Your Two Bits

A friend lent me the book, The Four Laws of Debt Free Prosperity, which I read in my sparse spare time this last week. Fortunately, it’s a quick short read.

The book’s strength is that it keeps the principles simple and condensed to four main points, which is a great way to go to keep from overwhelming the reader—especially considering that the readers who most need this material are likely already feeling overwhelmed by their financial situation. The four main points or laws are:

1. Track your spending so you know what you are doing with your money,
2. Target or set financial goals,
3. Trim your spending so that you spend less than you earn,
4. Train yourself in financial matters so that you spend and invest well.

The book further explains and illustrates these points. I liked the chapter on debt-elimination the best. It has some good examples of how to accelerate debt-elimination and can help you not only feel like getting out of debt is possible but motivate you to do it.

The Four Laws was produced by or for Chequemate International (I don’t know the company). This book appears to be part of a system they sell to help you get out of debt and get ahead with your money. Not knowing the company or the rest of their products, I really can’t say anything about them. However, I think this book would be helpful to those who are not sure why they should have a budget or who want to eliminate their debt. It’s one of those books that has a storyline, and the principles being taught are overtly woven into the story—or rather the story is woven into the principles. While these kinds of books do not make for great literature, using the story format makes for a more entertaining read. Plus, this story is a good motivational read for those wanting to get out of debt.

That’s my take on it anyway. If any of you have read it and want to share your two bits, feel free.

Related Posts:

• Here’s a Way to Collaborate on Your Budget
• Winning the Lottery
• Paycheck into Checking or Savings?
• Should I Pay Off Debt or Invest?

Check out this flash movie I created, and see which person you are most like when dealing with budgets. Click Play below. (Note, it has audio.)

.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
You can view the transcript.

Related Posts:

• Here’s a Way to Collaborate on Your Budget
• Winning the Lottery
• Paycheck into Checking or Savings?
• Budget = Communication

Every day people ask me, “Michael, how do you do it? How do you keep it all together?”

I humbly reply, “Budget. It’s all in the budget.”

…And then their eyes glaze over.

If I weren’t such a fan of the budget, the word budget would be a conversation killer. Hopefully you’re still with me. Rather than extolling the virtues of a budget, which I will likely do in another post, I am providing a simple budget template.

You can download the template (I’ve also added it to the Resources page) and view a short video explanation I made about how it’s laid out and how to take advantage of its being a quarterly budget.

Quarterly Budget Template (MS Excel)

This budget covers one quarter—3 months—at a time. I’ve found that with an annual budget, it’s too hard to anticipate future expenses, and with a monthly budget, there’s not enough flexibility to work with expenses that vary from month to month. Some months have car registration, others have insurance premiums due, and others have Christmas. Most budgeting templates we found addressed the problem by distributing infrequent expenses over the year, such as $10 every month for an annual $120 car registration fee. But that was hard to keep track of. Our solution came with the quarterly budget.

First we determined our average monthly income, and then made sure that our budgeted monthly expenditures—including our savings and debt payoff—did not average more than our monthly income. If our income was $3500 a month, one month we might budget $3400, one month $3500, and one month $3600, but averaged together we would be on track. We figured that each quarter, we would have different large expenses come up, but that different large expenses would come up during different quarters, so that overall things would balance out.

One of the keys to this budget system is that you have a savings account into which all your income goes. Before a given month, you should have enough money saved there to transfer to your checking account all the money budgeted for that month. And then during that month while you’re going about your business, you are earning more money that is deposited into your savings account, ready to be transferred to checking for the following month. As you record expenses during the month, you are able to see how much money you have left as the month’s end approaches, and either reign in spending, responsibly put away more money to invest, or go on a shopping spree, depending on how the month is going.

If you don’t already have a budget or if you’re looking for ideas, this could be very useful. Feel free to share your two bits on budgets or on ways to enhance the template.

Remember, a budget can be painful or empowering. It’s up to you to decide which.

Related Posts:

• Here’s a Way to Collaborate on Your Budget
• Winning the Lottery
• Paycheck into Checking or Savings?
• Budget = Communication