Resolution Month

We all know that January is resolution month, February comes along and 50% of us have failed at our resolutions. Well it’s time to get back on track!

In today’s society a lot of us young people, and everyone for that matter, live on CREDIT and I am not going to say that there wasn’t a time in my life that I lived the same way. Recently, I have taken a step in a direction to no longer rely on credit but instead to use cash and save for those larger items. It all sounds like common sense and it really is, but we live in a society that we always want to keep up with the Jones! It needs to stop.. we need to be happy with what we have and what we can afford.

Here is my budget template:

Net income	Variable Expenses
Rental income	Cable
Government Benefits	Telephone
Other	Cell phone
	Internet
Fixed Expenses	Repairs
Mortgage & Property Tax	Gas & Public transportion
Electricity	ETR, Taxi & Parking
Gas & Water Heater	Medical
Insurance house	Groceries
Car payment	Personal/Hygiene
Insurance	Dining
Bank fees	Clothes
	Entertainment
	Pet
	Gifts
	Vacation
	Hobbies
	Gym

Step 1: Start with your estimated net salary. Don’t over estimate, be conservative if nothing else.

Step 2: Reduce your salary by your fixed costs – rent, mortgage, property taxes, utilities, etc.

Step 3: Next look at all of your variable costs and estimate the average amount. I am a big fan of the show ‘Til Debt to Us Part’ and Gail suggests taking an average of the costs over the previous 6 months to estimate your budget for variable expenses. Examples of these expenses include – cell phone costs, entertainment, dining, transportation, etc.

Step 4: With the remaining funds you need to consider debt repayment and savings. I don’t have the perfect formula for this just yet because I am just one of those people that HATES debt! So I tend to focus more on debt repayment than I should and do little in savings, but that is only because it is what is comfortable to me. The idea of saving while paying off debt instead of focusing just on debt repayment is to save for emergencies and long term goals. The easiest way to determine how much of the remaining goes to debt and to savings is to sit down with your five year plan (your realistic five year plan). In that plan, do you have things like buy a house or go on a big vacation? If yes, then you know you need to have money aside for those things when you get there. You need to realize that by the time you want to do things like that, you need to also have debt repaid.

Step 5: Once you are done the above, take a look back and ask, “Is this budget realistic?” and “Will I be able to stay positive at the end of the day and not need to go into further debt?” If at the end of the day, there are not enough funds to achieve all of your goals, you have a couple options. Firstly, go back and reassess your variable expenses. Is there anything you can reduce? For instance, call your cable provider and reduce services that would reduce your bill within budget. Could you reduce your vehicle costs by utilizing public transportation? Another option is to look for additional work or income that could be used for savings or debt repayment.

The idea is making realistic debt repayment schedules while still keeping the end goal of your budget something you are looking forward to, like a vacation. With realistic goals, there is no need to have a failed new year’s resolution.

If you have been off track on your resolution, it's time to get back on track! Goodluck.