Step one: Pay ALL of your bills out of each check.
I was finding that I was flush with pocket cash at the beginning of the month, but at the end of the month (when my car payment, car insurance, and rent was due) I was broke! My debt consultant told me to pay ½ of all my bills out of each payment.
ExampleCar Payment = $200
Car Insurance = $100
Rent = $650
Assuming you are paid bi-weekly like me:
Car Payment = $100
Car Insurance = $100
Rent = $325
Total of 1/2 of bills = $525
Car Payment = $100
Car Insurance = $100
Rent = $325
Total of 1/2 of bills = $525
Paycheck # 2 ($1000.00) - Total of 1/2 of bills ($525) = Money left over ($475.00)
Notes:
1) If you have standing payment for your credit cards, gas, etc, you would factor all of that into this section as well.
2) The best way to keep track of this is to create a spreadsheet of your bills!
3) Depending on due dates of all of your bills, it may take a couple of paychecks to get into this system. For me, I sacrificed pocket money in order to pay off one bill and save half for the next month's payment within the same paycheck (Example: Car insurance = $100. Paycheck #1 - Pay $100.00 to pay the bill AND save $50.00 to save for next month's payment. Out of Paycheck #2 - only need to save $50.00).
I take the remaining amount (in this example - $525, from Paycheck #1) and divide it up into different areas
- I take out $140 for my pocket money. That’s $10.00 a day for things like lunch, coffee, magazines, etc.
- I then divide the rest of the money (so in this example - $385), into three.
- 1/3 goes into my personal savings ($128)
- 1/3 goes into a separate checking account that I use for groceries and toiletries for the next two weeks. ($128)
- 1/3 I divide even further into smaller savings accounts for other things (For me, I have a separate savings accounts for Gifts, Vacations, Car (for things like oil changes, new tires, etc.), and Medical (Contacts are expensive!) ($32 in each account)
Notes:
1) You don't have to create new savings accounts if you don't want to. I am a visual person, so I needed to see that my money was seperated out and accounted for specific things. If I didn't do this, I would think I had bunch of money to spend, spend spend!
Step Three: What happens if you don’t spend the $10?
SAVE IT! At the end of the day, if I didn’t spend the $10 or if I have some change, I take it out of my purse/wallet and keep it somewhere safe. I have one of those motorize coin collectors, so that is where my change goes. At each payday (or if you are good, at the end of the month), take the money you have saved and apply it however you want. Pay extra on a credit card. Buy that coveted item (in my case, a purse!). Pamper yourself! It’s money that YOU SAVED! Spend it however you wish!
These tips were brought to you by the following:
And that my folks, is how I live on $10.00 a day!*
