Budget is not a 4 letter word

1. Budget is NOT
a 4-Letter Word!
March 2009
Presenter: Barbara J. Stark
Director of Community Development and Education
American Debt Counseling, Inc.

2. Budget is NOT
a 4-Letter Word!
Budget = Savings Plan

3. The Spending Plan
• Do you ask yourself where all the money goes
at the end of every month?
• Do you lose track of which bills you’ve paid
and which are due?
• Do you have a special project you’d like to save
for?
• How many of you need a car?
• Do you dream of owning
a new Porsche?

4. Why You Need a
Spending Plan!
Remember, it’s not about how much
money you earn…
I It’s about how well you manage
your money!

5. Why You Need a
Spending Plan!
! A Spending Plan is:
 A helpful tool that tracks all of your financial
information at a glance.
 A great way to organize
your finances and pinpoint
ways to save money.

6. Your Spending Plan
Creating and
maintaining a
livable, breathable
spending plan is based
on following 6 easy
steps.

7. Your Spending Plan
1. Identify your income.
This includes all income
for the coming year. In
addition to salary, think
of all other expected
sources of household
income including tax
refunds and raises.

9. Your Spending Plan
2. List expenses.
Be honest with yourself
about all household
expenses, including
eating out, salon
services, and hobbies.
Include all of your
regular monthly bills
and debt to creditors.

10. ATM Fees Computerware Home Parties Cosmetics
Online Services Beauty Parlor Over the limit fees
Beepers Dating Ice Cream Parking Fees CD’s
Gifts Overage Fees Bottled Water Bounced Checks Clubs
Cigarettes Greeting Cards Tanning Haircuts Videos
Cable TV Late Payment Fees Dinners Out Bar Night
Books Fast Food AttacksDry Cleaning Car Wash
Lottery Tickets Magazines Movie Rentals Sports
Lunches Out Film Development Gambling Prescriptions
Household Items Pet Costs Licenses Speeding Tickets
Cash Advance Fees Munchies Vending Machines Souvenirs

11. Your Spending Plan
3. Pay yourself first.
Always put a few
dollars aside in a
savings account each
month. Credit
Counselors say the
amount is not as
important as
establishing the savings
habit! Money adds up!

12. Your Spending Plan
4. Make adjustments.
Making expenses fit
into your income is not
always easy. Consider
consulting with a Credit
Counselor to structure a
personalized spending
plan that that focuses
on your long-term
goals.

13. Your Spending Plan
5. Dump the debt.
Building a strong
financial future means
getting rid of your debt.
Pay down highest
interest rate credit card
bills first. Hardship? A
Debt Management Plan
may be a solution.

14. Your Spending Plan
6. Track your results.
Check your spending
plan monthly to monitor
how much closer you
are to reaching your
financial goals!

15. Spending Plan Strategies:
Determine wants vs. needs
Establish short term and long term goals
Stay strong!

16. SPENDING PLAN
Budget Guidelines
Savings
10%
Transportation
20%
Other debt
15% Housing
35%
Other
expenses
20%

17. Tips for a
Successful Spending Plan
Household
Do your own repairs and painting
Shop for the best insurance rates
(homeowners, automobile, health)
Grow a vegetable or herb garden
Turn the thermostat up when not at home
Re-evaluate cable TV service and cost

18. Tips for a
Successful Spending Plan (Cont’d)
Food
• Pack lunches for school and work
• Eat out less
• Consider store brands
• Become a Coupon Queen (or King)
• Limit shopping to once a week
• Plan menus and shop with a list
• Brew your own “café” coffee

19. Tips for a
Successful Spending Plan (Cont’d)
Transportation
Car pool
Try public transportation
Ride a bike!
Keep your autos maintained for better gas
mileage
Be a bargain gasoline hunter

20. Tips for a
Successful Spending Plan (Cont’d)
Recreation and entertainment
• Discover outdoor activities for the family
• Rent DVDs for $1.00
• Use restaurant coupons and join dining clubs
• Take advantage of early bird offers at
restaurants and movie theatres

21. Credit Card Don’ts
Don’t carry more than two cards with you
Don’t use them for cash advances
Don’t use them to pay for basics:
rent, groceries, etc. (unless you pay the bill in full
each month)
Don’t charge more than you can pay that month
Don’t let others borrow your credit card

22. Credit Card Do’s
Use a debit card vs. a credit card
Use a card with no annual fee and low interest
rates
Know all of your cards’ hidden fees
Always pay more than the minimum each month
Pay on time, all the time

23. The REAL cost of Credit….
What happens when you charge a $50 dinner?
Finance Period 10.8 percent 16.8 percent 22.8 percent
1 Year $55.68 $59.08 $62.67
10 Years $146.53 $265.17 $478.49
20 Years $429.39 $1,406.31 $4,579.04
A $50 dinner over 20 years on a 22.8% APR credit
card would end up costing $4,579.04.
Paying only the minimum payment due could mean
you never pay off your credit cards for your entire life.

24. Good Vs. Bad Debt
 Good debt returns something of long term
value - higher education or a home.
X Bad debt is “feel good” debt for purchases
that you can’t afford and don’t really need.
Any bad debt over 15% of your annual
income after taxes should set off an alarm.

25. Debt Warning Signs
Beingable to make only minimum
payments on credit card bills
Making late payments or skipping payments
Having credit cards at or near your credit limit
Arguing with family or friends over your spending
habits or hiding purchases

26. Debt Warning Signs (cont’d)
Being unsure of how much you really owe
Using cash advances to pay your bills
Having your credit card purchases declined
Havingincreasingly more of your income paying for
debts each month

27. Staying Financially Healthy
 Develop and stick to a spending plan that includes
saving some money each month
 Make a habit of paying off the majority of your
credit card balances each month
 Live within your means
 Transfer any credit card debt to a lower interest
rate credit card

28. Staying Financially Healthy (cont’d)
 Plan ahead for large purchases
 Teach children the “3 Ss”:
Saving, Spending, Sharing
 NEVER turn unsecured debt into secured debt!
 Consult with a Certified Credit Counselor for advice
and confidential assistance

29. You can run…

30. But, you can’t hide…!

31. If you need help creating a Spending Plan
contact:
14051 NW 4th Street
Sunrise, FL 33323
www.americandebtcounseling.org
1.888. DEBT USA

32. Good luck!
Thank you!