“Budget, spending and savings are important.”
When was the last time you sat down and created a budget, I mean a serious look at how much money is coming in to your home business and how much money is going out to pay for your home business expenses. If you are not sure whether or not you are living outside of your means the budget will tell you whether or not you are. If you are living outside of your means then your business has a loss each month. The loss is being covered up by either credit cards or loans to make up the difference. Minimizing or eliminating credit card debt is great for your home business’ bottom line. Sit down and list all of the things that you have to pay each month, mortgage/rent, utilities, phone, internet/cable, car insurance, food and anything else that is paid month over month. Don’t forget to add in the things that you have been so accustomed to paying for like golf, hair and nails, gym memberships, lunch, credit card payments etc. Once you compare your expenses with the household income you can see if you are making a profit (savings) or at a loss (living off credit cards or loans.) Don’t be scared this is good thing and tells the true picture of how you are running your home business.
Now that you have a budget you can look for items that can be cut or reduced. Make a plan to eliminate all credit card debt; you may have to stop doing the things you love to do temporarily until you get your budget in good shape. Try sticking to one car payment at a time, the key is choosing cars that last with the expectation that when the car is paid for you should plan to go without having one car payment for a minimum of one year. When one car payment is paid off, continue paying yourself the same amount that you were paying to your car loan as this will increase your savings and discourage you from spending it on something new. See if your utility companies have equal pay or budget plans and sign up for them so you create fixed utility expenses. Check around for home and auto insurance rates every two years to make sure you are getting the most competitive rate. Are you investing in stocks or IRA’s while paying high interest on credit card payments? If so kill the investments and put that money towards paying off the credit cards and invest when you are credit card debt free. Saving $400.00 per month should net you with $4800.00 of annual profits (savings.) When you pay off a bill, take that same money and now pay yourself which will add to your profits. Remember a business is in business to make a profit not to lose money or shut down. Take the same attitude and make sure you are making a home business profit, the first step it knowing how much money you should be able to save monthly and annually. The key is to know what you are working with and making your money work for you every month and in turn each year.