Alternative Debt Reduction

Perhaps don’t want to do a budget or maybe tried and failed. There is an alternative way to reduce spending or at least keep spending under control. Unfortunately tracking is a must to get a good number. 

Transcript

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Hello, I'm your host, Mr. Chuck, a retired accountant turned truck driver, I reduce my debt in a relatively short period of time, debt reduction to achieve financial freedom takes commitment, confidence, determination, alternative debt reduction, perhaps don't want to do a budget, or maybe tried and failed, there is an alternative way to reduce spending, or at least keep spending under control. Unfortunately, tracking is a must to get a good number. What am I talking about a good number or that is all what this whole episode is gonna be about? How do you come up with a number that you can use to keep your spending under control? That is, in a nutshell, what we're talking about, I do have a link in my show notes. For this particular spreadsheet as happy giraffe.or For slash live, I believe that's the link there it's a they have a couple spreadsheets that you can download and use for free. They ask you to make a donation if you like it, or if it's helpful, and you're and you're getting your debt reduction. Now five bucks or so a couple of dollars, anything that helps them stay alive. And I promote them because one is a decent spreadsheet. At work, I used it for about a couple months, this does get the feel of what it is what it does. They've improved it since then, because that was probably at least a year or so ago. So and they have a book and they have some live training on that shirt too much about that if you go to their website, you can find out all that information. But what I'm going to talk about here is a different way to do a budget. And this is really you're not really doing a budget. But it's a way to keep your spending under control. Because if you have a debt problem, you probably had a spending problem of some sort or for some reason. Unfortunately, in my opening statement, I said tracking is a must. What's that's what I would prefer everybody to do, you still got to track your spending. So that you know whether or not you're hitting this number or staying below this particular number, you're going over a particular number, and you need to do tracking so you can get reports to help you fill out the spreadsheet. Now, you don't necessarily have to do it. But the better information you have up front, the better information you're gonna get. And war is gone to help you happy draft thought or is very good and useful spreadsheet, I'm in the one that's called budget happy or budget spreadsheet that the other one they have is for debt reduction. It's where you list all your say you want to pay off your credit cards, you list all your different credit cards, we can just list all your debt, ply money, make the minimum payment, like I recommend, apply the extra money, you keep track of it in a spreadsheet, and you can see how much your debts been paid off. I've never used it, it's a good idea. It seems okay. It's just a matter of getting in there and using it piano it can't mess it up as to say that. If you're not a spreadsheet person or you're afraid to use them, you can't miss mess any of these things up. And you can always go in and fix them. You can always change a number it's not set in stone, it's not you put it in once and you can never ever change it. With that said let's get started at the very beginning is the happy draft budget spreadsheet. And they do have a video show on how to use this. But you start by selecting one the current date, per se, and a time period and they have it and weeks. I recommend you do 52 weeks because that's one year. That pretty much covers everything that's going to happen in your budget. They have the sample set up for two years. You don't have to do that long. I wouldn't recommend 52 weeks. It's important to remember the day that you start this case it says April 3 2023. So on every 30 days, so the third of every month it's gone to cycle into a new month. And it's gonna go from April 3 2023, to April 2 2024, for this particular example. And in order to move throughout the spreadsheet, you got tabs on the bottom. And the first tab is called period. And that's how you're done. I mean, it took 30 seconds and you're done. The second one is called income. And right under, there's a paragraph that's figure out how much money you have to work with, include the money in your bank account and any regular income. So the very first line is bank balance. What's the current balance on this day and your checking account, we're only talking about checking account if you have a checking and a savings do not include balance in your savings account. Because this is gonna figure out how much money you have to spend every week. That's the number we're coming up with. It's the now amount of money that you can spend every week without overspending. So you've put in your current bank balance as of April 3, then you list all your income items. So if you're single, the only one person put, you know, the maybe the name of your company, they have my only paycheck, but you can put in the source, the name of your employer type, how often you get paid is a weekly, bi weekly. And if you click under it on the Type field, a little box pops up. And you got to get paid every other week, the first and 15th, the second Wednesday, third, Wednesday, fourth, every four weeks, Monday, yearly, one time, so all the options should come up. So if you're starting this and April 3 Hemsby, a date you get paid, then you're pretty well set, you just say and you get paid weekly, just select weekly, the exam example here is, is every other week. And what's your take home amount, what's the net amount of money that it's your checking account, or the net