Part 3 (2/2)

Debt management and family budgeting actually fit like hand-in-glove together. They compliment and strengthen each other if used appropriately and with caution, diligence and commitment to change.

It is advisable to get a handle very early on in your budgeting process on what exactly the debt situation is. For most people this is the most painful part of the process. Facing their monetary past and the aftermath of overspending, lack of budgeting and large debt!

Extreme care should be taken early on as well to protect your financial interest. Review your family budget spending categories and avoid debt by every means you can and not use it for living expenses.

Repaying your debt should be the main priority. Consulting with a financial planning and debt consolidation professional and specialist will help you answer the question whether you need to consolidate, transfer, stop using credit cards all together, file for bankruptcy or what your other options are. Exhaust all the possibilities before pursuing this route.

A personal debt review can be painful, but is very necessary to a.s.sess the status quo or where 45 you are now and how good or bad it is. What is the depth of your ”obligation” category in your budget, where this will inevitably fall.

Debt is a wide concept, covering lots of things, including mortgage, car, credit cards and other retail credit card accounts and personal loans of any kind. IOU's from family or friends also have to be included, if you are honest about making a difference, repaying in a timely fas.h.i.+on and truly want to know how bad it really is!

Your summary sheet can carry the following headings: account, total amount due, monthly payment, total interest paid last year, and interest rate. Financial advisors call this a debt review register. It is painful to see this data, because it will clearly show the impact of bad financial decision-making. Interest paid gives you absolutely NO BENEFIT WHATSOEVER!

Strategies for debt and cash flow management in a family budget include: - Consolidating all consumer debt (that is everything you owe, except for your mortgage) and making it a priority to pay it off in a timely fas.h.i.+on, getting reduced rates and maximizing your effort in wiping the financial slate clean.

- Paying off high-interest credit cards first - Use a line of credit if you can as the interest rates are typically lower - Suspend any kind of spending on any credit card and establish good habits paying in cash for purchases - Use all store-based cards wisely or not at all, if that is the disciplined approach you have chosen - Store-based card often have no annual fees and you could qualify for them even with a low credit score showing restraint and good fiscal management by making your payments on time, every time and keeping the account up to date, will go a long way to regaining your confidence and repairing your credit.

- Utilize the service of a good credit counseling service to a.s.sist you and deal with your habitual over-spending and shopping addiction - Use credit card statements for budgeting purposes for accuracy and tracking - Loans are handled no differently the strategy is pretty much the same: find the highest loan balance and the highest rate and start paying the latter first - Avoid any new debt - If after a six month period you have paid like clockwork, contact your creditors and negotiate a lower rate at that time to ease the burden a little bit 46 - Student and educational loans are approached as investments in your future and is a hybrid and shoulder debt category really. Loan-payback for all tuition debt needs to be included in your family budget. Taking a second job (evenings and weekends might be the answer here, ,while honing and practicing your skills and gaining some more experience as well!). This might lead to better business opportunity later and higher paying jobs later in life!

Take heart. Family budgets are not here to depress you even further. The fact that you are taking pro-active measures to partic.i.p.ate in your life, ,sends the right signals, not only to creditors and credit counselors, but also to the family members that care so deeply about you too!

Another popular topic for family budgets, is children and fun activities. How to make the most of these togetherness opportunities, while living and functioning within limited means and on a budget, causes many money wise parents concern: - ”The best things in life are FREE” you just need to know where to find them, how to look and then enjoy them together. Being cash-strapped or budget-challenged should not minimize the FUN you as a family have together.

- Prioritize it together with the other members and the children in the home (if they are older), discussing alternatives like picnics, walks, visiting a beach, lake or park close-by.

- Look for locations with lots of open-area s.p.a.ce, baseball fields, tennis courts, and basketball courts.

- Use coupons for entertainment like DVD rentals, miniature golf and other sports.

- Matinee rates for movies are a great way to save money.

- Play board games with friends, arrange potlucks and play-dates.

- Visit zoos and museums and outdoor summer concerts that are usually free of charge.

