You know, we've talked about the tools that you need to successfully get out of debt. We've talked about creating a debt inventory, talked about credit monitoring, accountability, partner goals and rewards. And I've also gone through on the course, so far, a general description or a teaching course on the boundary planning system. And I gotta tell you, that this is the most important tool that you've got to master. You've got to be able to master your spending and being able to effectively manage that. Now for most people, this is a problem.

They don't know how to manage their spending. I would say the vast majority of people don't know how to do this. So this is something that you got to learn. I gotta tell you that it's it's a process. It's a process of learning. It's a process of developing the habit, but this will serve you well because of the fact that we've got to stop increasing the debt and start decreasing the debt.

And what ends up happening I find is that people try to get out of debt. And they go along and they get to the end of the month and there is more spending than there is income that's coming in. And so because of that, when that happens, when there's an excess of spending, it goes on the credit card, it's the first place it goes, if you don't have the income, it goes to the credit card. So we got to eliminate that process. We've got to get you to where you're spending your within spending within your means. And the other thing to this real key about managing your spending is that we've got to figure out how to create money to pay off extra debt beyond the minimum payment.

So I thought to myself, what's the best way to do this, and to me, the best way is practical application. Now this spreadsheet that you see behind me here is a is part is a smaller version of a big spreadsheet that we've developed, that you can use to create the boundary system for yourself. And this is what I want you to do. If since you've since you bought the program, I want you to go to Bob at prudent money. Calm or go to pretty money calm. And there's an ask Bob section and fill out the form and say, Hey Bob, I'm in the middle of the prot, the program, pretty money University, please send me the spreadsheet, I will send it to you.

Okay, I really want you to be successful and getting out of debt. And this is such a key element in making that happen. So let's take a look at it. And listen, I want to make sure that for those of you who might be intimidated by numbers, I know that everybody is number oriented. But don't be intimidated by this because it's just plugging in numbers. you're plugging in your spending, you're tracking your spending.

And once you master this, this is going to be a great benefit to you Overall, during the time when you're trying to get out of debt and then when you're debt free, you will be it'll be amazing what you can do with it. So let's let's start and talk about this. As you're looking at the screen, you'll see column A right here now this is simply the in by the way, if you have not yet gone through the course you should Should have already gone through the course. But if you haven't gone through the course on boundary planning, you got to do that before we talk about this. But this column A is the boundary accounts. And a boundary account is everything that you spend money on.

Now, with the boundary accounts, anything that's over $5 needs to be tracked as my $5 rule, anything underneath $5 doesn't need to be tracked. And you're going to have two types of expenses here. The two types of expenses are fixed expenses, and variable expenses. So you see here, mortgage and rent, that's a fixed expense. So if you were starting out today, and it was May, what you would do is you would fill in $1,000, across the board all the way through December. We do this a year at a time.

And then you start to look at things like electricity, that's a variable expense, it's not constant day in and day out, excuse me month in and month out. So you would figure out what's the average expense and obviously, you want to boost that a little bit during the summer months, and in so that you're capturing exactly what you think you're going to spin And then we've got it, we'll have expenses over here that don't even come that you'll, you'll do nothing with that boundary account for me. So for instance, school costs, that's something that always, that always sneaks up on me in August. And it seems like we spend so much money getting the kids back to school, and I never plan for it. So always don't think about it. So in order to, to prevent that from happening from not happening, forgetting about it, you would go all the way over here to August and you would plug into that boundary account, that's what you're going to spend.

And so that you'll know about it. What this does, once you put all your your normal expenses, and you populate these boundary accounts, and you have it all populated out and then you add in, you know, another good one would be like a, your your auto repair. Let's say that, you know that you're gonna have to get new tires, and you look at it and go, you know, I think I've got a couple of months left on these tires. So you go out a couple of months ago, okay, I'm going to plug in, it's going to cost me about two $600, I'm going to put that in the auto repair. What that does is that gives you a visual. Now you may, you may be looking a couple of months down the road and go, Wow, I've got this amount of income coming in.

