Thanks for stopping by. Please leave a comment and let us know you were here.

Thursday, August 25, 2011

Putting your Financial House in Order Part TWO

Yesterday I talked about how to increase your income. Today I will discuss trimming your budget and the outgo.

My number one priority is tithing. I always pay it. No matter what, I believe that the Lord has blessed me in ways I can’t even name because of this.

The 2nd priority is the mortgages; you have to have a place to live. I have been working with the bank to modify our loan and finally got the rental to pay for itself, I don’t make any money with it, but at least I am no longer losing money. - If you are having trouble in this area, call your bank and let them know. Most of the time they will have some sort of program to help you with this.

Next is insurance, car, home, life and disability. Some will say you don’t need life or disability. I say it is a small price to pay for the piece of mind. If we hadn’t had disability insurance on my husband, when he had his accident, we would have lost everything waiting for Social Security to be approved.

But call your agent; discuss your situation and what is right for you. I also mentioned to my agent that I was paying the car insurance semi annually and he noticed we had been on a monthly bill cycle. By having him switch us to the semiannual cycle we save $200 a year.  I still take what I would have paid monthly and put it into my “escrow account”- more on that later.

Also make sure your coverage amounts and deductable is something you can work with. I just had 2 house fires in the same house 3 weeks apart and was glad I had a deductible I could work with – twice.

Look at the other categories in your budget.  Call your utilities, see if there is a different rate plan you qualify for.  Do the same with your credit cards and student loans. With my credit cards I was able to put all the balances into 1 card with a 0% rate until March of next year. That means EVERY CENT I send is to the balance and I ALWAYS send more than the minimum payment. (Every month the minimum goes down, but I keep paying what my budget calls for, even if it's only an extra $5. Hopefully we will have paid off the card by the time the interest rate goes up)

My student loan put me on a graduated pay back scale, that means for the first 2 years it was a steady amount and then each year it goes up a few more $$ per month. But I am prepared for that.

I have sections in my budget for medical, food, gas, savings (joint savings, escrow account and boys college fund).
What this means is that each fund is allocated a certain amount each month. If I don’t use all the money in the medical, but I go over in food, I can mix and match.

I have my bank do automatic transfers every payday. I put money from my checking to our joint savings, the boys’ college funds and our escrow account. This is done even before I sit down to pay the bills so it is gone, never see it, never am tempted to not add to savings to pay something else.

Our escrow account is a “slush fund.” Every month money is deposited into this account and I use it to pay the car and homeowners insurance, and the property taxes every year.  I also use it for maintenance on the rental and to pay the deductible on our property claims.
I put money into it every month, but what I put in doesn’t give me quite enough to fully fund the account. So every tax season I put a bit of our refund in there also to help pad the account.

My MISC fund is another “slush fund.” But this is for those little unexpected expenses such as stamps, school supplies, a new pair of shoes, or a haircut. None of these things needs their own category, none of them is every month, but they still need to be accounted for.

One of the biggest ways I have cut expenses is in using coupons for my grocery shopping. I cut, clip and scour the ads every Sunday afternoon and figure out a meal plan and what to buy based on sales and what is in my pantry.

I also save money by letting the bank pay my bills. Yup, they pay them, I  signed up for online banking, it is free from my bank, I just log in and tell the bank who and how much and when to pay based on my paydays. I no longer spend huge amounts of money on stamps, or checks and it has cut my bill paying time in half!

By budgeting and classifying where every dollar that comes in and goes out, I have been able to get our spending under control and feel more and more like my financial house is in order.