This is Part 2 of the Financial Boss series.
Within 24 hours I went from reactive to PROactive about telling my money where to go.
Because there are so many internet articles on how to budget, and how people deal with their personal finances, I want to tell a little bit about my history.
I opened up my own checking account when I was 19. Before then, I only made a little money at odd jobs and spent it all on clothes, of course. With time, my account would fill up with money, whether from work or from student loans through college. I never had a budget, I just knew I would be getting this much and could only spend so much.
This left my account empty for many, many years.
As I got older, I started working full-time and slowly began making more money, but also paying bills. I got a car, student loan debt, cell phone, gas, and insurance. I managed my bills the same as I always did: I received so much money a week, and owed so much money a month. I just knew not to spend more than I made.
Then, time went on and I switched careers, got married, had a baby, and bought a house along with more bills on top of my ‘early years’ bills. I continued making more money, but increasing the money that I owed by buying more stuff. At this point, my credit card debt was minimal, and if I ever used credit cards, I paid it off quick. I knew how much I made, how much I owed in fixed bills, and then I wouldn’t charge more than I could pay off quickly to credit cards.
Insert AWESOME credit score here.
I didn’t have a hardcore budget in place at this time. I just made sure I wasn’t going in the hole. This made it possible for me to pay all my bills on time, with just enough discretionary to get what I needed. However, no money was leftover at the end of the month and I had no idea where my money was going. But, I continued on in a reactive approach. My bills were autodrafted on time, and I just didn’t spend a lot on frivious things. Still, I had no idea where my money was going. I just knew I had zero at the end of the month and nothing to save.
Insert JOB LAYOFF here.
I got laid off last year. Since my finances were stretched to paycheck to paycheck I certainly couldn’t pay my bills. I don’t know if you are familiar with unemployment income…but it’s not enough to pay the basics such as a mortgage or car. It’s better than nothing or you would surely starve to death, but beware: if you have debt over $800 a month you are about to spiral down to a hot mess just like I did.
Insert CREDIT CARD purchases here.
Because I couldn’t afford diapers for my child.
Now, this is extreme and I don’t take fault for this part, but it changed the way I view my current expenses.
Insert TRASHED credit score here.
If we are not prepared for the worst, the government will not cover your expenses even if you live ‘modestly’ as I do. By modest I mean: a modest house, car, and insurance. Forget it.
So, I am now trying to pay off my debt, reduce my expenses, and find out ways to survive on my own should this ever happen again. Like, gardening, savaging and the like. Sounds extreme right? Well, not really.
What would you do if you lost your job? Or, if you stay home and husband/wife supports the fam, what would you do if he/she left?
It’s something to think about, for sure. I always put those thoughts out of my mind so I wouldn’t be scared about my future.
But if disaster strikes, we need to be prepared.
This is what inspired me to boss my money, instead of letting it take on a life of it’s own without my direction.
Part 3 will discuss my first steps in de-cluttering my wallet/credit cards and getting a game plan in order.