Is Reverse Budgeting Only for Rich People?
It must be nice to be rich. You get free checking accounts and low interest loans. If you manage to get in over your head with debt despite earning a high income and borrowing money at low interest rates, you can file for chapter 13 bankruptcy, where you do not place any of your assets at risk, and you continue putting part of the income to your cushy job toward paying something towards your debts, though not as much as the creditors would like, and spending the rest on splurges that most people cannot afford. If rich people must show the bankruptcy court that they are making an effort to live within their means, they can apply the 50-20-30 budgeting strategy, where 50 percent of their income goes to bills, 20 percent toward savings, and 30 percent toward splurges. Whoever came up with that budgeting strategy must have been a multilevel marketing kingpin in another life; it takes some extraordinary rhetorical skills to convince the 99 percent that they can pay their bills using only 50 percent of our income. The rest of us spend 50 percent of our paycheck on bills and the other 50 percent on debt repayment, and even that is usually not enough to keep the late fees and the collection agencies at bay. Now the Internet is talking about reverse budgeting, and you can tell just from the name that it sounds like aspirational claptrap. If you are in a downward spiral of debt and are ready to reverse course, contact a Miami debt lawyer.
How Does Reverse Budgeting Work?
When you make a conventional budget, the first step is to allocate money from your paycheck to necessary expenses, such as rent or mortgage, utilities, and minimum payments on debts; the next step is to see how much is left, and based on that, you can decide whether to beef up your grocery budget for gourmet cooking, pay down the principle on debts, or save the surplus for a rainy day, preferably in an interest bearing account. With a reverse budget, you start by setting aside money for savings or splurges. You use the rest for bills, and it may or may not be enough.
Reverse Budgeting Can Be a Motivational Tool for Gig Workers, as Long as Things Are Going Well
At first, reverse budgeting sounds like it only works for the wealthiest and the foolhardiest among us. A third category of people can benefit from reverse budgeting; these are the people who have both a steady job and a side hustle. You can dedicate X percent of your salary to savings, even if the remainder cannot cover all the bills if all it means is that you have to do enough gigs to bring in enough money to cover the rest of the bills. This is a feasible strategy when gig opportunities are abundant.
Work With a Debt Lawyer About Reversing Your Debt Drama
A South Florida debt lawyer if you have tried every possible budget and are still in debt. Contact Nowack & Olson, PLLC in Miami, Florida to discuss your case.
Source:
money.usnews.com/money/personal-finance/saving-and-budgeting/articles/what-is-reverse-budgeting
