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Budgeting

Okay, let's be honest. When we find ourselves unemployed or underemployed the most pressing thought may be how are we going to pay bills! It is hard to survive in today's world with little or no money. While it may be overwhelming, there are some practical things you can do to keep your head above water during this time of "shortage."

One of the first things you need to do is to develop a realistic budget. By doing this you will find out just how much and to whom you owe money. Here are some simple steps to setting up a budget:

1. Gather all your bills in one place. Go through each of them and record the name of the creditor, the total amount you owe, and the amount of the monthly payment, if any.

2. Think about and record any bills that are not due monthly, such as car insurance, the water bill, etc. If you are having a hard time remembering the amounts of these periodic bills, look through your check book.

3. Now consider all the items you purchase with checks: food, rent, entertainment, gas for the car, medication, etc. Review your checkbook for common expenses. Write all these down.

4. When you have listed all the bills, it is time to compare the amount you owe each month with the amount of income you will have. Don't be discouraged if you have more in the outgoing column than in the incoming. We will provide you with some suggestions about the "how" of paying these bills later.

5. Take a good hard look at the things you have listed as expenses. Are there some obvious places where you can cut corners? How about the number of times you have eaten out in the past month? How many trips to a department store resulted in your purchasing only items you absolutely needed? Can you reduce the money you spend on entertainment without turning into a couch potato? It is important to allow yourself some "entertainment" each week but it doesn't have to always cost money. Consider what you can cut and what has to stay in order for you to exist.

6. Now that you have cut some "fat" out of your expenses, consider what you can truly spend on the bills you have. For example, if you have a credit card bill with a minimum payment due monthly for $100, can you pay $50 or $75 each month? Don't worry about the credit card company yet, just put down what you think you can afford to pay. After you have done that, re-add the outgoing column and compare it to the incoming. Getting closer?

7. Once you have gotten the incoming and outgoing equal, you need to contact your creditors and explain what is happening. Let them know your intentions to put forth a good faith effort by continuing payments on these accounts.

8. Another suggestion is to write down every expenditure, no matter how trivial. This forces you to look at how you are spending your limited income and will be visual proof about where the money is going.

9. If you want more advice on budgeting during this time, contact the nearest University of Minnesota Extension Office. They can give you valuable information and helpful suggestions.

If you are receiving Reemployment Insurance (RI), you are required to report on your tax forms the amount of RI you receive during the filing year. Depending on the amount of other income you earned during the filing year, you may be required to pay income tax on the RI. It is a good idea to contact the Internal Revenue Office or other tax professionals when estimating the amount you may need to put aside for payment of this tax.

Budget Worksheet

What to Keep Worksheet

Now that you have looked at your budget, it is time to consider what you need to keep and what has to go. The first thing most of us think about eliminating when money gets tight is entertainment, hobbies, pleasure. This may not be a good idea.

You may need to keep activities in your life that provide a release from tension and stress. Now may not be the time, for example, to give up your membership in the health club. Working out is one way to reduce stress and maintain a positive outlook. Looking your very best as you are seeking employment may require keeping your regular appointment with the hair stylist/barber. Staying in touch with co-workers and friends is an excellent way to network during this time. Perhaps you will want to continue having lunch with them on an occasional basis.

List the activities in your life that provide relief from stress, that help maintain a good self-image, that enable you to continue communicating with people, etc. Then decide if the activity is one which you can keep in your schedule or not.

ActivityKeep or not
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2. ________________________________________
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4. ________________________________________
5. ________________________________________
6. ________________________________________
7. ________________________________________
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9. ________________________________________
10. ________________________________________

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This page was last updated on April 17, 1997
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