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Budgets are good… Budgets are great…

But who really likes to budget, they truly are a pain in the rear and I have not found one person who likes doing a personal budget.

1. Why do people hate budgets so much?

Many people associate budgets with being poor, having do watch every penny. People often have the idea that if you do not know how much you really are spending that it doesn’t really seem that bad. To some maintaining a budget is like admitting that darn I screwed up and now I have to live like I am poor to get out of it. They then will usually not do the budget and just keep spending more than they make digging a larger and larger hole.

2. I hate budgets, now what?

I would only recommend this if you cannot follow a budget. You need to setup automatic deductions that will pull a set amount of money each pay period into a savings account, this will force you to live on less and save more. The best way to make this work is to only spend cash, that way you cannot spend more than you actually have. If you continue to use credit cards you will over spend and dig a bigger hole.

This has personally worked very well for me.

Derrick

The first article in our reducing debt series discussed getting out of debt, after finding out where exactly your money is going you need to figure out where you can cut back to reduce your spending. This is next most critical item that is necessary to help reduce your monthly expenses so you ensure you earn more than you are spending.

That is why the first step of getting out of debt was to calculate how much you are spending on average each month, now you can easily and accurately determine how much you need to cut back to reach your goal of being able to lower your overall debt and save more.

Where can you cut back? Well the first thing I would look at is anything that is a recurring monthly payment.

Kill The Monthly Recurring Payments

1) Cable TV, do you really need HD cable right now or if you have a service like Directv do you really need to have the service in 4 different rooms? Consider cutting back the amount of channels if it will allow you to save some money.

Some people go to the extreme of getting rid of cable all together. You miss it at first but after some time you find other things to do to pass the time that are more productive.

2) Phone service - Do you really need a cell phone and a house phone? Currently I do not have a house phone. When I suggest this people usually ask don’t you always go over your minutes? Personally no I do not. Most of my friends are on the same cellular network and we get free mobile to mobile. I have also cut back on the amount of time I am on the phone which also helps reduce minute usage.

Also see if you can cut out extras on your cellular plan, do you really need those 500 text messages per month, texting is a pain anyways, I used to get a lot of them and the small fees add up.

I would tell people I didn’t like then and they would still keep sending them to me. Finally I just would not answer unless someone called instead of sending a text message and slowly but surely they stopped.

I have a few friends who are monthly subscription addicts. Some of the actually spend more than they make just in monthly recurring purchases such as, house and cell phone, TV, XM Radio, house payment, car payment etc…

He has no choice but go into debt to buy food and any other normal expenses.

After killing recurring monthly expenses I then would look towards things that you may not really need. Such as going out drinking every weekend. If you buy a case of beer and invite some friends over you can save more money that just buying your own drinks out at a bar.

You do not have to cut out all the things you like, but do not need… You just need to cut back. That is a big difference when you actually start doing it.

This next post will focus on the other way to attack your debt earning more money!

Derrick