Spending Plan & Goals By: Dr. Scott Kehiaian MIDDLE DISTRICT OF N.C. DEBTOR EDUCATION PROGRAM Spending Plan & Goals By: Dr. Scott Kehiaian

PROCESS OF BUDGETING $ SAVE THE DIFFERENCE $ INCREASE INCOME DECREASE EXPENSES $ SAVE THE DIFFERENCE $

INCOME PLANNING PERSONALITY TEST WRITE DOWN WORK ACTIVITIES THAT YOU ENJOY DOING www.BLS.GOV

BUDGETING EXPENSES: FIXED VARIABLE PERIODIC

FIXED EXPENSES FINANCIAL RATIOS: MORTGAGE TO INCOME TOTAL DEBT TO INCOME

BUDGETING EXPENSES: FIXED VARIABLE – equals tracked expenses PERIODIC

BUDGETING PERIODIC – equals estimated expenses EXPENSES: FIXED VARIABLE PERIODIC – equals estimated expenses

PERIODIC EXPENSES Property taxes and insurance Vehicle maintenance Tires Medical expenses Household maintenance Clothing Vacations Gifts & Christmas Miscellaneous

Vehicle Maintenance Use the internet to research vehicle maintenance costs. I like to use the following website: www.edmunds.com

MONTHLY PERIODIC TRANSPORTATION COSTS First Second Total Total Five Five Ten Year Yearly Years Years Costs Costs $4,059 $6,089 $10,148 $1,015 ($3,411 + $648) ($4,059 * 150%) ($4,059 + $6,089) ($10,148 / 10) Formula Ten year cost divided by 10 years divided by 12 months { ($10,148/10) = $1,015/12 = $85} Total Monthly Costs $85 ___ ↗↗↗↗↗

Household Maintenance Take the estimated value of your home and times it by 1%. (By Jeff Brown of MainStreet) Example: Home value = $200,000 Estimated annual maintenance = ($200,000 * .01 = $2,000) Estimated monthly maintenance = $167

Miscellaneous All families should budget for 5% of their gross income for miscellaneous expenses: Example: Monthly Income = $2,500 Allowance for misc. = 2.5k *5% = $125/mo

FIVE-STEP SPENDING PLAN

FIVE-STEP SPENDING PLAN

STEP THREE-TRIMMING EXP.

STEP FOUR OF FIVE

STEP FIVE – PERIODIC EXP.

Distribution of Expenses Expenses as Percent of Net Income Fixed Expenses 30% Variable Expenses 40% Periodic Expenses 20% Savings 10%