What Is a Zero Based Budget & Why You Need One

The Zero-Based Budget

A Zero-Based Budget or “zero balance budget” forces you to justify each expense by assigning a dollar amount to every move you make with your money. That is to say, your income minus your expenses, equals zero. Radio host and financial advisor Dave Ramsey explains, “If you cover all of your expenses during the month and you have $500 left over, you aren’t done with the budget yet”. Although Ramsey speaks of the zero based budget in terms of monthly spending, I prefer to budget twice a month since I have irregular income. You know exactly where your money is going, it leaves no room for overspending, and it is based on your current needs, which are clear advantages to this type of budget.

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I used to write down every expense to get an overview of how I spend money. It was good because I was able to see patterns in my spending that I was unaware of. Outside of being a very tedious task of tracking every expense (pre-smart phone apps), doing this sort of overview only happened AFTER I have already spent the money. Nowadays, I take a more proactive overview of my finances and I spend my income on paper BEFORE I spend a dime in reality by using a zero-based budget.

How to Make a Zero-Based Budget Work for YOU!

Sure there’s computer based software for budgeting, but I find a simple pleasure of the good ole’ pen to paper method. It’s my personal preference but in order for you to be diligent in your effort, you should choose whatever makes you most comfortable. Got your tools? Let’s go!

Read the Full Post Here: 6 Easy Ways to Make A Zero-Based Budget Work 

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{Financial Cents} How To Make A Financial Plan

debt-free

Sometimes I need to remind myself that a goal without a plan is just a wish. Every morning I would pray for financial blessings but somehow found myself going through the motions, which was slowing my progress to my goal of zero debt. For me, it is about finding that balance between enjoying my lifestyle and making financially sound decisions. I have been bitten with the travel bug and I can’t wait to explore the world, I live for bottomless mimosas at brunch, and I believe shoes and the right lipstick makes the outfit. However, I also believe in building a hefty savings, going into marriage without bad debt (i.e. credit card and student loans), and building generational wealth. I must agree with Dave Ramsey, financial guru, who affirms, “Personal finance is 80% behavior and only 20% head knowledge”. I am working on the behavior part. I found that even though I enjoy shopping, I’m more likely to shop when I’m bored. Recently, I started filling that boredom with QT with the Mr. walking and exploring our city. I am focusing on better decisions, which will yield better behavior. Every cause has an effect and every decision has a financial consequence; that’s why coming up with a personalized financial plan has been my saving grace. Yes, I prayed for financial blessing…I still do, but I have also added the caveat that with financial blessings comes financial responsibility.

Check Out My Financial Plan!

1.  Write down your debt & don’t forget to include people you owe money.    I was talking with a childhood friend who say he had zero debt.  As we got to talking it was revealed that he did not include the almost $7,000 he owed to a family member and the card he maxed out in his college days.  Out of sight, out of mind, I guess.  Once we dove deeper into our conversation, he and I started listing our debt.  My list was simple- one credit card, student loans, and mortgage.  His, well…let’s just say that I composed a very sobering list on his behalf that included all the debt that he could remember.  Seeing your debt listed, makes it more real.

2.  Emergency Fund Minimum.  Baby Step One of the Total Money Makeover is to get your emergency fund to $1,000 if you have an annual income of $20,000 or more.  “Your car will need repairs and your kids will outgrow their clothes. These are not emergencies; they are items that belong in your budget. If you don’t budget for them, they will feel like emergencies”.  It was this statement from the book that caused me to stop dead in my tracks and redefine what I considered an emergency versus saving.

3.  52 Week Money Challenge- BINGO Style.  This was actually a part of my New Year’s Resolutions for 2013.  The challenge is to make a weekly deposit that reflects the number of weeks of the year. For example on week one you deposit
$1.00 and on week 27 you deposit $27.00 and so on.  I took the challenge one step further by remixing it into a BINGO style which makes it easier to be successful.  In the end, you will have saved $1378.00!  I’m using the money from the challenge to pay down the balance for my credit card and b-day/holidays.

4.  Tackle Your List.  I revealed in the post, Tackle Your Credit Card Debt Today, that as of January I owed about $5300 in credit card debt.  I have reduced my debt down to $4786.00 by paying a little over the minimum and applying the Bingo Style money  to the balance EVERY Friday (I have yet to miss one), but that interest is killing me.  Without interest, my balance would be paid off by the end of the year.  While making additional payments to the credit card, I am making the minimum payment toward my student loans and mortgage.  Once the credit card is paid off, I will then apply that money to extra payments to my student loans and so on…this is called the Snowball Method.  Now, I will confess, if I had more debt, I would recommend switching between the Snowball Method and the Avalanche method, which we will discuss later in the Financial Cents series.

5.  Emergency & Savings.  Don’t forget to save that money you are no longer paying to others.  Use it to prepare for the future.  Emergencies will arise and more than likely something will come up that will cause you to tap into your savings….be prepared.

Do You Believe Personal Finance is More Behavior or Knowledge?

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{Financial Cents} Is Your Way of Thinking Making You Poor?

