Tuesday, May 8, 2012

I Wish I Had a Money Tree...

I don't have a money tree and it makes me sad. 

Because of the absence of a mythical money tree in my life, I was forced to get organized and watch my pennies. Once I started really paying attention, I began watching those pennies march right out of my bank account and into oblivion, never to be heard from again and rarely with anything left to show for them except for mounting credit card bills. Blech.

That made me even more sad. 

Instead of sobbing into stacks of bills (which I did do on a handful of occasions) I decided to take charge of my penny army and make those cents work for ME! With a little organization and a sprinkling of willpower, I was able to get my spending in check and slowly, but surely, watch my debt decrease. 

"How ever did you do it," you ask? Well, of course I'll tell you how.

Step 1. Get a folder. 
Mine is green. Feel free to choose whichever color you like.

Step 2. Get organized. 
Gather up all your bills into one large, overwhelming pile. 

Step 3. Get a grip.
You're likely frightened at this point and would love to shove those bills under the couch or behind the refrigerator. Don't. It won't make them go away. Instead, separate your bills into two piles. The first pile should be bills that are due from the 1-15th of each month. The second pile is bills that are due from the 16-31st of each month. (This is based upon the fact that most of us are paid bi-weekly.)

Step 4. Make a spreadsheet.
I've taken the initiative to make the spreadsheet for you, so all you need to do is fill it in. Easy peasy.
One spreadsheet covers one month, broken into two pay periods. So, the first section will be used for your first paycheck of the month, let's say you get paid on the 15th. You will then enter any bills that are due between the 16th and 31st of the month. Enter the bill in the first column, the amount you owe in the second, the date it's due in the third and the balance remaining after payment in the last column (this is mainly for the debt section). 

Then, you'll repeat for the last paycheck on the month, let's say you'll get paid on the 31st. Under this pay period you'll enter any bills that are due between the 1st and 15th. Get it? 

I fill out the spreadsheet for the entire month, usually on the day I'm paying bills for the second pay period of the prior month. 

You can also find this under the Printables tab
Step 5. Grab your folder.
Take any and all bills that you have entered on your spreadsheet and paper clip them behind the spreadsheet. That way you won't need to search for them when bill pay day comes. Now tuck your neat little package into your folder.

Whenever a bill arrives in the mail, face your fears, open it, and place it in the folder.

Step 6. Part with your money.
Twice a month, sit down and pay your bills. I pay mine the day my paycheck hits my account, that way I'm forced to work within my budget and don't have to think about it again. Setting up online bill pay through your bank is the way to go. I DON'T do automatic payments, just in case an emergency arises and the funds aren't there. I just remain steadfast in my bill paying routine and all goes smoothly.

Step 7. Control your spending.
Now that you feel in control of your money, and you're actually making headway on paying debt KEEP IT THAT WAY! Don't get out of control and spend every last cent in your bank account. Toss a little in savings instead. The easiest way to avoid this is a Needs vs. Wants list. Luckily, I've crafted one for you.

Also available under the Printables tab
List every item you may need or want and the price. Then check off whether it's really a need or just a want. You may WANT a new pair of shoes, but I can guarantee you don't NEED them. And although you may not WANT to pay for a root canal, you may NEED it. Be honest with yourself here. Then mark off all your needs in order of priority.

The key here is to not buy ANYTHING not on the list. That will keep you from making impulse purchases. Obviously focus on things you need, but as your budget allows, sprinkle in some of the items you want. 

Keep this list in front of you when filling out your Budget Worksheet and add items under the miscellaneous column so everything is accounted for and you don't end up accidentally blowing your rent money on a new iPad.

Step 8. Breathe.
While this may seem like a lot of work, I guarantee you after a month or so, you won't know how you ever managed before. I spend all of twenty minutes each month budgeting and paying bills now. And while I still wish I had a money tree, at least I don't lose sleep over it anymore. 

*** If you have any problems printing the spreadsheets, simply email me at theartfulwife@gmail.com. I'd be happy to send you a PDF.

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