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How Can You Get Ahead Financially?

Don Mize
© 2005, Don Mize

Do you have enough money?  Most people will say that they do
not, and most people believe that more money will solve their
problems.  While most of us would like to have more money, the
truth is that we allow a great deal of cash to slip through our
fingers.  The first step in getting ahead is to use well the cash that
comes into our possession.

Most of us could instantly improve our situation by adopting a Net
Income Budget Plan for a monthly budget.  This simple, workable
plan often leads to instant progress.  The essence of the approach
is to focus on how much cash actually comes into your possession
each month (net income).  Another important aspect of the plan is
to see where the money actually goes.

All you need is a pencil, a piece of paper, and the ability to add and
subtract.  On the third line write "Family Income" near the left
margin and list how much each family member contributes each
month (net) after taxes, insurance deductions, etc.  In other words,
list by name how much cash each family member contributes to
pay the monthly bills.  Add up the figures to arrive at a Total
Family Income (i.e., the amount of cash you actually have to work
with each month). (
see example)

Make two columns near the right margin.  Label the outside
column Money Left.  Label the other column Bills.  Write your
Family Income total in the Money Left Column, skip a line, and
start listing your bills.  Say, for example, your first bill is rent (or a
house payment) for the month.  If you spend $500 a month on
housing, subtract the $500 in the Bill Column from the total
income in the Money Left Column.  If you started with $2000
Family Income (minus $500 rent/house payment), you now have
$1500 in the Money Left Column.  Repeat with the next monthly
bill, and watch your Money Left Column become smaller.

Continue listing your bills in order of importance and subtracting
each one from the Money Left Column.  Most people run out of
money about half way down the first time they actually put their
monthly bills on paper.  In fact, most people end up with a minus
figure.  If you end up with a minus $1500 (-$1500.00), you need
that much more each month to balance your budget.  Another
option is to cut your monthly expenses.

Do not forget to list recreation.  Your recreation expenses each
month may include eating out, going to a movie, or shopping.  
Many problems lurk in the recreation area.  Consider giving each
family member a weekly allowance and limit all recreation to the
allowances.  Future articles will explain why this actually helps you
stay on a budget.  Be sure and list essential living expenses first.  
List credit card bills and other debts last in order to deal with the
actual cash you have for expenses each month.

The reason for listing essentials first is that you must have
transportation, housing, and food in order to live.  Of course, you
should pay something on your debts each month, but you must live
in order to better your situation.  If you spend more than you take
in each month, trouble lies ahead (no matter how much your
income).  Future articles will discuss a strategy for paying off debts
while not making new debts.

Most people are surprised to see where their cash actually goes
each month.  Many find ways to improve their situation the first
time they list their cash (net) income and expenses.  You will forget
some bills; add them as they show up.  Expect to revise the budget
many times before all is in place.  However, the first step is seeing
where your cash really goes.  Immediately you have an opportunity
to make changes for the better.
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