Scott: Yes, hello and welcome to joining us here. We’re talking about budgeting today, that great fantastic topic. Well-
Scott: Well, the accountants love it.
Alex: Accountants are boring.
Scott: Accountants have money.
Alex: Let’s do it.
Scott: Alright. So, are you ready?
Scott: Okay. Excellent. Today, we’re going to talk about budgeting. Budgeting is an exercise everyone should take a hold off.
Alex: Kegels as well.
Scott: Nope. They’re both strengthening exercises.
Scott: You feeling the burn?
Scott: Because now we’re going to talk about the money that people are burning in the budget.
Alex: Burning budget.
Scott: Burning budget. But the first and before you can even establish a budget is you need to know what kind of money is coming in, the cash flow coming in. That’s the revenue. That’s the fun part. That’s money from your job.
Alex: The money I steal from Dunkin’ Donuts.
Scott: That might not work as well off. Work as well off [inaudible 00:53]
Alex: [inaudible 00:54]
Alex: Illegal activity gets me high.
Scott: Anyway, let’s talk about income for a moment.
Scott: Income. Yes.
Alex: Money coming in to you.
Scott: Money coming in to you. Yes. Before you’re able to spend, you got to know what you have.
Scott: Makes sense?
Alex: Yeah. Makes sense.
Scott: What most people do is they have it — they have some sort of a job. They get some sort of regular payment, paycheck, then they got paid by the hour and they got paid a salary. They get paid once a week, they get paid every twice a week, some get paid once a month. I mean there’s other people that-
Alex: Once a month?
Scott: Once a month. There are some people.
Alex: That’s bull (beep).
Scott: I don’t make the rules.
Alex: I will not have that job.
Scott: If you’re were going to get $10,000 in a month, you’d rather just have it and if that’s the only way you can get it, you’re just forgo the job?
Alex: Oh, we could do that.
Alex: I’m sorry. Continue.
Scott: Anyway, back to our budgeting exercise here. The first you’d do is to be able to calculate the actual income you have coming in. Some people say I make $500 a week, I make $20,000 a year, $100,000 a year, makes $10,000 a month. The main thing is you want to get to number one A, what your monthly figure is, but number two, you want to get foot your take home monthly figure is because ultimately, you… Can I help you? Is that your financial planner on the phone?
Alex: Hey hon.
Alex: Yeah. That show, it’s so boring. I’m shooting it right now. His breath smells like shit (beep) like he hasn’t brushed his teeth in a month. I think he gets paid once a month, that’s why.
Scott: Budget cuts.
Alex: Oh, hello?
Scott: That’s it. Okay, good. In any event, what you want to get to is how you get paid and how much you’d actually take home. First thing is what determine how often you get paid, you should know the answer to that question. You get paid once a week, you get paid twice a week, you get paid once a month.
Alex: That was a good one.
Scott: Okay. First, figure that out. If you get paid once a week, look at your pay stub, and look what’s called the Net Pay. That’s the amount of money you’re actually taking home or it’s getting direct deposited in your account. To figure out what your monthly income is on that, you want to multiply that by 52. Oh, my lord. If you get paid once a week, you’re going to take that net figure and you’re going to multiply it by 52. That’s going to give your annual pay on a weekly basis. Then, you take that number…
Alex: 52 weeks in a year.
Scott: 52 weeks in a year.
Alex: That’s true.
Scott: Thank you for joining us. From there, what you’re going to do is you’re going to take that 52, and then you’re going to divide it … Take that number, you multiply it by 52, then you divide it by 12 because…
Alex: 12 months in a year. Yeah, yeah, yeah!
Scott: That’s going to give you your monthly net income. That’s the money that’s coming in. Now, you may have money from other sources that you can count on if you get any type of social security or pension or if you have any residential real estate income…
Alex: Social security?
Scott: Social, yeah.
Alex: Oh, like the old people.
Alex: I’m an artist. Do I get money? No.
Scott: That’s going to be your money coming in on a monthly basis. Now we know what we have to work with. The other end we got to look at at the budget are the expenses. The expenses is your money going out. Now, most people know their general expenses as far as they know their rent payment, they know their mortgage payment, they may know their car payment. That’s probably about it. They might be able to generalize a couple of little things.
Alex: Oh God it’s hot. This is (beep) (beep) got toj get a freaking soda? Just a one diet (beep). Hey yo.
Scott: Okay. When you’re … Okay. Aright. For your expenses, obviously we’re going to start writing things down. Starting with your housing expense; that’s usually the biggest expense for most people.
Alex: Yeah, you need a roof over your head.
Scott: You do?
Scott: Your rent, your mortgage payment, whatever your situation happens to be, you write that down. One thing a lot of people do miss is actually paying themselves. You should actually pay yourself first.
Alex: Like a savings or what?
Scott: Yeah, like a savings.
Scott: There are going to be times…
Alex: There’s going to be rainy days, folks.
Scott: There’s going to be days where you’re going to be between [ballers 5:07] and you’re going to need your own cash. Ideally, you want to save at least 10% of your take home pay every month.
Alex: Okay. You want to save that once a month, 10% of what you make net pay?
