Broke-A$$ Brotha Tip #1: Ignorance is Not Bliss

I'm not sure when it happened. At one point in my life I was living large. In fact, I left my secure corporate-type employment for life as an entrepreneur back in July 2002. The economy over the past few years took a big chunk out of my cash inflow. The problem was that I didn't cut back on my cash outflow at a similar rate. Next thing you know ... I'm a Broke-A$$ Brotha.

I'm not proud of being a Broke-A$$ Brotha.  My plan is to take steps necessary to get rich.  The process begins by getting serious about my current financial situation. I'll share some tips with y'all as I go through the process. I would love to hear from you on some Broke-A$$ Brotha (or Sista) tips that you have learned over the few months and years as well.

My first tip is simple. You can't fix your situation if you fail to face your situation.

Ignorance is Not Bliss!

My Dad dealt with personal finances in a very disciplined and direct manner.  He was an aeronautical engineer so he made a good living.  However, he didn't believe in credit cards ... so he never got caught in the trick bag of living beyond his expenses.  I remember that he would take me to the Sears warehouse store to buy clothes because they had some great deals.

The largest single expense that my Dad ever had was the first (and only) home he bought.  His instructions to the realtor were simple -- the home had to be located in such a manner that the sun was behind his back on both ways of his commute to work.  Secondly, the total mortgage expense needed to fit into his salary.  You should know that my Mom was working full-time as a public school teacher ... but, my Dad insisted that the mortgage payment fit into his salary as if we had a one-income family.   It took a little longer to find the house ... but the 2-story brick house that my parents purchased is now fully-paid off and remains the family home of my Mom as she enjoys her retirement years.

My young brother was disciplined as well.  He showed me his system once.  He would get cash at the beginning of the month to cover his discretionary expense budget (food, entertainment, clothes, transportation, gifts and such).  He would then (literally) place the cash-dollar-bills in envelopes that were labeled for these various discretionary expense line items.  He was disciplined enough to stop spending on a particular item if the money ran out before the month ran out.   He told me that it became easier to cut back on things like fast food and other money-wasters while he was using that envelope system.

I now recognize that I need to get a handle on my expenses. I need to BUDGET. The odd thing is that I've been tracking income and expenses with my Quicken software for many years. However, I've not been disciplined about reviewing the results regularly ... analyzing those financial results ... and making adjustments accordingly.

Ignorance is Not Bliss.  When you're living large you're making enough money to make up for stupid spending decisions.   When you're a Broke-A$$ Brotha those stupid spending decisions can literally put you in jail (...speaking to those of us paying child support with that comment!).  

I pledge to review my budget vs. actual expenses for the first nine months of 2010. I will also create a budget for the final quarter of 2010 that details out my fixed expenses (rent, utilities, child support, etc.), my discretionary expenses (transportation, food, entertainment, etc.), my debt repayment expenses, my long-term savings and my emergency savings (six months of current income).

How about you? Do you have a written budget for the month of October? Are you tracking your actual income and expenses against that budget? If not ... it is time to get busy.