Your Money: Budgets Are Back

Budget. It's an old-fashioned word that has come back into favor these days, the latest item everyone needs. Everyone's suddenly aware that their paycheck -- if they still have one -- cannot be stretched to buy everything they see and want. In fact, many budgets cannot even be stretched to cover the basic necessities.

When faced with the new economic realities you have two choices: bury your head in the sand and just keep writing checks and charging purchases until the money runs out. Or take a close and accurate look at what's coming in, and where it's going out!

That close look is called a "budget." A budget is like a roadmap or online directions from Mapquest or your car's route guidance system. You wouldn't drive blindly, without directions, simply hoping to get to your destination. In that same sense, a budget is designed to give you both a starting point and guidance to help you get where you want to go.

So let's take a look at the two basic steps to making a budget -- and some tools and products that can make the job much easier.

Step 1: Where are you now? The first step is actually writing down what you own and what you owe. This may be the most difficult step, but all it requires is a sheet of paper with a line drawn down the middle. Now sit down at the kitchen table, pile up your bills and take a closer look.

Take a sheet of paper and draw a line down the middle. Make two columns, one for the total amount you owe and the interest rate on the debt. Next to that make another column for the minimum monthly payment on everything you owe, including your monthly mortgage payment.

Add up all those required monthly payments. Now you know where you stand. And now you can start to make your budget, trying to stretch your income to cover those required payments, plus food, utilities, gasoline and other necessary expenses.

Step 2: Making a plan: So far, all of your work has been done on paper. And you can continue making a paper budget, using some of the very helpful guides that are available. My favorite is "The Budget Kit: The Common Cents Money Management Workbook" by Judy Lawrence. It's available inexpensively on Amazon.com or in bookstores.

But if you have access to a computer, there are several free online budgeting tools. Quicken started the online banking and tracking craze years ago with its software programs. Now, like others, they've graduated to the Internet. You can go to Quicken's
Web site and sign up, creating your own secure password. Then using this secure site, you'll register the PIN and password to all your online accounts, from checking to credit cards to mortgage payments.