Munching a Budget Pachyderm . . .

You might have heard the old adage, How do you eat an elephant? Well, dear reader, the answer is “one bite at a time”. And so it goes with munching a budget pachyderm.

I’m willing to wager that you didn’t get into debt overnight, but rather in small chunks over a period of time, perhaps even years. You might not have even realized how big your “elephant” was getting, until it slapped you in the face.

How do I know if I’m in trouble?

:calendar: Ask yourself a few simple questions:

Do you live paycheck to paycheck?

If next weeks check didn’t arrive, would you be in trouble?

If your furnace or other major appliance broke today, would you be able to replace it without having to charge it on a Credit Card?

Do you have a retirement plan?

Do you know how much money you owe to each of your creditors?

If you answered yes to 3 or more of the above listed questions, chances are you’re in some financial hot water right now. There are essentially 3 steps to creating and maintaining any type of budget plan.

Step 1: Income– Write down every source of income you have coming into your home including any self employment earnings, unemployment checks, paychecks, Social Security, Investment Earnings, etc.

Step 2: Expenses: Write down every Expense, Mortgage/Rent, car payments, insurance, utilities, gas, phone, groceries, Credit card bills, Cell Phone plans, Satellite TV entertainment, etc

Step 3: Tally Up :Total your monthly expenses and your monthly income. If you are in the red, (you owe more than you make), than you’ll need to go through each expense and figure out where you can trim the fat, so to speak. For example, if you’re spending $800 a month on groceries, you can reduce that to $300 and use the $500 towards other bills.

If you’ve created budgets in the past and found them difficult to stick to, I highly recommend the Envelope System for budgeting. While there are “Online” versions, I find that using Actual Envelopes and Cash force you to pay attention to how much you are spending because it feels more “real” when the money is leaving your hands, rather than your bankcard.

If you have a tendency to need a budgeting template that is more in depth, perhaps one that includes additional categories like medical expenses, personal care items (cosmetic allowance),etc, than I invite you to visit our Finances Pageand choose from our list of free printable budgeting templates.