By Mike Aux-Tinee
I have talked about getting your finances in order, paying off your balances and encouraging you to use cash. Now, I will make some suggestions on where to curtail spending and then onto making your financial journal.
Now that you are using cash, the next step will be to eliminate excess spending in order to free up money and redirect it to outstanding balances.
One thing to remember, not every one of these items may appear in your income and expense sheet. If they do not, that does not mean you are exempt. Instead, look for other items to cut back on.
Here are my suggestions:
1. Buying lunch. This is an overlooked item in the income and expense sheet. I know, you need to eat lunch. But, the average lunch costs anywhere between five and ten dollars a day. That comes to $1,250-2,500 a year.
This may represent thirty to forty percent of your outstanding balance.Try this instead, start taking your lunch every day. If you discover you are short on time in the mornings, pack it the night before.
Another bonus for taking your lunch, you have the opportunity to network with fellow coworkers and potential supervisors. This is an excellent time to get to know someone in a relaxed setting and make friends.
2. Dropping cable. I know, you must have your cable or satellite television. The big game at your house is a weekend tradition. By keeping the cable, you are spending at least $80-100 dollars a month, which adds up to $960-1,200 a year.
When you cut the cable, you free up time to spend with your family and friends, get outside and exercise or work on that never-ending to do list. Since the cable has been discontinued, I have found more time each week to focus on things that make me happier and I feel less stress.
I do not feel rushed to finish what I am doing in order to get inside to watch tv. Instead, I focus on what I am doing and enjoy doing those things more.
3. Cutting other ‘necessities’. This will vary for every person and includes dinner out, movies, trips to the coffee shop and sporting events. Along with cutting these items, you will be cutting unnoticed expenses such as gas, parking fees and tips.
There are many other options available to you. You could start making more dinners at home, check out movies from the library and make your own coffee.
While you are making the effort to make these changes, it is important to keep track of your progress. A tool I found very helpful was to make a financial journal to track monthly income and expenses. The journal provided an up to date summary and it assisted in making adjustments as needed.
For my journal, I picked up an accountants work book. There are several columns and I set it up with the following headers.
Date: the month and date of the entry.
Check number: if you wrote a check.
Transaction: a brief description and reminder. Such as cable, cell or cash withdrawal.
Amount: the amount of the transaction.
Balance: remaining balance of the account.
I make adjustments anytime I pay a bill, make a cash withdrawal or I get paid. Doing this provides an up to date account balance and I do not need to wait for my monthly statement from the bank.
I hope you continue on the path to reduce your credit card usage, balances and use cash for purchases.