amount of the amount of money you can deposit in your checking account. If you have direct deposit, which you probably should, if you don't, you should set it up if your employer offers it most employers offer nowadays. So it's the amount of money being deposit in that checking account. When is the next pay date. So we're on April 3, he's getting paid on April 7, which is Friday, and he gets paid every other week. That's all you have to put in there. One time and you're done. So if you get paid weekly, you put that in once or you put your income in, how often from how often you get paid. You put your spouse's income in how often your spouse gets paid. Any other sources of income that you get on a regular basis, say you work. Have a part time business, you do a business side because you're a firefighter. And you work four days a week, he got three days off, you started your own business, and you make about$500 A week or $500 a month or whatever you put that in there. Also, if it's a regular stream of income, you can include that in this spreadsheet, because it's important, because it's money you have available, and not only to spend but to pay your bills. Then the third tab is called fixed expenses. This is a list worry your tracking is gonna help you fix expenses occur on a regular basis. And the amount usually stays the same but not necessarily. Included is like savings and other fixed expenses. And they're broken down in this spreadsheet by monthly yearly, one time. And other they've changed this since I've done my testing but monthly is start there. And the example is Scott, your mortgage your rent. So you'd put the name of who you're paying, or what it is whatever the case, you put in the dollar amount, day that you pay the bill. We only want the day this will happen each month that should be the number between one and 31st. So they pretty much made this fairly simple. So if you pay your mortgage on the fifth of every month you put in the name who you pay, the dollar amount that gets paid And the fifth. And the pay utility, say your electric bills paid on the 12, electric bill, the dollar amount, the 12, your natural gas, the dollar amount, the day you pay it, your cell phone, your car payments, everything you pay each and every month, no matter what happens. And if you want to put a little bit of money into a savings account, say you want to save $25 a month, and you want to deposit transfer it on the 20th of each month, he can put that in there also. But if you're struggling to pay off debt, you're probably on a half of all your monthly credit card payments. And he may not quite have enough money to put a little bit in savings. So the savings is something you can add it later, you can come in. Once you have this set up, you can come back and adjust it any way you want. You can add things, it could be six months down the road, and you can make changes. But remember, when you make those changes, your weekly dollar amounts gonna change, it could go up or down. And if it goes down, that means you got to adjust your savings, or your spending down to match what the dollar amount you have. So the idea on the spreadsheet is everything you know, you pay on a regular basis is set up bi monthly. And then they have yearly, yearly, it could be like your car registration, Christmas gifts, car insurance, anything you pay once a year, which may not be a whole lot like for me, I have a couple streaming subscription that pay once a year, but it's not a whole lot. Then you have another column, or section, it's called one time, something you pay off one time do maybe a one time event, maybe you haven't your 10th anniversary wedding anniversary, you want to have a big party, and you spend $1,000. So you could put that in there. Or you're planning on doing it sometime in the future, under yearly, what you could do, if you pay things quarterly, you have to set say you pay your instead of paying car insurance once a year, you pay it every three months or once a quarter, from your start date, you look forward, you put in car insurance, the dollar amount, and the next date, you're gonna pay it, which may be three months from now it could be the following month could be the current month. But that would be your first payment. Now you got to put this in four times because we're looking at a year a year cycle here. So if you pay it quarterly, you enter it four separate times, with four different dates, the date that you pay, at least the month, close to the day, it doesn't have to be exact day we get it close. And then the year. Now you're gonna like since we're starting in April, and ending in April, you're gonna lap over a year. So be careful there. And if you just paid it the previous month, that would be the last one you put in your spreadsheet for you the yearly thing. So you could break down your quarterly and throw them under the yearly column, your semi annual, you do the same thing, but you only enter it twice. I really when I was using it didn't really use the one time maybe once or twice. And then other, I don't know what you would call it because of its day care that would be monthly could be monthly, or maybe can include that under other. Okay, under other they have it set up every three months. So that would be your quarterly. So what you could do is put your car insurance under other you could do either or way, fine, figure out the first quarter that you're gonna pay when that is and then set up every three months. And then, you know, once you make that first payment, oh go out three months, and then three months and three months. So that'd be the easiest way to do it. If you have something that you want to include, or they have pest control, maybe it's a one time thing. Maybe it's something you're going to do only do in the summer time. Others were you put everything that pops up on your list that you don't know where to put. So once you get