In this tutorial I’m going to show you how to get your finances together and back on the right track. This is just a run down and in the future, I might break into each part as separate blog entries to go into more detail.

Part 1: List Debt To Be Paid Off

• The first thing you need to do is list all of your debt that you need to pay off. This debt does not include your monthly bills that will always be there such as cable, utilities, phones, etc. The only time you should add these are if you’re behind and not caught up on all your standard monthly bill accounts.
• This will give you a total for each group (i.e. School Loans) as well as a total overall. The number may be shocking! Some people don’t even realize how much debt they really have, especially when you factor in large things such as your home, cars, and student loans.

Part 2: List Monthly Bills

• Now make a list of your monthly bills, and when they come out. You need to keep track of how much is due for each one, and when they come out during the month. I use Quicken for this purpose because it easily keeps all of my bills on a monthly chart where I can go through them each week to see what needs to be paid, and mark them off as I go along.
• Be sure to include any of the credit cards and other debt to be paid off with their minimum payment due or how much you’re paying that month (see Part 4).

Part 3: List Monthly Income

• Get a general idea of your monthly income. In this do not count overtime or extras as your main source of income. This should only be what you can compeltely depend on every month. If you get the same overtime every week and it’s very consistent, then including it should be alright, but this is your call.

Part 4: Paying Off Debt

• The best and most effective method I have found for paying off debt is the “Snowball”.
• If you haven’t heard of this method, basically determine which of your debt to be paid off is the lowest balance. Pick a dollar amount that you can pay ON TOP OF the minimum payment required and start paying that each month.
• When you have paid off that first account, move on to the next lowest balance. Take whatever you were already paying on that account, plus whatever you were paying towards the first debt in the snowball and pay that on the new account.
• For example, say you have these accounts:
  • Account #1: $500 Balance | Minimum Payment Due: $40
  • Account #2: $1000 Balance | Minimum Payment Due: $75
  • Account #3: $5000 Balance | Minimum Payment Due: $300
• You have an amount of $200 extra you can put towards paying off debt. So start paying $240 on Account #1 every month (the $200 + the $40 minimum balance). When you have that paid off, move on to Account #2.
• For Account #2 you will now start paying $315 every month ($240 + the $75 minimum balance).
• As you can see, when you get up to the higher balances, you will be paying a lot of money on them at once, getting rid of them once and for all.
• Of course this is easier said than done, but this is the most effective method I have found so far. We’re currently using this to pay our debt down and it seems to be working pretty well.

Part 5: Food Budget

• Now it’s time to set a food budget.
• To do this you need to first decide how much you believe your family can live on every week. If you think $100 is good, then that is your budget for every week.
• Now how do you stick to it?
• First make a grocery list. This is very important. Do not go to the store aimlessly. You should also do this first so you don’t cut coupons for things you wouldn’t have normally bought, but only things that will really help out with your shopping trip.
• Now get out your scissors and start cutting coupons! They will save you a lot of money and if you match up your coupons to sales that are going on at the store you regularily shop at, then you will save even more.
• Next, take out the CASH from your bank account to go grocery shopping – exactly $100 (if that’s your weekly budget).
• When you get to the grocery store, add up the items (minus your coupon savings) as you go along. If you end up going over $100, decide what can be sacrificed, and put it back. Keep it under or at that $100.
• If you have trouble picking up those extra snacks and goodies that weren’t on your list originally, agree with your family (if you go shopping together), that anything not on the list that is picked up at the last minute is to be paid from the person’s allowance who wanted the item. (See Part 7)
• Another tip is to start cooking from scratch. Once you have the basic spices and such in your pantry, it will be much more affordable.
• When you start cooking from scratch, look into good budget friendly recipes online, there are tons!
• With the above rules you’ll stay in your food budget and get what you need.

