So here we are again, continuing the journey… Budgeting… for some reason, the word budget can strike fear into any man, woman, and family.  Are budgets scary?  Absolutely not!  They can certainly be intimidating and downright overwhelming, however, a proper budget is the first step to get you in the right place financially.  I’m not so strict with my budget and always give myself some wiggle room.  I do sometimes lack discipline when it comes to my budget…  Some people cannot do that in their current situation, but that’s ok.  Those who cannot afford to have wiggle room, need to have a tad bit more discipline.

So being in the military, I get paid twice a month.  I split my budget into two paychecks and sort my bills out based on that.  My mortgage payment can be a bit overwhelming, but I split my payment up.  I pay half on the first paycheck and the second half on the second paycheck.  I like to split the bills to leave room with each paycheck.

If you are in a place where you can put money into savings, treat your savings as a bill.  One of the recent changes I have made with my budget is adding in a joint mutual funds account that I treat as a bill.  I have to pay all of my bills as well as pay my savings account and joint account before I give myself any money to “splurge” with.  Treating your savings and investments as a bill is IMPORTANT!  You are able to give yourself a mental “check in the box” when you pay your savings bill.

Now, if you have debt such as credit cards, loans (besides car payments and mortgages), or owe money elsewhere, pay off debt first before you start to save.  I like to refer to this as consumer debt.  I recommend having at least $1,000 in your savings before you start “snowballing” on your consumer debt. 

What is snowballing?  Glad you asked.  When you snowball your debt, you are paying off one bill at a time.  You will make your minimum payments to all of your bills, and then you will take your leftover funds (whatever you have left after paying all bills) and dump it into the credit card or loan with the highest interest rate.  You rinse and repeat these steps until you pay off all of your consumer debt is paid.  Once all of that is paid, you can decide if you want to pay off the car note early or start saving.  Now, if you have a low interest rate on your car, just continue to make payments and start saving your money.

Once you save up to at lease three months of living expenses (not pay), your emergency funds will be funded.  It is important to have an account for emergencies.  After you have that put together, it’s time to start saving your longevity.  This is when you start building your wealth and set yourself up for your future retirement.

This is the basic start to getting your financial future in order.

Mike Cavaggioni
Mike Cavaggioni

Mike Cavaggioni is an Active Duty Officer in the U.S. Navy, REALTOR-ASSOCIATE®, Real Estate Investor, and Finance Coach located in Honolulu, HI. He is the founder of Average Joe Finances and host of the Average Joe Finances Podcast. Mike is building a community for people to come together to learn and build their wealth.

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