How To Budget Your Way To Financial Freedom | Desarie Anderson | Skillshare

How To Budget Your Way To Financial Freedom

Desarie Anderson, Cash Flow Management

How To Budget Your Way To Financial Freedom

Desarie Anderson, Cash Flow Management

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8 Lessons (1h 22m)
    • 1. Introduction

    • 2. Instructions Tab

    • 3. The Net Worth Tab

    • 4. The Input Tab

    • 5. Input Tab Assignment

    • 6. Summary Tab

    • 7. The Dashboard Tab

    • 8. Crush Your Debt

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About This Class

Do you wonder where your money goes each month and why you can’t seem to see the end of the road when it comes to your personal debt? Do you want to stop making excuses and take total control of your finances?

The first step to changing your financial position is to know how much money you are making, how much money you are spending, what you own, and how much you owe and to whom. Once these questions have been answered, you are 50% closer to your dream of financial freedom.

This class will show you step-by-step how to calculate your net worth, create your income and expense budget, and you will learn two techniques you can use to start paying off your debt so that you can become financially debt free.

Meet Your Teacher

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Desarie Anderson

Cash Flow Management


I am originally from London, England but currently live in Atlanta, GA with my husband David.

I always joke that I have had the distinct pleasure of using both the left and right side of my brain. I owned and operated a hair salon for over 17 years (Right side), and now I own a small Tax and Accounting practice (Left side). So you can get your hair cut & colored and get your taxes done all in one visit.

I graduated from Georgia State University with a BA in Accounting. I am a Georgia CPA and an IRS Enrolled Agent. I am also a certified QuickBooks online Pro advisor.

In addition to providing small businesses with bookkeeping and accounting services, I am passionate about helping small businesses manage their cash flow. No business can survive without proper c... See full profile

