Trouble getting on budget
Dear Dave: Iím trying to work the Baby Steps, including building up an emergency fund and creating a monthly budget. But Iím having trouble transitioning to the new budget. I get paid in the middle and end of each month, but my bills are due at all different times of the month. Can you help? — Brenda
Dear Brenda: Iíd suggest a two-column budget for your situation. One column represents the first of the month, and the other represents the 15th. Place the income for that pay period at the top of each column, then work your way down spending every dollar on paper — for that pay period — until all the money is gone.
If your cable bill is due on the 10th, it would go under the first column. If your electric bill is due on the 21st, it would go under the second column. Then you can adjust the categories where you have some flexibility. Clothing is a good example of this. You can budget for clothing in whichever pay period has the least amount of bills due.
It just takes a little time and practice, Brenda, but this is how lots of people pay their bills. And it can keep two big bills from eating up your entire first check of the month! — Dave
Marriage and money
Dear Dave: My wife and I are going through a divorce. Previously, we each had a credit card from a shared account. After she left, I got notices from the credit card company that she had charged $1,875. I signed on to the account, but sheís the primary card holder. Iíve also gotten a $1,200 medical bill for a procedure done after the separation, as well as a utility bill from her current home where we used to live. The utilities are still in my name. How can I make sure I donít have to pay all of this? — Lee
Dear Lee: Iím sorry, man, but youíre liable for any bill that is from a service for which you signed up — like the utilities and credit card. You need to take your name off the utilities immediately, along with any checking accounts you once shared.
You also need to contact the credit card company by mail — return receipt requested — and notify them that you will not be liable for any charges made to that account starting the day they receive your letter. Technically, youíre still liable up until then because you signed on to that account. It also doesnít matter that you werenít aware of the $1,875 she charged after you guys separated. You both signed up for the account, so youíre both liable for any charges made to it. But you are not responsible for the medical bill because you didnít sign for that debt.
You can always try and negotiate for her to pay the bills she has run up since your separation as a part of the final divorce agreement, Lee. Regardless, Iím sorry you have to go through all this. — Dave
Growing family needs bigger car
Dear Dave: We have five children with another on the way. We have two vehicles — a 1995 minivan and 1989 Honda Civic. With the new child, weíll have outgrown the minivan. The Civic isnít big enough for all of us, but both cars are paid for, and the only debt we have is a couple of credit cards. Weíre working on our budget and trying to pay our debt down. How do we move to a bigger vehicle without going deeper into debt? — Carrie
Dear Carrie: How about this? Letís trade your van for one thatís full-size.
Donít worry, Iím not suggesting that you go into debt to make this happen. Just get a larger vehicle thatís an even swap for your minivan. You might end up with a van thatís not as nice, but it will carry more people and get you around until you get your debt cleaned up. Then, you can save for a nicer van and pay cash for it.
Good question, Carrie! — Dave
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