Yay Monday

Friday is payday.  Money has come out of my checking account for the movers, and the balance is down to $2558.  BOOOOO.  But hopefully I’ll get paid on Friday and bump that back up to $6500 or so.  But that isn’t enough to make the big next mortgage payment, so I’ll need to wait until Oct. 15th to do that.  Waiting isn’t very fun.  Tonight is the next FPU class.  #3: Cash flow planning.  I prepared a bunch of questions / things to think about, but obviously there won’t be enough time to get through it all.  I guess I need to prioritize.

Budgets are to look into the future and to measure how well you did in the past.  Here are some things you can do to learn more about yourself and pressure yourself to succeed:

  1. Review your grocery list and estimate how much you pay for the different types of meals you eat.  How much would you like to be paying?
  2. Review your vacation spending and figure out how much you’ve been spending.  Is there anything you’d change?
  3. Review your electricity use over time.  How much are you using?  What days/hours are the highest?
  4. Review your cell phone plan.  How much do you actually use vs. your limit?  Would a lower plan work just as well?
  5. What are you subscribed to?  Monthly?  Yearly?  Which subscriptions support your long term goals (i.e. our spending is where our heart is)
  6. Add up the spending you could have avoided in the last 3 months.  What are the categories?  What are some specific strategies you can take action on to prevent this spending in the future?
  7. Research shows that people are more successful saving money when there is a real downside to not sticking with the plan.  What minor incentives or punishments could you put in place to help you stick to the budget?  Who will hold you accountable and enforce these?  Set a specific date to review your progress and reset.
  8. Spending often cascades because people are bad at estimating all of the different costs of their decisions over time.  What examples do you see in your life of cascading spending (e.g. you buy a new phone and now you need a new case, charging cable, car attachment, etc.)?  What specific actions can you take on future purchases to avoid this? (e.g. sit down and recognize all of the different potential purchases up front, plan to spread the purchases out every-other-month, etc.)
  9. Where will you keep your emergency fund?  When and where will you transfer savings and debt payoff out of your account?
  10. Add up the total debt you are paying off per month or the total savings you are putting away per month.  Divide this by 30.  When you waste this amount of money, you’re delaying your dreams by one day.  Start measuring your purchasing decisions in time.
  11. What would it take to reach your goal in 1 year?  How much money would you need to pay down per month?  How much would you need to earn?  Would you need to sell things?  How easy would it be to sell those things?  What about 2 years?  Could you make more money through consulting?  Working on the weekend?  To the extent that you think through these issues in detail, you can shorten your payoff period by changing your behavior.
  12. Put all your debt payoff and savings into a spreadsheet.  Sum everything up and chart your progress over time.  Are there certain months where your progress slows?  What are the expenses that are slowing it?  Are there certain months where you don’t have to spend a lot?  What’s happening?
  13. How often are you paid?  What is your total loss per pay period?  Total savings/debt principal?  List out the loss separately and make a pie chart.  What is the biggest category of loss?  Is there anything you can do about it?
  14. How much cushion do you have in your account?  What would be too much?  Why would it be too much?
  15. Project out what you’ll be paying on your debt/savings for the next 6 months.  How will Christmas / Tax Refund impact your plan?  What other things will be going on in your life?  What things will make it harder?  What will make it easier?
  16. How much have you spent on your car?  Per month?  Per year?  Would public transportation make more sense?
  17. What actions do you take at places that could put you over budget?  The grocery store?  Amazon.com?  The mall?  Can you block these websites on your computer?  Can you list out your groceries exactly before you go?  What other actions can you do to separate yourself from these places, and what activities will you replace them with?  If the budget doesn’t impact your behavior… what’s the point?  So we have to be proactive about finding replacement activities at the same time we stop old behaviors to keep ourselves busy.
  18. A budget is a plan for money.  Do you have a plan for your emotions?  What feelings do you predict that you’ll have?  How can you cope effectively with these feelings (exercise, free meetups (quidditch), etc.).
  19. Research shows people feel best when they see steady progress toward a goal.  What can you do to feel that sense of progress?  A daily chart that adds up your debt payoff or savings.  Color it green for that day when you don’t overspend (+$40) or red when overspending consumed all the money you would’ve saved that day.

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