Make a Budget and STICK TO IT – 7 Simple Steps

Ever felt like this guy here? I have. I think we’ve all had… well, let’s call them “Budget Issues” like this from time to time–Some of us more than others. Money can be the best thing and the worst thing all at the same time.

Just about the time we make ends meet….Somebody moves the ends.
I WANT TO HELP YOU NAIL DOWN THOSE ENDS.

I know well the woes of “budget issues.” I’ve had my share and then some! I know how they can peck away at your peace of mind night and day. I know how they can steal your sleep.

I also know that they are completely SOLVABLE.

You can begin to fix your budget TODAY.

Yes, I mean that. Without exception and without reservation I tell you that you can begin the process of gaining control of your money this very day. I don’t care if you’ve been out of sync for a month or a lifetime.

It’s simple, it’s something you can learn and you can learn it TODAY.

Even if you think you’re only a little out of sync with your money, this FREE REPORT can give you ideas that could increase the balance of your savings account ten years from now by thousands and THOUSANDS of dollars.

Yes, that’s right! I said, “By thousands!”

Fixing your budget is simply about making a few changes to your
spending and saving habits.

Before we get to that process, let me tell just a short story.

It was over 30 years ago that I learned a very important lesson.

I learned the importance of working from a written budget and I learned it while I was in the Marine Corps. In 1974 I got my Second Lieutenant bars; I got married, and was shipped back to the east coast for seven months of intense training. One of the requirements of my new position was that of having to purchase a complete set of officer uniforms (Dress Blues, Dress Whites, Winter Greens, utilities, socks, boots, and even regulation underwear!) Our cost: Just over $2000. None of us had that kind of money so they very kindly extended us credit to complete the purchase during our training. We were given just a few months to pay off the balance or we would have to face some steely-faced general who would chop us into little pieces and feed us to his dogs. (Or so we were told…)

Well, I completed the training and was transferred back to California and rented an apartment near Camp Pendleton. I had to pay first and last months rent, buy groceries, gasoline, insurance, and blah, blah, blah… you know the drill. My deadline for my uniforms was just a few paychecks away and I was behind.

I was convinced that I was making enough money to pay off the loan on time. I thought that if I could just get organized and write down who and what to pay with each paycheck that I could avoid being doggy lunch.

That’s exactly what I did. I probably spent the better part of an entire weekend bent over a grungy little desk in our apartment with a pencil, paper and a calculator. After hours and hours I had a plan.

Well, it worked. We paid the rent, ate, and paid off the uniforms on time. We didn’t do much of anything else, but we survived and retired the debt!  I liked the little system so well, I thought I’d write out a couple more months of income and expenses. After that I was hooked. It took all the stress out of payday. I had a simple, methodical plan to decide how to spend our money and I stuck with it.

Over the years I tweaked and refined the system. I’ve also learned some other little tricks from people I’ve met along the way. The system has included budgeting for car payments, rent, baby diapers, clothes, electricity, soccer uniforms, allowances, the saving-to-buy-a-house fund, house payments, groceries, dentist bills, piano lessons and college tuition.

It’s worked when we were short on money. It’s worked when we had extra money. It’s kept us from blowing money on stupid things and it’s allowed us, occasionally, to blow money on stupid things.

It’s simple. It works at any income level and any kind of pay periods (weekly, semi-monthly, bi-weekly, whatever…)

Just a couple quick thoughts and we’ll get right to it!

As you embark on this process of fixing your “budget issues,” let the process work for you. You’ll experience some frustrations. It all won’t work perfectly the first month. You’ll wonder how one earth you could have possibly thought you could get a handle on all this.

If you have been frustrated in the past or you’re frustrated now,

DON’T QUIT…

Do this Instead…

Accept the learning curve.
Yes, you’re on a learning curve.

You may have been doing these things that got you into trouble for years. Don’t expect to change those habits overnight, or even in a month or two. Think in terms of a year – a year where every month will be better than the last one. Every month will find you closer to gaining control of your finances than you were the month before.

I’m ready…

Are you???

7 Simple Steps —

Make A Budget And Stick To It !

STEP #1

Commit to the process

This is, without a doubt, the most important step that will enable you to MAKE A BUDGET AND STICK TO IT.

Unless you want this to work more than you like to spend money in ways that’s causing you problems, you need not read any further.

Sounds harsh, huh? I know it does. But it’s the simple, honest truth. You may put this down and pick it up several months from now. You may start and then quit. But then, when you’re REALLY READY to make this work, you’ll do it.

