Step 1: List out Your Monthly Expenditures

In order to understand where your money is being spent, you need to compile a list of your expenses. Make sure to include both your fixed expenses and your variable expenses. Fixed expenses may include rent, residence taxes, housing insurance, state and federal taxes, and tithe. Variable expense may include food, utilities, entertainment, medical/dental, clothing, etc. Variable expenses can be hard to determine so to make this easier have your family members keep an expense diary for 30 days. This diary can help you figure out exactly what your variable expenses are and what they total each month.

Step 2: List Available Monthly Income

Once you have figured out what your expenses are per month, you should figure out what your available monthly income is. To figure out your monthly income be sure to add up your salary (ies), interest earned, dividends, etc. If you operate on a non-fixed monthly income, use a yearly average divided into months.

Step 3: Compare Expenses and Income

After figuring out your monthly expenses and monthly income, it is time to compare them. If your total income exceeds your total expenses then you will simply need to implement a budget control method in your home. This will allow you to keep control of your money and will allow you to bank some savings. However if your expenses are greater than your income there is a more extensive budget for you to create. The goal is for you to reduce your expenses so there needs to be a budget analysis done. Following are the breakdowns of where your money/income should be allocated each month. Naturally these percentages aren’t absolutes and will vary with income and location.

• Housing: 36% of net income
• Food: 12% of net income
• Automobiles: 12% of net income
• Insurance: 5% of net income
• Debts: 5% of net income
• Entertainment/Recreation: 6% of net income
• Clothing: 5% of net income
• Savings: 5% of net income
• Medical/Dental Expense: 4% of net income
• Misc.: 5% of net income
• School/Child Care: 6% of net income
• Investment: 5% of net income

For more information on budgeting as well as some helpful hints download our free budgeting guide. http://www.familylifecredit.org/wp-content/uploads/2011/06/FamilyBudgeting.pdf

That Sunday I wrote out my first tithe check at church based on my gross income.  This was still tough because on paper that was a chunk of cash that we no longer had for our normal living expenses each month.  We knew it would be a little difficult to begin with, but that we would get used to it.  After all, I knew that this was what I was supposed to do as Lord’s voice in my head had prompted me to.

It was literally the following Monday when our accountant called me to break some bad news to me.  Now, a majority of my wife’s income is self-employment, so we usually end up having to pay in to the government a little bit at the end of each year.  This year, we had really been attacking some debt of our own, and had a few other abnormal income sources that had added up from extra jobs we had done.  We didn’t realize how much of a difference it would make in our taxes this year, and the news from our accountant was that we owed about six times more this year than we had in previous years!

We have recently been paying every extra dime we had toward our debt, and had next to nothing in savings at the time, other than some cash we had saved up for a vacation we were planning this summer.  We immediately started writing down everything possible we could save between then and April 17^th to make sure we could get this significant tax bill paid off in time.  When we had exhausted our resources in our minds, we ended up $700 short on paper with everything we had – including our vacation fund.  We started praying, and I remember thinking, “Lord, I don’t know how You are going to do this, but I know You wanted me to tithe more, and I’m trusting You to provide what we need to get these taxes paid on time.  I hope this is not my punishment for not tithing on my gross income this whole time!”  As ridiculous as that maybe sounds, I was actually very energized by this situation, because it’s times like this that God tends to show Himself.

Not more than two days later, I received a text message from a phone number I did not recognize.  This text read something like, “Do you still have your hot tub for sale?”  To give you some background, we had tried to sell our hot tub last fall, and had no success.  We had not had it listed for sale since last October, in fact.  I responded and said that we did indeed still have it and asked if they were interested in buying it.  The returning text message said, “Yes we would.  We would give you $700 for it.”  Praise the Lord!

In Genesis 22, God tested Abraham by asking him to sacrifice his son Isaac as a burnt offering.  Just when Abraham was about to slay his son, an angel called out his name to stop him.  Genesis 22:13-14 says, “Abraham looked up and there in a thicket he saw a ram caught by its horns.  He went over and took the ram and sacrificed it as a burnt offering instead of his son.  So Abraham called that place The LORD Will Provide. And to this day it is said, ‘On the mountain of the LORD it will be provided.’”

Just like in Abraham’s case, God waited until just the right time to provide exactly what we needed.  If we would have sold our hot tub back in October when we tried, we would not have had the money to pay our taxes in April.  That money would have been paid toward our student loans.  God’s timing and perfect plan was just that: perfect.

I will never know for sure if my decision to make the change in my tithe had anything to do with what the Lord worked out for us in our finances.  I do know that God cares about us, even our finances.  Nowhere in Scriptures does God guarantee riches and financial abundance, but He does want to provide for us when we wholly depend on Him.

On April 3^rd, we met with our accountant one last time, signed our tax returns, and sent off our tax payments – two weeks early.  The LORD will provide.

By Nathan Aakre, CPFC®

Certified Credit Counselor

This webinar will take place on May 21st, 2012 @ 1pm CST.  To Register CLICK HERE.

This webinar will take place on May 21st, 2012 @ 1pm CST.  To Register CLICK HERE.

