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Cut em up!

April 17th, 2006 at 07:48 pm

Yep, we're talking credit cards. I just got done reading All Your Worth by Elizabeth Warren (suggested by someone on this site, thank you whoever!). It made so much sense! I have worked out a great budget using their 30/20/50 plan. I hope this is a great beginning. After I figured up my plan I cut up two cards, a big player and a little fish. How scary it is. What if....., but then what if not? I am going to try more cash only. I will use any money from extra side jobs to pay ahead on the cc bills. We'll see how it goes. Wish me luck!

5 Responses to “Cut em up!”

  1. Amber Says:

    good luck & ongrats I think I'll p/u that book as well

  2. contrary1 Says:

    I'm checking with my library too. In the meantime, what is the 30/20/50 plan you referred to??

  3. boomeyers Says:

    Total up your monthly earnings after taxes, if sporadic, you average it. Add up your "Musts" (mortgage, home equity credit, utilities, phone, insurance (car and health), monthly meds, car payment, average gasoline, basic food, student loans, and contractual obligation payments and I added tithe). Divide this total by your monthly earning total and it should come to 50% of your earnings. If less - great! If more - you have to cut back until you get close. I made it to 54%. Then you add up your "Savings". First you add your retirement fund contributions per month, then other savings (emergency fund, etc.) then add extra money you may put on any of your payments regularly. Now it gets a little harder. You have to average your credit card amounts. If you are still spending you average the amount it has increased in the last 3 months divided by 12. If you have been paying things off, you average the amount it is going down for the last three months and divide it by 12. You then add/subtract this amount from the savings/retirement amount. You take this number and divide it by you total monthly income. It should come out to 20% of your income. Everything else, roughly 30% is for "Wants". This includes cell phone, movies, cable, eating out, convenience foods, etc. Although a little off in my percentages, everything balanced out to the penny. The kids lessons, money in savings, extra for paying ahead on balances. Their theory is too many people save pennies and not dollars. They scrimp so much and they have too many "Musts". This brings the amounts into balance. I will only have 350.00 for real "play around" money, but hopefully that will be enough! The other fun stuff is covered as is the utilities and etc. Get the book, it explains it so much better!

  4. Thrifty Ray Says:

    I immediately went to the library website and reserved a copy of the book based on your recommendation...I am looking forward to reading it! (Thanks)

  5. PrincessPerky Says:

    Heh, my mortgage is 50% of after tax money! I could never do that 30/20/50 but it sounds like a nice idea.

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