- Add fun elements to choosing, like putting the activities in a hat and letting other choose what to do next.

- Avoid window shopping, mall-crawling or expensive shops where you will be tempted to spend more money or leave feeling guilty that you cannot.

- For discounted, bargain-priced brand-name kids clothing, shopping at end of season sales is a real budgetary blessing!

- Budget for one very special outing or event, you can do as a family and set aside a little extra if you can for that annual camping, local or road trip you plan for, in your family 47 budgeting process each and every year.

Family budgets is not all doom and gloom. There are always ways to do little things together, make memories and invest time and attention in one another that costs absolutely nothing but time, a smile, a hug or two and a caring heart to share them all with!

FINAL THOUGHTS ON SETTING UP A FAMILY BUDGET.

- None of us want to remain or be without money, short on cash, cash-strapped and None of us want to remain or be without money, short on cash, cash-strapped and not able to live well and or get the things we need, dream about and want. not able to live well and or get the things we need, dream about and want. Family budgeting brings us one-step closer to our fiscal realities, while offering more than the direction and route, but also the tools and techniques to get to fiscal nirvana! Family budgeting brings us one-step closer to our fiscal realities, while offering more than the direction and route, but also the tools and techniques to get to fiscal nirvana!

- Most of us have an inherent want to protect what is rightfully ours Most of us have an inherent want to protect what is rightfully ours. Our hard-earned cash is no exception here. We want to enable, as far as it is in our power, to utilize what little (or much) we do have to the best advantage and our family benefit overall. Family budgeting helps us do so with method, structure, elements and processes that enable success.

- Family budgeting can a.s.sist have and have nots alike make better financial decisions Family budgeting can a.s.sist have and have nots alike make better financial decisions with a future perspective always in mind. with a future perspective always in mind.

- Building greater awareness of where our money actually goes, or ends up, can be Building greater awareness of where our money actually goes, or ends up, can be enlightening and empowering at the same time enlightening and empowering at the same time. Some react with shock and horror, as they realize they are their own worst enemy. They bear witness to impulse-driven shopping and periods with no fiscal discipline. Realizing that this course of action hurt you and your family in the long run, puts a sudden halt on the money flowing out typically! (even if the effect does not last too long!) - Although family budgeting can be overwhelming at first, the tools and techniques, process and steps to follow are fairly simple, straightforward and easy. Like so often said, it is not rocket science! We just need to have the right att.i.tude, motivation and persistence to see and follow things through. Budget or bust!

48.- Family budgeting can help you get, be and remain in control of your money and family's financial situation. Be kind to your pocketbook!

- Set aside time to work on your household financials and budgeting processes on a regular basis. Keep it up to date and accurate. This way you can spot problems early, react quickly and come up with creative solutions in the short-term to address any issues, challenges or shortfalls. Be on top of things.

- Family budgeting helps you know your own financial facts. You will be able to know, instinctively and exactly what is going on with your cash-balance without even looking at your statement necessarily! A good test to tell whether someone is using a family budget for their household is to have them write down the exact amount they have in the bank today, and as of now also on their person, in their wallet. Add the two and write down the total right now.

What did you learn from this exercise? Let us take it one-step further. What do you owe?

Include credit cards, car financing, mortgage and other debt. Subtract what you owe from what you have. Have you learnt anything by doing this simple exercise? For most of us the answers would be astonis.h.i.+ng! This hands-on involvement and knowledge about your finances helps some and not others. For some of us just glancing at our statement now and again, having no idea as to what is in our wallets, is quite all-right too. (That is, as long as you are not finding ways to spend it without realizing it!) - In family budgeting, do not be hesitant to set stretch-goals too. Whether you get there by cost cutting, taking a second, part-time or seasonal job or find another source of supplemental income, it helps your raise the bar even higher.

- Family budgeting is not just about budgeting to the last cent and flying by the seat of your pants. It offers structure, wisdom, decision making and reward for the serious and tenacious amongst us. Taking it on as a major and regular task and priority will change your quality of life, sometimes without you even realizing it.

