So now you've stopped going into debt. What's the next step? Make a plan. Yes, it's the dreaded "B" word, budget. Make sure that you make out your budget before the month begins. Most people use a budget to track where their money went. But, that's a report, not a budget. A report tells you what has already happened, whereas a budget is projecting the future. You need to estimate what you think your expenses and income will be for the coming month and directing the money where it should go.
By making a report and just tracking where the money went, you are being reactive instead of proactive. Reactive is letting situations happen to you, while proactive is you taking control of a situation. Being proactive with money is anticipating what expenses you know will occur, and ones which will likely occur, and planning for them. It's making sure you have money for yearly expenses such as property taxes, insurances, even Christmas and birthday gifts. When you're just tracking your money you don't think past the events that are happening right now. Lo and behold Christmas comes and it's an emergency because you weren't proactive in planning for it. Since you are no longer going to use credit cards or finance those expenses you MUST be proactive. Make sure you're putting money away for those long-term expenses.
Next week I will show you how to use some of the planning sheets that I created in Google Documents. For now though, I have some homework for you. I want to you to find out how much is spent on Homeowner's Insurance, Car Insurance, Property Taxes, Car Tags, and Christmas. You will need this for next week when we make our new monthly budget. You also need to have a list of all your debts and minimum payments.
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This post is linked to Works for Me Wednesday and Money Saving Mondays