Posted by Southwest Beverages on 1/6/2015
The holidays are over and its time to pay the bills for all those impulse purchases you made. Assuming you’re the average family you most likely spent $1,148 on holiday gifts, mostly using credit cards. OK, well with a little self discipline and a budget you can not only paid off these debts but ensure that you’re not in the same place this time next year.
STEP 1: Prepare a budget. Across the top of the page list each month. Then list down the left hand side of the page your monthly wages and expenses: Withholding taxes, 401 Contributions, Rent/Mortgage, Electric, Gas, Water, Waste Management, Land Line Phone, Cell Phone, Television, Life Insurance, Auto Insurance, Medical/Dental Insurance, Other Insurance, Food, Student Loan, Gas, Transportation, Parking, Car Loan, Furniture Loan, Other Loans, Credit Card #1, Credit Card #2, Credit Card #3, etc.
STEP 2: Rationalize each line item of your expenses. Withholding taxes-are you having too much of your wages withheld? If the answer is yes, reduce your withholdings. To determine the directional amount of your reduction take the tax refund you will be getting from filing your 2014 return and divide it by 12 (no use in giving “Uncle Sam” an interest free loan). Continue to rationalize each line item-always asking yourself, do I need this item or do I want this item? Simply put, you need a roof over your head, food, electric, water, auto insurance and life and medical insurance. The other “stuff” are items that you want. Like a land line; to many TV channels; going out; A new car, etc. For example you don’t need a $500/month car payment? (The average car payment in the US is $488/month, which is mostly interest. Think seriously about selling the car and purchasing one for cash. For example, you could get a good working car for $5,000. That means that within one year the car would pay itself off from the monthly car payments you will be saving). Start using coupons when you shop for groceries; cut back on your food purchases (next week my wife will post a blog on preparing 5 dinners for under $10.00/dinner).
STEP 3: Rip up your credit cards. You’re never going to re-structure your finances if you can simply reach into your wallet and purchase things you don’t need. For example, at the end of a trying week of work, its very easy to state to your wife, “lets go to dinner tonight”. What you are not thinking about is what is taking place with this decision. Assume for a minute the meal costs $50.00 and that you charged it. Assuming 30 % credit card interest that means that you are adding about $15.00 to the cost of the meal over the year, if you make the minimum credit card payment per month. While you might want the meal, you don’t need the meal.
STEP 4: Apply the savings that you get from the above towards paying off your credit card debt. First, pay off the card with the lowest balance; next the one with the next lowest balance, etc.
STEP 5: Save the extra money that you will now have towards next year’s holiday gifts.
Written by Bob Jenkins, Founder & Chief Executive Officer of Southwest Beverages®
Bob has had the privilege of working for some of America’s largest and well run public and private companies, including Philip Morris, Canada Dry, Dr Pepper, Cadbury Schweppes, Snapple Beverage Corporation, Tasker Capital Corp. and The Water Club and River Cafe – two of New York’s finest fine dining restaurants. He has worked in various capacities as Finance Manager, Controller, Director of Finance, Vice President Finance & Administration, Chief Financial Officer, Secretary, and Treasurer.
Bob holds a Masters of Business Administration degree in accounting from the University of Tennessee and a Bachelor of Science degree in accounting from the University of Arizona.
Southwest Beverages® is a manufacturer and marketer of two brands of premium quality dry mix beverages: Sippity® hot cocoa mixand Kemosabe® gourmet flavored coffee. All Southwest Beverages® products are uniquely blended flavors that contain all the ingredients necessary for you to enjoy the ultimate hot beverage experience. Simply add water and stir-then sip, savor and enjoy.
For more information, please visit www.southwestbeverages.com.
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