Budgeting & Debt

A budget doesn’t limit your freedom, it gives you freedom!

7 Steps to Build a Household Budget

1. Setting goals What is important to you? This will lead to your goals. For example: If it is important to live without money worries – your goal may be to pay off your credit cards If it is important for you to travel once a year – your goal may be to save an amount each month for that trip. Short term goals: within about a year Intermediate goals: within 5 years Long term goals: 10-15 years or more

2. Identifying income & expenses Look at where your money comes from, and where it go right now. Most people know where and how much money comes in, but not as certain with where that money goes. Tracking is the easiest and most efficient way (but difficult?). Spreadsheets – apps – online banking

3. Separating needs & wants The key to good money management is separating these two. Levels of need & want. Example: Yes, you need a vehicle to get to your new job. Do you buy the more expensive SUV that you want? Or will a less expensive, more economical vehicle fit your need?

4. Design your budget Takes away the stress of money troubles – allows you to enjoy the fun stuff. Ask yourself: “Will this budget help me achieve my goals?” Emergency savings (even during financial difficulty) How much should you save? (circles)

5. Putting your plan into action Match spending plans with your income schedule Bi-weekly? Monthly? Irregular Income More attention needed. Know the minimum income needed for expenses. Build a side account when possible.

6. Managing seasonal expenses What are seasonal expenses? Car repairs, vacations, gifts, clothing, etc. Planning on how you spend your saved money (timeline goals)

7. Looking ahead Life is NOT linear – nor are our monthly expenses. Monitor, review, and re-evaluate your budget.

5 reasons your budget isn’t working

1. Analysis paralysis Why it happens: The Solution: If you’re a perfectionist, you might be afraid of making the wrong choice – so you make no choice. The Solution: Just start somewhere, even just tracking for a month or two. An imperfect budget is better than no budget

2. It’s too complicated Why it happens: The solution: People assume budgeting has to be a lot of work, when it’s really about finding simple solutions and habits The solution: Keep it simple and give it time. Take advantage of the technology out there.

3. Life changes Why it happens: The solution: People tend to focus on what is right in front of them. The solution: Brainstorm seasonal expenses, potential one-time events. Build a side account or opportunity/emergency fund

4. The “buy” button Why it happens: The solution: It is so easy to be online and see a deal or a ‘small’ price for an item – and it is easier to buy it, just click buy. The solution: Before you press ‘buy’, take a pause and ask yourself if you really need the purchase.

5. you’re a giver Why it happens: The solution: Many people find it’s easier to justify spending on other people than on themselves. The solution: Build gifts and treats into your budget. Just because it’s not for you doesn’t mean it’s not an expense.

How can I make a budget quickly? EveryDollar

How to get out of debt: the snowball plan

True or false? You need to pay off the debt with the highest rate first to get out of debt quickly.

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WHAT IS THE DEBT SNOWBALL METHOD? Built on the premise of keeping you motivated and getting the sense of accomplishment throughout your debt elimination. It begins by paying off the smallest debt first, not necessarily the debt with the highest interest rate.

1. LIST YOUR DEBTS FROM SMALLEST TO LARGEST

2. MINIMUM PAYMENTS ON ALL DEBTS EXCEPT THE SMALLEST

3. REPEAT THIS METHOD UNTIL YOU ARE THROUGH ALL DEBT

EXERCISE: THE SNOWBALL METHOD Credit card 1: $500 at 13% with a monthly payment of $25 Credit card 2: $1,000 at 19% with a monthly payment of $50 Car loan: $6,000 at 4% over four years with a monthly payment of $135 Student loan: $15,000 at 5% over 10 years with a monthly payment of $159

Thank you

Sources How to get out of debt with the snowball plan https://www.daveramsey.com/blog/get-out-of-debt-with-the-debt-snowball- plan/?int_cmpgn=no_campaign&int_dept=dr_blog_bu&int_lctn=Blog- Text_Link&int_fmt=text&int_dscpn=15_Practical_Tips_for_Your_Budget- the_debt_snowball_method 15 practical budgeting tips https://www.daveramsey.com/blog/the-truth-about-budgeting 5 ways to stick to your budget https://bettermoneyhabits.bankofamerica.com/en/saving-budgeting/how-to- stick-to-a-budget 7 steps to build a household budget https://www.mymoneycoach.ca/money-management/budgeting-plan-for-future