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The Lord's Prayer

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In the meantime, we would like to share the information below with you.


Is Your Budget Working ?



How do you set your spending limits or don't you? Setting a budget should be a rather simple task but for most people, they just don't know how. Budgeting really means you are only spending your disposable income...ie...your after taxes and deductions income. Spend is a loose term because as you will see, if you set the correct limits, you will also save and have a pad of income for the emergencies that arise or to take the that much needed vacation..

There are some rules to allocating your disposable income. This will require that you collect all the information on the bills you must pay monthly, bi-monthly, quarterly and annually. Obviously, you must meet your basic needs, food, housing, transportation and miscellaneous expenses.

Here are the guidelines based on your disposable income:

  • 30% Housing (this includes property tax if property is mortgaged )

  • 20% Food

  • 20% Transportation (Includes vehicles purchased with a loan,insurance and maintenance)

  • 20% Miscellaneous:
  • Utilities

    Clothing

    Medical

    Gifts (Example: Christmas Club)

    Entertainment

    Charitable or Religious Donations

    Computer Expense



  • 10 % SAVINGS This is probably the most important guideline of all.


* * Let's assume that you are paid weekly and your checks are pretty much the same from week to week. To compute your disposable income, first take your net paycheck amount and multiply it by 48. Why 48 when there is 52 weeks in a year? Every month has at least 4 weeks but every quarter there is one extra week which comprises our year of 52 weeks. However, the extra week does not come within a given month, it is a few days here and a few days there. Therefore, the safe way to do this is on a 48 week schedule. To say this another way, you don't get a paycheck for the last 3 days of a month.....those 3 days end up as the first week of the next month. Divide your annual disposable income by 12 to arrive at your monthly income.

Now that you have computed your disposable income, you need to take a look at your expenses. Chances are your housing expense, utilities, food can be considered on a monthly basis. If you shop once every week, take the weekly amount and multiply the amount by 4.33 to arrive at the monthly amount. Annual expenses such as vehicle insurance, vehicle license, vehicle maintenance, auto club and anything else paid annually, semi annually, quarterly, or bi-monthly need to be considered. Divide annual expenses by 12 or semi-annual expenses by 6, quarterly by 3 (3 months comprises a quarter).



Next, using your housing expenses total, divide the expenses by your monthly disposable income. Make yourself a simple journal (also called spreadsheet) with the headings, Guide, Actual. Down the left side of your document put the classes from above (housing, etc.). Put the percentage of your division in the actual column next to housing. Do this for each classification above.



Next compute the percentages above on your disposable income for each classification. Put these percentages in the Guide column. Are you spending too much on housing? Transportation? Entertainment? Are you not saving enough? If yes is the answer to any of the classifications, then something has to give. Maybe the spending in a classification is less than the guideline percentage. If so, the slack could be taken up in another classification. Save more or maybe actual housing expense is greater than the dictated percentage taking up the slack. The point to remember here is you cannot spend more than your disposable income and survive!



Eventually overspending catches up with you and it can destroy your life. Credit is almost impossible after a bankruptcy. However, there is one loan that almost anyone can obtain--an auto loan. Why? Because a vehicle can be repossessed if the borrower defaults on payment. There is one disadvantage with a bankruptcy order in this respect. That is the probability that you will pay a higher interest rate and, perhaps, a more frequent payment than once every month. The terms will be more restrictive.



You will be immensely surprised when you have a 5th payday within a month. Your housing will be taken care of and most of your other monthly expenses. So what happens now? Well you do have to have food for the week but you will have money left. Could save more or treat yourself for a job well done.



To close this subject, you can control your spending so that you are living within your budget (disposable income). Maybe you have to give up or cut back on some of your spending but you will be happier if you do not have to constantly worry about meeting your bills and bill collectors harassing you.