Budgeting, avoiding debt and getting out of debt, Part 1


Budgeting, avoiding debt and getting out of debt

Part 1

            On January 27, 2015 I was asked to speak to families by the BCMW Head Start program in Centralia about budgeting, avoiding debt and getting out of debt.

            I prepared a thirty-minute speech with handouts and other documents. Most of my speech was cobbled together from notes online, and I thought I would write it up as a blog to share with you.

            Note that these are lecture notes and not originally done to be read. It’s like reading a play – something I always complained about in school when studying Shakespeare, etc. It’s like trying to “listen” to Mozart or the Beatles by only looking at the sheet music. So it is a little disjointed, but I hope you enjoy it.


            If you do not have debt, congratulations. There aren’t many people out there that can say that. Most of us have debt and that can cause stress & anxiety.

            If you’re afraid to open letters, answer the phone or open the door, but they are ignoring the problem – but it won’t go away.

            Being in debt can be a stressful experience. No matter what your circumstance is, if you signed for a loan, you are obligated to pay it back even if you have a life altering experience like losing a job, getting into an accident, or even if you have increased expenses due to having a child.

            Money is the No. 1 cause of relationship breakdown.

            Ignoring it may also make you dread what tomorrow might bring. And it’s all because of money worries.

            Facing up to the problem can be a frightening thought, but it is the first step towards doing something about it.


            To avoid debt or to get out of the debt trap you are in is to know your income and expenses.  What you have coming in and going out…

            Few of us were taught the basics of money management.  Drawing up a budget is a mystery to many. Yet it has an impact on our day-to-day living.

            Look at your income; I made an income sheet that details your gross, your deductions and then you final net income – your take-home pay.

 Gross Income                                             $

Overtime (average):                                $

Total:                                                             $_____________



            Federal                                              $

            State                                                   $

            Social Security                               $

            Medicare                                           $

            Other (FICA, etc.)                         $


            Health                                                $

            Life                                                      $

            Vision                                                 $

            Dental                                                $

            Disability                                          $

            Other                                                  $

 RETIREMENT                                            $


 OTHER                                                          $


NET INCOME:                                             $

 Determine your monthly income:

            Paid weekly*?                                                         x 4 =

            Paid every other week*?                                     x 2 =

            Paid two times per month?                               x 2 =

            Paid monthly?                                                        x 1 =


*(actually, weekly is 4.33 and bi-weekly is 2.167, but this will give you a cushion)


            Know what your deductions are. Is this insurance? Is this a voluntary charity? It’s important to know where your paycheck is going.

            Is there a way you can adjust this?

            Can you adjust your withholding? Do you need that big tax refund or can you lower your withholdings to make more money during the year. You may get thousands of dollars in February but are eating Ramen noodles by November, and borrowing for Christmas and paying for it with those thousands of dollars in February – it’s a vicious circle of debt…

            You can even spread out your earned income credit through the year. This can be hundreds of extra dollars per month.


Then look to see where what you are spending. I’ve also included an expense sheet we use at our office. You can find lots of these online or in self-help books at the library you can copy for your own use.

Electricity $
Heating Fuel; Gas or Propane $
Water and Sewer $


Cell Phones $
Cable $
Satellite $
Trash $
HOME MAINTENANCE (repairs, lawn mowing, painting, etc.) $
NON-FOOD GROCERY ITEMS (laundry soap, diapers, toiletries, etc.) $
CLOTHING/SHOES (yearly average ¸ by 12) $


MEDICAL AND DENTAL EXPENSE (do NOT include insurance premiums) $
TRANSPORTATION – include gas, oil, repairs ( do NOT include car payment or insurance) $
INSURANCE (do NOT include any payroll deductions)  

Homeowner’s /Renter’s (if not escrowed)

Life $

Health (Major medical, dental, vision, etc.)

Auto $
Other $
TAXES – do NOT include any payroll deductions or any that are included with your mortgage payment  $
INSTALLMENT PAYMENTS – only those you  intend to keep  
Automobile payment $
Automobile payment $
Other $
ALIMONY, MAINTENANCE AND SUPPORT PAID TO OTHERS (do NOT list if this is a payroll deduction)  $
CHILD SUPPORT (do NOT list if this is a payroll deduction) $




Postage $
Haircuts/Beauty Shop $
Pets $
School Supplies/Lunches/Expenses $
Charitable contributions $
Other __________________________ $

             Be realistic! This will help you see where your spending goes.

            Check the income minus the expenses – where are you at? Do you need to trim some expenses?

            Go over each line item on your budget and ask yourself, ‘how can I make this number smaller?’ It may involve cancelling services that you rarely use like a gym or swimming pool membership, Netflix subscription (although that is sometimes cheaper than cable), etc. It might even involve reducing the amount of times that you eat out at restaurants each month.  Maybe make it once per month – makes it more special.

            Stop buying non-essentials. Buying lunch every day? Coffee? Think how much you spend on high-end coffee per cup. $7.00 for a mocha froth? One of those a day for month equals an average car payment. A car payment … a cup of coffee. Get it?

            Use coupons or buy generic (although it is usually cheaper just to buy generic green beans rather than name brand even with coupons).

            If you decide you’d like to keep getting that big tax refund instead of spreading it out through the year: think hard about what you want to use it for. Don’t blow it on a vacation.  Remember the cute phrase some years ago – “Staycation?” Go to Springfield if you like history, camp out at Giant City or Rend Lake, St. Louis Zoo is still free, etc.

            Movies? Get them from the library. Games? Rent them, too. Cable? Can you watch shows you like online or though Hulu or Netflix (but watch out your not paying extra for the internet streaming. Netflix may be $7.00 per month, but if you go over your internet limit that will cost tons… see? You have to watch for those little things)? Cell phone? Get prepaid – you can reward yourself with a smartphone after a debt is paid off.

            And feel free to reward yourself when you hit a milestone and pay off a debt. Go to that movie, eat out someplace nice.

            Before buying an expensive item, count how many hours you will have to work to pay for it or how many months’ income it is. Rule of thumb: if you can’t afford it, you can’t have it.

            Other ways to shave off a few bucks from your expenses are old tropes or old ideas, but they happen to be true and happen to work: Your car’s most economic speed is likely to be between 50 and 55 mph.   When you buy a car, get one that is two years old – its price will have dropped by 40-50 per cent – and keep it three years.

            Never go shopping when you are hungry – and, if possible, don’t take the children. My secretary told me her cousin plans their meals for the week and writes it down in a notebook and takes it shopping – cuts down on the impulse buying and buying things you don’t need or impulse items.

            The amount that you slash depends upon your commitment level to getting out of debt.  The more committed you are, the easier it will be for you to give up some of the unnecessary amenities in life.  You might not even need to sacrifice much if you can find these items or services for less.

            But you will probably have to make changes in your life to climb out the hole. Think about how long did it take you to get here? This won’t happen overnight, or in a month or a year! It takes perseverance, patience, and dedication; it takes time and effort.

            From here you can now make a plan – by looking at the kind of debt you have – secured (fixed payment) and unsecured.


            End Part 1 …

            Fear not, Part 2 of this speech will be posted on my blog right away … if there’s no hyperlink at the end of this blog, you can click here.

            (The suggestions and ideas of this blog are cobbled together from various internet sites and blogs. Some ideas and suggestions are original; some taken from various “un-cited” sources. Copyrights, if any, are held by the proper holders.) 

Michael Curry

One thought on “Budgeting, avoiding debt and getting out of debt, Part 1

  1. Pingback: Budgeting, avoiding debt and getting out of debt, Part 2 | Currytakeaways

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