Budgeting To Rebuild Credit – Understanding Fixed, Variable, Savings, and “Extra” Expenses

Automotive Finance, Credit Education

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Rebuilding Credit With budgeting

If you have bad credit in Canada, you need to start budgeting today! Creating a comprehensive household budget allows you to understand the state of your finances, see where you can save money, and provide you with a roadmap to repairing your credit.

However, creating a budget can be somewhat complex – especially if you’ve never done it before. To help, we’ve put together a quick guide to some of the most basic concepts behind budgeting – different types of expenses. Take a look, and use your knowledge to build a better financial future!

Fixed Expenses

When you’re first creating a budget, understanding fixed expenses is very important. A “fixed expense” is any expense that must be paid every month – without fail. These expenses can include things such as:

  • Student loan payments
  • Auto loan payments
  • Mortgage/rent
  • Health insurance
  • Car insurance
  • Health insurance
  • Property taxes
  • Utility bills
  • Credit card minimum payments
  • Debt payments for debt repayment plans (if applicable)

These expenses are fixed – that is, you know that each month, you must pay them, and their amount will vary only slightly – if at all.

Understanding your fixed expenses should be the first step you take when budgeting. Once you know how much money you have to spend on fixed expenses each month, it’s time to move on to variable expenses.

Variable Expenses

Variable expenses are, essentially, items that you have control over. Basically, this category covers everything you can buy in a store, as well as other expenses that are within your control – such as a gym membership or a meal at a restaurant. Here are some more examples of variable expenses.

  • Groceries/personal care items
  • Fuel/transportation costs
  • Parking
  • Clothing and shoes
  • Work lunches/snacks
  • Restaurant meals
  • Entertainment services (Netflix, Spotify, etc.)
  • Hobbies/sports & recreation
  • Media and entertainment expenses
  • Tobacco/alcohol

Usually, variable expenses are where you can save money. While you don’t have the option to not pay your fixed expenses, most variable expenses can be reduced somewhat, with proper budgeting and spending habits.

Consider things like cooking more at home, reducing the amount of money you spend on clothing, walking to work instead of driving (if possible), and other cost-saving options. By doing so, you can reduce your variable expenses – and increase your ability to pay off debts that are fixed expenses.

Savings Expenses

This may surprise you – but you should consider your savings as an “expense”. Ideally, you should save about 20% of your money every month, and put that away in a savings account.

Viewing this as an “expense” allows you to understand how you can stay on top of your fixed and variable expenses, while still contributing to your future.

There are two kinds of expenses that savings are useful for – irregular expenses and goal-oriented savings.

Irregular expenses are expenses that are costs that come up throughout the year irregularly – things like health bills, vehicle maintenance, and even Christmas gifts. It’s a good idea to put some money aside for these expenses.

Goal-oriented savings refers to any money put away for a specific goal – retirement, a vacation, down-payment on a home or a car, education expenses or tuition, and so on.

Including both of these in your budget will help you stay consistent, and allow you to regularly contribute to your savings accounts.

“Extra” Expenses

If you run across “extra” expenses that are hard to categorize, simply ask yourself 1 of 3 questions.

  • Does this expense occur regularly, often, and at the same cost? (Fixed expense)
  • Can I buy this item from a store – or control how much I spend on it? (Variable expense)
  • Will I need to save for this item in advance? (Savings)

It’s possible for an expense to be in more than one category. For example, a $9.99 monthly payment to Netflix would technically be a fixed expense – but since it’s optional for you, you could also consider it as a variable expense.

If this is the case, simply prioritize accordingly – and categorize the expense in whichever column you feel is best.

Budget Wisely – And Get A Better Credit Score!

If you can follow this advice to create a budget, you’re sure to be able to manage your money more effectively – and begin the journey to a debt-free life!

So whether you have bad credit in Canada – or are just looking to learn more about budgeting – study the expense categories above, and use this information to create a comprehensive, informed budget!

At Ride Time, we know that having bad credit makes things hard for you – even if you budget wisely and can afford a monthly car payment, you may not be able to get a loan from other auto dealers.

Well, we’re here to help! Even if you have bad credit, we can provide you with a reasonable auto loan from our 15+ specialized providers – just give us proof of 3 month’s employment, a pay stub showing $1,500/month in take-home pay before deductions, and a valid Canadian licence!

If you can give us those three things, we pledge to do our best to find you a great deal on a fantastic used car. So come to our Winnipeg showroom today – or browse our cars online, from anywhere in Canada!


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