all that done now we go to tab four and it's called Happy money. And this is that number You're looking for, we're looking for a number that we don't want to go over. Now, when you're putting all these expenses in here, notice I didn't say anything about gas for the car or groceries, things that you pay, maybe weekly, maybe you go this grocery store a couple times a week, maybe you have to put gas in two different cars. And it might have three different times those type expenses asked unknown, where you don't know when you're gonna do it. And you don't have the exact or close dollar amount. groceries, gas, dentists, doctors, when I say dentist, and Doctor, I'm talking about your copay, the out of pocket, the$20 2550, whatever it is, you really don't know what's gonna be those are the things is happy money is going to pay for, it's gonna use this money to pay for things that's not included in your expense. Spreadsheet, think of it that way. So what did you not include? So if he didn't include car insurance, or homeowners insurance, or what you should, because of the big numbers, or renter's insurance, because there's a small number, then that would come out, you're happy money, just so you get a better understanding what's going on here, this is not happy money, you go out and buy whatever you want. This is happy money that you pay for things is not already accounted for, in particular spreadsheet, that you spend money on a regular basis. Blow is your maximum weekly allowance in an easy, perfect world. And what they do is they take your total income for the year or for the time period, which are this, which I this is two years, but we're setting it up for a year, that total a fixed expense that you entered in your expense area. And they come up with how much you have to spend. And they take that and they divided it by the time period that you set up in this case, it was two years, and they come up with a max allowance. And this particular example says$312.60 rounded up. So your actual weekly allowance is they put in $300. And what that does, it's got boxes here that turn red and green. And the example the boxes are green because it's under the your days your account will go negative is zero, your low is bank balances$10. Here are over under expanding by and their case are under expending by $4.65 a week. So I would adjust that down to 275. If it was me do a mind per week, this is per week. And you only spend it on gas, food, dining out things like that. And you shouldn't be dining out if you got a debt problem. If it's in green, you're good to go. That's your number, the $300 or whatever your actual number comes up to, you can adjust that down, make it 275 A week and put$100 a week into your savings account and see if you can do that. So you start with your first week, he tried to keep your spending of everything not included in the spreadsheet, I can't stress that enough, under$275. And if you do that you have an extra about $30. But leave five bucks in your checking account with that checking account balance should be higher than $10. It should go up more than $10 As your lowest point it should be like 300 ollars should be your lowest and that's what you use to live on for that particular week. sounds fairly simple done. Then we have a nother we're not done yet. tab called cash flow chart which you can see the balance of your checking account. If it's all green, you're doing good. And the white you can see where the balance drops down and gives you dates and all that kind of stuff. And then the final tab of the ferry right side is called a just cash flow. This is probably where it kind of gets confusing for some people. I didn't really have much of a problem with it. But let me just go over. It's where you can adjust your flow, the cash flow that you all the information you put in there to get it to match your bank balance because they have a running balance on your bank balance. But here's Some things to note there. This is all based on that first day that you start. So in this case, it starts on April 3. And then it's everything that you entered in there, except for your weekly allowance going forward for, let's say, one year, and the day that you put in that you are on a path that you paid it are going to pay it. So it's automatically already in there. So you can look, okay, on April 3 is $190, one time expense deducted, there is a monthly expense on April 6 of $250. And there was an other expense of 175, you go back and look to see what those are. Your income when you got paid on the first Friday is was is also in there under income. And then we have a column called allowance, that your happy money dollar amount. And it's automatically adjusted on the start date for the week, divided up and weekly segments. So every time you see another $300 deducted, because that was their weekly allowance. That's the start of another week with you're trying to reconcile this to your bank on from the start until the day until the end of the month, or end of the week, you're not going to be able to adjust to because there's already a bank already has that $300 taken out. So I guess technically, you could go to the bank and take out $300 cash, and your bank balance would match on your start date. And then use that $300 On this to say took out $275. And so you'd love to $25 extra in there, because we're going to try to save a little money, you take out the $275 cash and you use that to pay for your gas, your groceries, if you dine out, whatever you do, that's not included on the spreadsheet as what you use that cash for. So if he only took out $275, he need to make an adjustment for$25. And you make that a a addition. So you make an adjustment, and you put in 25 and then notes to deposit into savings. And that will adjust your bank account, I just put that note there because I'm going to once a month transfer to savings, when then you need to make