Budget is not a 4 letter word

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Budget is not a 4 letter word

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Budget is not a 4 letter word

  1. 1. Budget is NOT a 4-Letter Word! March 2009 Presenter: Barbara J. Stark Director of Community Development and Education American Debt Counseling, Inc.
  2. 2. Budget is NOT a 4-Letter Word! Budget = Savings Plan
  3. 3. The Spending Plan • Do you ask yourself where all the money goes at the end of every month? • Do you lose track of which bills you’ve paid and which are due? • Do you have a special project you’d like to save for? • How many of you need a car? • Do you dream of owning a new Porsche?
  4. 4. Why You Need a Spending Plan! Remember, it’s not about how much money you earn… I It’s about how well you manage your money!
  5. 5. Why You Need a Spending Plan! ! A Spending Plan is:  A helpful tool that tracks all of your financial information at a glance.  A great way to organize your finances and pinpoint ways to save money.
  6. 6. Your Spending Plan Creating and maintaining a livable, breathable spending plan is based on following 6 easy steps.
  7. 7. Your Spending Plan 1. Identify your income. This includes all income for the coming year. In addition to salary, think of all other expected sources of household income including tax refunds and raises.
  8. 8. Your Spending Plan 2. List expenses. Be honest with yourself about all household expenses, including eating out, salon services, and hobbies. Include all of your regular monthly bills and debt to creditors.
  9. 9. ATM Fees Computerware Home Parties Cosmetics Online Services Beauty Parlor Over the limit fees Beepers Dating Ice Cream Parking Fees CD’s Gifts Overage Fees Bottled Water Bounced Checks Clubs Cigarettes Greeting Cards Tanning Haircuts Videos Cable TV Late Payment Fees Dinners Out Bar Night Books Fast Food AttacksDry Cleaning Car Wash Lottery Tickets Magazines Movie Rentals Sports Lunches Out Film Development Gambling Prescriptions Household Items Pet Costs Licenses Speeding Tickets Cash Advance Fees Munchies Vending Machines Souvenirs
  10. 10. Your Spending Plan 3. Pay yourself first. Always put a few dollars aside in a savings account each month. Credit Counselors say the amount is not as important as establishing the savings habit! Money adds up!
  11. 11. Your Spending Plan 4. Make adjustments. Making expenses fit into your income is not always easy. Consider consulting with a Credit Counselor to structure a personalized spending plan that that focuses on your long-term goals.
  12. 12. Your Spending Plan 5. Dump the debt. Building a strong financial future means getting rid of your debt. Pay down highest interest rate credit card bills first. Hardship? A Debt Management Plan may be a solution.
  13. 13. Your Spending Plan 6. Track your results. Check your spending plan monthly to monitor how much closer you are to reaching your financial goals!
  14. 14. Spending Plan Strategies: Determine wants vs. needs Establish short term and long term goals Stay strong!
  15. 15. SPENDING PLAN Budget Guidelines Savings 10% Transportation 20% Other debt 15% Housing 35% Other expenses 20%
  16. 16. Tips for a Successful Spending Plan Household Do your own repairs and painting Shop for the best insurance rates (homeowners, automobile, health) Grow a vegetable or herb garden Turn the thermostat up when not at home Re-evaluate cable TV service and cost
  17. 17. Tips for a Successful Spending Plan (Cont’d) Food • Pack lunches for school and work • Eat out less • Consider store brands • Become a Coupon Queen (or King) • Limit shopping to once a week • Plan menus and shop with a list • Brew your own “café” coffee
  18. 18. Tips for a Successful Spending Plan (Cont’d) Transportation Car pool Try public transportation Ride a bike! Keep your autos maintained for better gas mileage Be a bargain gasoline hunter
  19. 19. Tips for a Successful Spending Plan (Cont’d) Recreation and entertainment • Discover outdoor activities for the family • Rent DVDs for $1.00 • Use restaurant coupons and join dining clubs • Take advantage of early bird offers at restaurants and movie theatres
  20. 20. Credit Card Don’ts Don’t carry more than two cards with you Don’t use them for cash advances Don’t use them to pay for basics: rent, groceries, etc. (unless you pay the bill in full each month) Don’t charge more than you can pay that month Don’t let others borrow your credit card
  21. 21. Credit Card Do’s Use a debit card vs. a credit card Use a card with no annual fee and low interest rates Know all of your cards’ hidden fees Always pay more than the minimum each month Pay on time, all the time
  22. 22. The REAL cost of Credit…. What happens when you charge a $50 dinner? Finance Period 10.8 percent 16.8 percent 22.8 percent 1 Year $55.68 $59.08 $62.67 10 Years $146.53 $265.17 $478.49 20 Years $429.39 $1,406.31 $4,579.04 A $50 dinner over 20 years on a 22.8% APR credit card would end up costing $4,579.04. Paying only the minimum payment due could mean you never pay off your credit cards for your entire life.
  23. 23. Good Vs. Bad Debt  Good debt returns something of long term value - higher education or a home. X Bad debt is “feel good” debt for purchases that you can’t afford and don’t really need. Any bad debt over 15% of your annual income after taxes should set off an alarm.
  24. 24. Debt Warning Signs Beingable to make only minimum payments on credit card bills Making late payments or skipping payments Having credit cards at or near your credit limit Arguing with family or friends over your spending habits or hiding purchases
  25. 25. Debt Warning Signs (cont’d) Being unsure of how much you really owe Using cash advances to pay your bills Having your credit card purchases declined Havingincreasingly more of your income paying for debts each month
  26. 26. Staying Financially Healthy  Develop and stick to a spending plan that includes saving some money each month  Make a habit of paying off the majority of your credit card balances each month  Live within your means  Transfer any credit card debt to a lower interest rate credit card
  27. 27. Staying Financially Healthy (cont’d)  Plan ahead for large purchases  Teach children the “3 Ss”: Saving, Spending, Sharing  NEVER turn unsecured debt into secured debt!  Consult with a Certified Credit Counselor for advice and confidential assistance
  28. 28. You can run…
  29. 29. But, you can’t hide…!
  30. 30. If you need help creating a Spending Plan contact: 14051 NW 4th Street Sunrise, FL 33323 www.americandebtcounseling.org 1.888. DEBT USA
  31. 31. Good luck! Thank you!

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