Secure Your “Four Walls”, Secure Your Life

Let's talk about the necessities of spending, the Four Walls: food, shelter (including utilities), transportation, and communication. Some very close runner-ups are other necessities such as childcare, healthcare, and life insurance.

Falling behind on these bills is dangerous because they impact your ability to survive. Getting your lights cut off, a vehicle repossessed, or a statement of foreclosure is the absolute last thing you need when you're trying to get started. Whether you're about to go through a significant life event, or faced with an emergency- what you need, what we all need is a plan that ensures our foundation is rock solid. When we establish a plan, in this case, a budget, we discover peace of mind. Take it one step further: use your budget every day as a guide, and I promise, you'll feel like you got a raise!

Before we even get started, ensure accountability of your Four Walls. If these bills are delinquent, let's take the time and due diligence to call customer service and talk to someone (an actual human being!) about getting caught up. They may be willing to work with you to take one lump sum that is significantly less than what you owe, or they might be able to get you on a payment plan that you can afford.

Once you catch up OR agree on a payment plan with the lender/service provider, you can consider those accounts to be in good standing. At this point, we can then focus on any other outstanding bills.

Maybe you're behind on a credit card bill or your student loan, for example. Let me clarify something quickly: These bills ARE NOT YOUR PRIORITY! These bills are examples of unsecured debt. Unsecured debt is any debt where the creditor does not have anything physical or tangible to take from you if you don't pay. However, they can always sue you for payment, but that's a story for another day.

On the flip side, when it comes to secured debt like a car loan or your mortgage, the creditor can seize your tangible assets. They can repossess your car, foreclose on your home, or even serve you an eviction notice, which is precisely why we pay those bills BEFORE we pay the unsecured debt when you're in crisis mode. At the end of the day, I want you to pay back ALL of your debt… this is just about who gets paid FIRST when you're in crisis mode.

 So remember, before you get started, make sure you're current on any overdue bills that affect your Four Walls, then get current on everything else. When you do that, you will blast off towards your freedom to build meaningful and lasting wealth!

All right, now for the nitty-gritty! The Four Walls!

1. Food: While there's nothing wrong with enjoying a good meal, overspending on food is one of the most common budget busters! This category can be seriously problematic if you're already having a tough time sticking to your budget or you're going into credit card debt from eating/ ordering out. The average American household spends almost $300 monthly on takeout, fast food, vending machines, delivery, and food trucks. While this exact number varies based on location and other factors, it's pretty standard for Americans to spend at least 10% of their income on food alone.

2. Shelter (including utilities): Most experts, including myself, recommend that you shouldn't spend more than 30% of your gross monthly income on rent or your mortgage. When you get close to or even surpass this percentage, the pressure of feeling "house poor" can settle in. Let's take this one step further. I strive to live by the adage of: It's not about living within your means; it's about living WELL within your means. By that token, try not to spend more than 25% of your gross monthly income on rent or mortgage. This extra space will leave you plenty of wiggle room to fit your utilities into the budget without busting through the 30% range. Please consider this when it's time to extend your lease or while you're planning on buying a home.

3. Transportation: This category protects your ability to get around to your job, side hustle, doctor's appointments, and many other essential tasks that either would be extremely difficult or nearly impossible to do without a personal means of transportation. Included in this category, if you have a vehicle, is your monthly car payment if you have one, maintenance, fuel, insurance, inspections, and registration. Suppose you don't have a personal vehicle. In that case, the cost of public transportation passes, ride-sharing, and other means of transportation, must be reviewed and accounted for in your budget.

4. Communication: This last but certainly not least category cannot stress this enough! It is paramount that your phone and Internet stay on! In today's predominately virtual world, this is your way of staying connected with your work, friends, and family. This category is even more crucial post-covid than it was pre-covid.

The Runner Ups:

Childcare, healthcare, and life insurance (if applicable. Yes, I said IF applicable) are necessities of life that you must factor into monthly spending. Remember my military (active, reserve, and veteran) brothers and sisters: If your spouse is a civilian, a private healthcare plan may be a better fit for them and your children. Don't assume anything here! Do your homework and research this one!

My challenge for all of you today: Take charge of YOUR last name. Look at your bank statements, receipts, and credit card statements from the last three months. Identify where your money is going and how much you allot each of these prioritized categories. Please comment on this post sharing at least one thing that surprised you about your spending habits. Be sure to like and share this article with everyone you love and care about. This information has the potential to change the trajectory of their lives, if not save it all together. I know it absolutely did for me.

Remember, as always, LIVE FREE!