Budget Properly by Identifying Expenses
If you’re trying to get out of debt, the first step should be to create a budget that you can stick with. This task can be difficult if you don’t have an accurate picture of your monthly, semi-annual and unexpected expenses. In order to properly plan for the future it’s essential to identify these expenses and determine a plan for meeting them. Use our checklist below to determine what your monthly expenditures are.
Weekly Expenses
You may not have weekly expenses depending on how you prefer to budget your money. If you do like to divide it out weekly, here are some of your likely categories:
- Groceries
- Gas or Bus Fare
- Parking
- Day Care or Babysitters
- Coffee money
Monthly Expenses
In this category are all the expenses that you pay monthly.
- Mortgage or rent payment
- Car loans or leases
- Child support
- Credit card payments
- Installment loan payments
- Internet
- Phone
- Subscription fees (Netflix, Audible, etc.)
- Auto insurance
- Life insurance
- Health insurance
- Garbage/Sewer/Water
- Gas and Electricity
- Homeowners association fees
- Private school tuition
- Landscaping or yard maintenance
- Clothing and shoes
- Savings
- Charity or Giving fund
Annual or Semi-Annual Expenses
- Property taxes
- Vehicle tabs or licenses
- Professional services like tax preparation
Unexpected Expenses
It’s a good idea to save a little each month in the event that the unexpected occurs. Try to estimate the amount you spend on the following each year, then put aside a proportionate amount each month.
- Medical expenses – Medical, dental, lab, chiropractic, massage, prescriptions
- Home repairs – HVAC, plumbing, yard
- Vehicle repairs
Discretionary Spending
The above listed categories are the “essentials”. Nearly every thing else is discretionary. This would include items like:
- Books
- Toys
- Travel
- Eating out
- Gym and other memberships
- CD’s or .mp3′s
- Impulse purchases
Use this list as a template to create your own monthly expenses list. Then keep track for a month or two of how much you spend in each category. Once you have a good idea of where you’re spending it will be easier to identify places you can cut back. Could you mow your own lawn and cut back to buying coffee out just once a week? If so, you could save $100 a month that could be used toward a credit card debt. How much are you spending in eating out? Many people report that they spend more in restaurants than they do at the grocery store. While it is more time consuming to eat at home it is a big place you can look to save money – and it’s better for your health as well.
Another way to save money is to make sure you’re using everything that you’re paying for. Are there any subscriptions or memberships that you only rarely use? Have you examined your auto and homeowners insurance policies lately to make sure you’re only paying for coverage you need? Are you overpaying for your cell phone? By examining every item on your expense list you can find hidden dollars in nearly every category. Use this extra savings to make a huge dent in your debt.
Examining your expenses isn’t the greatest feeling in the world – but getting out of debt is. Take some time to identify your expenses and how to cut them and you’ll be on the road to living debt free in no time.