Budgeting 101 Part 2

Budgeting 101: Part 2

By Keith Bunn Jr.

Getting Started on Your First Budget

Before we get started, I want to let you know that there is really no bad way to do a budget. There are lots of different forms, programs, and software out there that can help you do your budgets. Some of them are free, while others will cost you some money. 

The thing you want to remember is that YOU have to do it or do it with your spouse if you're married. Don't pay someone to do this for you. That is a good way to have costly mistakes sneak into your finances or be ripped off by someone who is just looking to take advantage of you. 

You have to be proactive about your finances! In this series, I'm going to show you how to do a Zero Based Budget the very basic way... with paper & pencil. This is the simplest way we've found that works for us. Once you get the basics down, you can find whatever works for you.

Singles and Budgets

If you get paid once a week, take a piece of paper and divide it into 4 sections. At the top of each section, write down the dates of each one of your paydays for the month you are going to start in.

 Example 1:

Next, on a different sheet of paper, list EVERYTHING you'll have to pay on or buy for that month and put the dates next to them when they are due. 

Example 2:

Note: The categories highlighted in blue, are your minimums you need to survive each an every day.

The categories highlighted in yellow, are the categories we suggest that you fund using the Envelope System.

The categories highlighted in green, are your giving and savings categories, which you most do both. 

Once you have your list made out, go back to the first sheet, the one with the 4 sections, and write what your paycheck is for that first week under the date. Then start paying off what bills you can with the money you got that week. Income minus bills equals balance, and so on.

Example 3:

Now before we go any further, you not only have to pay attention on what bills you're going to pay that week, but you have to have a prioritized system in place also. Meaning, there are certain things that you have to buy or pay on first before you do anything else in your budget. Those things are called the 4 Walls. They are Food, Shelter, Utilites, Transportation, and Clothes (highlighted in blue in example 2). 

These are the things we HAVE to have at the bare bones minimum to survive each an every day. Notice that I didn't mention credit cards, vacations, or spa treatments in the 4 Walls? That's because they are NOT a priority. If this is all you can do for that week for whatever reason, that's fine, stop right there. With those 5 things covered, you can live to fight another day.

Now, if you get to the bottom of that week, and you have paid on all you can but still have some money left over, you need to carry it over to the next payday and add it to your next paycheck. You do this for every week except for the fourth week. At the end of that week, your balance should be ZERO. If you do end up with a number other than zero, then you need to go back into your budget and fund a few more things until the end of the month equals zero. That is a Zero Based Budget.

Now I know that not everyone gets paid every week. Or sometimes you get some extra income that comes in, etc... Next week, I'll go over other different scenarios of budgeting.

Why I Do This

The reason I do this is to inspire and give hope to people. To make them think about their finances, whether they are young or old, so they can win financially.

If you find any of this information useful, please share it with others. You can also find more money news, facts and ideas, on my Facebook pages. I'd be grateful if you followed me. Thank you!

Budgeting 101 Part 1

Budgeting 101: Part 1

By Keith Bunn Jr.

The Act of doing a Budget

Doing a budget each and every month is key to a healthy financial plan. I don't care how old you are, how much money you make, whether you're a man or a woman, or single or married. If you're struggling with money, that could be the biggest reasons why.

It was our problem too! For years, we were living paycheck to paycheck. All the money came in and it all went right back out just as fast, sometimes faster! Then we did our first budget and it was like we had a V8 moment when we realized that not only did we have enough money coming in each week to eat, pay our bills, and put gas in the cars to get back and forth to work, but we had a surplus! At first, we felt like we got a raise when we saw the surplus on our budget, but then we started to wonder, "Where'd all that money go?" We had absolutely nothing to show for the amount of money we saw on that sheet of paper, other than having financial stress because we didn't have a plan.

Now we do a monthly budget each and every month, BEFORE the month begins. And because we are now doing a budget, we have to date, paid off about $80,000 of our debt. It took us a while to do that and we're not done yet, but we couldn't have gotten close to paying off that amount if we didn't do a budget, if we didn't have a plan!

Why People don't do a Budget

I've heard tons of reason why people don't do a budget. The biggest reason I've come across is because the person just doesn't want to do one. They don't want to take the time to do it or they think they won't be able to do the things they like to do if they do one. 

The next reason is that is they just don't know how to do one. Even though writing out a budget is fairly simple, no one sat that person down and said, "This is what you have to do..." So the whole thought of doing a budget is intimidating to them. They didn't want to look stupid so they just wouldn't do one. By the way, that one was me!

Another reason would be just plan fear. Fear that their situation is worst than they thought. They'd see tons of envelopes sitting on their desk or kitchen table and just feel completely overwhelmed, so they would ignore the pile and watch it grow over time.