But I've got this amount of expenses. This is when we go to work because you're doing one of the core principles of boundary planning, which is anticipation of expenses, and planning for those so it doesn't catch you off guard because remember, once again, if it doesn't get paid for with income, it gets paid for on the credit card, we don't want to increase the credit card, we want to do without that we want to get to eliminate the credit card debt. So let's take a look at some of these some of these numbers. Now I've gone in and I have plugged in expenses. And let's take a look say at electricity you had in your boundary account 300 $300 and you actually spent 250 so it gives you a $50 positive in the in the electricity boundary account. Let's go down here and you spent You spent for the babysitter you allocated $100, you spent $125.

Now you have a $25. deficit in that babysitter, that babysitter boundary account. So you look at the two, you got $50 up here, positive $25 negative. So what you do? Let me justice for you to bear with me here real quick. What you do is you go over here to the electricity account where you had $300.

But you change that to 250. Now, you move that 50 down, excuse me, you change that to not 50 you're you're over, you change that to 275. And that leaves you $25 left over there, and you switch that 25 down here to babysitter you increase this by 125 that gets rid of the deficit. Now, does that make sense? Let me get one He talks through that now. What you did, you really just spent on electricity to 75, you had 300 allocated in the boundary account.

So you what you, you want to move $25 from here, all the way down to here. So you subtract out $25, you remove it. So that makes this $25 the 50. And you take the $25 down here to the babysitter, you add it in, and that gives you zeroed out in the amount. So the key is, is that through the month you're tracking your overages and you're tracking where you've gone, where you went under your by your boundary account for the month. That way you can tell if you're on track to finish the month with a positive number or at least an equal number.

You don't want to finish the month with a deficit. And incidentally, we're talking about this in May. All I want to see is my expenses. I don't want to see June expenses and by the time I get to the end May, I want to have closed out all my expenses and paid all of my expenses, so we can start fresh with June. Now this is what you do with your income, how do you know what income to use for me? Typically people are paid two times a month.

So at the end of the at the end of April, there, you know, you get you get the April 30 paycheck, and then you get the May 15 paycheck, those two paychecks are going to go to fund these expenses during the month of May. And then when you go to June, you're going to use may 30 paycheck in June 15 paycheck as the money to fund these expenses in June. Once again, if you've populated this out, if you've anticipated exactly what you're going to be spending, you're going to know where Hey, I've got this amount of income, but I've got this amount of expenses. Where am I going to find the additional money Now fortunately, I have built into the system contingency plans which we're going to talk about. So let's go down here and look at a couple of other boundary accounts that you can take advantage of.

And I come down to allowance. Now, I'm a big believer, if you can afford it inside your spinning plan, I'm a big believer that you allow for an allowance for you and your spouse, I think it's important to have money that's not tracked money that you can spend on whatever you want to and there's no rules, no regulations or anything on that money. And the way to implement this is simply this and it's not an ideal situation, you are able to pay out money as far as allowance goes. So so you start out your boundary plan and you wait till the end of the month to pay out the the money because you want to know maybe I needed to pay other expenses. So if you get to the end of the month, then you pay out the money because you know you have it as opposed to paying out the money at the beginning of the month they get spent and then you go Oh no, I needed we needed that money for something else.

So the allowance is something that I I think works out really well if you can afford to do it. And then as we go down, you'll see right here, gifts, holidays and birthdays, and then savings for gifts. Now, this is an important, I think, an important category because, you know, think of it right now. How many? How many of you have actually planned for Christmas? We spend a lot of money during Christmas, and it's rarely planned for you.

People rarely sit there in January and go, Okay, I, you know, we're going to spend maybe 1500 dollars a Christmas, and I'm going to start saving for it. So what you want to do is you when you start this out, you want to figure, you know, how much do I need to do I need to how much do I need to save for Christmas? How much do I need to save for birthdays and start saving that money. Now, each month you want to take that money out of your bank account and put it in a savings account. Which brings me to how Do you manage the savings account. So let's go over here to the second sheet.

