Hi,
Over the years, I've noticed that many of my clients with severe debt problems have fallen into one or more red zones. Today I'll talk about entertainment red zones. A common topic in the entertainment red zone is going on what I call "a credit vacation". Vacationing now, and paying for it in the future, results in compounding existing debt problems while creating new ones. It is important that people be aware that credit vacations can cause unforeseen future problems.
Let's examine the every day little red zones people might slip into:
1) Airports. Everywhere you turn, you pay exorbitant prices for goods and services. Parking, eating, drinking, gift shop items etc., cost you much more inside the airport than they do off site. Hopefully you're on an expense account and the above danger is a moot point.
2)Sports events. Sometimes we associate the cost of a baseball game with the price of the tickets. We don't factor in the costs of parking and concessions which many times can equal or exceed the cost of the tickets.
3)Transportation. Downtown parking is a red zone which can be avoided by parking in a commuter's lot and taking mass transit into the urban center.
These are just a few examples of common red zones. Identifying your personal red zones is a necessary step in planning your debt management strategy.
Tomorrow we'll talk about the pile of grocery receipts.
Until then,
Alan
Showing posts with label red zones. Show all posts
Showing posts with label red zones. Show all posts
Thursday, February 8, 2007
Wednesday, February 7, 2007
Tracking Your Monthly Expenses by Category: Entertainment
Hi,
Many people know that they spend more money than they make each month. The next step in categorizing your expenses allows you to see in detail where you spend your money. After you get a grand total of all categories, and compare it with your monthly income, you will get a good idea of how much you need to reduce your expenditures. By analyzing each category you will be able to determine in what area you feel comfortable reducing your monthly expenses. Today let's start by looking at your entertainment expenses for the month. When you look at your entertainment dollars, it's a good idea to break out your morning coffee expense, lunch expense, and your after work drink with friends expense. For example, if you buy a coffee specialty drink in the morning at $3.50 and at lunch, you spend $6.00-$8.00, followed by a couple of $3.00 beers or wine, you are conservatively spending $250.00-$300.00 a month on these pleasures. This is generally a good area in which to painlessly reduce some of your monthly spending. Now let's address dinner. In looking back over a month's spending, some people are shocked to learn how much money was spent on fast food at dinner time. For sound debt management, money spent eating out needs to be considered entertainment and not part of the food budget.
Tomorrow: red zones.
Until then,
Alan
Many people know that they spend more money than they make each month. The next step in categorizing your expenses allows you to see in detail where you spend your money. After you get a grand total of all categories, and compare it with your monthly income, you will get a good idea of how much you need to reduce your expenditures. By analyzing each category you will be able to determine in what area you feel comfortable reducing your monthly expenses. Today let's start by looking at your entertainment expenses for the month. When you look at your entertainment dollars, it's a good idea to break out your morning coffee expense, lunch expense, and your after work drink with friends expense. For example, if you buy a coffee specialty drink in the morning at $3.50 and at lunch, you spend $6.00-$8.00, followed by a couple of $3.00 beers or wine, you are conservatively spending $250.00-$300.00 a month on these pleasures. This is generally a good area in which to painlessly reduce some of your monthly spending. Now let's address dinner. In looking back over a month's spending, some people are shocked to learn how much money was spent on fast food at dinner time. For sound debt management, money spent eating out needs to be considered entertainment and not part of the food budget.
Tomorrow: red zones.
Until then,
Alan
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