Money is such a tricky subject. People like their money, and can take great offense to the idea that they are not managing it properly. What they don’t realize is that often they are not managing their money, their money is managing them.
So Idea #2 is that you resolve to be in control of your budget, and not have your budget be in control over you.
I am a huge fan of Dave Ramsey’s Total Money Makeover. I can honestly say that it changed my financial life in the same way that Wheat Belly changed my physical life. His ideas are simple, no nonsense, and can greatly impact your life whether you are making millions, or just pennies.
He has Baby Steps, and here are the top 3 to get you started:
1. $1,000 in an emergency fund-We funded ours when I took on a second job. You could use money from tax return, selling stuff, working overtime, etc.
2. Pay off all Debt using the debt snowball-Until you have your emergency fund ONLY pay minimum payments on your debt. Then follow Dave’s plan for paying off your debt. CUT UP YOUR CREDIT CARDS, and vow not to use them ever. Your emergency fund becomes your fallback in the event of an emergency, NOT your credit cards.
3. 3-6 months of expenses in savings-Yes, that sounds overwhelming, but once your money no longer goes to pay off debt, this can become an incredible cushion for layoffs, new babies and more.
Aside from following Dave’s plan, here are some other ideas:
1. Stop eating out (or limit it to 1-2x/month): Making your meals at home will not only give you more money in your wallet, but it can also help if you are trying to lose weight. (we limit ours to once per pay period)
2. Switch to generics where possible. I will admit, I was once a brand snob. I imagined myself only using the best diaper brands for my child, but gosh they are soooo expensive. I switched to generic Target diapers and wipes, and they worked as good as the brand names and saved me a TON of money. This can also work for food items and more. (clearly I am a brand snob that had a reality check!)
3. Cut Cable. No really, you are still paying $60-80/ month for TV?? Trust me, you don’t need it. If you want, you could get a Netflix and/or Hulu Plus in addition to your internet and save some cash. (We have internet and Netflix)
4. Speaking of internet, do your really need the highest data plan on your phone? Do you need data at all? If not, consider switching to a pay as you go plan. Or try calling your phone provider to see if you can get a better deal. (We paid off our phones, and decided not to finance new ones)
5. Sort out wants vs. needs. I will admit that there are a lot of things that make life more convenient and wonderful. But we live in a society that glamorizes the lives of those with lots of stuff. Stuff is just stuff. The things that matter most are the people in your life. It’s ok to by used. It’s ok to not bring a gift, or to give a small gift. It’s ok to tell your kids no. (This is tough, but I have started making meaningful gifts, and keeping Birthdays and Christmas simple)
6. Sell/donate stuff you don’t use. I know people who are serious hoarders, and spend money on lots of little things they don’t need and will never use. And while I may have my tendency toward digital hoarding on Pinterest, I try to regularly purge my home of the things we don’t use or need anymore. I sell the stuff I can, and then donate the items that are too difficult to sell, or there’s just too many of them. I get the tax write-off for the things I donate and give to some great causes. (I go through my house every 4ish months or so, and put the stuff I think I want to get rid of into the garage. If it’s not used in a certain amount of time, I sell or donate it)
7. Downsize. This is a tough one, but what if you got rid of all the extras and then were able to move in to a smaller home or apartment? If you are able, consider smaller spaces. This will benefit you on lower monthly payments on rent/mortgage, utility bills, and the time it takes to maintain the space. (This is my dream. Right now we are making repairs on our home to make it more appealing to buyers, and hopefully we can sell it in the next year or so)
I hope this gives you some ideas to get you started on taking control of your money. And if you want the whole shebang, Dave Ramsey has a ton of free resources on his website. His books, and Financial Peace University are phenomenal too (although not free). Worth every penny.
Tell me how you have or are planning to Manage your Money with Power in 2014!