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1. Introduction: Hi. Welcome to my class House budget your way to financial freedom. Now, most of us dreams about being financially. Why should I should I say different now? What exactly is a dream? A dream is a goal that has not yet been written down, whether it be electronic Lee or the old fashioned way by hand. Now, in order for us to become financially free, there are a couple things I have to do. The first thing you have to be to realize to realize I dream, is to create a budget. A budget is like a road map to financial freedom. So if your dream off being financially the freshman you want to do is write that dream down , then it becomes an actual goal, rising it down with me, creating a bucket. Once you create your budget, then you start to actually build your budget. When you can speed the money that you're spending and the money that the money that you're bringing in you are then able to make a plan for how to get yourself out of debt. So in this class, you're going to learn how to house a creative like it and how do you actually create that budget in such a way that you can begin to take down on your debt so that you, too, can become financially free? Hopefully, you enjoy this class and you achieve your goal of wanting to become financially. Thanks for taking the time to watch my class. Have a great day. 2. Instructions Tab: Hi. So in this lesson, we're going to be talking about the instructions tab. Now I know most of us. Or should I say some of us like to ignore instructions and just jumped right into the meat of the matter. But it's important that you you actually take take the time to read the instructions. So before you actually start building your budget, you want to start reading, you want to read the instructions, and the reason why you want to read the instructions is because it explains every single tab. So we have a total off, including instructions, a total of six tabs. So we have a net worth tab, the input data, type the summary type, the dashboard type, and what the advantages off the dashboard tap is, or rather what the information that the dashboard provides you. It lets you know how you can use that information to benefit yourself and whatever it is that you're trying to do. And then we have a final tab, which is the crush your debt tab. And in that tab, if you are trying to pay off debt, you would definitely need to pay close attention to this particular time, so make sure that you read the instructions before you commence. So just briefly explain to you what each tab is about. Let's thought with a net worth tab, the net worth tab is pretty much less. You know how much you are worth? So, basically, what this type is telling you is that if you were ever sued by anyone, what they want to know is what is your net worth? So this is the amount that a person who is suing you can sue you for and more than likely get if you are. If you are fire found liable now, this is not legal advice. I'm just trying to give you an example off how you would utilize your network. You want to know how much am I worth? If somebody was coming after me and a lawsuit came, then we have the input data tab. This is where you create your estimated budget and your estimated expenses, and you will then compare that information toe what you actually made what you actually spent in that month. So on this tab you would impose all of the information. So you include your estimated budget and your actual income and your actual expenses. Then we have a summary town. The summary tap is pretty much a summary off the input tap. So whether input tab, let me show it to you where the import tab has a list of all of your possible income expenses. Of course, your income on all of your possible expenses. The summary tap summarizes all of that. So, for example, you're looking at that stay housing. So, looking at housing, you have all of these different expenses. Okay, you have your mortgage, your phone, electricity, and so on and so forth while the summary tabs summarizes all of that, so it gives you a total figure off what your housing cost is. So it's just a a summary off everything that you find in your input town, and then we have the dashboard tab. The dashboard tab is a picture snapshots off your income and your expenses for a particular month. So let's look at that. This is the dashboard tap. It tells you basically, whether or not you went over your budget or whether or not you were, you were rather whether you exceeded your budget or whether or not you spent less than your budgeted what you budgeted. And then with this information, you can actually take these numbers and make very, very intelligent decisions about your spending habits. And also, if we're trying to pay off debt, you can use this information to help you with that. I will talk about that when we actually get to the dashboard, and then finally, in the instructions tab, we have the crush your debt, tap the crush. Your debt tab is a worksheet that you would use if you are trying to pay off debts. So if your whole goal is to pay off debt and become debt free, this is the tab that you would use to do that. And when we get to this section, I will explain to you exactly how you can do that, using the crush your debt tab. So please, please, please do not forget to read the instructions before you actually start to work on the different tabs. And in addition to reading the instructions, if you also need to go back toe, watch the video that's that's specific to a particular tab. Please feel free to do so. OK, thanks 3. The Net Worth Tab: in this next lesson, we're going to be talking about your net worth. So what is your net worth? What exactly does that mean for your net worth? Basically, is the value off all of your assets minus the total off all of your liabilities? So basically put. Put another way your net worth is what you own, minus what you owe. So let's. So for example, let's say you are ever involved in, say, a lawsuit on attorney would want to know what your net worth is, because that will give him or her an idea of how much that he or she can possibly get from you if you are found liable by a judge. So it's important to know what your net worth is, if for no other reason, just for the fact that you want to know personally how much you're worth. If you have Children when you pass away, what's your net worth? Because that's going to determine how much your Children could possibly inherit from you. OK, because after you die, you know your creditors are going to come after what you owe and they're going to they're going to get a piece of the action, meaning that if you have whatever your net worth is, they're gonna start digging into your net worth to try to cover whatever your total liability is with them. And then whatever is left over then, of course, your whoever inherits your estate is then able to, you know, keep the rest off the money or the assets. So just knowing how much you're worth is quite important. So what is the first thing that you want to do when you're trying to determine how much you're worth? Okay, so let's first start by looking at the asset section off the spreadsheet. So the assets section is going is going to tell us what you own. Everything that you own is going to be on the asset side. The liability side is going to tell us everything that you oh otherwise, who are your creditors? Who do you owe? So let's start out with a home. So let's say you own a home and you have your home is worth $245,000. So let's start filling these out so we can sort of like a sort of give you an idea off. What your net worth is going to look like once you input your assets. And also your liabilities. Not 20 not a 1,000,000. Let's change that to 400 at 245,000. So let's say in your checking account you have $9000 so you haven't. You have a home, and your home is worth $245,000. Okay, you have a checking account in that checking account, you have $9000. You have a savings account in your savings accounts, you have $2500. Okay, You also have a retirement account. So let's say that you are saving money on every time you get paid. You put money into a retirement accounts or you have a retirement account with your employer. You say you have $6500 in that account, you have a 401 K with your employer. You also have $6500 in that account. Not keep in mind. When you are determining how much you is in your retirement account, you have to make sure that you are on Lee, including the amount that is vested. Okay, so in other words. If you quit your job, let's save when you look at your account, it shows a value of $8000. However, you only have $4000 vested in that accounts, meaning that if you quit or if you if you if you get fired or if you retire, you can only draw $4000 not the entire $8000. In that case, you want to. You want to value your account at $4000 under the asset section and not value it at $8500 became. Now let's say you have an investment account, so you're still trying to save up for Let's say you want to start business where you want to purchase a home for rental property person for purposes. So you are saving up to invest in yourself. Or let your saying just investing in yourself or whatever reason, you have an investment account, and in that account you have $8000. Then you have an emergency funds. In that account, you have $3500 then you own a vehicle. Okay, so your vehicle is worth $2600 came okay, so let's see. Oh, no, not 260,020. $626,000. Okay, So based upon this information, what we've inputted so far, your total assets are $307,000. Now, let's see how much you owe. What are your liabilities? So you're more gauge. You old? $230,000 on your mortgage. On your car, your vehicle. You owe $24,500 and then you have a visa card that you have a balance of $950 