What if you are a chronic over-drafter, and you can't make heads or tails of your account, and you just want to "Keep It Simple Stupid"?
- Some people can separate and compartmentalize their finances easily.
- Some have no idea what they pay each month.
- Others are 6 months behind before they know how late they really are (this one would be me...).
If you are behind, or you feel lost in financial windfall, don’t worry you are not alone.
It’s among the most important practical skills most people could learn, but many don’t know where to start. We will examine a few things you can try if you are buried and don’t know how to get out.
Nothing comes fast and easy, but with some good information and willingness to try new things you can start your journey to a better place, one step at a time.
~Time for a Do Over~
Calling it a do over is just fine.
In fact, if you have an account that is often overdrawn, you may even want to consider closing it and starting a new account number so that you can start your new register skills at square one.
In addition, if there were automatic payments causing the overdrafts they will cease because that account is closed and they will not have your new account number. Don’t give it to them either. Pay them in cash, with online bill pay, or money orders.
Often they will start drafting automatically again once they have your new information, even if you told them not to. Don’t put yourself in that situation. If they demand auto pay, set up a new account number separately just for auto pays and another for your main bills and spending.
~The Cash Method (Dave's Envelope System)~
On each envelope write a category (gas, rent, groceries, bills, etc…). You can even keep a separate envelope for each bill.
For each envelope you will have a separate notebook or section of a notebook.
Whatever works for you is the best way.
As you get comfortable with this cash method you can eventually combine the envelopes of various categories into one envelope. Then have one notebook for your cash. Then mark in that notebook the date, money, and category and in the separate category notebook you write the date, money, reason (specific).
If you don't plan in the fun, you will do it anyway.
You must plan fun or you will binge-spend causing more money to go to that than you would want which would take away from the money that should go to other things.
~Bill Pay and Money Orders~
Start with money orders or Bill Pay and don’t use an ATM/Check Card until you’re thoroughly sure that you are ready.
Stay away from credit cards unless and until you can honestly call yourself disciplined to pay them in full each month.
Once you're sure you can use a credit card to your advantage, you could pay everything with the credit card and get one with a great rewards program.
Make sure to pay it off in full every month never carry a balance on a credit card.
They may offer amazing deals with 0% APR for 6 months. But what you don’t know is that if the card isn’t paid off within 6 months many companies will back date that interest to day one.
Think of credit cards as a convenience tool, like a check or debit card. You don’t use a credit card unless you have the money to pay it off. Credit cards can be useful because errors caused by merchants or fraud through use of the card won’t affect your cash balances in your checking account directly, where as they will if you had used your debit card. Think of your debit card and credit cards as the same or similar tools.
~The Multiple Account Method~
Much like an electronic version of the envelopes.
- I have one account for just bills.
- Another for spending money.
- Another for tithe and offering.
- Another budgeted for the kids.
- You could also use one for business purposes, budgeting play money, gas money, or hobby money... you get the idea.
I have my direct deposit split into each account automatically. Tithe then is as simple as going online and sending that payment from that account twice a month.
I know my money is His, so I plan for Him to ask me for its use to further His kingdom.
~The Computer Method~
If you can’t afford Microsoft Office on your computer do a Google search for “Open Office”. Download that and use their “Calc” program, it is their version of Excel. It is a free open source program that does most of the basic things Microsoft Office does. Google Spreadsheets is free now too.
- and Total.
To see a running balance along the side after each transaction just add the cell above to the cell new cell. In this example cell “D6” is 100 plus cell “C7” which is -850.
You must use the negative in front of all subtractions to make this method work. It is among the simpler ways to format your sheet.
Almost without exception one person is a natural saver the other is a natural spender. If one person does all the banking there is bound to be tension.
The Insider is a BIG fan of Dave Ramsey:
- Go read/listen/watch Dave Ramsey and he'll teach you how to do it right!
- Listen to The Dave Ramsey Show (HERE)
- Or by his most popular book: (HERE) The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness