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I have a plan to make sure you control your debt.
To keep your debt in a box, it’s a spending plan.
A spending plan will help keep you from overspending.
It’s the money you have available to spend, minus your expenses within a definite time
period, say a month, quarter or semester.
You identify the money you have available to spend within your time frame and with that
in mind, you set limits.
When we don’t set limits and spend more than we have, that creates debt.
You don’t want to budget like the federal government because it spends more money than
it brings in.
You also don’t want to budget like Enron, that exaggerated their income and lied about
their expenses.
Right along side your spending plan, is keeping track of your spending. If you don’t stick
to your limits, your spending plan won’t help.
I write a budget and I also have online banking with my credit union, so I watch that. But
I have friends who record their purchases in a spiral notebook. They list the date,
how much they spent on a particular item, and then they subtract that from their account
balance, so they know how much money they have left to spend.
If there’s a particular category that is giving you trouble, say shopping or going
out, you can set a limit for that category.
Write the limit down on a piece of paper or use your computer.
Let’s say its $200.
Record every time you spend money in that particular category, break down the date,
what you bought, how much you spent, and with each purchase, you subtract from your limit,
so that when you reach $200 or whatever your limit is, and when it reaches zero, your spending
is done.
One of my friends uses an envelope for dinners out, he puts a set amount of cash into the
envelope and then when he dines out, he takes money out of the envelope, when the cash is
gone, he has reached his limit and he cooks at home.
Be good with your money.
Distinguish between wants and needs.
Think about what you really need, comparison shop and go for the best deals. Be careful
of rationalizing over-spending.
Always, always know your debt level and think twice before you increase it.
And to protect your budget, make sure you’re properly insured.
The problem with credit cards is, they can feel like they’re helping you, like they’re
a supplement instead of a cost.
Using a credit card takes from the amount of money that you have available to spend.
Let’s find another one: 42 bucks Shorty’s. I don’t even remember going to Shorty’s
and I’m probably still paying off.
Student loans can also feel like a budget supplement because they don’t have to be
paid off for 4 years.
Here’s a good rule to live by. Make decisions based on your financial situation as it is
right now, not as you imagine it to be in the future. If you live reasonable now and
things don’t work out exactly as you planed, then, you’re not in over your head.
Another way to say that is, if you live like you’re a professional while you’re in
school, you’ll live like a student once you’ve graduated.