On Paper We Don’t Have Enough

The Family Plan is nothing more than a way for a family or individual to resolve their problems.  The goal is to resolve problems.  

Every person and every family is different; that means no family’s problems will be the same.  We’ve been discussing the accounting/fiscal department of the family plan for several weeks and today we will discuss how to make your expenses more manageable.  

We’ve all found ourselves dealing with problematic expenses.  Maybe we’ve gotten behind on paying the power-bill.  Do you know how difficult it is to get a bill back under control? Maybe you’re recently married and you know the two of you together should be better off than the two of you separately.  It’s funny that most couples think this way and still find themselves dealing with the same or more financial woes.  The reason why is because there wasn’t a well defined plan.  I’d like to tell you about how Pamela and I made a plan for our expenses and hopefully give you the motivation you need to plan for yours.

On Paper We Don’t Have Enough
We found ourselves in a bad situation.  We had more expenses than we had income.  Our ends weren’t meeting.  Each month we found ourselves in the same situation and it created more and more problems.  Then one day we decided to do something about it.  We decided we’d no longer live like this.  There are people out there who can pay their bills with no problems and we wanted to be one of them.  So our plan for our accounting/fiscal department was to be able to pay our bills and have a little money left over as opposed to being short month after month.

We sat down together and laid out everything we knew about our finances.  We took five steps, however I’m only going to give you four:

1. We listed every single expense we had.  This included those we were currently paying and ones we weren’t.  Have any of you been there?  There are just some bills you can’t get to because there’s no more money.   For example, we had student loan payments deferred.  Listen to what we did next.
2. We separated the mandatory expenses from the non-essential expenses.  You can simply place an asterisk by the ones you must have.  Here are a few examples:
   • Rent or mortgage
   • Power
   • Gas
   • Water
     I don’t think there are very many expenses that can be viewed as mandatory, things you just can’t live without.  Once you’ve done this, you can move on to the next step.
3. We determined which non-essential expenses we could live without.  This would be everything else that’s left on the list excluding already incurred debts.  Car payments may or may not fit into this category because you don’t always need a car, especially if it’s a second car or an expensive automobile.  Take a look at these non-essentials and find those that you can live without.  Examples of non-essentials include: lawn care services, mobile phone (if you’re serious), cable TV, monthly subscriptions, private school tuition or daycare, and trash pick-up.  
4. We reviewed a few items that are neither mandatory or non-essential.  These are the debts that could create legal issues and other obligations that would create bigger financial issues like tax payments and child support.

Executing The Plan
Gathering information and knowing whether they are mandatory or non-essential is great, but more important than that is using this intel to execute a plan.  Here’s what we did with the information.

Make the mandatory expenses the priority.  Each month, we made it a priority to pay the mandatory expenses 1st.  They are the ones that no matter what, are a priority.

Get rid of as many non-essentials as you possibly can.  By the way, you really can’t justify any of the non-essentials because they are not mandatory which means they’re items you can truly live without.

Pay only the amount you owe for the month.  Never pay what’s in arrears.  Now is not the time to get caught up because we don’t have enough to pay what we owe.  This process is called, “stop the bleeding.”  You don’t want to get ahead of yourself.  Getting ahead of yourself doesn’t make the situation better it only gets worse.  This is why a plan is so vital.  

This was our plan, we got our bills to a place where we could at least pay them.

Today is Friday!
The first step to getting out of financial problems, isn’t to cut up your credit cards.  It’s to learn the discipline of how to pay your bills successfully.  Tell us how this post is helpful or what we could do to make it even more helpful.  Leave a comment below.

In our next post, we will share how to improve upon paying bills when you’re able to now pay them all.  I mentioned earlier that we took 5 steps, but I only gave you four, if you’re interested in the 5th step, click here.