Reprinted from Daily Journal

Budgeting is the first step to getting - and keeping - a house
By PAM CLIFTON / Daily Journal Correspondent

Editor's Note: The following is the second in a several-part series focusing on home mortgages, budgets and repairing/maintaining good credit.

Surprisingly, 80 percent of lottery winners end up bankrupt. That startling statistic makes even the biggest saver wonder, "What are they doing wrong?"

Brad Cooper, owner of Cooper Financial Solutions of Park Hills, has a one-word answer to that question: budgeting. "For most people," he says, "we pay the bills and there's nothing left at the end of the month."

Cooper and his staff help their clients learn how to budget their money to reduce debt and at the same time see money left at the end of the month.

One of Cooper's favorite quotes, by John Maxwell, refers to the importance of budgeting. "Budgeting is telling your money where to go instead of wondering where it went." Unfortunately, budgeting is something many people do not enjoy. They don't take the time to write down all their expenses and, therefore, have a nonexistent budget.
"Budgeting is the dreaded 'b' word," he says. "It's the one thing that people hate to do."

Cooper offers several items of advice on budgeting to make the process more enjoyable and hopefully a bit easier. First, he says, give the budget three to four months to actually begin working. "It won't be perfect the first time you do it," he cautions. Second, spend "every dime on paper before the month begins." He suggests that consumers over-fund categories such as groceries, and if married, "husbands (if applicable) need to loosen up and quit using the budget as a whipping tool on their wives."

An important point Cooper stresses is that couples need to do their budgeting together. "The preacher said, 'and you are one,'" he points out, emphasizing how important it is that husbands and wives work together during this budgeting process.

Once the initial items have been completed, it's time to begin personalizing the actual budget. Although each family's financial obligations differ, everyone should follow a basic budget outline and then adjust the increments as needed.

Cooper suggests using the following:

1. Total income and remaining income - This shows your total monthly
income vs. income you have allocated, or spent, in your budget.
Remember, the goal is to get the remaining income balance to $0.

2. Categories - There are 11 main categories in your budget:

- Charity, 10-15%

- Savings, 5-10%

- Housing, 25-35%

- Utilities, 5-10%

- Food, 5-15%

- Transportation, 10-15%

- Clothing, 2-7%

- Medical/Health, 5-10%

- Personal, 5-10%

- Recreation, 5-10%

- Debts, 5-10% (Cooper recommends 3% for this one)

Once categories have been established, the percentages can be adjusted to fit each family's needs.

It is important that families sit down together to discuss their monthly budgets. What most families don't do but could do is refigure ways of using their current money, not new money, to pay off items.

Budgeting - or re-budgeting - can better establish a family's financial success. An equity acceleration program, such as the one Cooper's office assists families with, helps get them out of debt usually in 6-8 years. That's also great for the potential homeowner who has been turned down for a home mortgage loan. If he or she budgets properly, and follows the path to financial freedom, they should, in the end, be able to purchase their own home.

Cooper and his staff can also help families with the Get Ready Mortgage Program, which assists borrowers who don't qualify for a home mortgage loan at the time but can work to get debt and spending under control so that they can become homeowners.

"If you're living paycheck to paycheck," Cooper says, "the first thing you need to do is to set up a budget." It is crucial for families to figure out where their money is going.

Debt snowballing is another suggestion Cooper offers to clients to not only save money but also get out of debt. He suggests that families write down a list of all their debts, beginning with their home mortgage at the top and then ending with the smallest amount owed (home mortgages, vehicles, credit cards, etc.). Then, they should make extra payments to those smaller amounts at the bottom of the list to pay off those balances.

Once those items have been paid and marked off the list, Cooper says to take that "extra" money and apply it to the next items at the bottom of the list. Eventually, families will get to the top of their list and will be able to apply larger amounts of money toward their higher-priced debts, such as vehicles and home mortgages.

For more information, consumers can contact Cooper at his Park Hills office at 573-431-5286.

In addition, consumers can find additional budgeting resources at:

- www.betterbudeting.com

- www.foxway.com

- www.mvelopes.com

- or read "The Millionaire Next Door" by Thomas J. Stanley and William D. Danko.