Part 6: Gasoline Budget

• This is a tough one to create a seperate budget for, however, it can be a good idea to KNOW how much you generally spend on gasoline each month. One month keep close track of how much you fill up that month with your standard drives to work, church, school, etc.
• When you know how much you generally fill up, then pad that a little bit to account for going extra places on the weekends.
• Because gas prices are changing every month, this number will at least give you an idea of the upcoming month based on what the gas prices have been around lately.
• Another idea is to have a set amount that you put towards gas and put into a seperate checking account every month. For example, let’s say that you set it to $400 per month.
• If you put that $400 per month into the gasoline checking account and then some months you use less, you’ll have more left over for the months where you spend more.
• This might not be entirely fool proof with how drastically gas prices change, but it’s a good start to get at least SOME control over this increasingly large part of every household’s budget.

Part 7: Spending Budget & Allowances

• Everyone loves spending and getting things for their hobbies and such every week. However, this is often what can get people in trouble. Some months you may spend more, other months less. It gets to be inconsistent and spuratic.
• To tighten it up a bit, set allowances for everyone in the household (not just the kids). For example, you and your spouse could get $100 each per week.
• With these allowances, DO NOT keep them in the account and have your family spend from the Debit Card. Instead, withdrawl the CASH and give everyone that cash every week.
• If you feel like eating out for lunch, it comes out of your allowance. If your spouse wants to go clothes shopping, it comes out of their allowance.
• This keeps everyone fair. If you want any extras that week, then it comes out of your own allowance, and other people in the household don’t suffer from it.
• Another great thing about this is that it gives you a physical feeling of how much money you have left for the week and if something really is worth spending that money on. You can also discipline yourself to save up for something you really want as well.

Part 8: Setting Up Separate Savings Groups

• It’s important to save, but it’s also important to have goals when saving. If not, it becomes unrewarding and tempting to take that money for something frivelous.
• To prevent this, setup different savings groups. It can all be in the same savings account, however, keep a spreadsheet of what “belongs” to what savings.
• Here are some example groups that are good to have.
  • Emergency Savings
  • Vacation Savings
  • Fun & Extras Savings
  • Household Repairs/Upgrades Savings
  • Retirement Savings
  • College Savings (for the kids)
• Setup a set dollar amount that you can put towards each savings group each month. You can also decide how much you have left for saving in general and then divide it up amoung your savings groups according to your priorities.
• Keep this savings account difficult to get money out of. Do not attach it to your Debit Card and if possible, disable from being able to easily transfer money from it to your checking account. The reason I say this is because as much self control as we believe we have, it can get very tempting as that amount gets larger so you need to take every measure you possibly can to remove that temptation.

Part 9: Balancing Your Checkbook

• With all the online accounts and Debit Cards these days and everything being automated, it makes it VERY easy to get into trouble. This is why you should still balance your checkbook every week.
• I know it may sound old fashioned and it seems pointless with having an online rundown of everything, but here’s why you should…
• Because banks should not be entirely trusted with what goes on with your money! Mistakes can happen, things can look like they’ve already come out when they haven’t yet, you might overlook something and end up overdrafting, etc. Take it into your own hands to know how much money you have.
• Despite keeping a balanced checkbook, utilize the tools you have available to you. Keep an eye on your online account just in case you missed something. Basically it’s a good rule of thumb to make sure everything matches up between your records and your bank’s online banking.

Part 10: Paying Bills Easily

• Using the lists and parts above, compile your bills into one calendar for each month. Like I said above, Quicken can be quite a time saver so it might be worth looking into. I know it’s been worth the $40 or whatever I spent on it in my time alone.
• When you have all of your bills down on a calendar and what days they are due, you now have a good look at how each week looks financially.
• I personally like to pay bills online because it’s easy, fast, and you just can’t beat instant satisfaction!
• One thing to consider though is if the bill is DUE on a certain day you need to mail out the check early enough to get there. Also, certain credit card companies (such as HSBC) require that you pay the bill online several days before the bill is due. Keep these things in mind to prevent being late and accruing late fees.