Day 11: Get Your Finances in Order
We are in the second week of our sustainable living challenge. This week is all about building the foundations for a more sustainable lifestyle.
Today your challenge is to create a plan to put finances in order. This includes creating a budget, making a plan to eliminate all debt, and developing long term goals and plans.
I understand this may not seem relevant to a self-sufficient lifestyle, but it is! The more dependent you are on consistent full time work to pay bills, the less flexibility you have to do what you want.
I am aware that this can be overwhelming, especially if you are managing several debts, but the key here is to make a plan and start living it.
How do you begin planning?
- Locate all of your financial documents. This means loan agreements, bank accounts, and credit cards.
- Find the facts. Compile a list of monthly income and expenses.
- Put the facts in order. We use Xcel. We have a monthly budget template in Xcel. Each month we open a new tab and track our spending. We also maintain a spreadsheet with all of our loans. Debts and payment details are listed in order of importance, with the most important (and dangerous) at the top.
- Consider your goals. We each have different goals, buying a house, paying off loans, purchasing a car, developing an emergency fund, building retirement, etc. Clearly decide what your goals are and note how much time you have to get there.
- Make a budget. Considering your long term goals, expenses, and income, make a budget. Allot a specific amount for each monthly expense and don’t forget to include your goals. For example, if your goal is to save for a house, consider how and where you will save money for this. My husband and I are both terrible savers. If the money isn’t immediately transferred to savings the day it shows up, it will be spent on something else. Don’t forget to consider your level of self-control!
- Follow and track your budget. Making a budget is difficult. Track your spending so you know where to make changes. For the last year, I have complained that I spend too much on food. After reviewing our spending for the last six months, I realized the logical solution was to allot more money for that expense. We no longer go over our budgeted amount and I’m no longer kicking myself for spending too much when I leave the store.
We will each have different goals and priorities here. In our house, the ultimate goal is to live a sustainable lifestyle and to us, that includes a debt free life. It can take a lot of planning in the beginning, but as you begin paying off loans and building up savings accounts you will begin to see [and feel] the benefits!
Please be aware, I am not a financial advisor. I am simply sharing our management strategies that are helping us towards our goals. Most of what I have learned, I have learned online. Here are some of my favorite tools:
- The Simple Dollar: Trent offers up great advice and has a consistent message- spend less than you make.
- And Then She Saved: Anna paid off her debts with a spending fast. Lots of inspiration!
- Money Management International: I haven’t used their online resources, but I’ve attended workshops and use their reference guide regularly.
- Credit Education.org: Again, I haven’t utilized their online resources, but find their workshops and resources useful in budget planning.
- Community workshops- Over the last several years, I have attended 3 financial planning workshops and taken one quarter long course. All have been free and extremely helpful. Check with your local community center for such opportunities.
Money plays an important role in all of our lives and it always will. We can’t run from it, so we need to learn to live in balance with it so it doesn’t control our lives. What are some of your favorite financial tools?
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