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The Dreaded “B” Word

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We are followers of Dave Ramsey. He has helped us in working our way out of debt, which we will hit after the first of this next year. The most important key in working your way out of debt is involves that horrible “B” word. Dare I say it—budget! Gah!

No one likes to be on one. It is not fun, but it really is necessary! With the state of the economy, it is very important to know where your money is going every month. When you set up a budget, you control your money instead of your money controlling you. Isn’t that a great idea?

I know you are sitting there thinking—how in the world do I even get started? I know that it can be very overwhelming to even think about. So, we are going to start very simple and work our way into this, okay? Let’s do it together. Ready? Here we go!

Step 1
Make two lists of where your money goes every month; one will be your necessities (i.e. shelter, food, etc.) and the other will be luxuries and/or debts (i.e. dining out, credit card payments). To help you, here is a basic list of necessities. Keep in mind yours will include things not listed here and some things you do not have:


  • Home/Apartment (i.e. Mortgage or Rent)
  • Utilities (i.e. gas, heating oil, electric, gas, water, telephone, cable)
  • Vehicle Payment(s)
  • Insurance (auto) Include health only if you pay for this out of your pocket after payday
  • Auto Fuel
  • Savings (for taxes, holidays, etc)
  • Groceries (includes food and toiletries)
  • Clothing (adult and child)
  • Medical/Health (includes monthly prescriptions)
  • Hair Care



Now, some luxuries/debts include:


  • Dining Out
  • Entertainment
  • Vacation
  • Credit Cards
  • Unsecured Loans
  • Blow (money spent on whatever you want each month)





Step 2
Okay. So now you have the list of each of those, right? I want you to list the average amount you pay towards each one every. Look back at the past three months of bills and average the amount you spend to determine this. Before you say, “I don’t need clothes,” yes you do. You need to budget this in.

Step 3
Now that you have your basic budget done, subtotal each sheet. Does the total of both sheets exceed your monthly income? Example: Total of your budget sheets is $2,000 and you bring home $2,500 monthly. In this case you have “money leftover.” If this is the case, go back into your sheet and increase debt payments until the total of your sheet is equal to your monthly income. If you have no debts, increase your savings, groceries or something until the sheets equal your monthly take home pay.

If the total of the budget is greater than the amount you bring home (example: Budget = $2,000, take home pay is $1,800), do not panic, okay? This is why I had you do two sheets. Look ONLY at the necessities budget. If this amount is less than your take home pay—you are just fine! You need to adjust down luxuries until the total equals your take home pay. I recommend that you do not decrease debt payments and begin with luxuries such as dining out, as if you have debts you can’t pay, you really probably should just dine in. I know, I know, it will be hard, but I have faith you can do it!

If you can’t cover your debt payments right now, do not fret. I recommend contacting them to see if you can work a lowered payment or a deferment. The economy is bad and a lot of companies are willing to work with people rather than have them declare bankruptcy. Just be sure to get everything you discuss confirmed in writing and document date, time and rep’s name/info when you place those calls.

If you find that your necessities sheet is greater than your take home pay, you will have to look at trimming unnecessary expenses. Can you downgrade your cable service? Perhaps you have a land line and a cell phone, can you drop one of them? See what you can do to trim the budget so you can actually live comfortably each month.

Step 4
I now recommend now that you set up envelopes for some of your monthly expenses and pay for them with cash. When you do this, keep track of every penny spent (write it on the envelope) as you will be less likely to spend as much if you can hold your budgeted amount within your hands. You learn that when the cash is gone, you are done spending.

Write a check for your budgeted amount for the total of these for the pay period and get it cashed and split out into your envelopes, as works for your budget. Here are envelopes you should use … you may have more than this.


  • Groceries
  • Hair Care
  • Auto Fuel
  • Dining Out
  • Blow



You have already taken great strides in controlling your money. You can see where it is going and you are actually completely in control of the outflow of cash from your account. I am sure that some of you probably want to climb under the covers of your bed and not ever come out, but I hope the majority of you feel pretty good.

I know this can be very overwhelming. I have been in your shoes. I have hit rock bottom and have built myself back up—more than once. I really can relate and I really do understand where you are at.

Budgets are definitely not fun, but, at least you can see it all in black and white. You can’t make any changes to control your financial future until you take control. So you have made huge strides towards doing that. Pat yourself on the back and—only if your budget allows for it—go get yourself a latte!

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