How to Organize Your Money in Jars to Help Get Out of Debt
Getting out of debt requires a plan, good organization and self-discipline, and it can sometimes seem like you're fighting a losing battle. Although it may take time, depending on the amount of your debt and your income, setting up a system to track your finances can be a huge help. Organizing your money in jars has become a popular method for becoming financially organized so you can get out of debt, and is simple enough for almost anyone.
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Instructions
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1
Make a list of all of your fixed expenses for the month, such as your mortgage/rent and car payment and insurance. Write down how much these things cost you each month. Then, write a list of variable expenses, including groceries, electricity and any other expense you have that changes every month, but do not put a dollar amount with them. Also, do not include your debts in these lists.
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2
Calculate your average monthly income AFTER taxes. Add up your fixed expenses, then subtract that from your monthly income. Using the amount left over, set yourself a realistic budget for your variable expenses like groceries. Write these numbers down.
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3
Label a jar with each of your monthly expenditures. For example, one jar will be labeled "rent," another, "groceries," a third,"car payment" and so on. Create a final jar labeled "debts."
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4
Divide the amount of each of your expenses by the number of times you are paid each month. If you're paid every other week, divide each bill by two. If you're paid weekly, divide each bill by four. Create a new list that tells you the name of each monthly expense and how much you should put in the jar each time you're paid.
For example, if my monthly mortgage payment is $1,200 and I get paid twice per month, I would write down: Mortgage, $600.
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5
Go immediately home after being paid and divide the money you've earned among your jars according to the list you made in Step 4. Any money that is left over after all of the jars have been paid should be placed in the "debts" jar. Additionally, any money that is not spent out of the variable expenses like groceries should be put in the "debts" jar when you are paying your jars on the new payday. At the end of every month, total this money and use it to pay off your debts.
If you don't have any money left to put in the "debts" jar, re-evaluate your budget for variable expenses and see where you can cut back.
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