And this comes with it with the the spreadsheet. In this savings account, I have $7,000. And I'm gonna explain what all this means here in a minute. General savings, vacation fund gifts in American Express. So what basically what I would do, if let's say that I had 800 $800 in gifts, and I put 200 in it, then I would raise it to 1000. So I know that I see $7,000 inside of my my savings account, but this keeps it allocated.

And this keeps it straight as to what those what makes up that $7,000. As you can tell there's there's quite a bit of detail and in this but here's what I want I want to explain to you though is that as you do this as you develop the habit of sitting down each week, pulling your expenses, putting them on this sheet, you start to get better and better at it. You start to you start to getting to where this flows pretty quick, the process and it doesn't take as much time. I will warn you though it can be frustrating if you're not used to doing this. And so you've just got to accept that and realize the goal is to get an effective spending, spending strategy, in plan to where you can manage your spending, because this is going to make or break you as far as getting out of debt.

Now, we've talked about saving for gifts and figuring that out ahead of time. And this is this is what I think people do. I think that for most people, Christmas is a good example of this. I think they kind of ignore it, they know they're gonna have to spend money, but this is kind of one of these things where I really don't want to save for it. So I'm gonna figure it out later. You don't want to be figuring out anything later.

You want to plan and anticipate, because if you are left to figure it out later, guess what ends up happening, you create debt, we want to eliminate debt. Remember, that's why we're doing the programs. We want to eliminate debt, not create debt. And this gets you Real with your spending, you know, I have this phrase called fantasy budgeting, you just spend money and hope money's there at the end of the month. We don't want to do that anymore. We want to get real with our spending of what we have.

And I'll tell you that if, you know, typically in a in a in a marriage, one spouse takes care of the bills would take care of this process, and the other doesn't. And what ends up happening is that that spouse that's not involved, it kind of gets out of out of sync with what's going on. And nobody talks nobody communicates. That's why the the boundary planning system I talked about, it's important that you set a time each month that you sit down, you look at the spending, and then together you anticipate because I you know, I know with with my wife, she's seeing costs and expenses that I don't even know that are there. And then she's already anticipating so we get together and we communicate. It's all about managing and the resources you have effectively and making sure that you're not overspending because once again what is overspending Do it creates depth.

Now let's talk about the spending tool for just a second. Everybody has a spending tool. Unfortunately for most people, it's a debit card. I'm not a real big believer in big advocate of debit cards, I'll tell you why here in a minute. But most people, it's a debit card, and that comes directly on the bank account. And really, from this standpoint, is probably the I'm gonna contradict myself, but it's probably the better way there's the reason I don't like debit cards is simply this from an identity theft standpoint, you're giving a thief direct entree into your bank account what you don't want to do, I would rather give them you know, access to a credit limit that I can get replaced versus a bank account where I might cause me problems if they stole money in my bank account is first thing the second thing is you're not doing anything for your credit score with a debit card.

You get you get no positive activity from using a debit card as you do a credit card. So those are my the two things that I don't really care for debit cards, but really for this, you're getting the money taken out of the bank account. Now how you use a credit card. Now I use American Express, because the fact that American Express doesn't carry a balance, so I don't ever have to worry about being tempted to roll something over. They actually have a program, but it's very, it's very cumbersome to use, but for the most part, they expect you to pay it off, and pay down and pay that in full each month. That's what I like about the American Express card.

So let's think of it this way, debit card, American Express, or Visa, MasterCard. Now when I say Visa, MasterCard, that could be a Visa MasterCard that has no balance on it, or has balanced I'm going to address both of them. Let's go back to the American Express cards. I think that's the easiest one, and you can use the visa just like the American Express card because you're paying it off each month. Let's say we pull up our American Express. And we have and let's keep this very, very basic.