on. You have an American Express card that you have $900 Theo. $900 on and then you have a student loan. At this time, you owe $16,000 on your student loan, and then you have a small personal loan out there for $3000. OK, so based upon the information that you included as your assets and based upon the information that you included as liabilities, you have assets of $307,000 liabilities off $275,000. Okay. Which means that your net worth is $31,650. This is how much you are worth. So if worst case scenario, you have to liquidate everything that you have, You you will have $31,650 in your hands, give or take a little bit. Also if, say, somebody walk somebody was trying to see you. And I know I always use the whole lawsuit thing as an example, because it's almost the easiest way to visualize how this works. So if someone is trying to sue you and they look at your assets and your liabilities, they will then see that you you are worth $31,650. So now they know where to begin. Then type the entire lawsuit. Okay, so this is how the network tab works. And to just give you a simple, easy visual effects off what your karmic net worth is. The Green Line shows your total assets. So the Green column shows your total assets of $307,000 and then the pink line shows your liabilities off. $275,000. Now, if God forbid, the pink line is taller than the Green Line. That means that you are worth negative something or another. So let's do that. Let's say that your car it Let's just assume that you owed some that, say, $40,000 in credit card bills. That means that your net worth is negative $7400. Meaning that, as you can see the pink line, is that the pink column is taller than the Green column, telling you that your liabilities exceed your assets. Now this is something you never want to see. You don't want your comment net worth to be in the negative. Now it happens. OK, but if that happens to be you, then you want to start the process of trying to figure out how you can start to eliminate debt so that you can bring your net worth into the positive. So that is how the net worth tab, or rather than net the net worth worksheet, works. So thistle is what you want to start with before you start filling in any of the other tabs . You want to start with your network to see exactly how much you are worth. It's a good thing to know, and of course, this is going to change over time. So over time you're going to start only unless and say car notes. You're gonna unless in credit card bills. Hopefully, if your intention is to pay those off, you're going to owe less in student loans, and you're going to also start to pay down your personal loans. So as you start to do that, you want to come back to the net worth tab, and you want to adjust these numbers. In addition, if you are saving money in an investment account, if you are saving money in an emergency fund account, if you are saving money in a retirement account, and if your savings account is also increasing, you want to come over here and increase those dollar amounts. So over time you're going to see a shift in your current net worth is going to go up, and it's going to go down depending upon what you're trying to do Now. Hopefully, your goal is to become financially free. Okay, you want to become debt free, so hopefully in the process of doing that, you can come back to this tab and you can start to reduce your liabilities and to increase your your assets. So before I close out this lesson, let's talk about the Turquoise column. The Turquoise column is visualization off your net worth Now, whenever this turquoise column is below the zero line, that means that you are in the negative and you don't want that came. So the whole idea is for this Terkel's talk turquoise line to be above the zero. But let's change this. $40,000 back to $950. And as you can see, the turquoise line is now above zero, meaning that your net worth is greater than zero. Once again, if it is below the zero line, that means that your net worth is less than zero, which puts you in the negative, okay? 4. The Input Tab: Okay, so the next tab we're going to be talking about is the import tap. Now, the import tab is where alof the magic happens. This is where you actually create your income and your expense budget and where you input all of your actual income and expenses now. But before we get started creating a budget, let me show you around the worksheet. So you know exactly what you're working with and what you need to do. So the first thing you want to do when you get onto this worksheet is you want to start with the date or the month that you want to start tracking. So, technically speaking, we normally start tracking our Roger. We start creating budgets at the beginning off any year beginning of the year. So you would then start with January 1st off every year that you're in. So now you're tracking your budget on a 12 month basis, so it's gonna go from January 1st to December 31st. So depending upon the period that you're trying to chat, try trying to track that's going to determine the month that you choose in this area. Okay, Now, the next thing you know the next thing is the budget side off the spreadsheet. This is where you actually create your budget. This is where you make all of your assumptions. So if you assume that one a monthly basis, your net income is, say, five or rather your paycheck. Let's say you have a regular 9 to 5 job. You work for someone and you have a fixed income, so you would actually know how much you bring in every month. Usually it's not going to change anything. It might change the Pentagon a kind of work you do. You may work over time, or you just may be on some kind of flexible schedule. But you want to make your best guestimation as to how much you're going to be making on a monthly basis when it comes to net pay. Okay, now, that pay could be if you have a regular 95 job, or it could be if you are self employed. If you are self employed, then the net pay is going to be what you anticipate that Excuse me, anticipate your expense, your nets in conservation. That income is, of course, gross income minus one of the all of your expenses that equals net income. So that is what you're going to put beside net pay. And then you have some people have a lot of people actually have more than one stream of income, so you have the option to create a stream of in or rather to include wherever stream of income you have in the other three cells. So let's say you do hair on the side, then you can just type in hair or typing whatever the name of the businesses or whatever you know, identifying information that you need to to determine exactly where the income came from. Let's say you rent property if you have real estate that you went out that you can include your rental property income and then any other kind of extra income. Okay, so this is where you're going to estimate how much money you bring in on a monthly basis. And, of course, you have your monthly expenses, so you want to determine based upon past bills past behavior. You want to now determine how much money you spend every month. Well, things like your mortgage or your rent is going to be fixed. That is what it is. Your phone bill may or may not be fixed. Depending upon the type of service that you have. Your electricity bill is going to be somewhat fixed, and that's going to really depend on where you live. That does. The weather changes. It fluctuates. It does fluctuate certain times of the year. It's going to be more than other times. Same thing with your gas now. Well, I I normally do is I set up a budget plan with my gas company on my election company, which means that every single month I pay the exact same thing. So let's a steam that I pay $177 every month. Well, that means I'll pay the 1 77 in the summer. I'll also pay 1 77 in the winter and also pay 1 77 in this foretell spring, so it just eventually evens itself out, and it's the it's the to me. It's a better way to pay your bills when it comes to bills that are that fluctuate because it's easier for you to create a budget if you know exactly how much you're going to spend. So when it comes to your electric bill, your gas spill and possibly your water bill. I don't know E in Georgia, and I'm not sure if they have budget plans for water bill they might do. I'm not sure. I likely it's likely that they probably do. But if you can set up a budget bill plan with your utility company, that would be the best route to take that where you can have a for sure number in here. So in this section you have all of your housing bills, and then you have transportation, insurance, food. Now, before we actually start to input our actual costs, let me explain to you what you conduce with some of these Some of these expense sections. You can actually expand or retract some of these expense sections. For example, you can click on the minus side it look on the minus sign. It's going to retracts housing. If you click on the positive sign, you're going to expand it so you could do the same thing with transportation. The same thing with insurance, the same thing with food. You can retract food if you want to, so if you're like me and you rather just look at small portions of information at a time. Then you can just go ahead and retract everything, and then you can expand it when you want to go ahead and go ahead and record your income and your expenses. Or you could just leave certain items retracted, for example. You can leave. I don't have any pets. So if I were filling out this budgeted worksheet, I would leave the pet section attracted because, quite frankly, it. Like I said, I have no pets. What, you don't have any legal fees or legal bills? You can leave that the tractor kid. But that's something that you can do in order for you to not to have to look