I spent a few hours this morning at a relatives house helping them write a budget. They've really been struggling to pay the bills. I went out on a limb and offered to help them go over numbers. They've never operated with a budget before. They don't know where their money goes each month, or each week even. They don't have a check book registrar that they balance. They don't have any sort of computer software that they plug numbers into. As I found out this morning they don't even know "about" how much the electric bill, or the phone bill, or this or that bill is each month.
I'm NOT judging them. I'm fully aware that more people than not operate this exact same way. You get paid. You spend the money. You hope to pay the bills along the way. Period. I almost expect people to operate that way. It's so common. I was impressed that they jumped at my offer to help them draw up a budget and get their bills caught up. On the plus side they don't have any debt, a small student loan but otherwise they're in SOOOO much better shape than my husband and I have ever been. On that note I want to say that it probably helps a lot of people out to not have very good credit or even bad credit early in life. If you can't get a credit card it's considerably more easy to stay out of debt. I commend them for that! Oh, I could only wish...
I started with the number one goal in budgeting: spend every single penny on paper before the month begins. All of your money should have a goal; all of your dollars should have a name before you ever see them. I actually went over there knowing "how" I was going to help; I was going to give them basic budgeting principles and draw up a budget with them. Can I tell you, for the past few days, as I've been getting ready to go over there I've been second guessing myself, thinking," surely they must know all these things. surely I can be of no help by just telling them about budgeting. Hm, I wonder if there's something else that I'm not thinking of that they're really expecting me to help with." Not like asking for money. I knew that wasn't the case at all. But I was still trying to figure out some other thing that might be more knowledgeable than "simply" how to budget.
I had drawn up an outline before hand. They were so scared going into this "meeting." They had hit that hopeless point in the financial journey where there are so many shut off notices and late fees and past due letters that they didn't know if they could ever get out of it. I knew they were in better shape than they did simply because they have no debt (okay, I'm not counting their mortgage in that debtless declaration either).
I sat down with them and had them start filling in the blanks:
Projected monthly income for August
They sat there so impressed with my outline. Okay, there was fear on their faces too, like "oh my word, is there going to be a giant negative number at the end of this page?" We filled in the numbers and I kind of had to giggle when I told them, "see, you're really not as bad off as you thought." We got all their bills caught up by October. Nothing will be shut off (well except the internet and cable that were already disconnected... shoot and the garbage service (also already shut off)). We budgeted in a decent amount to grocery money, yes they are living on a set grocery budget now. I think they were both a tiny bit excited about the challenge of budgeting the groceries on considerably less money than they are used to for this month. After we were done they both seemed, I don't know, empowered. Like they're now in control of their money for the first time in their lives. We budgeted in back to school expenses for the kids, a hair cut for one of them, birthday presents for relatives. I tried to get every single expense out of them that they could think of.
We also drew up a weekly budget for the rest of August. "Now this is WHEN you're going to spend your money and $355 from 'this' check needs to be saved for your mortgage payment during 'that' week." They were thoroughly impressed. I'm going to go back at the end of the month to budget out each week in September with them and revise the September monthly budget that we drew up depending on how they do this month. I don't anticipate going back again after that. In truth I'm really impressed with them for accepting my help. They made me laugh when they said they really needed to pay me for my financial services. All I did was tell them how to budget. hehe :-) They seemed like an enormous weight had been lifted from them when I left there today. I'm very proud of them!
The whole ordeal got me thinking though, how many people lose their houses because they just don't ever budget their money? For real! How many people go about it the normal way: get paid, spend money, maybe pay the bills?!?! You can only get so far in the negative and then there's this enormous monster living on top of you and one day everything just caves. You lose the house. We call the monster poverty. But for real, how often is the monster just foolishness; just poor planning (or no planning)? We are living in a crazy world! Even look at the government of my country. All these wealthy beyond belief bureaucrats truly believe they can just spend any amount of "government" money, who cares if it's not actually there to spend and "one day it'll all balance out." IT DOESN'T"T WORK THAT WAY PEOPLE!