I can’t make you want to be ready. I can’t force you to commit to this process.

What I can do is tell you that your life will be immeasurably better. No more hiding when the phone rings. No more sleepless nights. No more explaining to the people you owe that you just don’t have the money this month. That’s going to be SO OVER FOR YOU!

PICTURE THAT!!!

Worth it, isn’t it!

Decide to be a FINISHER before you even start.

STEP #2

Figure out what you’re spending now

This may take a month or even two. It’s VITAL to your success. You’ll probably be amazed at how much money you spend at, oh I don’t know, let’s say STARBUCKS! Or maybe it’s the Roach Coach that visits your work place every day. Or maybe it’s those stops at 7-Eleven every day. You know what I’m talking about. I know you do.

Here’s what you need to do:

1. Get a sheet of paper. Fold it and put it in your wallet or money clip or wherever you keep your loot.
2. EVERY TIME you spend a penny, and I mean every time, write it down. Doesn’t matter if it’s cash, ATM card, debit card, credit card or check – WRITE IT DOWN.

This is probably the single most revealing habit you can have. You won’t have to do this forever, but do it for at least several weeks until you get a good idea of where your money is going. A little later, you’re going to take this information and apply a few limits to it.

STEP #3

Write it all down

Write down everything you spend in a month. Include the list you just completed of your daily expenses. Also include your rent, utilities, groceries, insurance, gasoline, newspaper subscription, cash requirements for your daily living, cable TV, childcare cost, recreation, fun stuff.

Here’s an idea of how complete you need to be with this:  If it’s not written in this list, you’re not going to spend it. That’s right. If you haven’t included a category to go out to dinner with your friends, you’ll need to stay home.
(Remember we talked about commitment in STEP #1)

I’d also like you to budget a monthly amount for regular savings. Even if it’s only $10, put this into your plan. More about that later…

Now, on a separate piece of paper, you’ll need to list all the expenses you have that are NOT monthly. It helps to get out a calendar here just to jog your memory. This will include things like dental expenses, car insurance, property taxes, back to school clothes, summer swim lessons, vacation, Christmas shopping, birthday gifts, and magazine subscriptions.

For the first year of your learning curve, you’ll be constantly revising these lists. Keep in mind if you haven’t been writing everything down, things will come up that you haven’t planned for.

Now you’ll need to translate and transfer all of the non-monthly items to your monthly page. Let me translate that for you…

If it’s an annual expense, divide it by 12. If it’s a semi-annual expense, multiply it by 2 (because you have to pay it twice a year) then divide it by 12. Some of these (like dental, birthday gifts, etc) you’ll have to estimate your annual cost.

Now you should have a very good snapshot of your entire year of expenses put into monthly terms. You’ll need to keep the annual items in a separate section of your monthly expenses. Then…
VERY IMPORTANT…Plan to set aside these annual requirements either to a savings account or to envelopes with cash. (More on the cash to envelopes part of the system later)

STEP #4

Trim the fat – use the 85% rule

OK — Moving right along now. You’ve done a lot of work up to this point and here’s where you’re really going to make a difference.

1. Total up your monthly expense page.
2. Determine exactly how much money you bring home every month.
3. Compare the two numbers.
You’ll likely see one of three things…
You’re over, you’re under, or you’re right on the money. Likely you won’t be the latter one. If you’re under-spending your income, that’s great. If your number shows that you’re overspending your income then that’s okay too. You can now proceed to TRIM THE FAT.

Use the 85% Rule. See the box at the right.

If you’re over your budget (meaning you’re spending more than you’re making) or if you’re NOT at the 85% rule and you’d like to be, this is TRIM THE FAT time for you.

This is one of the most critical steps of the process. You’ll need to actually STOP SPENDING MONEY on some of the things you might like spending money on.

CUT OUT the non-essential spending items until your budget is balanced. Aim for at least 95% of what you make. In other words, if you’re making $1000 a month, try to get your expenses to $950. ($3000 a month, get your expenses to $2850)

Let me offer you a little help here.

If you’re looking at an item that you think you need to cut, but you’re having a hard time. Calculate your Life Value of that item.

What is the Life Value of an item? It’s the amount of time you need to spend at your job to have it.

