Living on a Budget
Getting out of Debt
 A budget is people telling their money
where to go instead of wondering
where it went.
 Budgeting is about choices – choosing
how to make money and choosing how
to spend it.
 The #1 key to success in managing your
money is a WRITTEN PLAN.
 Lets you control your money instead of
your money controlling you.
 Reduces your anxiety of not knowing
whether you have enough money to pay
your bills when they are due.
 Helps you prepare for your future.
1. Get Organized!
• Have a specific place for your bills.
• A budget box is wonderful, but
even a basket will work.
• Open all your bills
2. Track your daily spending habits.
• Write down every purchase. Keep a
check register or notebook with you
at all times and write in it every
time you make a purchase.
• If you use a debit card, you can look
at last month’s bank statement.
3. Know Your Budget Busters!
• Budget Busters are small items that add up
throughout the month and can bust your
budget.
• Common Budget Busters:
• Pop
• Cigarettes
• Coffee
• Candy Bar
• Lunches
• Lotto Tickets
• Chewing Tobacco
 If you want to be in control of your
money, you must understand where
your money goes.
 Communication is KEY!
 Determine what spending you can cut
back on.
 Understand what Fixed and Flexible
Expenses are.
 Fixed Expenses
 Flexible Expenses
• Amounts that do not
• Amounts that often
change from month to
month
• You do not have any
control over how much
you pay.
• Examples:
 Rent or Mortgage
 Car Payment
 Insurance
 Loan Payments
change from month to
month.
• Things you do can affect
the cost.
• Examples:
 Turning the heat down
in the winter saves on
heating cost.
 Driving less uses less
gas.
 Turning the lights off
saves on electricity.
 Odd jobs
 Assistance that you may be eligible for:
• Food Stamps
• Medicaid (difficult for adults to be eligible)
 Advanced Earned Income Tax Credit
• If you have been eligible for the EITC in the
past, you qualify to have a portion of it
credited to you in your paychecks
throughout the year.
 Helps you plan in advance when you will pay your bills.
 Lets you record in advance when you will receive
income to pay those bills.
Income
Expenses/Bills
Pay/Due Date
Amount Due
Paid
Job 1
April 1
$700
Child Support
April 8
$800
Job 1
April 15
$700
Job 1
April 29
$700
Savings
April 2
$100
Mortgage/Rent April 2
$400
Food
April 2
$100
Personal
April 2
$50
Gas
April 2
$50
Car
April 9
$300
Phone
April 9
$100
Credit Card
April 9
$200
Food
April 9
$100
Sunday
4
11
Monday
5
12
Tuesday
6
13
Car: $400
18
19
26
7
14
Phone: $100
20
Internet: $25
25
Wednesday
21
Thursday
Friday
Saturday
1 $700
Pay Day
2
3
8 $800
Child
Support
9
15 $700
Pay Day
16
22
23
Visa: $100
27
Car Insurance:
$75
28
Mortgage: $400
Food: $100
Savings: $100
Gas: $100
Phone: $100
Credit Card:
$200
Food: $100
17
Food: $200
Gas: $100
Cable: $100
Discover: $100
29 $700
Pay Day
10
30
24
 Use different color ink for Income and
Expenses
 When you have paid a bill, cross it out
or put a checkmark next to it.
 Do a new schedule each month.
 Make an envelope for each expense category
• Online envelope systems also available
 When you receive income, divide it into the
amounts to cover the expenses listed on the
envelope
 Pay bills right away so you’re not tempted to
spend the money on something else.
 A small box with dividers for each day
of the month
 When you receive a bill, check the due
date and place it behind the divider
that represents the bill’s due date.
 As you receive income, pay all bills that
are due.
Pay Essentials First!
1. Food
2. Mortgage/Rent
3. Utilities
* After you have paid for these things, then
you can pay your other creditors.
Talk with your creditors.
 They are usually very willing to work with
you.
 All Credit Card companies have hardship
departments.
 You can’t just ignore the problem. It only
makes it worse.
Seek Help
 There are a lot of community resources out
there to help you through this difficult time.
 Seek Credit Counseling
 Credit cards don’t help, they just make the
problem worse. All they do is get you deeper
into debt.
 The more you charge, the higher your
minimum payments go until pretty soon
you’re drowning.
 Cut them up and quit using them. If you
keep using them, you’ll never get your head
above water.
http://www.youtube.com/watch?v=sLZJ5Fza8bg
 Payday
 Cash Advance
 Rent-to-Own
 They are NOT there to help you!!
 They charge over 100% interest
• Example: You write a $225 check dated one week from
now which will be payday – you’ll get $200 for only
$25 – only the $25 represents 650% interest annually!
And what makes you think you’ll be able to repay this
loan on payday?? By then, you’ll need that money for
something else and then, when you can’t pay, the
interest and fees will really kick in!
 If you’re getting a big tax refund soon or just
got it.
• Pay all your bills up current
• Save $1000 if possible so that you have
money to fall back on.
• Save $500 if you can’t save $1000
• Save more, if possible, for those short
months when you never have enough
money.
 If you have some money saved, you have something to fall
back on if you have a hard time instead of charging things
on credit cards.
 If you find it nearly impossible to save try:
• Getting rid of Cable/Satellite
• Lower your phone plan
• Sell your cars – get rid of those big payments
• Sell your stuff
• Have a garage sale
• Sell on E-Bay
• Sell on Craig’s List
 Overdraft Fees
 Late Fees
 Interest
Mr. and Mrs. Clark sit down to pay their bills and expenses at the end of the month.
They have been holding off paying their bills because they know they do not have
enough money to cover everything. But finally, Mrs. Clark insists that they have to
start paying some of them, or their situation will get even worse.
The Clarks have five credit cards. Three of them have an interest rate of 24 percent.
The other two cards have an interest rate of 13 percent. Two of the high interest rate
cards and one of the lower interest rate cards are 15 days past the due date. Looking
over the credit card bills, Mr. Clark is amazed to see that his wife spent $200 last
month on shoes. Mrs. Clark is amazed to see that Mr. Clark bought yet another power
tool and spent $385 for it. “No wonder we don’t have any money!” each says to the
other. Mr. Clark also confesses that he stops off at the coffee shop on his way to work
every morning and spends $5 on a cup of coffee, then eats lunch at a restaurant near
his office. Mrs. Clark admits that she gets a pedicure and manicure twice a month.
The Clarks want to make sure that they have enough money for rent, utilities, the car
payment, and food. But if they pay these bills first, they will have only enough money
to make the minimum payment on three of their five credit cards.
What has caused these financial problems for the Clarks?
What can they do to resolve their problems?
 What has caused these
financial problems for
the Clarks?
 What can they do to resolve
their problems?
 Immediately call the credit card
 Overuse of Credit Cards
 Personal expenses are
too high
companies for the cards that are
past due to see if they can work
out an arrangement to bring the
accounts up to date.
 Set aside money for rent, utilities,
the car payment and food.
 Call a halt to “splurge” buying on
credit.
 Cut back on personal spending.
 Get credit counseling to help them
create and implement a budget
they can follow.