The Dreaded 'B' Word: Budgeting

	Budgeting - Money Problems Radio Show (Opens in a new window. Optimized for Windows Media Player 6.4 and later versions)
Originally aired on January 7, 2006.

Show Topic:

Today we discuss one of the scariest words in the English language: Budgeting.

Guests:

Douglas Hoyes and Ted Michalos are the founders of Hoyes, Michalos & Associates Inc, one of Ontario's leading personal insolvency firms. They emphasize a "fresh start" when dealing with money problems. They can be reached at www.hoyes.com or, in Ontario, at 310-PLAN (no area code required).

Show Summary:

Budgeting is simply an organized way of managing your finances. A budget can be as simple or as complicated as you allow. Basically, it gives you an overall picture of where your money is coming from, when it's coming in and how it's being spent. Above all, a budget should be flexible, changing according to your circumstances.

Budgeting helps us get the most from our money. We work hard for it, so why not? When you take control of your financial affairs, you're more confident about the future.

Everyone should budget. A budget gives you a 'snapshot' of where you stand financially and where you're headed. Don';t rely on anyone else to do your budgeting - take control of your own finances. Even encourage your children to budget - it makes them realize the value of saving and achieving their own personal goals. Budgeting to buy a new comic book, a mountain bike or a pair of roller blades is the ideal way for kids to learn about the value of money and saving.

How do you get started on budgeting?

First, set your goals. Goals could be paying the rent next month, buying a new car next year, buying a house in five years, or sending the kids to college in ten years.

Whether your goals are short term or long term, you need to plan for them.

Budgets don't need to be complicated.

There are many ways to budget - on a day-to-day, week-to-week, or month-to-month basis. The more detailed approach is likely to give you a more accurate picture, but remember that a monthly budget is just fine. If you get paid every two weeks it may just be easier to let your budget follow your pay schedule.

When you create your budget, you can use a spreadsheet on your computer or write it on a sheet of paper.

Make a list of what you bring in each month, and what you spend. Create categories that make sense for you.

Each month, re-evaluate your budget, and make changes to keep yourself on track.

Question of the Week:

Q. I made up my monthly budget. I make $2,500 per month, but it's costing me over $3,000 per month to live. What can I do?

A. Your first option is to cut your living expenses and try to repay your debts on your own. At the same time you may try to get a debt consolidation loan. Non-profit credit counsellors may be able to help you file a Debt Management Plan: you pay your debts in full over a two to five year period, and the creditors agree to waive any further interest owing. If you have equity in your house, you could file a consumer proposal. You will probably pay less than the full amount you owe to your creditors, and you can keep your house. If no other option works, personal bankruptcy is the final option. It is possible to keep your house when you go bankrupt, but expert advice is required.

Don't let your Money Problems overwhelm you; contact a bankruptcy expert today for more information about budgeting.