Figure out how much money you keep per hour of work. NOT YOUR WAGE, but how much you actually bring home for every hour you work. Here’s the formula: MONTHLY TAKE-HOME INCOME divided by TOTAL HOURS WORKED IN A MONTH. Let’s call this your LIFE WAGE. It gives you an idea of how much of your life you have to give to have something. Let’s say your life wage is $12.50 per hour. Let’s say you’re looking at your monthly newspaper bill that just happens to be $25 per month. Ask yourself, “Am I willing to give 2 hours of my life every month at my job to have the newspaper delivered to my house?” Or if you’re looking at your premium cable TV channels at $50 per month ask, “Am I willing to trade 4 hours of my life at my job to have these premium channels?”

Apply this reasoning to everything you buy and you’ll be well on your way to the 85% RULE.

You may be at a point where you have trimmed as much as you can and your expenses STILL are greater than your income. If that’s the case, then you may need to make some serious changes in your lifestyle. You may need to change your living arrangement, look for a better paying job, get a roommate, or buy a less expensive automobile.
Don’t be afraid to do whatever it takes to balance your budget!
You can only live on negative cash flow for so long before you’re headed for serious complications such as bankruptcy or a foreclosure on your home.

If you have credit card debt, you need to devote every spare dime to retiring that debt. We’ll tell how to go about that the Smarter Way a little later.

If you just can’t get your budget to balance, give me a call. Sometimes just a few outside ideas can make all the difference. I really mean it; give me a call. No charge, no pressure: Let’s just talk about it. 619-670-1000

STEP #5

Assign your expenses to your paychecks

This is your organizational step. It’s important to keep your finances organized. If you’re just haphazardly hoping that your expenses match up to your income, you’re setting up a system that will not work in the long run.

Break down each paycheck you receive on a monthly basis into how you’re going to assign it to your expenses. For as long as I can remember, I’ve been paid twice a month. I simply used the due dates of each expense.

Here’s a VERY SIMPLIFIED example. I realize nobody could live like this, but it gives you an idea of how your “assignments” might look.

Please notice a couple things with me. First – The rent is $400/mo. Even though it’s due at the end of the month, it’s broken into two parts to balance the paychecks. Just write a check for $50 on the 15th, keep it and add your check for $350 at the end of the month. Landlords NEVER complain about getting rent ON TIME but in 2 checks

Next please notice that we’ve allocated $50 for gas. You could do this one of two ways. You could simply put the cash in an envelope in your glove box, but some people don’t like to do that. The other way is to use your credit card. BUT… some people have trouble with credit cards. Here’s my advice. Do this similar to your rent. Write a check for $50 to your credit card and put that in a special place. Go ahead and use your credit card for GAS ONLY. (It’s kind of hard to OVER-SPEND on gas. You just use what you use…) Then on the 30th, write a second check for $50 to your credit card company and include both in your envelope with your payment.

STEP #6

Use cash to keep from over-spending your budget

WHAT’S NEXT IS SIGNIFICANT ! !
IT’S THE ENVELOPE SYSTEM

Notice on the previous page that there’s money distributed between cash and checking account. You’ll also notice that there’s a cryptic little $-note at the bottom of each box like — $-7/20, 1/10, 5/5. That’s simply the breakdown of bills you’ll get when you cash your check. For example on the 15th, you’ll put $550 into your checking account and get $175 as cash. Just ask the teller for seven $20 bills, one $10, and five $5 bills.

Then you simply get some envelopes, write GAS or STARBUCKS on the front and in pencil, in the corner, write the current amount that envelope gets. In our example, your STARBUCKS envelope has $25 written in the corner. Put the five $5 bills in there. Then, using the money in the envelope ONLY, spend as much as you want at Starbucks. When the money is gone, you’re done at Starbucks until next payday! Use the same system with your other CASH ENVELOPES.

It’s the only FOOL PROOF way to keep from over spending your budget.

Using the envelope system is the simplest and most powerful way to manage your money. You simply CAN’T overspend.

One last suggestion in this step:

STOP SWIPING STUFF

I know how easy it is just to whip out your ATM card and swipe that black stripe to buy stuff you want and stuff you need. STOP! For awhile, at least until you’re completely in control of your spending, its either cash or check. Swiping is just too easy.

STEP #7

Constantly review your budget

Your budget is an ongoing, evolving event. It’s really never completely perfect. You’ll get to a point where it will be pretty static for periods of time, but it always needs a little revising or tweaking along the way.

In order for this to work for you, you need to kind of MOVE IN with your budget. What I’m trying to tell you is that you really have to LIVE AND BREATHE it for the first few months. Kind of like a fanatic!

This budget system will change your future DRAMATICALLY. It will allow you to:
1. Save more money.
2. More easily say no to spending where you know you shouldn’t
3. Live with less stress (and live longer because of it)
4. Enjoy your daily life more
5. Be a happier person.

For me, those last three are most important. You see money should never be a source of subtracting from your life, it should only add to it. When it’s under control, your life is just better.

ODDS AND ENDS

A word about CREDIT CARDS

Credit cards are convenient. You’ll hear no argument from me on that one. They’re also the source of more “BUDGET ISSUES” than anything else on the planet! I think you’ll agree.

According to MSN Money, the average American carries over $8000 on credit card debt. That’s just the AVERAGE. I’ve known people whose credit card debt exceeded their annual income. That could be you. If it is, I have a few ideas to help you get out of that problem.

HAVE SOME PLASTIC SURGERY. No, not the kind you see in EXTREME MAKEOVERS, but the kind that cuts your plastic credit cards into little tiny pieces. Keep only one credit card and LEAVE IT AT HOME. Don’t carry it with you. If you really need to use it you can go home and get it for a single purchase.

PAY OFF THE DEBT. Here’s a simple way to look at it: Pay off the highest interest rate first. Pay the minimum on any other cards you might have and pay as much as you possibly can against the highest interest rate card. When that one is paid off, pay as much as you can on the card with the next highest interest rate until they’re all paid off.

If you get offers in the mail for other credit cards, take a look at them. Consider transferring your balance to a ZERO or lesser interest rate card. You can manage your debt at ZERO or smaller interest rates and save THOUSANDS of dollars. Give me a call on this and I’ll talk you through the process. It’s really simple. 619-670-1000

Once you’re paid off and out of credit card debt, NEVER CARRY A BALANCE AGAIN. Maybe just run your gasoline on your card for awhile and write a check to cover that every payday. If you purchase something out of the ordinary, make sure you have the cash to cover it and WRITE THE CHECK TO YOUR CREDIT CARD COMPANY BEFORE YOU MAKE THE PURCHASE.

How about those automobile loans
You might have guessed that I’m not a big fan of carrying debt. Early on in my life I aimed for zero-debt living. (the only exception would be real estate) At first it wasn’t really realistic. I had to have a car and the only way I could get one was to get an auto loan. So here’s what I did.

I went ahead and got the loan with the shortest possible payment period I could afford. I think it was 36 months. THEN…

When I paid off the car, I kept…
Making my car payment
TO MYSELF!

Yes. I simply continued paying the monthly payment to my own savings account. The next time I needed to buy a car, I had a little bigger down payment to use because I’d been saving for a few years. I took a smaller loan and a shorter payment period. And again, when it was paid off, I kept making my car payment to myself. The next time I had enough money saved to just buy a good used car outright.

SAVING!

Your most exciting commitment

Saving your money is probably the smartest, most powerful tool you can use to finally leave the challenge of “budget issues” behind.

It’s almost magical! But almost nobody does it. Why don’t they?

I have absolutely NO IDEA!! It’s not complicated! It’s rewarding.

I think lots of people WANT to save money, but they just don’t know how to get started.

I’m here to GET YOU STARTED! You can start your NEW SAVINGS PLAN TODAY! It’s just that simple.

We’ll help you. Let me tell you this….
There’s no great mystery to saving money and creating wealth. It’s not about how much you make, it’s about how much you keep . . .
Keep for yourself; Keep away from Uncle Sam; and Keep ahead of the game.

According to a recent study by the Department of Health and Human Services, for every 100 people starting their careers, the following situation exists at age 65 . . .

  • 29 are dead
  • 12 have annual incomes under $3,500
  • 54 have annual incomes averaging $6,100
  • 4 have annual incomes greater than $20,000
  • 1 is independently wealthy.

95% are either dead or dead broke!
Only 5% continue living the American Dream.
Which group would you choose? The 95% Club? Or The 5% Club?

Hopefully the answer is obvious. How is it that in the world’s richest nation, millions of people live in poverty?

Most people don’t plan to fail,
they just fail to plan!

The 95% club has no plan. They’re on a road to nowhere and will certainly get there.

But what about The 5% Club? They’re succeeding. They’re on top of the heap instead of behind the curve. What’s the difference?
Both groups have access to the information necessary to succeed. They both have the same burning desires to create financial stability possibly even to the point of not needing to work at a J-O-B.

They both look the same . . . on the surface. But the surface picture is not the real story.

