Christmas is over and there they are, staring at you, laughing at you maniacally …your credit card bills. Last year you resolved to get rid of most, if not all, of that credit card debt or to save more or to pay off that car or to use cash to pay for Christmas presents. Yet, here you are...as the old Tennessee Ernie Ford song goes, “another year older and deeper in debt.” You’re not sure how you got here and you’ve resigned yourself to settling in for the long haul because you can’t seem to find the emergency exit. Don’t panic! You don’t have to live this way. All Things for Mom is here to help you start climbing out of the pit of financial mismanagement and despair. But, before we get started, just remember that you didn’t get to this point in one day or even one month so be prepared that it’s going to take a while to get out.
Every month we are going to talk to you about a different aspect of getting your finances in order and it’s not going to be pleasant. The steps themselves are not difficult but implementing them can be life-changing and, for some, quite emotionally painful. However, from personal experience, I can tell you that the rewards of living debt-free far exceed any short-term "high" you received in the past from buying something on credit. Maybe you’re saying to yourself, “I don’t have a money problem.” Hear me out...just because you don’t have the threat of bankruptcy proceedings hanging over your head does not mean that you aren’t living on the edge.
According to Mary Hunt, the author of Debt-Proof Living: The Complete Guide to Living Financially Free 
- You are living on credit.
- You pay your bills late.
- You are not a giver.
- You are not a saver.
- You dream of getting rich quickly and living an extravagant lifestyle.
- You worry about money.
- You overspend your checking account.
Can you relate to any of these red flags? If so, then stop making excuses and let’s get to work.
We’re going to get mathematical on you in this series and challenge you to live by the 10-10-80 formula in your financial life. Don’t worry, it’s not rocket science but it might feel like it at times. The goal is to begin living so that you save 10% of your monthly income, you give away 10% of your monthly income and you live off of the remaining 80%. I understand that you might not be able to achieve that right out of the gate but we have to shoot for something – a person who aims at nothing will be sure to hit it. Keep that in your head…10-10-80, that’s your goal.
The first step in taking control of your finances is to create a spending record for your family. This consists of determining your monthly net income and then tracking all of your spending…yes, I mean all of your spending. Money leaks out of our lives like a bad faucet and even though, at the time, those drips might not seem like much – a new shirt here, a cup of coffee there, dinner out on Friday – before you know it, you’ve wasted gallons of money that you don’t really have to spend. Knowing how much you have to spend and how much you’re actually spending will give you a good baseline to kick start your journey to financial freedom. I know it's the new year and you're probably chomping at the bit to get started so please don’t be frustrated when I tell you that it will take you a month or two to get a good determination of your actual spending. Remember, it took time to get here and we don’t want to skip steps to get out. You’ll waste your time going in circles and end up right back here.
Begin by adding up your monthly income and subtracting any automatic deductions, whether it’s mandatory taxes, your retirement contribution, child support, etc. This will tell you how much you have to spend each month. Next, get yourself (and your spouse, if you’re married) a small notebook or a pack of index cards. You and your husband will be carrying these with you everywhere so find something that will work for you. Now, begin writing down every single expenditure that you incur. Yes, everything. Whether it’s the water bill, toilet cleaner or a pack of gum, you must account for every penny you spend for 30 days whether you pay cash for it or use a credit card. Other than that, it’s business as usual. Do not make any financial changes right now, just track your spending. You can’t figure out how to solve the problem if you don’t observe it in action. And, for Heaven’s sake, resist the urge to scrutinize your spouse’s spending record. It will not help the situation. If you’re going to resolve this problem you will have to take a team approach.
There you have it…your homework for this month. Be sure to check back and let us know how it’s going. We’d love to be your cheerleaders! Stay-tuned for more financial fun next month. If you’re already feeling overwhelmed and in need of more in-depth information, stat, then pick up a copy of Mary Hunt’s down-to-earth and informative book Debt-Proof Living: The Complete Guide to Living Financially Free (Debt-Proof Living (Paperback))
You can also use these budgeting tools to help you track your spending for the month.
For more in this series, check out our other articles in the Finance Mom section.
