Sunday, 4 January 2015

Now more than ever it is important to learn how to get out of debt and live within our means.

I am creating this blog to help anyone who has ever wanted to get control over their finances. I hope that others will add to this site and give us all other great ideas.

The very first thing that you need to do to get control over your finances is to create a budget.


 DON'T just write down a list of what you think you spend on things. I struggled for a long time until I realized what I thought I was spending was quite different than what I was actually spending.

First take at least a week to track all your expenses. I recommend using the free app TrackMySpend. If you are like me you will be surprised at how much you spend on little things like coffee or eating out.

Next, look up all your previous months bills, water, power, phone etc. With utlity bills many companies will look at your yearly costs and allow you to make a monthly payment based on the average which is nice if you have a hard time saving in the summer for those cold winter heating bills!

Now make a budget. I have made up an excellent budget maker for Excel you can download for free here: BUDGETMAKER.XLS. Or if you just need a very simplistic on-line version you can find one here:Simple On-line Budget Maker.


Now that you have made your budget you might see like most people that your expenses out weigh your income. First cut out everything that is not essential for living. This may include, cable, cell phone etc. There are many cheaper things like no cable just netflix, or get a voip phone like magic jack that lets you use any WiFi hot spot to make and receive calls in North America for $65 a year.


 For some people this means putting the money for each item into labelled envelopes or jars. For others it means only carrying cash and leaving all plastic at home. If you are a strong impulse buyer leave the plastic at home. If you are worried about a deal have them put it aside for you for 24 hours 9 times out of 10 you will realize you don't need it.


 If your credit is still good talk to credit card companies about reducing your interest rate or if they don't listen go to the bank and get a line of credit (usually half the interest rate of credit cards)to pay off the higher interest credit cards. Or sometimes switching credit cards will give you a lower interest rate for a year for switching. Once you have reduced your interest rates as much as possible. Follow these simple rules for paying off debt.

 First put the most amount you can pay on your highest interest rate and make minimum payments on the others. Once the highest one is paid transfer that payment to the next debt or if you are struggling to survive take half towards living expenses and half to the next debt payment. Then repeat for the next debt payment and so on until you are down to the last one. This is the critical moment when you have finished paying the last of your debt take that payment or most of it and start saving for retirement! Place the money in government approved retirement savings and get some more money back on your taxes and use your tax return to take a vacation!


  i. ALWAYS grocery shop with a list and a calculator. I recommend this free grocery list maker: GROCERY LIST MAKER.COM. It has items listed by type and extra blanks to type in what is missing and is completely free.

  ii. NEVER grocery shop when hungry.

  iii. Build up a food storage buy things while on sale or with coupons and have extra food for emergencies or sudden expenses.

  iv. Teach your children how to budget. I recommend bringing home your whole pay cheque in cash and then asking the children what to buy. Then go through the budget with them, this much for food, this much for electricity, etc etc. Then after going through the budget and what is left over ask them what they should spend it on. In my experience their choices after very different than before and it is a lesson they will never forget. And you may just get a little less begging for every little thing while shopping!

   v. Look at the value of things. Plain oatmeal is much less expensive than cereal about 10 times less expensive. Bar soap is much less expensive that body washes and lasts two to three times longer.

   I really hope this helps as being out of control of your finances is one of the most difficult things in life and in a marriage and being in control can give a great sense of satisfaction and security. Please please add any ideas of things that have saved you time, money or helped in anyway.

Thank you.