Guest Post: Fabulously Broke in the City on Budgets 101

Today's Guest Blogger is Fabulously Broke, who writes a blog called: Fabulously Broke in the City, which is a lifestyle blog with a focus on personal money management and debt. She also writes for two other blogs: The Everyday Minimalist, a blog about "Living with less, but the Best" and Style on a String, "Because style has nothing to do with money."

This is Part One in the Series of: How to get started on your 2010 Money Resolutions. -------------------------------------------------
The answer to any kind of money crunch is always: Cut back or make more money (‡ la Rebecca Bloomwoodís father of Confessions of a Shopaolic by Sophie Kinsella) But hearing those two phrases can throw any of us into a tailspin, because we WANT to cut back or make more money, but how do we go about doing it? It isn't easy, believe me, but it is possible. I got out of $60,000 of debt in 18 months, earning a gross salary of $65,000 a year, and saving 4% of it in a retirement fund. It was NOT easy. But I was so aggressive towards getting rid of my debt, that eventually, it disappeared. And much sooner than I had expected! In this and the next two guest posts, I will cover these three major topics:

1. Setting a goal that will resonate with you
2. Building a budget, tracking your expenses & analyzing it
3. Keeping yourself on track

Setting a goal that will resonate with you

If you can set a concrete resolution with numbers, figures and facts, you are more likely to succeed in it. But how can you know how to set up a money goal? Well, this is how you come up with a target savings goal, and how to go about saving for it. Let's say your goal is to take a 2-week trip to Paris this summer. It has been your DREAM for this year, and you want to truly make it happen. Right now, you may be feeling like there are too many extra expenses that seem to be popping up here and there, like having overspent on Christmas 2009, or you just can't seem to say no to a girl's night out each week.

How to do it:

1. Make a Vision Board so the goal becomes an actuality

Make a vision board, or a collage of photos of all the places you want to visit. You can pick up travel brochures from your travel agency, or just simply Google images online and print them out in colour. Collage one side of the board with your Europe goals, and leave the second half of the board blank.

2. Figure out the cost of the trip from start to finish

Grab a piece of paper, and set your ideal traveling dates. Then using those dates, research online and tally up the costs: Airplane fare, Metro pass, Hotels or Hostels, Food costs, Attractions you want to visit, and Extra spending money. Once you have all the rough figures down (we all know prices can change during the year), list it out by line item on the blank side of your Vision Board.

3. Save.

With the final number that you need to have a great 2-week trip, figure out how much you will need to save from now until then. If it is going to cost $3000, and you have 6 months to save, then: $3000 divided by 6 months = $500 a month, at least.

4. Now to save the money

Start the fund and call it a Paris Fund. $500 is no chump change to save each month, believe me. You will have to make some drastic cuts in your spending habits, or start earning more money. But it is achievable. If you spend $100 a weekend going out with the girls, in a month, that is already $400 saved each month. Or if you go shopping when you feel tired or upset, and end up spending $50 each time, thatís another $50 you could put towards your Paris Fund.

5. Think outside the box

Maybe a friend would like to go too. You could save on hotel costs if you split it 50/50. You can also pick to go OFF season, like not during the summer or any of the busy times. Choose September, or October as those are the months where travel seems to dip down in cost. Or perhaps you can pick up a second side job, or extra over time to make the cost. If it is still too much money to save, then you need to re-evaluate your Paris Fund, and cut back. Maybe you can stay in a hostel instead, and need to save less money each month. Or decide that you will not spend as much money shopping as youíd like. There are plenty of ways to get what you want, but you may have to compromise along the way to do it. If you are interested, this was my Money Goal for 2010 was done in pictures, click here to check it out!
Check back next week for the second installment of Fabulously Broke in the City's How to get started on your 2010 Money Resolutions!

Comments

[FB @ FabulouslyBroke.com]

Thanks for having me as a guest poster :D

[Good Taste. Healthy Me]

Great tips! I look forward to the other two as well!

[Diana @ The Chic Life]

Thank YOU for your awesome post! :)

Diana

[Meryl]

I'm interested in finding out how you were able to get rid of all that debt in 18 months.

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