Today’s topic is what I call a “Lifestyle Check” which is one key component towards becoming a young n educated person. After browsing online, I came across Oprah’s Debt Diet spending pie chart which is a good monthly model for every person and household to follow. However, before you start number crunching, the first important step is to review your total earnings, and analyze your Net Pay. Using your net pay -known as take-home pay- you should multiply that figure times the percentages indicated in the chart to find out, your expense limit for each category. A percentage calculator will help you quickly determine the best model for you or the household. Below specifies what is to be included within each of the five categories.
- Housing 35% – Mortgage, Rent Repairs, Taxes, Utilities, and Insurance.
- Transportation 15% – Car Payments, Gas, Insurance, Repairs, Parking/Tolls, and Train/Bus Fees.
- Debt 15% – Student Loans, Credit Cards, and Personal Loans.
- Other Living Expenses 25% – Eating Out, Vacations, Entertainment, and Clothing.
- Savings 10% – Savings fund.
After I completed this challenge, I was surprised that although my transportation expenses was higher than 15% (just purchased a new car 6 months ago), I was well under the percentages of Debt, Housing (since I live with my significant other), and Other living expenses! So I met Oprah’s challenge however, one critical factor I did notice missing from Oprah’s Debt Diet was the expenses for everyday food, which is easily another 10% perhaps hidden within the other living expenses among eating out. So, if you apply that logic, realistically you have 15% remaining for vacation, entertainment, and clothing.
Did you meet Oprah’s Challenge??? Lets hear it!
More information can found at the following Reference: http://static.oprah.com/download/pdfs/money/money_pie_chart.pdf accessed on June 30, 2011.
Written by: Randy Williams