Today I will be visiting my alma mater, Spelman College, to sit in on a class taught by the smartest woman I have ever met, Dr. Michelle S. Hite (seriously, she is probably one of the top ten people who have significantly impacted my life). Just thinking about Spelman puts me back in an academic frame of mind, so for today class, I will be teaching Budgeting 101. In my opinion, budgeting is like using common sense, everyone should do it but not everyone does. The importance of making and sticking to a budget is the freedom of knowing exactly how you spend, what money can be spent elsewhere, and where you overspend. So grab a pen and paper and let’s get started:
LIST YOUR SOURCES OF INCOME
CREATE A LIST OF YOUR MONTHLY EXPENSES
Fixed (Mortgage/Rent, Car Payments, Insurance, Emergency Fund)
This is the time for you to really think about what’s important. Shelter, Food, Utilities, and Gas are at the top of my list. Although I hate to do it, I can live without costly entertainment.
ASSIGN A BUDGET TO EACH EXPENSE
WRITE DOWN EVERYTHING YOU SPEND YOUR MONEY ON (for 2 weeks)
Do not leave anything out in this step. If you spend $1.00 at the vending machine, $3.00 for Girl Scout cookies, and $7.00 for parking downtown when meeting friends for drinks, you already splurged $11.00 on random spending that you probably don’t even consider when mentally reviewing your spending for the day. Writing EVERYTHING out will help you see exactly what, where, and how you spend your dineros.
CUT OUT IMPULSE SPENDING
My friend and Rah Tiffany (hey girl) put herself in a mental shopping rehab back when we were in college. At first, my friends and I thought she was crazy, but in fact she was making the best financial decision as a then single black female addicted to retail (thanks Kanye). She went almost 40 days without random impulse shopping. Following suit, I did the same. I reviewed my spending habits from the previous step that revealed my mindless exhaustion of funds at the mall. I would get up, go to the mall, see something I thought I couldn’t live without, buy it, then after working so hard at shopping I would go for lunch, go back to shopping and finally come home. Now looking back, I have to ask myself, did I really need those shoes, that purse, that book, that phone case, or that expensive lunch….NOPE, I did not. Then I thought to myself, wow, I could have taken that money and put it in my bucket list fund. Trust…skydiving will be more memorable than that cute shirt I purchased sometime last season.
PAY FOR EVERYTHING IN CASH
This tip makes its way into almost every post I write. This is a must for financial empowerment!!!
REVIEW YOUR BUDGET MONTHLY
Things change. Financial situations change. Keeping your list up to date is the only way to ensure that your budget is working for you.
She Makes Cents is happy to introduce you to our newest guest blogger, Kimberly Fleming, for the series Fitness that Saves Cents Makes Sense . Kimberly aka KIMf is a writer and health/fitness nut who has a strong passion for everything that’s aimed at improving an individual’s overall lifestyle. Her love for exercise grew from her involvement in track & field sports as a child and continued through college. It taught her tenacity, endurance, and overall, how to finish any race that she starts in life despite how difficult it may seem.
Eventually a passion for running turned into a passion for all fitness components, which turned into a passion for teaching those components to others. Her goal is to bring knowledge to the world so that we no longer look at being fit as a burden. She wants to change the mindset that fitting a few minutes of exercise into our daily routine will set us back. Many of us know the importance of exercise and healthy eating, however in this cyber world full of emails, conference calls, and frequent status updating we need help implementing it in our lives. She wants to go beyond helping you shed a few pounds or gain a few muscles. Her vision is not for you to be able to close your eyes, hold your breath and walk past that donut stand that you love, but it is for you to stop at the donut stand, smile, and walk away because you don’t even desire it anymore. She wants to change your perception of healthy living. She Makes Cents, along with KIMf’s website and videos will help you place reasons/knowledge behind every step during your fitness program so that you can achieve a healthy lifestyle and not break the bank. I think she is awesome and it is through her youtube videos and my new found fitness discipline that I lost 2 inches in my waist in two weeks!!! I love Kim and you will too. Maybe you will recognize her work from Salt magazine or if you are from the Atlanta area, you have seen her in her grey and pink facilitating a boot camp. Either way check her out… while I work on my bikini body!