Just as slaves born into slavery can’t visualize freedom, we Americans don’t know what it would be like to wake up to NO debt.
Dave Ramsey, Total Money Makeover

Is Your Way of Thinking Making You Poor.pngYour alarm clock sounds, alerting you that a new day has come. You awake to find yourself owning a car without a car payment, a home without a mortgage, an education without student loans, and credit card(s) with a zero balance. How did you get to this financial freedom? Did you a) win the lottery, b) rob a bank Sugar & Spice style, or c) align your behaviors with your long-term financial goals? Well, the answer to the question depends on whom you ask.

I told a friend of mine that I was working to become debt free and she looked me right in my face and laughed. I mean laughed to the point of tears while telling me how unrealistic I was being. “Everyone has debt”, she alleged. If this were her outlook on financial freedom, I would guess that she could image a debt free life comes only as a result of a windfall. She will either rob the bank or win the lottery. I, however, understand how even the most minute  sacrifices will help me get closer to my financial goals. I have to think beyond the day-to-day and month-to-month if I want to build  generational wealth. Financial expert, Dave Ramsey adds, “We have been sold debt with such repetition […] that it’s hard for people to imagine what it would be like to have no payments”. Debt shouldn’t be the normal status quo and I am not comfortable adopting that mind-set. When the day comes when I wake up with no mortgage, no student loans, and no credit card balance, I know it will be a result of my financial plan and my commitment to it.

Is Debt Normal? Share Your Thoughts…

{Book Cents} 3 Books I Can’t Wait to Read!

I Like Big Books & I Cannot Lie!

I can be somewhat weird about books. Rarely do I lend them out because I’m afraid people won’t take care of them as I do. I don’t write or mark in them unless I have to; and when I do, I usually buy another clean copy. Weird, right? I haven’t even told you how I pick out books. I am very loyal to authors I like, I’m open to recommendations, but more often than not, I pick out books because I think the title is interesting. While I’m currently reading the Total Money Makeover by Dave Ramsey, I am always on the search for more books. Below are three that I have on my list to pick up.

Check them out!


Nice Girls Don’t Get the Corner Office by Lois P. Frankel, PhD


Cupcakes and Cashmere by Emily Schuman 


Bubbly on Your Budget by Marjorie Hillis

How Do You Pick Your Next Read?

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{Eat on the Cheap} Healthy Eating on a Budget

I got this question in from a reader who connected with me through my about.me!

Hello there! I am curious, I am wanting to start using the envelope method but I’m wondering how to go about spending the amount given for me in the grocery amount when on a diet. Diets are super hard to stick to especially when you are on low budget. Any advice?

MyKudos to you for making two great decisions eating clean and trying not to go into debt doing so. The envelope system, by Dave Ramsey, is such a wonder tool that has helped me reshape how I think about money. Truthfully, it may take a few visits to the grocery store for you to figure out exactly how much goes into your grocery envelope. My latest goal that I have implemented into my own life is to set realistic goals. Once you figure out how much is realistic to spend for your budget, lifestyle, and family size, then you are really to maintain a consistent amount every check.

My second recommendation would be to plan your meals on a weekly basis and make a grocery list based on the meals you plan to cook. There are a number of sources that provide recipes to help you eat cleaner by planning your meals in advanced. Choose My Plate is a government website that helps you plan motivational menus on a 2000 calorie diet, provides tips to help you save, and suggests foods that are great for your diet. Here is an example of a sample menu for the week. Another great source is Pinterest, which is filled with thousands of recipes from people across the web who share similar tastes and goals as you. Now that you have an idea of what you want to prepare for the week, then it is time to make the all important grocery list. I really like this grocery list from MomAgendga and I recommend never stepping into a grocery store without a completed list.

Other tips to consider:

  • Never shop on an empty stomach…it often causes people to over shop and over spend.
  • Wear your most fabulous heels to the grocery store: Look good, feel good, right? Well, yes… but wearing your most fabulous heels (which often ends up being the ones that hurt the most) will force you to stay on track so you can get exactly what you need and get out of there so you can get home to more comfy shoes or…no shoes at all. It may sound crazy, but I keep my heels on after work ONLY on days when I have to run errands where I may be tempted to spend!
  • Get a shopping/accountability buddy: My good friend, Kema and I used to make our grocery lists and go shopping together. It made the experience fun, we used that time to catch up, and we helped each other stay on target and budget.

For other tips, check out these 10 tips from Choose My Plate on Eating on a Better Budget

What is your favorite budget shopping tip?

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{The Green Experiment} How Going Green Can Save You Green

The Green Experiment, have you heard of it? If not, let me be the first to introduce how “going green” with your finances could really save you money. At its most basic level, it is doing away with your debit and credit cards and living off cash for a specified period of time. Did you know that most people spend more when they pay with cards over cash? One psychologically reason for this is that people can’t “see” the money dwindle down when using cards. If you are using the oh so fab, envelope system, you are already living a green life. For others, this experiment might not be as easy as it sounds.  For those of you up for the challenge, let’s see how you do for ONE week with cash only.  My thoughts… you will start saving money because you can physically see your wad dwindle with every purchase.   Hopefully, this will cause you to determine to spend or to save. Sophia Banay from Glamour magazine adds, “all you need to determine whether you can afford something is peek in your wallet.”  If you are down for the challenge, She Makes Cents is going green starting Sunday, August 5th.

Are You Down for the Challenge?

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