not thinking at all of the repercussions of our purchase, we just
think "I want it."
Take a moment and ask "do I need it" then we usually try to justify
the purchase :) but do your really NEED it. The majority of the time
the answer will be no, this does not mean you cannot purchase the
item, this simply means you may not wish to buy it yet and may want
something more than you want the other thing. That brings us to basic
It works like this and it is simple.
You have set things in life you NEED to pay for and should be grateful
you can pay for. These companies are not ripping you off by billing
you and your taxes are a result of the great country you get to live
in so yes, you should be happy you can afford to pay those too!
Insurance is often required by law, thus it is also a necessity and
when insurance is by option it is still a need rather than a want as
insurance protects our well being.
Write down how much you make and how often you are paid.
Write down all of you debt then see if you can get it to be one
payment. This includes all credit cards (consumer debt), mortgage and
car. One payment is easier to track than many and also you may be
able to get a lower interest rate. Once that is done, cut up all but
one of your credit cards and make sure that credit card has a very low
limit (no more than $1000) You will also not use a debit card but in
my opinion should always carry your bank card, and one credit card
with you just incase of emergency.
Once you have a clear picture of your debt, then look at your bank
statement. It will show when payments are coming out. Make note of
the dates so you are sure to have enough in for each payment. If you
are renting, post dated cheques are the easiest to work from. If you
own or rent, try and get all of your bills, hydro, heat, electric
equalized (thus paying the same amount each month) and revisit how
much you are paying for you phone, cable etc as some of these extras
you may wish to cut once what you are spending becomes more clear.
Write down how much your debt repayment is per month, then how much
your bills are as well. This total is fixed and MUST be paid each
Things that are not fixed amounts are how much you spend on
transportation and groceries as well as clothing and self care (and
things for the kids that we all buy way to much of:)
Take some time and think how much you would feel you need to spend on
these things and then revisit how much you can actually afford to be
spending on these things. Remember we still haven't even revisited
all the other things you want to buy!
If there is money left over after taking what you make and subtracting
what you need to live on, then subtracting fuel and food, then you
must take a moment and realize one should also keep an emergency fund
where they can. Even $50 a month is enough if you are running low on
cash. Ideally one should have 3 months of set bills put away just
Emergency fund is different than investments as well. If you wish to
invest this money you can but keep it separate. We should have three
months worth of bill payments on hand incase of emergency (injury,
illness etc) and I do not know really of anyone who has this. Most of
us just figure we could use our credit but remember the interest and
how long it will take us to get back on our feet if we do this!
For things you want then you must use money that is NOT required for
any basic expenses. Wants and need are different things and we must
look at the truth of how much we actually need of 'needs'. Life is
not what society tells us it is. No we don't need to look like we are
broke, pride in yourself, your home and vehicle does not cost
anything, thus something that costs what you can afford can still be
beautiful if you are proud of the fact you own it.
With a budget in place you will see very clearly you DO have enough to
live on and you WILL make priorities rather than living believing you
don't have enough money for what you want so why bother thinking about
Watch Til Debt Do Us Part on Slice, educate yourself. learn about
what you need to live and make your life a more comfortable financial
place to be. Trust me, living on cash, saving up for what you want
and knowing you have your bills up to date and debt under control is
very, very freeing.