The US Debt Ceiling and Your Finances

Speaker of the House John Boehner was quoted yesterday as saying:


"We can't raise the debt ceiling without doing something about what's driving us to borrow more money and to live beyond our means."


I mean without getting political - hahaha - that is exactly the place that every financially struggling family that comes to see me or talk to me finds themselves in: the bank or daddy or the loan store will lend them more money... should they take it instead of dealing with either a) their lack of income or b) their too high expenses.


What should the US do? I don't know. But is your family struggling with "money issues"? You aren't alone. Here are 5 or 6 tips from this lowly Pastor's desk to help:


1. Don't change anything, track your expenses and income for 30 days.

I have yet to meet a financially struggling person or family that has the information at their finger tips they need to solve the problem. They have the data... they have online banking and several large piles of receipts which mock them... but they haven't organized that data into a system of tracking their income and expenses on a month to month basis. Don't try to change anything until you know what the problem is you are going to attack. Remember:

If you can measure it, you can manage it. 

But most family's don't measure it so they can't manage it. Do this task together if you are a couple. The sitting down and taking out all your receipts and adding them into a paper ledger or into a spreadsheet will be very eye opening. My suggestion is either on paper or in a spreadsheet (like this one) track every debit (expense) and credit (income) that goes into and out of your bank account for 1 month. I would stop using cash. Use only your debit card as then you'll have a computerized record of every purchase and can usually remember what it was you bought depending on the store you bought it from.

Total up what you spent into 10-12 categories and what you made into 3 or 4 categories. Subtract the total expenses from the total income and that will tell you your net income for the month. It is negative you lost money. If positive you made it.

But most importantly you'll probably find out, just through this little exercise where the major drains on your finances really lie (probably eating out, gas and insurance).

2. Appoint one person in the family to be in charge of the money.

Having gone through the time and effort to track your expenses, appoint one person to be in charge of the money from now on. As you track your expenses and work together on this, it will become clear which of the two of you is more adept at money management.

3. Track the expenses EVERY day and update the paper or computer spreadsheet. 

4. Set the budget amounts for the coming month in all the categories

5. Communicate to everyone what the budgeted amounts are for the coming month in all the categories

6. Convene a meeting with your spouse on the 15th and the 30th of the month to adjust the cash flow and go over the expenses.