Margin

I've talked about the importance of having "margin" in the past, having wiggle room in all aspects of your life. Why? You never know when something suddenly comes up; thank you Marcia Brady. For instance, a couple weeks ago when I mentioned that I hit a car jack on the freeway at 65ish mph. I hadn't really budgeted for buying 3 tires and wheels for another 25,000 miles or so.

Margin.

I always plan for things I know are going to happen, but how often is that things out of my control happen? Without margin, and I don't use credit, I wouldn't have been able to fix the car. Over the past three years I've had to re-learn how to create margin in my finances. Many people near and dear to me are currently learning the hard way, how important margin is when it comes to budgeting.

I wanted to share what I feel is the best budget yet, for determining well, your budget. With times becoming more and more uncertain, with our own government printing up money like it grows on trees based on nothing. Like Proverbs says- Sew to the wind and you'll reap a whirlwind. So craziness will happen soon, when this all catches up, those with margin will be in a far better position then those who didn't plan.

They say if oil becomes scarce, a typical store has about three days of food and supplies in it. after that, the shelves are empty. If gas goes up another buck a gallon, because of the cost to truck to market goes up, expect to see basics double again like they did over the past 18 months.

So here's the budget: 50% of your NET income-(minus taxes, deductions, charity) to NEEDS. 30% to your WANTS, and 20% to DESIRES.

That's it.

A need is defined as survival mode. Housing, food, and basic transportation. A hundred years ago, a typical person had three changes of clothes and one pair of shoes, anything more and you were considered as being rich! Are clothes considered a need? Not really. A whole outfit with shoes, can be had at Goodwill for the cost of one or two foo foo drink at Starbucks, so they are not in the need column. Cell phone, cable, car payment, heat or air? Nope.

A WANT is anything that you typically think you need. I'm always telling my kids to put on a sweatshirt and/or blanket rather than turn on the heat.

A Desire as anything you want in the future, or to retire. Both short term and long term saving, paying off all debt, etc.

Triple A auto club used to have a cool schedule for the true cost of driving. Once gas hit $3 a gallon, based on a certain budget and 15,000 miles a year, your first dollar for a car payment or lease was after someone made $4000 a month. In other words you had no business having any kind of car payment at all unless you made over $4000/mo. because of gas, maintenance, registration and insurance costs.

Wow!

One last thing on credit. Did you know that if you merely pay the minimum on your credit cards, that every purchase is really 300%! If you see a pair of shoes you just gotta have on sale for $29- they are really a $90 pair, so re-think if that is a good purchase. That $5 Starbucks drink swiped is really $15

...I'm just sayin.