- You are in it for the long haul! Take responsibility for spending. It this means laying down some ground-rules in your household and cutting back on a couple of luxury items, that needs to be discussed, agreed upon and stuck to, to make your budget work and have 49 an impact over time.

- Family budgeting is about minimizing and totally avoiding if possible any unexpected and deemed unnecessary spending. Spell out the realities and consequences of these purchases to others short on cash, family tension, unnecessary stress and complications, hards.h.i.+p and more. Openly discussing it builds fiscal responsibilities on all fronts. This does not mean rigidity or inflexibility. Need, merit, means and circ.u.mstance will obviously dictate.

- Family budgeting is also about shared responsibility. All members can partic.i.p.ate even the kids. Taking responsibility for the grocery bill for example. Mom is responsible mainly for the weekly outing to the store, but when it comes to the staples like milk, bread, eggs and cheese, one of the teenagers can be entrusted with the budget funds and task, help shop for bargain, check flyers and more. Setting house-rules about who gets to pay for what and when is also important when you have young adults still living in the house or have boarders. Family budgeting allows the channel for discussion and eventually mutual agreement on financial goals and priorities.

- Perhaps the most important part of all, is that family budgeting helps us all learn where the money actually goes, as opposed to where we think it does or should go. Normally very different things! The initial realization of the amounts (usually larger than we think!), involved on incidental, discretionary and impulse buying is an eye-opener for most and ends up saving families all kinds of money they never knew they had. Just brining that into the awareness and our conscious mind tends to put a stop to unnecessary expenditure.

- Mall crawling and hanging out in retail stores to kill time, is counter-productive and part of the reason we spend frivolously. From bookstores, to lottery tickets, gourmet coffee, food-court lunch, and a quick movie, items you do not really need, but think you or your spouse or kids would like leads to hasty, flawed and almost distorted decision making.

The thought, actions and actually purchases are not budget-driven and money conscious at all. All these things add up over time. Smoking, daily coffee (or two), buying candy, chocolates, pop, magazines and more to 'kill time' are all money-guzzlers that should be avoided.

50.- Other examples of incidental money-guzzlers are parking meters, donuts, shoe repair, ,raffle tickets, fund-raising, car wash, pay phone. Avoid it is probably unrealistic, but family budgeting, logging and tracking at least makes us more aware of these categories and 'traps'. Have a category in your budget for Miscellaneous and track it for say 3-6-12 months and see how it adds up!

- Beware the flyers, advertis.e.m.e.nts, special discounted sales and other retail or sales tricks of the trade that tempt, entice and lure you in to spend your precious dough!

- Keep on tracking spending and income no matter what. A good tip for family budgeting is, at least initially, get a notebook and a pen and write things down as opposed to going to high-tech, spending money to get it done etc. Avoid this being or becoming just another unexpected and unplanned expense! It is supposed to help you, not hurt you.

Tools are great, but process and results are better.

- Family budgeting help you focus on the different types of expense you and your family and household face. The annual ones are the hardest, we tend to put them on the back burner and they tend to be larger amounts too. Having them in your budget a.s.sist us not forgetting there major expenses like school fees, judo or gym members.h.i.+ps, dance cla.s.ses, Christmas and birthday gifts, babysitting or nanny-salaries and more.

- Fiscal restraint, wise decisions, weighing options, informed choice, planned set and formulated goals and projection estimates and steps to get there, all work together in the family budget, to get you back on track and on the road to enjoying your dollar-earnings.

- Initially, when setting up your family budget probably for the first time, it is acceptable when estimating some of the expenditures and cost to err on the higher side. This will definitely show you where you would need to cut back if you had to add in budget line items or budget for big purchases like appliances, furnace replacement etc.

- Family budgets keep it real, in the moment and us humble, on our toes and accountable.

- Some realities we will have to live with. Some fixed costs we are not able to reduce right away or at all. The fact of the matter is, we are on the look-out and actively finding other and innovative ways to cut spending and costs that we would otherwise not have been 51 motivated enough to do of our own accord.

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