Now that you have tracked your expenses, we’ll discuss how to analyze what you have listed. Since this is a brief weekly column I try to keep things very basic and simple. Put your list or bill pile on the table. Some people like to have the actual bills in piles to be divided into groups and others prefer to list them – it really doesn’t matter. Begin to divide them into two groups:
1)essential for survival (Needs)
2)non-essential for survival (Wants)
Things that are essential for survival are food, shelter and most utilities. While any high interest debt would take a priority in any final decisions on who gets paid when, its still not a basic survival problem. What I have found over many years of counseling patients and students with debt problems is that they won’t stick to a spending plan which makes them feel insecure about their basic survival needs. People who are hungry and worried about the roof over their head will not stick to a budget. Well, not easily anyway. So separate these expenses.
Once you have all the essential bills stacked in their pile, get them listed in order of highest expense to lower. Food is a hard expense to track for many people, so put down the high estimate of your monthly food bills. Once this is done you can see how much of your monthly household income is needed to cover these basic human needs. Many people are unpleasantly surprised to find that a very high percentage of the household income has to go into just meeting basic needs and surviving. That’s why they ran up the credit cards bills in the first place! They got hooked by the next category: "Wants."
Wants are the fun non-essentials of life -- Cars, cable TV, trendy clothes, to the delight of retailers, the list is endless. Most high interest debt is incurred when people have a bad "Want Attack" and impulse buy something they really can’t afford, or would have to save to buy. Occasionally, these Wants can be very strongly motivated by often unspoken social or job pressures to present a certain "appearance." They can be symbolic to the person, like the fellow who buys a fancy car to prove to himself he has "made it." Or they can be as trivial as liking to buy your kid a couple gum balls in the machines every time you leave the store from shopping. We’ll discuss all this in a later article regarding "Problems Sticking to a Budget."
What is important in the beginning is to understand that not everything in the bill pile is an essential expense. They are all not life or death issues. This makes the process of achieving some control in your finances much less overwhelming.
One site I have used which saved me lots of money on car insurance and phone bills is:
LowerMy Bills.com
LowerMyBills.com.
Another site some friends of mine used to do the same is:
LoanOuotes:
GetAFreeQuote.com - get a free quote and save on loans, cars, insurance, home improvements, credit cards and more!
You might check them out!
For frugal inspiration check out sample pages by other frugal authors at:
Complete Tightwad Gazzette
The Complete Tightwad Gazzette
Declare Your Finanacial Independence
Declare Your Financial Independence
Complete Cheapskate
Mary Hunt's Complete Cheapskate
Miserly Moms
Miserly Moms
You Can Afford to Stay Home With your Kids
You can Afford to stay Home WIth your Kids