The last reason I'll list here is that they haven't found any kind of software that best suits their situation. Really? I think that's the worst reason of them all!

Tell Your Money Where to Go

John Maxwell said it best! He said, "A budget is nothing more than telling your money where to go, instead of wondering where it went." I love that quote, and in this series, I will go over how to do a budget. Regardless if your single or have a family, one income or multiple, and even if you have an irregular one, I'll go over what you need to know to start doing a budget and finally start winning with money.

Why I Do This

The reason I do this is to inspire and give hope to people. To make them think about their finances, whether they are young or old, so they can win financially.

If you find any of this information useful, please share it with others. You can also find more money news, facts and ideas, on my Facebook pages. I'd be grateful if you followed me. Thank you!

Playing the Lottery

Playing the Lottery

By Keith Bunn Jr

You Have to Play to Win

For years, I've heard the same reply to my comment that it's not worth playing the lottery... "You have to play to win." So, the beginning of 2016, I decided to test that theory for a whole year. 

But how do I do this? Being a non-believer of the lottery, I didn't want to spend a ton of money on this, I also wanted to get the "Best Odds" of winning too. Seeing that playing the Powerball was absolutely out of the question, because the odds of winning that thing is 1 in 292 million, I decided to play the scratch off tickets. They were not expensive and the odds of winning were not too bad. Anywhere between 1 in 4.51 to 4.69.

My Experiment

I get paid every 2 week, so I bought $2 worth of tickets every payday. Sometimes that was twice a month, but there were other times it was 3 times a month. If I won anything, it went towards buying new tickets. If there were any winnings leftover by the end of the year, I'd give it away. 

So from January 1, 2016 - December 30,2016, I spent $54 on scratch offs. And even though I had some winners, I only won $15. So let me put it this way, it was as if you gave me $54 and I gave you back only $15. Would you call that worth it? Probably not. I didn't.

Date         Amount Spent     Amount Won

1/1/2016      $ 2.00
1/15/2016    $ 2.00                  $ 2.00
1/29/2016    $ 2.00
2/12/2016    $ 2.00
2/26/2016    $ 2.00
3/11/2016    $ 2.00
3/25/2016    $ 2.00
4/8/2016      $ 2.00
4/22/2016    $ 2.00
5/6/2016      $ 2.00                  $ 2.00
5/20/2016    $ 2.00
6/3/2016      $ 2.00
6/17/2016    $ 2.00
7/1/2016      $ 2.00
7/15/2016    $ 2.00                  $ 2.00
7/29/2016    $ 2.00
8/12/2016    $ 2.00
8/26/2016    $ 2.00
9/9/2016      $ 2.00
9/23/2016    $ 2.00                  $ 2.00
10/7/2016    $ 2.00
10/21/2016  $ 2.00
11/4/2016    $ 2.00
11/18/2016  $ 2.00                  $ 5.00
12/2/2016    $ 2.00
12/16/2016  $ 2.00
12/30/2016  $ 2.00                  $ 2.00

Totals           $ 54.00                $ 15.00

Now I'm not so naive to not know that there are examples out there where people do win large sums of money. But they never tell us how much money these people actually spend on these tickets before they win the big money. They also don't tell you what the opportunity cost you're missing out on either.

Opportunity Cost

Opportunity cost means, when you spend money on anything, you can't take that same money and spend it on something else. People who are wise with money, always think of the opportunity cost before they spend their money. And out of all the things they think of that they can do with the money, they make the best choice that they want to do most with that money. Whether they use it to take a trip, buy a car, invest it, etc... it is the best decision for them and there is absolutely no guilt by spending it.

Now if you were to take that $54 and invested it every year, starting at the age of 20, getting a 10% rate of return, and kept doing that until you were 60. That $54 a year would turn into $28,734.35! I know that's not much. It's not even enough to retire on, but people just don't spend $54 a year on the lottery. In fact, in 2015, Americans spent a total of $70.15 billion on lottery tickets. Folks, that's a lot of money that could have gone towards better things in your life, wouldn't you agree?

If you think playing the lottery is still the best place for you to spend your money on, do what I did. Keep track of how much you spend and how much you win in just one year. I'll even email you a copy of the Excel spread sheet I used to keep track, and share your findings. I bet you by the end of the year you'll find that it's just not worth it.

Why I Do This

The reason I do this is to inspire and give hope to people. To make them think about their finances, whether they are young or old, so they can win financially.

If you find any of this information useful, please share it with others. You can also find more money news, facts and ideas, on my Facebook pages. I'd be grateful if you followed me. Thank you!