at all of the data on the screen at the same time. Okay, so now let us go ahead and start to input data. So when we start in putting data, we input data on the actual side off thes spreadsheets. So this is the budget. Decide. With this, the budget decide stays sixed, so usually it's fixed. That's not going to change. The actual side changes because whatever you anticipated, your a particular bill to be may be different during that month. Now, with the budgeted side, you do want to go back every so often just to make sure that things haven't changed. Because even though the budgets inside is fixed, bills increase. So where you may have been paying $700 a month your phone bill for the past 67 months, you may now be paying $150 so you want to always go back to make sure that your budget it's side is still as accurate as possible. Okay, rights. And then it starts to input information for the month of February. So for the month of February, let's assume he made $5000 for you and $5500 in the month of February with your regular job . Let's say you have your side gig. You may do hair on the side, and you made $1000 then you have you rent probably have rental property. Your rental property is budgeted at $1200. Now that will probably be consistent. It will change if, for example, if you have repairs and maintaining, so that's one that can change. You can fluctuate up and down. But let's just say for the month of February there was no repair and maintain is to worry about and then has come down to housing. So let's expand housing. So our morgue age more than likely is going to stay the same phone. Say that this month, rather than paying, we budges in $98. But instead something happened. We want a paying, say, $120.25 dollars, not 1250 the electricity. We have a budgeted electricity bill, so it stays at 1 77 Same thing with our gas bill. The gas bill also stays at 109 and then water and sewer. That changes. So let's say that we only paid $55 this month, and then cable normally stays the same. That's a repairman maintainers that's assumed that we had to repair our A C that cost us $200. Them supplies are, let's say we spent about $50 supplies, but let's go ahead and put a budgeted amount in here. So for supplies, let's say we normally spend about $75 a month and for repair and maintain its repair and maintain its. That's assumed that this just average it out. So that seems over the year. You know me, spend abouts. I don't know, $800 usually on Repairman maintains over the year. So let's go ahead and average that out. So we average $800 over a 12 month time period. That would be about $66. So let's just say, on average, we spend $75 a month on repair and maintenance, okay? And that's just based on a yearly average case. And I would done with housing. Let's go ahead and input information for transportation. So the transportation you have your vehicle payments that if you let's assume that you have a loan and you pay 1 15 months now that's that's to the budget. So that's 1 50 and then for bus, taxi fare, insurance, licensing, fuel, maintain ins and officer. That's a thing. Maintain its average. Let's average it out for the Inter because some months you may have, um, repair and maintenance. Other months you may not have repairing maintaining, so let's average it out for the entire year. And let's say we spend $1200 a year Um And then let's see. So for actual, for them. For the month of February, we spent no money on bus and taxi fare. But let's assume that every now and then we're using uber. So we asked, originally monthly basis, $50 on uber. And for the month of February, let's say we only spent $15. And then, of course, your insurance for a vehicle that stays is saying that's 107 on for fuel. $50 is quite a low. But for a person like myself that works from home for the most part time at home, my feet. My gas deal is pretty low on my fuel bill is pretty low, so let's increase that to 200 a little bit more really realistic there. So let's say your fuel bill for the months off February was 1 75 repairman maintainers you had none. And now let's look at insurance. So for home, your home insurance. If you have a mortgage than usually the insurance is, um, part of your mortgage. But if you rent, you may have renter's insurance, and then you would include that here. Health insurance, life insurance and you have it. And other in this case, for this fictitious individual. They don't have any insurance excusing other than health insurance at 6 50 that states pretty stable every single month. And then let's go down to food that see. So for this fictitious individual, they spend $150 a month who usually they budget about 1 50 months on groceries. We just kind of low. And then they dine out. Cost him $75 a month and then for other. Well, it just depends. If you have something that's other than dining out and groceries, then you can include that here. This could be on. Let's say you every now and then use Let's just assume that you do a lot of Starbucks type spending. Then you can include that under other. And for those of you that do drink Starbucks, you want to really, really track that because it can get quite costly. So you want to see how much we're spending every single month on Starbucks. OK, so actually, for groceries for the month off February Susan, who is a fictitious person, we are deep. We're working with spent $200 dining out. She only spent $25 she decided that she didn't want to mess around the spot start of Starbucks this month. So she left and then pets. Susan has no pets, so we'll skip that personal care medical. That would be, Let's assume that you go to the doctors on a regular basis and you have a copay. Then you would include that as part of your medical expenses, and your hair, your hair and nails done on the regular basis every month he wants include that clothing, dry cleaners, health club organization, D's and other. Either could be prescription medication or whatever you consider other now for heaven nails . Susan does not get her hair and nails done. She barely goes to the doc, says she does go to the gym. That's probably why she barely goes to the doctors so she spends $40 a month on her her gym membership. And let's go down here to entertainments. Let's see what we have. Entertainment entertainments Now the only thing that Susan cares about his Netflix. She has a Netflix account, and she spends $15 a month on that, and then Susan has loans. He has a personal loan, a student loan. She has credit card bills and she also has what I said. That's what he has. And this is what she pays on a monthly basis. She pays $50 for a personal loan for a student loan. She pays to 50 and credit cards. She pays $100 a piece. Now this. You definitely want to monitor this area very, very closely because if the budgeted amount is going up, that means that you are constantly spending money using your credit card. Okay, you should. The student loan is not going to go up. It's gonna stay where it is. Of course, that will change if penalties and interest accrued what they start charging penalties and interest for whatever reason. Personal loan. You want that to stay the same? Because if it doesn't say the same, that means that you are re upping on your loan. And the whole idea for this budget is that you do you want to become debt free? So the coming debt free means that you don't want your personal loan to increase. You don't want your credit card monthly payments to increase because they're going against what you're trying to do now. If your goal is not to try to become debt free and just try to maintain, that's OK to a field goal. If you feel like you are comfortable where you are and you don't mind, you know, creating a little bit of additional debt by spending more on your credit card or taking it another person alone. That's okay to just know that you can monitor exactly what you're doing. That way, if you feel the need to make changes, you can do so. All right, So for personal, $50 were spent in February for your student loan in January. For some reason, you can only afford to pay 100 which is less than what you're supposed to pay. So you may or may not have encouraged some type off some type of late fee. But let's just assume that in the month of February you pays $250 Credit Project 800 as you're supposed Teoh, and you paid 100 for both of those and I. Let's move down to taxes now, taxes maybe a little bit tricky. So depending on the type of work that you do, whether or not you work for yourself or if you, if you have an employer, you may or may not have to include taxes as part of your budget. Now, if you have a regular job and you work for an employer meaning or an employee, more than likely they are going to withhold the federal and the state with holdings from your paycheck. Now, if you are self employed, hopefully you are paying your quarterly estimated taxes every single quarter. So in this area for taxes, for those of you that are self employed or even those of you that have a regular job. But you also have a side gig, something you do on the side that you do for yourself. Maybe you maybe an uber driver. You may be a part time hairstylist were just something that you do part time where you work for yourself. You have to remember that you have to pay estimated taxes, so this is where you would include the estimated taxes for every single month. Now I always tell my my clients don't wait until tax time to try to come up what you owe because more than likely you're not going to have it. If you have a hard time saving up drink during the year on a monthly basis to pay your your quarterly estimated taxes, you are going to have an evil and even harder time trying to save up money to pay all of the tax at the end of the year. So you want to make sure that you are calculating your