Enjoy your hard earned money, treat yourself well – I tried to go out of my way to treat my wife with new clothing. It was a major part of the plan. So we went to Cotton On in Mongkok to buy her clothes that were on sale but of good quality. Our friend, Bong Cuntapay, who now works there, was at hand to help us choose good designs for her.

So many things to buy in Macau

Overall, we enjoyed this trip. We went home satisfied and grateful to Uno Overseas, for giving us the chance to travel and relax.

I look forward to more tours.

To your debt-free life,

Jimmy

10 Smart Ways to Improve Your Budget

When you're dead serious about managing your money to eliminate debt in your life, you will go out of your way to dig for more insights and precious information that will help you be on top. After all, I don't have all the solutions to my money problems. I need others to support me with my goal of reaching a debt-free life.


I came across this smart article from US News written by Kimberly Palmer, 10 Smart Ways to Improve Your Budget. I am an advocate of using budget as an important tool in managing our financial resources. That's the reason why I highly recommend this very practical and useful article.


Here goes:

10. Share your budgeting goals with others.

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Whether you want to stop wasting money on unnecessary shopping trips or pay off your credit card debt, share those goals with friends and perhaps even strangers. Websites such as 43things.com and MyLifeList.org makes it easy to share goals with similarly-minded people.

9. Reward yourself.

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Diets that force people to expunge almost everything tasty from their meals never seem to have much success. That principle applies to money, too. Denying ourselves every material pleasure turns money into a sad subject, instead of an empowering one. After all, you work hard for your money, so it should bring you some pleasure.

8. Avoid temptation.

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If you were on a diet, would you stare at chocolate chip cookies all day? Of course not. So why do we torture ourselves by allowing catalogues full of shiny, new kitchen gadgets or tempting electronics to come through our mails slot every day? Cancel them.

7. Take the spending diary challenge.

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Write down every single thing you spend money on for two weeks, along with notes on why and how it made you feel. You might be surprised to discover the real leaks in your budget. Instead of lunches out and cab rides, you might be wasting money on coffee and happy hours. After the two weeks is up, review the list and see what jumps out at you.

6. Consider your high and low points.

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A quick review of where you went wrong—and right—over the past few months will help pinpoint your weaknesses. Did you end up spending twice as much as usual on plane tickets because you waited too long to buy them? Or did you buy overly expensive gifts? Don’t just beat yourself up; consider the good decisions you made, too, whether it was comparing prices before buying a new television or cooking more homemade meals.

5. Set money aside for leisure.

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Research shows that people get the most pleasure out of spending on leisure activities, such as vacations, movie theater tickets, and hobbies, partly because these things usually involve spending time with other people. Don’t forget to reserve some cash for such happiness-inducing pleasures.

4. Consider the year, not just the month.

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Budgeting for the year is better largely because we feel less confident in our monthly estimates, so add more of a buffer for unexpected expenses, according to research by University of Southern California’s Gulden Ulkumen, Cornell’s Manoj Thomas, and New York University’s Vicki Morwitz.

3. Time yourself.

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Once you decide you need to buy a specific item—a new computer, for example, or a backpack—give yourself a specific time limit to make the purchase, such as a half-hour. “You don’t want to lose precious time sifting through options when your instinctive reaction will probably end up being the best decision,” says AnnaMaria Turano, co-author of Stopwatch Marketing: Take Charge of the Time When Your Customer Decides to Buy.

2. Harness the power of a Web tool.

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On Mint.com,you can upload your account information and get immediate insight into where your money is going. You can then use that information to start saving more money, just in time for back-to-school season. Other online options include Wesabe.com,Pennyminder, and You Need a Budget.

1. Decide on your priorities.

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Most people’s budgets revolve around three costs: food, housing, and transportation. After you budget for those expenses, which probably account for between half to two-thirds of your take-home pay, and factor in any debt payments, decide how to prioritize savings, household expenses, professional expenses, and entertainment.

My wife and I went on tour to HongKong this week. The first thing we did was to decide on our priorities when it came to spending. We had a budget and it helped us control our expenses and came out of this tour fully satisfied and rewarded. In the end, we enjoyed HongKong, Macau and Shenzhen a lot.

Here's to your debt-free life,

Jimmy

How to Become Financially Independent in Seven Years or Less

I am 59 and looking forward to a financially stable life. I can't complain, but I also want more in life. I feel I am just beginning to accelerate in my quest for financial independence. That's part of the reason why I blog. It helps me discover out-of-this-world ideas, opportunities and people. I learn from them.

Mark Ford, Editor of the Palm Beach Letter, son of a teacher, started out with no money but built a multi-million fortune.

If you are middle aged, whose net worth is meager,  and your income is barely sufficient to meet your expenses, this article is for you. He says that we should take responsibility for our situation and make changes. When we see our financial goal not aligning with our age, we are to take courage. Don't give up on your dream of being wealthy. Mark says that we always have the ability to change our financial life. But it will take a bit of time and patience.
Here are four things he suggests we do:

1. Accept the fact that you are solely and completely responsible for your financial situation. Nobody can change your future but you. The sooner you do that, the anger and blame will be dealt with and you begin to feel financially powerful.

2. Set realistic expectations. Don't be in a hurry to get rich. Be contented with 10%-15% returns per year. This is a journey and like a train, you can't go from 0 to 100 mph in no time flat. Be content with 10 and then 20 and soon you're doing 100. Your journey to millions of dollar is earned $100 at a time.

3. Thoroughly understand the difference between spending, saving and investing. Mark says that every paycheck you get cover your necessary expenses first, then put money on your savings and then put some money toward investments. Then and only then, after paying yourself, should you add to your spending.

4. Recognize that your net investible income (the amount of cash you have after spending and saving) is the single most important factor in determining how quickly you will become wealthy. Commit to adding to your income a second income.

I love the what he says about the value of time: devote your time to wealth building rather than spending time on non-productive hours like watching TV.

I am so happy to discover this very practical and doable tips from a man whose been there and came out successful. If Mark can do it, we can.

To your debt-free life,
Jimmy

P.S. I have changed the way I think. Blogging  about my passion, helped me gain not only personal but global economic realities.

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