Scott: Yes, that’s right.
Alex: I learned something.
Scott: Progress, not perfection folks. In any event … Did you like that one?
Scott: Thank you.
Alex: At any event.
Scott: In any event.
Alex: It’s his favorite line.
Scott: It is.
Alex: What event are we at?
Scott: We’re at the main event.
Scott: Great. You like that.
Alex: He’s growing on me.
Scott: From there, write down your other expenses that you know you have. Your electric bill, your phone bill, other utilities.
Alex: The little ones.
Scott: Little ones. Try and track what you spend on gas. Where most people really get in trouble is with cash expenditures. The gourmet coffees that people grab everyday or the donuts or the drive-thru restaurants or the digital music downloads that they go on time and time again.
Alex: Old balls for men cologne?
Scott: Yeah, you like that?
Alex: Yeah. My dad wears that one.
Alex: [Got 6:27] a guy.
Scott: Not bad. Alright.
Alex: Budgets, incomes, 52 weeks.
Scott: Budgets. Yes. What if you get paid every two weeks, what would it be?
Alex: I told you, we’re not doing math today. 24?
Alex: Damn it. God, I’m so stupid.
Scott: But you were close. Actually, if you’re doing … if you get paid every two weeks, you actually multiply by 26, then divide that by 12.
Alex: Duh. Alright. Thank you.
Scott: The good news in if you get paid once a month it’s what?
Alex: What’s the question?
Scott: If you only get paid once a month, what’s your monthly income?
Alex: I don’t know. I just want you to stop talking or finish or something.
Scott: I’m almost finished.
Alex: Oh, better.
Scott: Alright. Most people get in trouble with cash expenditures. One good tip to probably do or an exercise you can incorporate is if you happen to have a credit card that has a zero balance on it, everything you do for the next 30 days, charge it. You go to the gas station, charge it. You go to restaurant, charge it. Cup of coffee, charge it. Pack of gum, you charge it. At the end of the month, you’re going to get a bill. First thing and foremost, pay the bill in full. You don’t want to be incurring debt for everyday, living cash expenditures…
Alex: Some people get that like not liquid courage but plastic courage. They can’t control themselves.
Scott: I don’t think it takes a lot of courage. They just…
Alex: Do you smoke weed?
Alex: Do you want to smoke after this?
Scott: No, thank you.
Alex: Alright, we’ll see … Budgets man.
Scott: Budgets, still on the budgets. Oh, because I was going through my exercise before you were soliciting me for some marijuana. God bless you. The exercise once again is to take a credit card, charge everything you do.
Alex: Do your kegels.
Scott: If that helps. Charge everything. At the end of the month, number one pay the bill, but number two, really analyze that statement and see where are your money really went. You’ll be surprised to find how much money you actually spent. There’s some people who actually spend $60 on a cup of coffee. Unbelievable.
Scott: If you’re looking for a place to try and save some money or if you find yourself in a situation where that income is being reduced that money coming in, look at that for a sense of place where you can really cut some expenses. Another thing you can look at, your auto insurance-
Alex: Well people need coffee though.
Scott: They do, but they don’t need to pay $7 a cup for it.
Alex: They can invest in a machine, on a credit card and then pay it off.
Scott: That would be okay. If they pay it off that month, that’ll be fantastic.
Alex: No they got to make payments.
Scott: Actually for what they pay for a coffee machine, what they pay for a coffee in a month, you could buy a … Yes?
Alex: Just thought you needed that.
Scott: Do I look like I need a little love?
Scott: In any event, that’s a good idea. By the coffee maker.
Alex: Now I’m right.
Scott: Buy the coffee. See that love and affection, see just, it’s turning me over now.
Alex: You can turn me over later.
Scott: So …
Scott: Budgets. In any event, another strategy is looking at your auto insurance. If you haven’t checked your auto insurance lately, you might want to just grab your policy and stop by and visit an insurance person and preferably an insurance broker. Someone that deals in multiple lines with multiple companies-
Alex: You tell them, like, “I’m leaving you”. Then they fight over you. This happened to me; they fight over you.
Scott: They do.
Alex: Not just guys. This happened with the insurance company. They fight over you and out of nowhere, “Oh, we can give you $200 off”, “Oh thanks mother (beep). You didn’t want to call me last month when I was trying to pay my bills and tell me this last month?” No, they don’t. You have to threaten to leave their asses and then whip, whip, whip. You’re good to go. In the bag. That’s great advice. That is really good advice. This is real life (beep) that happened to me.
Scott: See? Maybe some of the stuff I share is actually worth lsitening to.
Alex: It is, it’s great.
Scott: Instead of doing your makeup and taking phone calls while I’m trying to talk to people.
Alex: Oh I’m listening.
Alex: It’s all in here.
Scott: Okay. Anyway, we’ll actually put some extra tips on there where you can do some extra budget cuts to look at on our website. Be happy to take a look at that. For now, I’m Scott [Tenell 11:04] with DCC, a financial freedom community.
Alex: Listen to this guy, he’s smart. His name is Scott. My name is (beep), signing off.