Budgeting
I am getting a lot of emails and comments about budgeting. I say it is simple and some of you say it isn’t. Sorry, it is. First, write down how much you make after taxes monthly. Then write down every penny you owe monthly ….I mean ALL of it. If your expenses are higher than your income, you have a problem. So do this. Write down the essentials. Shopping isn’t an essential. Shelter, food and bills. Those are essential. Shelter is your rent or mortgage plus utilities. Food should not run more than $50 per person per week. Bills means any money you have already spent and owe. (Credit cards, student loans, insurance, etc.) Subtract the amounts that cover those 3 areas from your income and if there is any money left over, you get to decide how to spend it. I suggest you save a good portion of it in case of emergency…..trust me, there will be emergencies. And then decide what you want to spend your money on.
This is a short version. No time for the full explanation on budgeting today. But know this: it is simple. Don’t let “numbers” scare you away from doing it. Just sit down, suck it up and figure it out. Then stick to it. Don’t spend more than you make. That is my NUMBER ONE thing: spend less than you earn. If you do that, you can get out of debt and more.
For those who want more from me about money, I have a new book which will be coming out in December that covers all of this and more. Keep checking back for an announcement about the book.
Larry, I know its that simple, but stay afraid. I know its because the numbers don’t lie, and will lead me to what you say about ‘follow your money’ in the Big Spenders post. Its sad where I’m concerned. The best I do as far as budgeting is to look at the bank statement at the stores I frequent and avoid the ones that I spend a lot of money.
I thought it was $100 per person, per month on groceries. I can barely do that with 4 adults in this house, but do work on that one. This may be where my frustration comes in and I just throw up my hands, and pick up the phone and call the pizza place, or visit the local fast crud joints that are near us.
Hang in there Kay! Four adults in the house? Are they all working?
How about this one Larry – The hubby and I keep separate everything – checkbooks, bank accounts, retirements, etc. We have no kids and we both earn a decent living (not wealthy by any means), but I discovered in January that he had a dirty little secret to the tune of $44,500 in credit card debt!! I’m no angel either, but that’s out of control…and he was laid off for the first 3 months of the year….so…
I made him cut up his cards and I should frame them as a $44,500 piece of artwork :). I took out a chunk of my 401K to knock the debt down (and am repaying myself at 9% interest) and to keep our credit rating above par. He’s still got to finish paying off the rest though (I love him, but not enough to ruin my retirement!). His “financial advisor” suggested we refinance our home at 7% to pay down the debt- we’re currently on a 15-yr fixed at 4.875%. I told him to tell his “advisor” to kiss my you-know-what! All he wanted was the Commish on the close! Am I thinking correctly here? We’ve cut our “leisure” spending (dinners out and NO vacations) to an almost non-existent state. I think I’m on the right track…
Larry – You pretty much hit the head on the nail every time. Keep up the good work.
Stephanie……you did perfect! I would have told your advisor the same thing! My wife and I have always had separate accounts but a common goal – which was to spend less than we earned and invest as much as we could. I don’t want to be doing this crap forever! I want to retire with plenty of money. Which means that is our priority more than any other thing. We both love to shop and obviously I like to spend money on boots and cowboy shirts and jewelry….but the most important thing is financial security. So again, good for you! Stay tough.
Kay……you nailed your own problem. You throw up your hands in frustration and revert back to the easy thing to do which in your case is ordering take out and then avoiding your debt problems. You can fix your problem when it is important enough to you to do it. Until then, your problem will only get worse and your fear and frustration will continue to grow.
Amazing…….THANKS!
Stephanie: I call them adults. Its my husband, me and 2 teenagers. One of the teens is looking for work. I don’t work outside of the home. I do charity work and am studying to be a web designer and database manager. I call my ‘work’ charity since I build web sites for free trying to build my portfolio :). The other teen is 14 and eats more than most adults, high energy/metabolism boy.
Larry: I’m trying to pay attention to the budget. I want to ensure that I’m able to be a stay at home mom and still have a retirement fund ready for my husband. He works so hard. We have cut things back enough to where he can work a 40 hour week without it hurting us. At one time he had to work so much overtime just for us to survive. Creating a budget isn’t hard, its sticking to it that is my problem. I’m a visual/metaphoric type person. I look at what I do like this… I love my children and want to buy for them. I overspend on them and its the same thing as giving them a hug and stabbing them in the back at the same time. Not only am I teaching them that instant gratification is okay, I’m also jeopardizing their shelter/food/clothing (aka needs). It also appears that I’m just flat out lazy. Instead of stepping up to the plate, dealing with the gripes about what I fix to eat, I cop-out (lazy) and give in to the kids – goes along with above — and go get fast food for them. Its not my children’s fault. Its mine.
Hi Larry,
I have seen your show a couple of times and just got done watching the one with CPA. As I watched I totally saw myself in him. The reason he is so disorganized is because he looks like a classic case of ADD. I have not seen many of your shows, but the 2 I have seen, neither really successes. I think they need to be woken up to the fact of their over spending, which you do, but you don’t address WHY they are spending they way they do. In some cases it could be like a medication to them. In the case of the CPA I think things would have ended up better if he had sought help for the ADD (medication) and then an ADD Coach to help him get organized in a way that made sense to him. Not everyone thinks like you and to tell someone to sit down and write everything down may not work for them. Just a suggestion.
Thanks Kim…….
You are right, there are always other factors involved. But the show is called Big Spender and I am only there to deal with the spending problems. Sometimes I send people to addictions counseling and more. And please remember, you only get to see 22 minutes of a show that involved weeks of taping so much more goes on with the people and much more gets said than always makes the final 22 minutes.
Thanks for watching….