Charlie Sheen has coined the phrase “winning” even though my bff claims she has been saying it for years. The bottom line is that having a great credit score is #WINNING, …duh! I promise, no more Sheen-isms for the rest of this post, but seriously a great credit score can be the difference between being approved for that car you’ve been saving for, that house you’ve been looking at, and even that job that you just interviewed for that is now pulling your credit history. If you have a low score, the people who decide whether you are an “attractive” candidate hold the cards. If you, however, have a great credit score, you hold ALL the cards. I learned this when I was buying my first home just three days after my 24th birthday. In the midst of trying to prove to my parents that I was in fact a real and financially responsible adult, I was unknowingly improving my credit score. In fact, during the contract negotiation period of the home buying process, my score improved by 20 points. A great score also came in handy once I moved because the majority of my utility expenses did not require a deposit and I was offered a lower rate. No matter what your score is, it is never too late to start improving it.
Here are 5 ways to boost your score:
First and foremost, it is imperative that you know your score, that way you know where you stand. By law, you are entitled to one FREE credit history report. In addition to your one FREE score, your state may pay for one more. Georgia residents, for example, are entitled to two FREE credit reports from each reporting agency. I would recommend, though, that you order your report from one of the three credit bureaus because we learned in the first week of She Makes Cents that FreeCreditReport.com is NOT free.
Pay your bills on time. It sounds simple, but I’m going to take a quick flashback to my days as a member of the ESSENCE of CAU dancing on the same field that Drumline was shot. (insert dream bubble here) To be early is to be ON TIME, to be “on time” is to be LATE, and to be late is UNACCEPTABLE (end flashback bubble…now). The same essentially holds true with how you pay your bills. Most people believe that as long as you pay before the due date, you are being financially responsible. Actually, the opposite is true. The earlier you pay your bill, the better. For one, you are certain that your bill will be received by your service provider way before the date. More importantly, paying your bills as soon as you get them can be a quick boost to that credit score. I try to pay all bills within days of receiving my statements and then record the due dates and balance due in my calendar. This allows me a quick glimpse of my monthly financial trends. This is something I recommend to EVERYONE!
Use only one credit card. If you have more than one card, start paying down the card with the smallest balance first by doubling the minimum payment. Once, that card is paid down, move to the card with the second lowest balance. Double the minimum balance and tack on whatever you were applying to the first card, until that card is paid down, and then so on. Next, choose one card to work with, preferably the one with the lowest interest rate and take the other ones out of your wallet. Freeze them, cut them up, lock them away but whatever you do, do not close them. Closing a credit card can sink your credit score faster than you can say “She Makes Cents”. Don’t do it, don’t do it, do not do it…
Increase your credit limit. Now that you have been working towards reducing the debt on your existing card, credit card companies should begin to see you as an “attractive” customer. Call your company and request a credit increase. Again, this is not meant for you to start increasing your spending¸ but rather it is opportunity for you to increase your credit to debt ratio. Can anyone say credit score boost?
Pay in Cash. I have said it before and I will say it again. Paying in cash forces you to really consider whether your purchase is right you. Personally, I find that paying for things in cash acts as a visual aid and helps keep me on track with my spending. In swiping a card, I can’t “see” my funds dwindling, but watching your cash go from thick to thin is definitely a sign that you could be mindlessly spending. When you pay in cash, you don’t have to worry about interest rates and hidden charges because cash is king.
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On our launch date, March 1, 2011, I began a series called Buy vs. DIY. The first post of this series focused on home decor with a Wallpaper vs. Stencil project and whether it is better to just buy the wallpaper or stencil an entire space, by yourself, to achieve the look of wallpaper. In the end, I believe for the space I am working with (also known as the world’s ugliest guest bathroom), it is more economical to stencil rather than wallpaper. Below is only a sneak peek of the planning process of this job. In upcoming weeks, I will provide a financial breakdown to see if my project is actually more economical. Stay tuned…
Today, I will be working toward crossing off TWO long-term goals on my bucket list. Therefore, I may be unable to post today. I wish you all a Happy Thursday full of savings and deals. Updates to follow…