an another adjustments to do that at all, I'm actually will adjust your bank balance now you're in balance should be imbalanced. With your bank, if everything happens on the day, it's supposed to happen. And that's where the problem the herein lies because every month is not going to be the same. Maybe your pay day falls on a Saturday or Sunday. So it gets changed to Monday. And if you start your spreadsheet on a Monday, that's going to go from one weekend to the next week. So you would need to either wait and do nothing and a wall eventually flow through or add it back in the previous week and then subtract subtract it out in the current week as an adjustment if you want to be annulled like I was, but you don't have to do that you could just wait to the end of the week, make your weekly adjustment on your 300 if that's still working, and go from there. So the biggest problem is going to be a timeline of when the date start and stop. And that's the only reason you'll have to make an adjustment other than your allowance amounts is always the start of the next following week. So if you started on Wednesday, it's gonna be Wednesday through Tuesday. The following Wednesday is gonna be your new start week. If you start on Saturday, it's gonna be Saturday through Friday, the next you get to adjust and that's going to be consistent throughout here for year just cash flow and it's once you get the hang of it is not that difficult. Now let's say you go along and you've been doing the$275 and you still have extra money. You know you hadn't spend it all maybe that that first week you just got done filling up your your gas and your car and you just got done going the grocery store. So you took out$275 out of your checking account, and you still have $150 or $100 Well, the next week, don't take out the 275 only take out 107 Only five, make an adjustment for what you left in there. And that's money that you can put into your savings account at the end of the month. This spreadsheet is very useful. If you can put accurate and complete information and there, the income part of it should be fairly easy for you to figure out. The expense part is where you're going to spend most of your time. That's why you got to keep up with your tracking. Because if you do tracking for the first 30 days, that's gonna give you your monthly expenses, which is going to be 75 80% of what you're spending your money on, then you have to think, what do I pay? Every once in a while? Do I have things I pay quarterly? Well, if you have quarterly, you can put those items under other because you can set it up every three months. And it'll automatically do that every three months for you. Or you can set it under yearly and put it in there four times, however you want to do it. The one time thing is something that you're looking ahead. What am I going to do maybe this year that I won't ever do again? Or own due every few years? Or, you know, I'm only looking at one year, what could that be? Well, my parents are having their 50th wedding anniversary and probably need to buy them a gift. So maybe I'll spend $200 Well, that could be a one time thing. Maybe you're getting married, and it's hopefully a one time thing. And you're male, so you got to rent your tux and stuff. And so you're spent thinking you're gonna spend$500. So include that and put in the date that you're getting married, or a week before you get married. Now, you gotta you gotta use your own best judgment, judgment on these things. I'll be back in one moment with my final thoughts. If you're interested in the articles I use in the any particular episode, I include them in my show notes. I also include links to shop financial, which is the software I use the personally get out of debt, if you're interested in checking it out. I appreciate it. I also have links to happy giraffe.org/live. There, you can get the spreadsheets I've talked about. If you'd like to make us subscription or a contribution to this podcast, I have a link there. Also, I appreciate anything. And I really appreciate all your you persons who are listening to this particular podcast. Thank you very much. Okay, we went over the basics on how to use the happy draft.org. spreadsheet. And but why do you want to do it? The reason is you have a debt problem, or you have a spending problem. Maybe you never kept track of this in your whole life. So you really are not aware of how much money do you spend on your monthly expenses and your quarterly expenses? And everything that you're already committed to paying? And are you aware of how much you spend for groceries dining out going out for entertainment? And what are those surprise expenses you had that you forget about that maybe pop up once a year or twice a year? It is it's a matter of getting your personal finances under control. That's why you need to use something like this or do your own tracking, create a budget and do it the traditional way. If you don't like doing a budget or if you felt like the budget didn't work for you, or you failed on doing it for whatever the reason, this is a way to get you started in the right direction that God to tell you how much you can afford to spend on a weekly basis. Remember, the more information you put in on your fixed expenses. The more things you include, the lower your weekly amount is gonna be but the more money you're gonna have to cover those expenses when they come up. So it's important to try to include everything. Doing thing are not going to include is going to be groceries dining out food delivery, gas, you can even include If you do an oil change once or twice a year, you know approximate dollar amount you can put those numbers and for your automobile maintenance and expenses, it's important. The more accurate information you use, the better information you're gonna have. And the quicker you're gonna solve your debt problem and you'll be glad you did so