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Lockdowners: Have you done a budget yet?

by | Apr 15, 2020 | COVID-19, Finances, Mortgage Adviser

We’re now into the fourth week of lockdown and you’ve probably had plenty of time on your hands. Time to watch Netflix. Time to use a small portion of the 20kg bag of flour you panic bought. Time to get seriously anxious about your income situation. Time to bury your head in the sand and hope like f#*! it all goes away.

I’ve seen this before. Actually, I’ve been through it before. The GFC nearly buggered my fledgling mortgage advising business. My income actually dried up, and we decided to sell the family home before the bank sold it from under us. Yeah, it was that bad.

The only way we knew whether or not that was the right move, was because we were right on top of our financial situation. Yes, we had a budget.

It was detailed. More to the point it was honest. It captured everything we spent money on including the essential items and the crap.

We knew what was coming in, what was going out. We knew how much money we had in savings and therefore we knew how long we could last. Our answer was approx. 5 months before the bank would get shitty.

But we didn’t wait. We got on and sold the house. Got good money for it too.

This isn’t a post about ‘how long have you got’ before the shit hits the fan. No, this is a post about the power of a budget.

The fact of the matter is that if we hadn’t known our numbers as well as we did, then we wouldn’t have been able to quantify if we were in the shit or not, let alone how deep we were. As it turned out, we were only knee deep. But we discovered the tide was rising.

In the end it was really comforting to know that we had time up our sleeves. Time to figure out what the hell to do next. Our decision was to sell the house, slash some costs, and hang on till things improved.

That’s why I can wholeheartedly recommend you do a budget too. If you’re anxious about the future, then a budget will help you make some hard calls. It might prove you’re worried about nothing. Or at least have less to worry about than you thought. It might even say you’re in a strong position and you can power forward.

Where do I start?

– Practical step #1. Take a night off Netflix. Get work or kids out the way. Sit down and start sorting. Once you get over the mental hurdle, it’s much quicker than you think.

– Practical step #2. Try downloading a csv copy of your bank statements for the last 6 months from your online banking.

– Practical step #3. Sort the information by category. Tally it up. You’ll soon see if your spending exceeds your income.

You probably already have a sense of how much money you waste since the shops you normally waste it in are shut.

If you need mortgage relief, then you’ll know if paying interest only or a complete mortgage holiday is the right way to go.

Either way you’ll be able to plan what your next steps are. Knowing what’s ahead, even if it doesn’t look that great, is often a really settling thing for your mental health too. My advice – take some of that angst away, and get it done!