quarterly estimated taxes on a monthly basis, and you are including as part of your budget. That way is in there. It's in your budget, and you are making a conscious effort and a conscious decision to save up and make those payments when they are do so. This is where you would include the estimated taxes for federal state and if you pay local taxes. And also there's some other sort of tax that you pay, depending upon what state you're in. You would include that here, So let's let's move down to savings or investments. So it's always good to save for retirement, and it's always good to have an investment account, and it's also always good to have an emergency fund account. So for your retirement in retirement accounts, especially if you work for yourself. You're self employed. It's really important that you pay attention to this because the only person that is gonna be there to take care of you in your latter years is going to be you. Okay, especially force form individuals who work for themselves. If you don't report all of your income, then that means that you are minimizing the amount of money that you're going to eventually collect on Social Security, because the less you pay or the lesser reports, the less that you you pay in self employment tax, which means that when it comes time seat when it comes time for you to collect Social Security, it's not going to be as much. So you want to make sure that you are saving for retirement. So let's say that you anticipate saving 3 50 month for retirement or you intend saving, and you also intends investing in yourself whether or not you want to start a business or you want to just invest in yourself for whatever reason. Then that's where the money would go. It would go into investment accounts, so $350 for your retirement and $100 for your investment and then other could be some type of emergency fund that depends on you. And you have different gift and donations. If you want to include that, you just have to expand the gift and donation inception. And then, if you have any, any type of legal bills that you pay, whether it be attorney sees whether it's court ordered alimony payments on a Nino judgments or something else. You're going to include that under the legal option. Now, once all that all of that is done, then you have your total on the bottom. Okay, so that is how you input information in the inputs, or rather, on the input data tab. In the next video, I'm going to discuss how you can actually look at this information in summary form. 5. Input Tab Assignment: this assignment is for when you are in putting your income and your expenses, but mostly your expenses in the input data tab. Now because, as you know, sometimes your bills are not necessarily the same every month, and especially when you're talking about your electric bill and your gas bill, maybe even your phone bill. And there are other bills that tend to change from month to month, depending upon the time of the time of year now. Usually you have maybe six months where that your bills are going to be pretty consistent and then the following six months, they'll be consistent for that time period. So I have done. I've created a sheet where you can actually calculate your budgeted amounts for all of these bills that fluctuates from month to month. Let's say, for example, your gas bill and your electric bill because your gas and electric bill change each month. The best way to come up with an estimated budget amount is to use an average amount, so an average can be calculated by adding the amounts you paid, say, for the last six months, in this case, like I'm using a 66 month calendar, the amount that you paid in the last six months and then dividing that total by six. The total amount that you get after you divided all of the six months by six is what you're going to use for your budgeted expense figure. So what you need to do is gather up all of your variable bills for the last six months. So that would be your electric bill gas bills or the bills that fluctuate. Gather all of those up and then you wanna plug each amount under the months column. Okay, when a plug him under the months column, and then you're going to use the total amount in column I, which is over here as your budgeted number in the input tab off your spreadsheets Also, another thing is, you may want to adjust the amount that you budget for your gas and electric bill based on this season. Or even better, you can actually can actually set up a budgeted billing plan with your utility company. So what you would do you would just take whatever that the dollar amount is and you plug it into this a month one that $600 months to, Let's say it's 200 months. 3 300 I'm just given examples here. Month 4 400 a month, 5 500 a month 6 600 As you can see, the average off all of these amounts is 350. So this is the amount that you are going to use as your budgeted amounts. 6. Summary Tab: Now let's talk about the summary tab on what the summary tab represents. So the summaries have is basically a summary of everything that you put in on the input tab . So in the import tab, you are including all of your But of course, your budgeted and you included all of your actual expenses on a monthly basis. Now, every single area has a section. So as you remember when when we were in putting data on the input tab, we had the house infection, which included a plethora of bills. We had transportation, which includes numerous number off options. Same thing with insurance includes numerous order off, numerous choice of options. So when you want in putting information in the input data tab, you're looking at quite a bit of detail, right? So it can be a bit challenging to sort of see at a glance how you did with every single section. So the summary tab break that down for you. So for housing, it summarizes everything that you input it in the input data. Tassel this information under housing, it's summarize into one single line. So it shows you how much you either, but your budget waas or what? Your actual waas just in one summarized line. Okay, that's the purpose off the summary time. So what do we need to know? What do we need to know about the summary tab? So, depending upon what months you want to look at, you are going to click on the drop down arrow and choose a month. Let's say we want to look at January, what occurred in January? We will click on January, and we're going to see in January what our budgeted expenses and income are, which, as I mentioned earlier, is usually going to be fixed. But they will see what we actually did. What we actually spend for whatever month we picked up here will see all of the actuals. And then you also see the difference. I came and then also in the summary tab. We also have a year to date. So we're on this side. We're looking at everything by the months. So over here we're looking at everything on a year to date basis. So if you choose January, all you're going to see is the month of January. And then, of course, a year to date will be through January 31st. Now let's change this to February, Okay? So when we change the month to February, as you can see, all of the information on the actual changed And then also everything on the budgeted side also changed because now we're looking at information for the month of January. But we're looking at year to date, which is going to include January and February. Okay, The same thing if we if we had information for the for the subsequent months, it will be the same thing. So when we get down to December, which, of course, there's no data for that. But when we get down to December, you would see all of December information on this side, and then you will see year to date. So all of your income, what you budgeted for them, for the money for the year that you're in what you actually spent for the year that you're in and the difference for the year that you're in, You would see a lot on this side. So now let's go back, Sue February, which is what we just imported in the input data screen. I take that back through January, rather to February. Okay, So what is this summary telling us is telling us that we budges head in February? Our budgeted expense are rather all budgets for our nets. Income on net pay was $5000. However, we actually brought in $5500. So whenever the difference is in black for income purposes, that means that we were over budget, which means we made more than we anticipated. So we thought we were going to make 5000. We made 5500 meaning that the difference off $500 was more than what we anticipated because it's in black. Whenever you see anything on the red side under income, that means that we underperformed. That means that we may less money than we anticipated. We did not make us much as we thought we were going to make. So for hair, Susan thought she was going to bring in $1500 but she only brought in 1000. So there's a difference off $500. So you know she thing uses information to either investigate to see exactly what happens during that month. Why she made less why she made more. Whatever reason she whoever reason, or rather whenever the reason was that she made MAWR. She may want to try to duplicate that or to try to improve on that when it comes to making less she wants to see Well, why don't Why did I make less? What can I do differently to either maintain my budget or make more? Then, of course, the rental property. There was no difference because the rental property the budgeted amount was $1200. She actually brought in $1200. So she's, you know, she's doing good. She's doing good right here. And then you would have the difference total in this case, the difference. The difference total is zero because she she over performed by $500 with an under performed by $500 which, of course, leaves zero. And then, when it comes to