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Simple Budget to Avoid Debt - My Method

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Anonymous
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Re: Simple Budget to Avoid Debt - My Method

Personally I do the max into your 401k which if you are under 55 is 18,000(comes out to about 360 a week but it is really a lot less if you think about how much you would have been taxed) as of this year with IRS's new guidelines.  I think this should be priority number 1.  If you get in a crunch you can always borrow against it with my plan, also I think you can withdraw 10k penalty/tax free if you are purchasing your first home, if you are good at investing you can borrow against some of it to invest that money if you are unsatisfied with the returns you are getting. 

Message 11 of 14
Anonymous
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Re: Simple Budget to Avoid Debt - My Method

Love the budget, one of the absolute most important parts is knowing what REALLY goes out before you budget. I see lots of people get frustrated with their budget when they cant stay on it because they didnt account for everything when they wrote it. I tell people they need to do one of two things before they write their budget, either pay for everything with a card, or write everything they spend down for at least a couple if not 5 to 6 months. One month doesnt really do the trick, some things we may not spend in a month. So you might well miss that item and it wil throw the budget off. Then people get frustrated and everything goes to hell.

Message 12 of 14
Anonymous
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Re: Simple Budget to Avoid Debt - My Method

That is exaxtly what has happened to me this month. But I moved some things around and was able to make it work. But I have adjusted next months budget to include some of my previously forgotten items.
Message 13 of 14
Anonymous
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Re: Simple Budget to Avoid Debt - My Method

For me it is all about forced saving. If I have money sloshing around in an account I will spend. The two greatest things for me were getting a mortgage and setting up automatic withdrawls to retirement savings plans.

I got a mortgage tm with a 25 year amortization that allowed me to voluntarily increase my payment to a 15 year amortization, so I did that. The money gets locked up in home equity so I can't spend it, but that decision alone has been the greatest contributor to my net worth, basically forcing me to save by building the saving into my mortgage payment.

Next greatest was signing up to have money automatically pulled monthly into a retirement savings investment account.

I have tried saving money by letting it pile up in a savings account but eventually I always find a good excuse to spend it. Only the forced savings have ever really worked for me.
Message 14 of 14
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