Good Things Come to Those Who Wait

Good Things Come to Those Who Wait

By Keith Bunn Jr.

We've all heard the saying, "Patience is a Virtue" and that is absolutely right, especially when it come to our finances.

It is so easy for us today to spend more than we make. With just a swipe or wave of a card, its yours! Easy as that! Even with a debit card, (which are OK by the way) its easy to get yourself in trouble with overdraft charges if you're not careful. And the banks and the stores we shop at are counting on our lack of patience, and our ability to impulse our butts off, to make more profit on the interest we owe on those cards then if we were to buy the same stuff with cash.

True Story

Here is an example and a true story of this very thing... 

Julie and I were in line at Sam's Club to checkout, when Julie noticed the lady behind us had a bunt cake in her cart. Julie said to the lady, "That bunt cake looks good." The lady replied, "Doesn't it? And I got it for free!" 

The first thing that popped into my head was, 'I want a free cake'. And as if Julie read my mind, as she often does, she asked the lady, "How did you get a free cake?" Right then, the lady got kind of excited to tell her story, "Well, I was walking around the store, putting stuff in my cart when I realized, I didn't have enough cash on me to pay for it all. So I came up front and signed up for the Sam's credit card and they gave me a free cake just for signing up."

I immediately started convulsing a little bit. That lady had just risked her financial future for just a few items in her cart and a bunt cake! Now we didn't know anything about that lady. She may have paid off the balance right a way, cut up the card and closed the account. I don't know, but chances are, she didn't.

Having Patience is even Hard for Us

Some people have more patience than others, we all know that. Being patient is not something we're born with, it is something we learn. It is even hard for us at times. Julie is a HUGE giver, which is awesome, but if someone she is close to says that they like something, if we're not careful, she'll buy it, even if it's not in the budget to do so. I'm kind of the same way. I like to get our grand kids the toy superhero masks you can buy at most stores today, and just the other week, I saw a Spider-Man mask for $11. Spider-Man is one of my grandson's favorite superheros and I know $11 doesn't sound like much money, but we didn't budget for it. I was seriously debating on whether or not to get the stupid mask. I looked at Julie and she said. "Its up to you." I thought about it for just a moment more and decided not to get it. I know someday, I'll find that very same mask on clearance or in a yard sale for cheaper than $11. I know our patience will pay off one day. Not just so we can buy our grand kids toys, but so we can live comfortably in our golden years, and leave an inheritance to my children's children of both knowledge and money.

Why I Do This

The reason I do this is to inspire and give hope to people. To make them think about their finances, whether they are young or old, so they can win financially.

If you find any of this information useful, please share it with others. You can also find more money news, facts and ideas, on my Facebook pages. I'd be grateful if you followed me. Thank you!

Credit Cards for Gas Usage

Credit Cards for Gas Usage

By Keith Bunn Jr.

I was asked a question the other week about using credit cards for gas usage. If it was a good idea or not, if you get the 5 to 10 cents off per gallon and pay them off right away. Well, if you've following me for 30 seconds, you'd know that I absolutely hate credit cards! I think credit cards are nothing more than legalized "Loan Sharking".

But I have to admit, I really didn't have a good answer to the question other than, "I hate credit cards!" So seeing that the person's question was about a specific local grocery store/gas station credit card, I went and got the application and read it over.

Information Found

After reading over the information on the application, I came to find out that there are 2 different cards. A regular one that is nothing more than an in store credit card that could only be used in the grocery store or gas station and the other one is a Platinum Master Card which can be used anywhere that takes a Master Card.

The in store card has an annual percentage rate (APR) of 26.99%, but it also says, "This APR will vary with the market based on the Prime Rate." The Platinum card has 2 different types of accounts, which are based on your "creditworthiness". Type #1 has an APR of 19.99% and type #2 has an APR of 23.99%. And again it says, "This APR will vary with the market based on the Prime Rate."

And just like any other credit card that is out there, there are fees you must pay if you're late making a payment. And for both cards it could either be a $25 to $35 late fee.

I know what you're thinking, "This is all fine and dandy, but you won't have to pay any interest or fees if you pay it off each and every time it's due, like the question was asked." And you would be right "IF" people paid the cards off when they were due. And that's a big word, "IF".

You Have to do the Math

Statistics show us that only 55% of credit card holder pay their cards off each and every month. So that means 45% don't. So by someone thinking, "I'll get the card to save on gas and pay it off right away." doesn't always happen that way. I know we plan on doing things a certain way, but life sometimes steps in and screws up our plans. Job loss, someone gets sick, a death in the family, etc... can all happen and cause us to lose sight of our goals.

