Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
There was nothing in the example statement made that demonstrated a plan or estimate was in place. That's why no budget exist even though they were saving money.
I used to have a monthly written budget and it was forward estimating and at month end I would review how close to plan I was and write the next month. I no longer budget things as I have gotten my savings goals to the point I want them so I don't really care what bucket the rest of the money gets spent in. I no longer have a budget
But do they have a plan outlined for how it's spent. They bring in $6k a month after taxes, $3k they send to Vanguard and $3k they leave in their checking account to go out for housing, insurance, repairs, strippers, UFC pay-per-views, their girlfriend's beauty costs, and other needs/wants that are to be spent.
Just because they don't itemize how much the UFC pay-per-view was, or how much their girlfriend's weave cost, doesn't mean they did not budget the money that came in.
They are not just going through the month. The $6k came in and they assigned a role for every penny of that $6k. They told $3k of it to go to Vanguard in a Balanced Fund, and they told the remaining $3k to sit here in the checking account as you will be spent throughout the month on housing, insurance, gas, utilities, UFC fights, drinks, my girlfriend's Gucci addiction, and other needs/wants/recreation.
Yes, a budget is about estimating expenses, which you would usually have to write down in order to TRACK throughout the month to determine if you are staying within the budget.
The guy that determines he only needs $3k of the $6k he brings in for needs/wants, he can make plans early in the month to send the remaining $3k to Vanguard because he doesn't need it for any needs/wants that are upcoming for that month in particular.
He can't do that unless he has already created a plan based on projections of how much is going to come in (inflow) and how much is going to come out (outflow).
I'm going under the assumption that this person making $6k/Spending $3k is the same person as when originally posted.
Quote:
Originally Posted by lieqiang
Well yeah. If someone is taking home $6,000/month and putting away $3,000 of it, living on the remaining $3,000 while also carrying no debt, significant net worth from savings, no frivolous spending, emergency fund in place, etc. I'd call them financially responsible regardless of whether they have a written budget. They are living well under their means. One doesn't need to have all the boxes checked to be considered financially responsible.
...
Above person can measure precisely what goes in and comes out. They take home $6,000, put away $3,000, and the other $3,000 goes out.
...
For the record I never argued against a recommendation of keeping a budget, I said "Having a written budget is always good" but I do disagree with your assertion that without a budget one is financially irresponsible. It is entirely possible to be financially responsible without a written budget.
You don't have to figure out things ahead of time. A lot of people don't and get by just fine. They go through the month, see that they have more money left over at the end(in this case it happens to be $3k) and they push some into savings. Some people will say "I want a safety cushion of $15k in my checking account" and at the end of the month, move everything above that into savings.
They don't need a budget for that. They just like having $15k or whatever number. That's the point of the disagreement. You can't assume that they're sending the money to Vangard on the first of the month, because the most common way of saving is the "I'll save what's left over" approach.
I just really don't understand the argument of having to use a DEBIT CARD (an inferior form of payment option compared to credit) because it's going to somehow make the person more "responsible".
How EXACTLY does it make the person more responsible?
I'll guess that a lot of these people are the financial equivalent of an alcoholic. You cannot tell an alcoholic to just have one beer when they go out. It might work for a week, or a month, or a year... but eventually they'll revert back to their previous abusive behaviors.
Same story with people who cannot control their spending. Yes, logically they would be better off in a lot of ways by having a credit card. Maybe they could change their behavior for a while, and pay it off in full for a few months or a year. But most will eventually start carrying a balance again at some point and get into trouble. The only way to curb the behavior is to go cold turkey.
Ramsey's "baby steps" are the equivalent of a 12-step program for folks with addictive behaviors.
I'll guess that a lot of these people are the financial equivalent of an alcoholic. You cannot tell an alcoholic to just have one beer when they go out. It might work for a week, or a month, or a year... but eventually they'll revert back to their previous abusive behaviors.
Same story with people who cannot control their spending. Yes, logically they would be better off in a lot of ways by having a credit card. Maybe they could change their behavior for a while, and pay it off in full for a few months or a year. But most will eventually start carrying a balance again at some point and get into trouble. The only way to curb the behavior is to go cold turkey.
Ramsey's "baby steps" are the equivalent of a 12-step program for folks with addictive behaviors.
You got it. I don't understand why joetucker99 is struggling so hard with this concept.
It's EASIER to avoid the temptation to drink if you watch the big game at home with a few of your friends instead of catching it down at the sports bar, where everyone else will be drinking. It's EASIER to avoid overeating if you pack your own lunch instead of buying it at McDonalds. It's EASIER to avoid overspending if you don't use a credit card. You may still have to use your willpower, but not nearly so much of it.
Making the right thing easy and the wrong thing harder, and you're more likely to do the right thing. It's pretty basic human psychology.
It's EASIER to avoid the temptation to drink if you watch the big game at home with a few of your friends instead of catching it down at the sports bar, where everyone else will be drinking.
Agreed.....but if a few of your friends bring drinks over then what? At some point you have to come to the term of being personally responsible and personally discipline.
Quote:
Originally Posted by Aredhel
It's EASIER to avoid overeating if you pack your own lunch instead of buying it at McDonalds.
Don't agree. You can bring a lunch to work, eat it, and still be hungry and decide to run down to McDonalds to fill up your stomach some more. It comes down to being personally discipline.
The examples you bring up are meaningless because there's a Liquor store everywhere, there's Fast Food restaurants everywhere, there are shopping malls everywhere. People have to develop budgets and discipline such as to CONTROL the consumption of said items and said spending.
Eliminating them in total isn't the answer because they can't be eliminated. That's what you don't want to seem to admit. I can bring a lunch from home every day of the week, I still have to pass McDonalds on the way to work and I still have to eat with people at work who will bring that stuff into the breakroom with them. If I have a discipline problem in relation to eating the stuff, I will fall off.
Quote:
Originally Posted by Aredhel
It's EASIER to avoid overspending if you don't use a credit card.
No....I disagree. But we can just agree to disagree man because we will go on for another 17 pages.
Your theory is that if a person is overweight, then let's try to keep them away from McDonalds. It would mean that McDonalds is causing the person to be overweight, rather than the person's habit of overeating. You can keep them out of McDonalds all day long, all they will end up doing is overeating on the stuff bought from the grocery store because they have a EATING PROBLEM.
Just like a person with a financial irresponsibility problem, taking the credit card away does nothing. They will run through all of their Cash/Checking/Debit Card Balance....then they will hit up their friends and family to borrow money to run through their money next.
The examples aren't meaningless just because there are stores on every corner. There is a huge difference in access not to mention accountability between having something at your house, or where you stay and having to go to the store. Same thing with packing your lunch
While they might try to hit up friends and family, that is often hard to do. I have spent 20 years counseling people in debt. They will run up the credit all the way to the limit and won't change their ways until they experience pain. With a debit card, they will run out of cash and will learn their lesson the hard way. Friends and family might help once or twice, but they will either grow tired of it or be unable to continue providing assistance due to their own financial constraints.
I think hes full of bs and his advice doesnt work for the average person. It may work for some but not all
This is the first step.
Yes it does work for the average person if you can discipline yourself. And it also helps you learn how to manage your money after you are debt free, it's habit forming. Once you've paid off debt you can progress to the next step. You even learn how to use good debt to make money, example in real estate investing.
Key, you have to be determined, you have to control yourself, you have to want it bad enough.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