her budget, she actually, when it comes to her budget, she actually met her budget because her budget was $7700. She met her budget. As you can see, her actual is $777,700. But even though she underperformed in the hair department, she over performs in the net pay, and therefore she was able to equalize her actual to her budgeted. That's why it's really important to have this stuff in front of use. Even you can see exactly what's going on because otherwise give me All this information is swelling around in your head and you know what you brought in. But you have no way of analyzing that information to make it make sense. So when you look at the information on a spreadsheet or let's see you write it down, however, you need to do whatever you need to do to keep track and to look at it what you need to make sure you do is analyze the information to see Okay, what happened? Why did it happen and how did it actually affect my budget? Now let's go to expenses for expenses for housing. She anticipated that she was going. She was going to only spend ah, 1009 159 but she spent 2066 a difference off $107. So in the expense section, whenever something, whenever the difference isn't red. Okay, that means that she spent more than she was suspect was supposed to spend, or rather more than she anticipated. Okay, so you want to look out for anything that's in red? Anything that's in red is basically a red flat. Do you want to further investigate what happened now for transportation? She spent less than she anticipated for transportation. She anticipated spending $1700 which is quite a bit and not quite sure why it's so high. But she only spent 447. Now, this is a bit this. This is a little off. So when you look at transportation anticipation there, $1700 she spent 444. What you want to do is go back and see OK, well, what happened? Because there has to be an explanation for that. Is that that number? Is that the off? So what happened here on the anticipation? Okay, so the maintain is That's what it was. She anticipated that she was going to spend $1200 a month. Oh, that's a bit high. As a matter of fact, let's change that to, um, let's change that to 100 and $20 a month. Yeah, let's do that. That's all. Rather, let's just take $1200 let's divide $1200 by 12 to C C 1200 divided by 12. That's $100. So let's just change this to, ah, $100. I think that's what I actually meant to do. Let's change up to $100 rather than 1200. So that that that was really a bit off. So now you can see that the budgeted versus actual is a little bit more reasonable. So she budgeted spending $607. Rather, she spent 444 so she actually saved 160 so she spent $160 less than she anticipated. And it's another thing when you have these things written down in front of you. If something looks off, it's so much easier to see. Okay, what? This doesn't look right, and you can go back and do some investigation and some research to find out why. The difference okay for insurance insurance was the same. So basically, you can see that for the month of February, Susan Citizens budget was 440. What, $434,446 But she only spent $4393 for a difference off $53 which means that she spent $53 less than what she anticipated. Now let's look at this year to date, so year to date, that would include January and February. So year to date the budget was $15,400. Susan actually brought in year to date $15,300 which means that year to date she brought in $100 less than what she anticipated. Well, you know, that's not necessarily a great thing, but it's not necessarily a bad thing because $100 is not. That is not that much of a difference, but still she may want to improve on that. You may say, OK, I think I would like to improve on that rather than having I'd rather be even or have brought in more. I don't want to bring in less. So then she could start to plan around that and say she could make plans to make sure that moving forward that there is no difference or the difference is on the positive side. Rather on rather than on the negative side. Now year to date, which includes only January and February she budgeted for her budgeted expenses were $8892 . Well, in all actuality, she spent 8000 $159. But this is wonderful. That means that she actually spent she actually saved $733 so she spent $733 less than what she thought she was going to spend. So that's wonderful. Now that's how you use the summary spreadsheet. Use a summary spreadsheets to look at all of your data inputs in a more concise view. That way you can look at it and you can analyze what happened, what was supposed to happen and what you need to change, what happened or what didn't happen. OK, 7. The Dashboard Tab: Hi and welcome back. Now we're going to talk about the dashboard tab. This actually is my favorite tap because you can actually see all of that hard work in one single snapshot, one single view. Let's you know whether or not you've exceeded your budget or whether or not you were under budget. Okay, so here is how the dashboard works. So first of all, you have to decide which month you want to review. So in this case, we're looking at February. If you decide that you want to review January that you have to go back to the summary arm tab and you have to change the month from February to January came Now, once you change the month from February to January, then in the dashboard tab, you'll notice that all of the information has now changed to January's budgets and expenses . So don't forget, in order for you to actually view the month you want to view, you have to go to the summary tap and pick the months that you want. And then the month that you want is then going to display on the dashboard tab. Now, here is how the dashboard tap world. So here's how you would read the dashboard time. So essentially, what we want to know is, did we exceed our overall budget or where we right at our budget, or did we will be under budget? So this tap answers that question. I asked you the question. Did I exceed my overall budget? The answer here is going to be either. Yes, well, no. In this case for the month of January, Um, Susan did not exceed her overall budget. Now, how is the overall budget calculated? The overall budget is calculated by netting your income and your expenses. When you net your income and your expenses, it's going to tell you over here how much you saved. If this is a positive number, then of course, is going to be black. If it is, a negative number is going to show as a negative number, meaning that you were definitely off off budgets in the months that you're looking at. Now, the way this is calculated is it takes your income and it takes your expenses, and it gives you the next. Now your income may or may not have been under or over budget. Same thing with your expenses. It may or may not have been under or over budget, but in order for you to know whether or not you were over or under budget within York's with your expenses or with your with your income, your expenses, he would have to go to the summary seat at their summary sheets to make that determination . Because, as you can see, for the months off January, Susan was actually under budget. In terms of how much money she brought in, she anticipated she was going to bring in 7700. In all actuality, she only brought in 7600 meaning that she was $100 short. However, for expenses, she budgeted $404,446 with, But she actually spent $3766 meaning that she understands by $680 she made less income. She only made 76 rather than 77 which means there is $100 deficit. And, as you can see in the dashboard, it shows that her savings altogether was 5 86 so basically the $100 was subtracted from the $680 on that Met ID. What has her overall savings for the month? Waas. So, even though on the dashboard it tells you whether or not you exceeded your budget, you always want to make sure that if the answer is no, that you still go to the summary tab and take a look to make sure that you were either within budget. Oh, you were over budget when it comes to your income or under budget when it comes to your expenses. Because looking at the broad no, doesn't really tell you if you had a deficit. Looking at the summary sheet lets you know that you did have a deficit. So, yes, it's a good thing that you did not exceed your budget. However, you did have a deficit, so you want to make sure that you can cure that that way. In the following months, you can avoid what you did in the month that caused you to have a deficit. So with that said, the dashboard screen and the summary screen. Or should I say, the dashboard worksheet and the summary worksheet work hand in hand so you don't you don't want to look at them in isolation. You definitely want to compare what's on the summary sheet with the final answer on the dashboard worksheet. So that is how the dashboard, that's how the dashboard screen works it pretty much. Let's you know whether or not you were over or under. And then you can use the information to make intelligent and to make actual decisions. That makes sense, because usually all these numbers are swirling around in our heads. We make assumptions. We think that we may have not made enough money or not made what we what we should have made or we spent the money on expenses. We overspend and then we wonder, Well, where did all the money go? Because you know how much money you make every month, But for some reason you're always growth. You wonder why am I always broke? Why do I never have enough money to cover my bills? I make enough money, but for some reason I can't seem to cover my bills. What I'm making well, looking at the spreadsheets and looking natural expenses that, in and of itself will really help you revisit your spending habits. Now, one other thing that I like about this sperm this screen is that you can actually