Let me explain it this way... On an average fill up, you'll be saving 75 cents (.05 cents per gallon) when you use either one of the cards talked about above. And if the grand total you had to pay was $40 and you put that on your gas credit card and didn't pay it off at the end of the month, at best, you would have to pay $75 for the same amount of gas that would have cost you $40. At worst, you would have to pay $86. Over double the cost for the same amount of gas. By not paying off that monthly credit card bill just that once, you'll have lost every once of savings you signed up for in the first place.

Now I don't know about you, but I get gas every other week. So if I were to use one of these gas credit cards, bought my gas for the month and forgot or couldn't pay my bill at the end of the month, I would then have to pay between $121 to $137 for $80 worth of gas. Folks, that's just screwing up once. Imagine doing that month after month. You can see how much that adds up. So again, using credit cards for anything, even just for gas usage, in my opinion, is not a good idea.

Something to think about

When any store, company, or institute offers you some kind of rewards program, look it over first before signing up. Do the math if necessary to really see if it is a good deal for you or for them. There can be good deals out there if you look for them. They've not all disappeared yet, even for gas usage. So look for them and just don't take things at face value.

Why I do this

The reason I do this, is to inspire and give people hope. To make people think about their finances, whether they are young or old, so they can win financially.

If you you find any of this information useful, please share it with others. You can also find more money news, facts and ideas, on my Facebook pages. I'd be grateful if you followed me. Thank you!

Are You Cheating Financially

Are You Cheating Financially

July 18, 2016

Have you ever signed up for a credit card, or a loan and didn’t tell your spouse about it? How about stashing cash and not telling them? If you have, for whatever your reason was, you have committed what is popularly called Financial Infidelity. Why call it that? Because the emotions that surround money issues can be just as strong as matters of the heart and when trust has been broken in your household finances, the emotions that come from that are as if you have cheated on your spouse.

These emotions are both strong and real and they can be felt by BOTH spouses. The ones who have done the deed can feel a strong sense of guilt from hiding this issue and because they know their significant other will be mad and probably not understand why they did what they did. The significant other can feel hurt and betrayed, thinking, “If they have hid this from me, what else have they been hiding?”

The first thing that has to be done if you have committed financial infidelity is tell your spouse the whole truth about what you have done. I know it will be a scary thing to do, but it has to be done. No healing can take place until this is done. If you’re the other spouse, the first thing you have to do is show some grace! I know you feel betrayed, hurt, and all that, but it has to be done. No healing can take place until this is done.

After that is done, you may need to seek out marriage counseling, because at the core of this, this is a break down in the marriage, not in the finances. You BOTH need to find out why this happened and begin the healing of your marriage so this doesn’t happen again. For a short time, the guilty party probably shouldn’t handle the household funds. Only after some time, and once some trust has been established again, can they handle some of the funds. Then when trust is fully established can they have free rein again.

Now one of the reasons this whole mess happened in the first place is because there was no budget meetings taking place. Think about it. If both parties sat down and did a budget together, each of them had a vote on what to do with the money, gave every dollar a name, they both knew how much money was coming in and going out, there would be no way to have this kind of money issues.

Also, during the healing process of both your marriage and money, the one who committed the financial infidelity must have a vote in the household budget meetings. This is also part of the healing process. This will be a difficult time for the both of you but only with time, patience, love, will you get through it.

Teach your Kids to Work

Teach your Kids to Work

July 4, 2016

Kids have to be Taught

I have posted it many times. Kids need to learn how to work. On top of that, they need to know that money comes from work, NOT from some government program.

Well, to put my money where my mouth is, we have started to teach our grandkids this important lesson. We started with the containers that they will be putting their money in. We bought a couple of clear containers and a few stickers (what kid doesn’t like stickers?). We put their names on them and they did the rest. They had so much fun. We chose CLEAR containers so that they can SEE their money grow as they earned more. Once they were done decorating, the work begun!

Getting their hands Dirty

Their job was to help me plant grandma’s Gladiolus bulbs. I did the hardest part of raking back the bark, turning up the dirt, and putting the edging in. Once that was done, I explained and showed them what I wanted them to do. We planted about a dozen (plus or minus) bulbs and put the bark back, making grandma happy. My grandson even made the comment, “That was good hard work!”

When the work was complete, we put the tools away, had lunch and then we explained what their containers were for and then we paid them for their work. We then talked about what they wanted to get with their money once they earned enough. Kortnee wanted Anna and Elsa dolls from Disney’s Frozen movie and Cooper wanted a Batman doll. We explained that all that was fine as long as they earned enough money to get them. They were excited for the chance to earn more money and save for what they wanted.