The best website to get your credit report is www.annualcreditreport.com.  It’s completely free and provides you with one free credit report per year from each of the three credit bureaus.  If you want to get your credit score, that costs money ($8 – $10), but I usually recommend just pulling your report to make sure everything is correct.  I pull my credit report at the beginning of every year.  Last year, one of my credit reports showed that my current employer was a job that I had in college almost 13 years ago.  Even though this is a minor error, it’s still a part of that 80% and it’s something I got fixed immediately.  More severe cases can include creditors that are not yours, or even judgments, liens, etc. hurting your credit that you weren’t even aware of.  For those of you with popular names (Johnson, Anderson, Smith, etc.), it’s very beneficial for you to pull yours more often to assure other people’s debts don’t end up there.

The faster you catch inaccurate information on your credit report, the easier it is to fix.  Not only that, but it’s never been easier to dispute information on your credit report if you do see something that doesn’t add up.  Like it or not, we all have a credit report, so it’s important that you keep a close eye on it these days!

By Jeral Croaker, CPFC®

Certified Credit Counselor

A time bank is a community-based organization that offers its members the opportunity to participate in reciprocal service exchange, using units of time as currency.  Basically, it’s an example of an alternative monetary system.  The unit of currency is valued at one hour’s worth of a person’s labor, most frequently known as a “time dollar”.  The time one spends providing services earns “time dollars” that can be spent to receive services.  For example, take a single mom who works as a hairdresser.  She may lack resources to remove snow from her driveway in the winter months, but she loves to do in-home haircuts for the elderly.  She could easily exchange her services for time dollars, and then spend those time dollars to have another time bank member plow her driveway when needed.

Time banking fosters a sense of community empowerment and allow individuals and families to connect with one another, save money, and gain confidence in their skills and abilities.  Many time bank members enjoy participating because of the numerous opportunities to get involved in the community and help those in need.  Numerous studies have shown that time banking makes communities stronger!

Time banks began in the United States in the early 1980s and there are currently over 50 official time banks in the U.S.  Some people have expressed concerns that the IRS would get involved.  While some forms of barter are taxable, the IRS has ruled that time dollars are not, because they value all work equally, work is done for a charitable purpose, and the exchange is informal and not bound by contract.

Time banks can be a great resource for those struggling to repay debt, because you can potentially reduce your monthly budget by exchanging services that you would normally pay for, allowing you to put more of your paycheck toward your debt.  Besides being a practical resource, the giving and serving you may experience participating in a time bank is an excellent way to get your eyes off your own situation, by helping those that may be struggling more than you.  What a wonderful way to bless others in need!

To find a time bank in your area or learn more about starting one, visit www.timebanks.org.

By Kristen Larson

FLCS Staff

Register here for the 7pm webinar.

Register here for the 1pm Webinar

Thursday, March 8^th at 1:00 PM and 7:00 PM CST.

1:00 https://www1.gotomeeting.com/register/525855720

7:00 https://www1.gotomeeting.com/register/559173121

To set up a monthly budget, you’ll need to start out by determining all sources of income.  I recommend using your net income, as this will paint a much clearer picture of what you actually have to put towards monthly expenses.  Next, you will want to list all of your fixed expenses.  Fixed expenses include things like: mortgage or rent, car payments, student loans, utilities, etc.  Flexible expenses will also need to be listed, but unlike fixed expenses, flexible expenses are bills that can be cut-back on or possibly even eliminated altogether.  These expenses usually include: recreation or entertainment, cable, clothing, dining out, etc.  Lastly, you’ll most likely have some periodic expenses (bills that don’t come in every month) that you’ll also want to budget in: auto insurance, taxes, gift giving, etc.

The best way to get a picture of where your money is going is to track your spending for one month.  You can write down your expenditures in a notebook, save receipts, or even get a rundown of your spending through your bank if you’re a devoted debit card user.  This one month tracking can be a real eye-opener.  To actually view where your money is going is the beginning of your monthly spending plan.

Budget together!  Bills and regular monthly budgeting should not be one person’s responsibility.  Too often I see this, and it should never be this way since your financial situation is a family issue.  Teenagers should definitely be included in the process so that they can learn how to budget and track finances successfully.  As a family you can discuss cut-backs, better spending habits, and any goals that you’d like to set.  Getting everyone on the same page financially is not only important for a healthier overall lifestyle, but it also makes any of those necessary sacrifices easier when everyone’s working together.

Here are some tips to help you succeed with saving money and setting up your monthly spending plan:

• Split up due dates – the 1^st through the 15^th and the 16^th through the 31^st.  Creditors can move their due dates.
• Try to eliminate certain bills altogether – it’s one less bill coming in each month!
• Car pool, walk, bike, or use public transportation.  This doesn’t have to be every day!
• Spend wisely – thrift stores, garage sales, coupon clipping, buy in bulk, etc.  Determine your needs versus your wants.
• Determine budgeting leaks and fix them – dining out, coffee, clothing, entertainment, etc.
• Save money – use a family change jar, round up when balancing your checking account, get a part-time job, etc.
• Talk with your utility company about getting on a monthly average billing plan.
• Chip away at your debt load and try not to use credit cards.
• Make sure that you’re living within your means so that you don’t continue to fall into debt.
• Understand that building a monthly spending plan and sticking to it is your road map to financial freedom.

By Jeral Croaker, CPFC®

Certified Credit Counselor