Why Budget?

Many people consider a budget as “constrictive” (to restrict the scope or freedom of; cramp) when in fact it’s merely “restrictive” (expressing or implying restriction or limitation), allowing YOU to place restrictions in areas YOU choose in order to maintain a healthy budget. It’s YOUR money and it’s YOUR choice.

Keeping Track:

There is only so much money from month-to-month. Question: where does it all go?

A sizeable portion pays for housing, food and basic living. Another portion pays for transportation. But where does the rest go?

Budgeting allows you to track your monthly expenditures so that you can plan key savings strategies for important short- and long-term goals.

Limit Your Spending:

Having a financial budget may find that about 5-10% of your total spending may be for purchases that are not needed.

Think about it. What could you do with that extra 5-10%? Perhaps your future plans include buying your first home, going back to school, saving for your child's college, paying down debt or simply setting aside cash for a special trip. A budget will identify expenses that can be cut so that you can set goals on making important long-term savings.

Discipline Yourself:

Your goal is to rid yourself of instant gratification (the symptom of credit card use). The budget sets guidelines on what and when items can be purchased.

Setting Goals:

Budgeting supports your financial goals, which may include:

saving for your first home paying down debt	preparing to go back to school planning for retirement

Good budgeting skills add these goals into the budget.

Prepare for Emergencies:

Question: if you were to lose your job, how long could you survive on available funds?

If you had to stretch those funds, what reductions can you make in your existing monthly expenses?

That is the key benefit of a budget. It helps prepare for emergencies with established expense reduction plans.

What's In The Budget

Income:

The budget starts with how much money you bring home on a monthly basis. Income sources include:

employment income alimony received investment income	social security support payments savings

How much income should be allocated for the budget?

Your goal should be around 90-98% or less The remaining 2-10% of your income gets allocated for savings

Housing Expenses:

Housing expenses will likely be your largest expense item, especially if you own a home. Housing expenses include:

mortgage payment with escrow (taxes, insurance) monthly rental payment if you do not own utility services (electric, gas, oil, water, sewage, garbage, etc.)	telephone, internet, cable house repairs and maintenance

How much for the budget? About 32-35% of income if you own; 15-20% if you rent...

Transportation:

Transportation expenses include:

auto loan payments auto insurance fuel expenses maintenance and repairs	taxes, licensing parking public transportation

How much for the budget? About 9-12% of income

Family or Personal Care:

Family care expenses include:

family care insurance (health, disability, life, dental, other care) doctor, dental, eye care, hospital visits veterinarian expenses prescriptions / over-the-counter meds	child care elder care health clubs

How much for the budget? About 8-19% of income; 15-25% for full child/elder care services

Living Expenses:

Home living expenses include:

food home living supplies school and work lunches snacks, vendors	clothing education-related expenses home services (cleaning, gardening) postage and paper supplies

How much for the budget? About 27-35% of income

Family Recreation:

Recreation expenses include:

dining out movies out and rentals outside entertainment cigarettes, beer, wine, liquor	birthdays and holidays vacation travel weekend, day trips gambling, lottery tickets

How much for the budget? About 4-6% of income…

Obligations:

Obligation expenses include:

credit card payments student loan payments home equity line or loan payments personal loan payments	alimony, child support payments judgment or liens other assessed taxes charitable donations

How much for the budget? About 18-28% of income (your goal is to reduce this percentage)

Savings:

Savings include:

• 401K contributions
• IRA contributions
• investments
• savings (personal, college, retirement)

How much for the budget? About 2-10% of income (goal is to increase this percentage)

HELPFUL DOWNLOADS

Money Management/Budget Pamphlet(Adobe .pdf version) An Excel Spreadsheet to track monthly spending for four months. Printable version of the Excel Spreadsheet (Adobe .pdf version) DD form 2919 - Application for RIRP benefits (See below for RIPR informaton) Paday Loan Consumer Information (Risks, APR, Costs, etc.) Working with "Credit Counseling Agencies" (Adobe .pdf version) FREE Downloadable Financial Calculators Budget Ideas(Adobe .pdf version) A short video as an example of working with percentages while figuring your budget Another short video on math, Navy style!

TEN TIPS FOR PAYING BILLS ON TIME

Paying your bills on time is one of the most basic but important things you can do to maintain or build up a good credit record. Late payments cost you money -- as much as $50 per month -- and can also have a negative impact on your credit record. Here are some suggestions for staying on top of your bills.

1. Figure out when all of your bills are due. It's impossible to pay your bills on time if you're not sure when they are due. Note when you receive your regular bills and how much time you have before they are due.
2. Call your creditors and request that your billing cycle be changed to make it most convenient for you. You may find it easier to pay your bills if they are all due at the same time of the month. Or you could switch your billing cycle so that it matches your paycheck cycle.
3. Set up automatic payments for as many bills as possible. When you set up an automatic payment out of your checking account, your creditors get the money electronically -- you never have to write a check or mail a bill.
4. Pay your bills online. Many banks offer online checking and most of them let you set up automatic payments or pay bills online whenever you want.
5. Create a bill-paying spot at home. Separate your bills from other mail and keep them all in one place. Store stamps, checks, and envelopes in the same place so that you have everything you need when you sit down to pay your bills.
6. Set reminders in your email program. If you tend to forget about bills, a monthly reminder in your e-mail program may help you stay on track.
7. Write down reminders on your home calendar.
8. Create a personal budget.
9. If more than one person in your family pays the bills, make sure that you both have a good system for paying them on time.
10. Resolve to never pay a late fee again!

Reserve Income Replacement Program (RIRP) Fact Sheet

The Reserve Income Replacement Program (RIRP) was developed to provide specific payments to eligible members of the National Guard and Reserve who are involuntary serving on active duty (the term active duty includes full-time National Guard duty) and who are experiencing a monthly active duty income differential of more than $50.00, as determined by the member’s Service Secretary.

An active duty income differential is the difference between the average monthly civilian earned income of the member before mobilization and the member’s total monthly military compensation while involuntarily mobilized, when the member’s average monthly civilian income exceeds the total monthly military compensation.

RIRP is an entitlement that must be paid to all eligible service members. To be eligible for RIRP payments, the member must be currently serving on active duty in an involuntarily status and have:

• Completed 18 consecutive months of active duty, or
• Completed 24 months of active duty during the previous 60 months, or
• Been involuntarily mobilized for 180 days or more within six months of the previous involuntary period of active duty of more than 180 days

RIRP is effective as of August 1, 2006, the first full month following the 180-day period after enactment of P.L. 109-163. Income replacement payments will be made only for full months of qualifying involuntary active duty performed from August 2006 through December 2009.

The first RIRP payments for eligible service members will occur in September 2006, for duty performed in August 2006 (the first full month authorized for payments). RIRP payments will be made to an eligible member on a monthly basis. RIRP payments may not exceed $3,000 per month.

THRIFT SAVINGS PLAN

TAXES!

MILITARY ONE SOURCE

SERVICE MEMBERS CIVIL RELIEF ACT