Let's say that we put up our American Express We spent money on. Let's see, let's let's say we spent money on groceries, and we spent 475. And so we put 475 in there. Now we have $25 left, and then we spent 250. on eating out. And we have that zeroed out. Okay, so we do we just spent money on two categories, they added up.

And once again, it was eating out 250 and groceries of 475. So that comes out to 725. Let me make sure my match, right, yes, that comes out to 725 that you've spent. Now here's the thing to remember. Once you've charged once you swipe that card, you have spent that money, don't don't kid yourself, otherwise you have spent that money. So it's important that as you do your weekly meeting, that you look on your credit card statement and go okay for this period of time, this is what I spent.

This goes on my boundary planning spreadsheet, I fill in, I populate what I spent and then It's important to say, Okay, I spent 725. Now I need to remove 725 out of my bank account and into my savings account. Now, if you go through this process, what ends up happening is by the time the bill is due, it's already out of your bank account. And it's in, it's in, it's ready to be paid. So now, American Express, you've just increased it by 750. So let's say it's 1000.

And that money is sitting in your savings account. It's a great way to manage your credit card and manage your spending. And still have the the convenience and some of the benefits of using credit to bolster your credit score. And let's go back to the spreadsheet for real quick, under other you that's that's where you would have the American Express and what I would do with American Express is, is keep could keep tabs on your bill so you can fill that in with the balance at it. But then I have over overage and unexpected and this is where I would encourage you to be able to to put amount that in case you did go over, and you didn't have any positive boundary accounts, you can pull money from this, from this boundary account to replace money that you overspent. And we would go through that exact same process that I talked about in the previous example, where you would deduct the money from the overage account, and then you would go on, you would increase the boundary account by that same amount of money, so that the spending equals out and now it's zero and you haven't overspent because here's the thing, you know, sometimes you're going to set these boundary accounts, and you're going to be wrong, you're gonna and you're going to put a lower number than it needed to be.

So you're just adjusting that number up to what it should have been in the first place. And you're making it whole by using that overage that overage boundary account. I also would encourage you to have a little bit of money that you save that goes into an emergency account. And you know, let's say in this example, I think I have $200 that I'm saving each month. Now when I'm saving that money, what once again, it goes over to the savings account, then I go to my savings spreadsheet, and I increase it by $200. So I know that's how much money I have in savings.

So what you're doing, you're creating the ultimate savings account to where if you had something unexpected happen, you had to spend $1,000 on the on your car to get it fixed, or you had something go out that needs to be fixed a major repair in the home, whatever it is. Now you can pull from savings, the overage account, you could even pull from the allowance account. So there's a lot of different areas that you can compensate yourself for. And make sure that you're not doing what we've talked about throughout this entire course creating debt. And so if you go through this process, and it really you know, the thing is, you're gonna have to in order to create the average account over and to to create the savings element of this of your spending. You're going to maybe have to cut back in other areas, I wouldn't look at that as a negative.

Because once you start getting financially confident, it's a great feeling, you reduce the stress. And you can do that through effectively managing your spending. As I said, it first as you start out the process, it could be a little bit challenging, but you've got to look at the reward, you got to look at the benefit of using a system like this, so that you can get to the end of the month and you don't have that stress. Man, I think that's the goal. And it also it, you know, a couple other things it does for you, it gets you and your spouse on the same page, which is, which is really a great place to be financially. But it also makes you sit down and prioritizing.

You look at that you you know, you set back, say $300 for eating out and you go you know what, that's not as important to me as building up a savings account. So we're going to eat out less, or we're going to eat out we're not going to eat out for two months. You know, whatever it is that you that you, you look at it and that's it. The whole basis of the boundary planning system is to spend based on your values and collectively as a family, what are our values, and it might even find that Hey boy getting out of debt is our number one value. So you orientate everything towards getting out of debt or building up a savings account or whatever it might be, or your values might shift from month to month. But this allows you to get priority on your spending and get out of debt once and for all.