PS: Life doesn’t always have a happy ending.
Hi Larry,
Our cable network doesn’t carry your TV show but I have read everything you’ve put out on the web so far. I’m waiting for my holidays to get to an English bookstore to get your books.
In response to Kim’s comment, as a professional organizer, I have helped clients control their spending by helping them sort out their paperwork and implement systems so that the bills that are delivered to their door actually get paid. For one client we set up all her utilities on equalized billing and had the money drawn out directly from a bank account that was set up just for that purpose. Every payday the bank would automatically transfer money from her account and her husband’s account into the utilities account. She was never behind on her utilities again. Once that was done she had the bank transfer more money that got put into a savings fund for their children’s university education.
Keep setting people straight Larry! I certainly will recommend your website and books to any clients I have that need to….Shut up, stop whining and get a life!
Cheers from Montréal
Larry,
Earlier this year I reached a breaking point with both my health and my career…it was time for a change!! I’m happy to report that I’m on the road to better things health-wise, and after reading/listening to both of your books, I’m also on the road to better things career-wise. In an effort to continue with this momentum in my life, I’d be interested to get your thoughts on other authors who’s message and style you’ve found beneficial, and would serve as a nice complement to your work.
Thanks for the encouraging words in your book….you’ve positively impacted another life!!
Regards,
Eric
Eric……..
If you are familiar with my work, you know that I have read over 4,000 books on success and prosperity. Few are worth a damn. Here are the best: Manifest Your Destiny by Wayne Dyer – not like my stuff at all but philosophically, in alignment. Dyer is on a different plane and I respect his work a lot. Many would be surprised that a practical in-your-face guy like me would like woo-woo stuff like Dyer – but I love it. Then there is Why You’re Dumb, Sick and Broke and How to Get Smart, Healthy and Rich by Randy Gage. Randy is my style and then some…..not for the small-minded or the then skinned. Randy is a multi-millionaire and a close personal friend. This book pushes all the boundaries. I will be writing a column for the blog soon about the five books that changed my life, but these are a start.
Dear Larry
After watching your show for a couple of months now, my husband and I decided to keep our own spending journal for a month. Boy were we surprised, we were blowing money left and right, at the tune of over $1200 a months. The good news was, were not going in the hole each month, but we were spending every last penny we had. We have started a budget, and an aggressive savings plan, and hope to have a nice little nest egg built up for a down payment on a house in two years. Thanks for your inspiration.
Larry, you said: ” I will be writing a column for the blog soon about the five books that changed my life…”
Any update on when this column or information will appear?
I am knew to you and your work, but fascinated by your information and this blog. Thanks for the blog and the information that you provide.
Thanks for the reminder Raymond……I’ll put it up this week.
Hi Larry,
I am a big fan of your Big Spender shows. My favorite line from them being “Its your own damn fault”. I take that personally 🙂
Im a single 30 something professional with a pretty intense schedule. I am trying to become better at tracking my spending but I am having trouble finding a practical system that works for me so that I am not going over budget in my budget areas. I have tried using Quicken and downloading my transactions, hanging onto receipts, and even thought about buying a ledgerbook to carry around in my purse.
So whats a method for keeping track of your finances and your different budget categories on a daily basis so you know financially where you stand at all times? I see on your shows you give people a journal to record spending, but how is this laid out? Does it have columns for budget areas (for example, groceries, gas, insurance)? How can I record and keep track of spending in a way that wont require a lot of time daily?
And while we are on budgeting, how do you deal with bi-monthly, six month, and sporadic bills on a budget? For example, bi-annual car insurance, annual membership fees, unexpected doctors visits.
I love all your advice on the show but I need help on a practical implementation for my crazy lifestyle.
Thanks!
Thanks, Melissa for the question. Don’t complicate this process. The journal on Big Spender is a BLANK book. I still think the journal is the best way to do it. Better than keeping receipts and putting them in your computer. Doing that makes it a chore and we all try to avoid chores! Get a little blank book. Then make your own columns. Date at the top. Column for the expense, the amount and the category of the expense. Go to the back of the book and make one sheet per category so you can track your expenses by category as well as by day.
Regarding your sporadic bills: set aside money in an envelope or a separate account for those bills. I like the envelope method. Put something in the envelope every time you get paid so the money will be there when the bill comes in.
The good news is this: I have a brand new book coming out at Christmas called You’re Broke Because You Want To Be: How to stop getting by and start getting ahead. That book has ALL of this and more in it. It is a practical guide to getting out of debt and has all of the tools you will need to start a new life of financial freedom. You will hear much more about this book as we get closer to the release date.
Hope this advice has helped!
Larry
Larry –
I tuned into your show by accident. I was watching Sell this House all morning and your show came on. I now record every show while I’m watching it so I can go back and watch them again.
I’m in debt (of course) 10,000 credit card, 100,000 mortgage and 45,000 2nd mortgage, 14,000 student loans. Am living had to mouth and and have no savings except my 401k. I’m sarting a budget and already know I’m spending more than I make. You made it possible for me to put all of this down and try to get out of debt. I really appreciate the help your show has given me.
Hi Larry!
Just watch few of your show and listen to the audiobook of shut up stop whining and well i really like your attitude.
You got that right doing a budget is fairly easy and as far as you could figure out then don t spend more then you make you would never been in debt.
I admit to be lazy and didnt do budget but still manage to keep away from debt , minus the mortgage for the place i bought but well better then renting and can sell it back in 5 years and making money on it. Like my dad told me when he show me how to do it is just about number you could move it around to make sure the payment are make as faar as you never spend more then what you could provide. Keep going your good job Larry and maybe more person going to follow your advice and decide to take their life on the good way.