see what percentage you spent on any given expense or what percent is your incomes Break was broken up into. So over here, you can see that you can see that the net pay is 59% off the total income that Susan brought in. You can see that rental income is 15% of total income brought in, and hair income is 26% auf total income brought in. So if you have more than one stream of income so you have several streams, streams of income you could actually see just by looking at this chart or rather looking at this pie charts which income stream is the most profitable. And then you can also use that information to make further decisions for the future. Same thing over here with your expenses. Where did mind when you go? Where was my money spent? Well, 48% was spent on housing, which isn't bad. I mean, 48% meaning that half of it, almost half of the expenses was spent on housing. Then you can see that 12% of that was spent on savings, foreign investment. You want to look at what the least amount was spent on, and in this case, it was personal care at 1%. And then also let's see Missy Personal Care at 1%. And then entertainments What entertainment shows 0% meaning that the amount spent was quite minuscule. But if you remember, she spent $15 exchange of the value of $15 it shows it for entertainment. $15. With Spence, however, is its real Italian, tallying it up a 0% because in the larger scheme of things, that amount is quite minuscule. And if you scroll further down, you'll see a little chart here, which shows projected versus actual expenses. Now, what this chart shows you is it shows you by looking at a lion graph how you did that month . So the yellow is what you actually spent, and then the pink line are your projected amounts. So it shows that safe transportation you actually spent way less than you projected. So whenever the yellow bar is below the pink line, that means that you actually spent less than what was projected. And also, if you look down here. You can also see the dollar amounts that you spent, so it shows actual for housing. Your actual spend was $1809 your projected amount was $1959. And let's see, let's go over here to food. It shows that you actually exceeded what you projected because the yellow bar is above the pink line. So that shows that you exceeded what you actually projected. And if you look at the numbers, it shows that your actual spend was $295. But you're projective. What you projected to spend was $225. So that's why I like this particular page because you can look, you could just look at the chart and look also at the lion graph. If you want to just see really quickly how you did in any given month. Okay, so hopefully you use this page in the way that it was intended, and you could really get some good information just by analyzing the pipe shot and also analyzing the line graph 8. Crush Your Debt: now that we have created our budget on with inputs it out actual expenses, we now have all the data and information that we need to analyze our spending. We also now know whether or not we exceeded came within or spent less than our plans. Budget. Armed with this information, we can now set financial goals. You can look at your overall results and align those results with your ultimate goal. Now Susan's ultimate goal for the purposes of this class is to get rid of a one off the unnecessary debt that she has that weighs her down. Allow the debt that she has, a quiet that prevents her from being able to make decisions that are not directly tied to what she has to do. Because of all of her financial obligations. She wants to three herself from financial slavery. Now imagine your vision and your dreams and use your budget to work toward that vision and that dream. Where do you want to see yourself in? Let's stay 567 years. Remember, all of this takes discipline and the desire to reach that goal. In order to achieve long term results, you have to take control of your finances and not let your finances control you. This entire budgeting exercise who helped you map the route you need to take to accomplish your goal? It would help you to understand the question. Do I need to cut back on what I spend on frivolous items, or do I need to increase my monthly income in order for me to reach my goal now? Always remember that it's not the big purchases that keepers broke and in debt, it's the small purchases that we make and don't keep track off that gets us in trouble. So my challenge to you is to try for one week to not use your debit card or your credit card to make a purchase. Use cash, and I can guarantee you that you're going to notice a change in your spending habits. Now spending cash will make you think about what you were buying on whether or not you really need that $6 cup of coffee. Now, studies say that we spend 37% more money using a debit card or a credit card than we do when we use cash. It's all very psychological, but believe it or not, that psychological experience really does work. It makes you think about exactly what you're doing on what you're spending money on, and it makes you make much wiser and smarter decisions. Okay, so now let's talk about some of the most popular ways that you can use to start paying down your debt. If you have a list of debt that you're trying to get rid off, thes two methods are the best methods that I'm aware of and that my clients have used to start paying down their debt. Whether they are business debt, whether it's a business debt or whether it's personal debt, it could work for either one. Now, I try to keep this a simple It's possible. So therefore, I didn't wanna work with too many formulas. I rather you just plug in numbers and you'll see what I'm talking about. As I go along, I rather you plug in numbers so you can see exactly what it is that you're doing and how the numbers are working. I could have just created formulas for all of this, but I didn't want to do that. I wanted to keep it as rule and a simple. It's possible. Okay, so let's get started now. The two methods that are out there, what are the avalanche method and the snowball method? Now the question is which one is best? Well, I would say it just depends. It depends on you, however, I'll tell you that the most popular one and them and the one that I think keeps people on track the most is the snowball method. And the reason why the snowball method keeps people on track the most is because when you use the snowball method, you are paying down your debt based on the balance versus when you use the avalanche method , you're paying down your debt based upon the interest rate on. Remember what I said something about our psyche. And psychologically, when we see results, we tend to want to continue what we're doing. When the results are too slow. We just say, Oh my God, I don't want to continue doing this. It's taking way too long. I'm just gonna quit, and that's why I love people. Quit when it comes to working out, because when you're trying to lose weight, it takes time for you to lose weight and to take it on to keep it off long term. It takes time, Same thing. And that's how we think. We just want things to happen now. Now, now, now, quickly, quickly, quickly. And that's just human nature. So I'm not knocking anyone for that because I'm that way, too. Sometimes it's human nature, but we have to discipline ourselves when it comes to something that we want it. We really, really want to become debt free. We have to discipline ourselves. Okay, so let me talk about how the Avalanche method works. And then we'll talk about how the snowball method works with the Avalanche live method you are paying down based on the highest interest rate. So in this case, Susan has a student loan at $16,000 and it is 20% she had. She pays 20% interest on that Now, As you can see, the 20% interest is the highest interest rates. On the other hand, the snow, but with a snowball method. Susan's lowest debt is her American Express credit card, where she only owes $900. So let's make the assumption that Susan pays. Let's say she pays $200 a month on her student loan, but then for her Amex she normally pays $50 a month, so these amounts that she pays on a monthly basis are her minimum monthly payments. But before I continue, let me show you how to Adam how to add a bill. So let's say you want to add a hospital bill. I'm going to go ahead and use the snowball method side because most people tend to use the snowball method so it at a hospital bill, you'll just type the name of the bill here, and then you'll tell you'll type the amount to, Let's say she owes $8500. So you tracked the dollar amount on the balance, and the percentage that she pays for her hospital bill is let's say it is 9%. You just added, There you just type of nine and hit Enter then, as you can see, the $8500 automatically populates under balance. Okay, so now let's start paying down some of this debt. One of look at the first thing you want to do when you pay down debt is you want to see if you had any savings for that particular month now. So we're gonna go back to the dashboard tap and the dashboard tab is going to tell us how much we saved in the month of February. So the month of February, we had $625 left over after we paid all of our bills. Now, this is based on our budget based on how much money came in and how much money we actually spent. Okay, so we wound up having $625 left over at the end of the month. So we know that because we saved 6600 and $25 we could actually use this money to help pay down some of our debt. Now, depending upon what other obligations you may have, you may want to use part of the savings to pay off some of your debt. Or you may want to use the whole amount. I personally would suggest using the entire mouth, because if he the more you use, the quicker you're going to pay off