The 1,2,3 of Simplicity

The 1,2,3 of Simplicity.

I do no not claim to be rich or out of debt. I just know what I see on a daily basis and what I have learned in my own life of being a single mom on a tight income.
At one point in time I was working in the finance world by day and then going to McDonalds by night just to make ends meet.
Thankfully now after alot of hard work I can make ends meet with only one job. I am no longer a single mom, but for all the intents and purposes of the financial end of life I am still on my own as I do not co-domicile with my partner.

I see simplicity as being a three step process.

Step 1: Simplify your finance. Use Cash.
Have one account that your automatic payments come out of , know what they are and when they come out. Most payments will accept it a few days late but they have tiny “ late payment fees” they do not always tell you about so the billing date is important.

Be sure to have the funds in the account, Going into an overdraft is just as bad as using a credit card, it is still credit just a different kind. Set up an auto payment if you have anything you still get a paper bill for, you will save trees as well which is said to be good for brownie points with the tree people.

Step 2 : Real numbers.

Assign physical numbers to variable expense. Let’s face it, tracking your money is dull. There is no flashy app for your smart phone that will make it fun.
Figure out a reasonable number for gas, food, and medicines if you get a monthly prescription. You should also budget in to this step your savings. Everything over and above these expenses are flexible and negotiable.

Take your variable expense money ( gas, food, medicines ) out in cash and put it somewhere that you can get at it easily and at no cost. I am a big fan of Mason jars hidden in the freezer and if you really want to be thrifty you can recycle pickle jars for the purpose.

Step 3 : The 50/50 rule.

This is key. You still need to have a life. I don’t care what you currently owe on your credit cards, your home or to Uncle Bob. You still need to have a life. No one is going to be motivated to keep working 9-5 or 9-9 if you never see or enjoy a dollar you earn. It sounds good in theory to work your tail off and get out of debt fast but I assure you, it is not worth it. I have done it.

The 50/50 rule is easy. 40% (and no more) should be fixed expenses like car payments, credit cards, utilities and mortgage payments.

10% of your monthly income is savings. Be diligent and pretend you never received it because you truly do not want to eat catfood when you retire and no one can work forever. You can make it grow, work for you and allow you to have some fun. . We can talk more about how to do that later. For now just remember 10% SAVE IT.

The other 50% is variable expense and of course living! Movies, food, friends, and weekends away all need to still be a part of your life, they just take a little planning.

Example, painless math I promise.

Income = 4000/ month so 1600 for fixed expense
400 to save
1600 to eat and play with

You can figure out how your own break down of those expenses works and you may have to cut in a few places to fit the formula but I promise if you use the 50/50 Rule you will avoid dipping into the credit cards while slowing paying down the balances you already have and building your savings.

Happy 50/50!

- Whiskey G