The 5% Club is realizing constant streams of solid, reliable, totally dependable, and predictable income month in and month out. The other group is not. The group that’s in the money has done one thing different than the group who’s struggling day after day.

Just one thing different. Now, you wouldn’t think that one thing could make such a big difference. After all, it’s only one little thing.

But in fact, it’s the biggest of all. You see the people who are seeing their dreams come true, right before their very eyes have:
Taken Action!!!

Yes, that’s the only thing they’ve done differently than the rest.

Taken action. It sounds so simple, and maybe even kind of stupid to even talk about.

After all, who doesn’t know that?

Of course everyone knows that for anything to happen in life, you have to take action to see results.

While I think everyone knows this, and understands it, most people just don’t get past the point of understanding . . . to the point of doing something!

We’re here to help you get about doing something!

Not sure you’re ready?

Ask yourself this simple question:

If the answer is yes, then keep doing it! If it’s no, then let us help you get started.

We’ll teach you the 5 SIMPLE SECRETS of SUCCESSFUL SAVINGS to GUARANTEE your savings plan will work. There are these 5 SIMPLE SECRETS of SUCCESSFUL SAVINGS that I’ve used over the years to gain greater success in my savings plans.

And just like the TV commercials tell you….
BUT WAIT ! ! ! ! THERE’S MORE!!!!!!!!

We’ll offer you a savings account that probably pays higher interest than you’re earning now. It almost always happens that way. We figure you work really hard for your money, why shouldn’t you put your money in a place where your money will work really hard for you.
And best of all… It’s SAFE THERE.
Our bank is FDIC insured and offers the most competitive interest rates available.
And it’s ALL included at no cost…
Yes! All this costs you NOTHING except what you choose to save every month!
BUT WAIT ! ! ! ! THERE’S some MORE!!!!!!!!

We’ll take a look at your budget and make a few suggestions if you’d like. No charge for that.

We offer NATIONWIDE AND 24 HOUR CUSTOMER SERVICE. That’s right — You simply call the toll free number: 877-734-8865 and you’ll have access to our 24 Hour Bank Response Center.
We also offer 24 hour online access to your account information. Our company website offers you more bank and savings information than your brain can possibly hold — All available with just the click of your mouse, 24/7/365.

You know what? There’s still more…just a little…
HERE IT IS….!

We’ll show you EXACTLY how to open that account to TRIPLE your chances that your savings plan will be a HUGE success.

We’ll set it all up for you. We’ll do all this COMPLETELY FREE!

That’s right – COMPLETELY FREE.

Our friendly, local office is here with a licensed, trained team to assist you in every phase of your savings plan. We’ve been in business here in San Diego County for over 25 years.
And, BONUS!
Whenever you call us during regular business hours, there’s NO ELECTRONIC TELEPHONE MENU to navigate — Just a friendly voice on the phone ready to help you. 619-670-1000 !

“WOW”, you say!
“And that’s all included at no additional cost?”
YES!

ONE MORE…last one…. I PROMISE…

WE’LL REVIEW YOUR ENTIRE SAVINGS PLAN FOR FREE.
Face it! Life changes. We’ll sit down with you or you can just call us. You should do this AT LEAST ONCE A YEAR. But in our office, we’re glad to review your plan ANYTIME YOU’D LIKE – Annually, semi-annually, monthly, weekly… you ask for it, you’ve got it.

This is so simple and easy to do.
We do all the work for you and in usually less than 30 minutes, you’ll have started your brand new SAVINGS PLAN.

Why somebody wouldn’t have their SAVINGS PLAN with us is simply beyond me.

So, here’s what you get…
¬ A FREE analysis of your budget and maybe some suggestions for a few changes
¬ We’ll teach you the 5 SIMPLE SECRETS of SUCCESSFUL SAVINGS
¬ We’ll set you up with a savings account with an excellent interest rate.
¬ 24 hour and nationwide customer service
¬ 24/7 online access to your account information
¬ A local office with a trained team to help you (and NO MENUS WHEN YOU CALL)
¬ A FREE annual (or semi-annual, or monthly, or whenever you want it) REVIEW OF YOUR PLAN
¬ Savings plans to fit any budget
¬ We’ll walk you thru the whole process (probably will take less than 30 minutes)
¬ Confidence that your plan is EXACTLY what you need: NOTHING MORE, NOTHING LESS

It just doesn’t get any better –
OR EASIER – than that…

You’ve got everything to gain and NOTHING to lose.
I look forward to talking with you soon!

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