your debt. So in this case, we're working with an additional $625. So now let's go back to the crush, your debt town. Now, if Susan decides that she wants to use the entire $625 here is how you are going to input that number. I remember I told you at the beginning that I'm trying. I wanted to try to use more more plugging rather than formulas for this section because I want you to be very aware of what you're doing. Okay, so let's say, for states of the student loan, she pays $200 every month for the student known. Okay, now we're going to go under the balance. So we're gonna go ahead and we're going to subtract the normal $200 a month that she pays because she made that payment so well, subtracts the $200. So that's what she paid in the month of February or wherever months, what you're working with. And she had an additional $625 so she decided that she was She only wanted to use $500 of that because she did start a great job with her budget. She wants to treat herself, so she's going to take 1 25 to treat herself and take the other $500 to help her pay down her debt for Let's subtract another $500. Okay, As you can see, her balance has gone down by 15,003 has gone down to from $16,000 to 15,300. Okay, let's move over to the snowball Method side now for her. Amex. Let's assume that's she normally pays every month the minimum requirements, which is $50 a month to let's go ahead and attract the $50 that she paid. And then remember, she has $625 that that she saved. So she wants to go ahead and pay down on her. Amex So she's going to spend $500 as an additional payment for her. Amex. That's an additional $500 so it has taken it down to 3 50 Okay, so as you can see over here on the avalanche side, she went from $16,000 to 15,300. Okay, technically speaking, that's not bad. But only here she went from $900 down to 350. Now, when she stays out 350. She knows that well, I can pay that off within the next two months, and that's very encouraging. So when she pays his $350 off, whether it be with within the next two months or even three months, she is now going to be encouraged to keep going. So now she can say, OK, I've crushed my Amex debt. Now let me move down to my visa card debt. I can I'm gonna crush that. And then she will say, once he's paid of her visa, then she can soak, have crushed that, and I'll keep moving down now, as you can see over here, remember, we added the hospital death for eight hunt for 8500. Well, you want to make sure that this the balances are in order. You want to make sure that it's going from smallest to largest. So what we're going to do here is we're going to sort this so that way we couldn't go. We can make sure that the balance is from smallest to largest. Here's what we do. We just go ahead and we will choose this area. We're going to select the area that we're truck that we're trying to work with. So once you select the area you're trying to work with you, then click on data. And then when you click on data, you'll click on sorts. Once you click on sort, you want to sort the balance column, so you want to make sure it says balance. If you click the drop down, you have options. You can sort by type. You can sort by balance. You could sort by interest if we were on the Avalanche side. We will choose who choose interest and we'll say, Okay, As you can see, it's sorted by interest. But that's not what we want. We want to sort by balance, so let's go back and click on data, click on sorts and then click on balance because that's what we want. And then we click. OK, now it's sorted it properly, so now you can see that the student loan is now back at the bottom. Now, if Susan continues paying off her debt as quickly as she's paid down the Amex, before you know it, she's gonna be down to her student loan. And that will be her final debt. And it's so much more is so much easier and more encouraging to start paying down on a $16,000 debt when you have actually crushed or your debt before that. Okay, Now, if she was, if she was using the Avalanche method, you can only imagine how long it's gonna take her to pay off. This $15,000 is gonna take her quite a quite a quite a while to do that and as I mentioned earlier, is going to be quite discouraging now before before you wrap this up, let me just say something. If you decide to choose avalanche method, you want to just focus completely on the debt that you're paying down. Whether it be the snowball method, whether whether it be the avalanche method, you want to always focus on the debt that you're paying down. When I say focus on the debt that you're paying down, here's what I mean is all of this debt has a minimum required payment, so you may have to pay, Let's say, $75 a month in your visa card. You may have a minimum payment off, say, $100 in your personal loan, you may have a minimum payment. A minimum payment off, say 1 50 on your hospital bill. Well, don't worry about subtracting all those amounts every single month. We're not worried about that. We're just focusing strictly on the Amex. Now, once your Amex is paid off so that say that the next month somehow she's a with a pail for Amex. So she paid that subtracts the $50 actually paid, which left her with 202 103 $100. And let's say she had enough money to pay down all of it. So we'll subtract another 300. Now she's down to zero. So now she's moving on to her. These the card. Now, if it's so car, let's say two additional months to pay off her visa card or rather, to pay off the Amex card. You already know that the visa card payments have you been making those payments over the last three months and you've been paying $75? Well, what you're going to do is now you are going to look at your your statements. So you're gonna pull out your credit card statement and see what your current balance is once you see what your current balance is, that you're going to come back and you're going to, you're going to plug in the current balance. So when we initially started the pay down, Susan Old $950 is three months later, she's paid over Amex. She's been paying on her visa card, and now she only owes. Let's say she owes $875 on her visa card. So you want to come in here and you want to refresh what you Oh, I would say, Just grab all of your statements and do the same thing for all of the debt that you see here. It's another personal loan. Let's say she's, you know, she was paying ah, $100 a month of that. And now let's say she only owes will just say $2500. Well, say 202,750 is what she now owes for her hospital bill. Let's say she now only oath 8200 and now for her student loan, she now owes only let's say she owes 15,000. Um, 15,600. Okay, so Now you've gone back and you've revisited by looking at your statement. How much you now? Oh, okay. So now we're gonna focus only on the visa card. So every time she makes the payments, her payment is $75. And make sure another thing is make sure there's an equal sign before you start actually subtracting numbers, cause if not, you're gonna get an error. So just in case there's no equal sign, make sure there's an equal sign before the number. So you're gonna go ahead and put the equal sign in there, Okay? And now you want to attracts $75? Now, let's have seen that in this particular month, she only had, let's say, $25 left over. So she's gonna go ahead and pay the $25 and now she's down to $775. Remember the personal loan, the hospital and the student loan? Don't touch. Those were focusing strictly on the visa. Now, when she finally pays off her visa card, then she she's gonna go back. Look at all of her statements and she's going to update what she owes and the reason why I want you to do it this way because I want you to be very aware of how much money you owe. I want you to be very aware off how much your your debt is being reduced. So you see, you see it at one amount and when you go back three months later or four months later, you see Oh, wow, even that have only been paying the minimum. I've paid it down to this amount. So all of that is quite encouraging. And also another thing that you're going to notice when it comes to those high interest rates. You're going to notice that when you come back to revisit how much you owe 456 months later , you'll say, Well, goodness, I've been paying $200 a month on this for the past six months, and it looks as if they've only applied less than half of that to my actual for the actual principle. And that's because when it comes to interest, it kills you. Interest is the killer when it comes to debt, and when you start to see that and you start to actually notice that you start to pay attention to that, then you're going to think differently when it comes to purchasing items using your credit card. You're going to think differently when it comes to taking out loans on Do Not paying attention to the interest. You're gonna start paying attention to interest when it comes to loans. When it comes to credit cards, when it comes to anything you're buying on credit, you're gonna stop paying attention to the interest when you actually notice that your principle is creeping down despite how much money you're paying because that interest is not your friend. Okay, now or everything that I showed you for. The snowball method is going to be the exact same thing for the avalanche method when it comes to the way that you're going to start crushing this debt. Of course, as you know, the only the only difference between the two is that in one instance you want you are working from highest interest, lowest interest, and in this case, we're working from with a snowball method. We're working from the lowest balance to the highest balanced, so I hope this helps. I hope you were able to take something from this class on. Hopefully you'll use the information that you learned to start to crush your debt