Discretionary Income, What Is It Really?

Discretionary income is, by definition, the amount of funds left over after all expenses are paid out. Simply put, if a person brings home 5K net and spends a total of 4K on bills and expenses, then there would be 1K left over....this is called discretionary income. We'll call it the "D-Factor".

The secret to the Money Merge Account system and how it uniquely builds wealth and reduces debt, is all about the D-factor. Well come back to the MMA in a minute.

Interestingly enough, when you ask the average American what their D-factor is, many times the answer is, "I don't think we have any money left over, Jason".

Now most of us place our income into our checking accounts and after all monthly expenses are paid we typically use up the rest as spending money. But does that mean we don't have any discernible discretionary income... simply because we choose to spend the leftover cash each month? Absolutely not.

Here's the situation folks. We all have discretionary income. It certainly can fluctuate from time to time based on infrequent expenses but rest assured, you do have it. Your lifestyle would diminsh drastically if your expenses exceeded your income. If you're needs are met, then you are in the black, even if it doesn't feel that way.

The question is, how much do you spend on average on a monthly basis?

To figure out your true discretionary income position, you can follow these simple instructions:

1. Take a simple pad of paper, make a list of your monthly obligations


2. Utilities (gas; power; water; trash; cable tv; internet, etc) Total up


3. Bills/Loans (mortgages; lines of credit; credit/charge cards; auto/rec vehicles, etc.) Total up


4. Living related expenses (groceries; entertainment; medical/prescription (includes dining out) Total up


5. Protection electives (insurance premiums, medical and life; investment allocations of any kind) Total up


6. Miscellaneous Electives (Golf funds, massages, weekend get-a-way fund, etc) Total up

Some tips, if you are organized and have access to your bank statements you can get quite detailed information by adding up several months in each category and averaging the figures.

This is a one time run through and once you are done you will be confident you know what you've been averaging for living expenses. Its all there in your statements.

Now take a look at each category and decide, based on your spending habits as they've been, if you can assign a BUDGET for each category. That's right folks, a BUDGET.

If grocery costs are 1000 per month, could you live on 700 or 800 and be more selective with your choice of what you choose to spend your money on? Could you plan meals for the week or even limit yourself from the drive-thru to twice a month instead of four times? You see, sometimes we just spend money cause its in our pocket, without thinking about it....by actually considering what you spend, before you spend, you could find that you could reallocate 200 to 300 or maybe more to your discretionary funds. Do this in all your categories and see where it takes you. You will be quite surprised.

Are you following me gang?

You see, actively monitoring your spending habits is very important aspect of money management. In having a basic budget of what you NEED to maintain your quality of life as it is now, you will be surprised at how much discretionary income you really have access to. Placing basic boundaries for your spending habits is an important step in having more control of your personal family business. There's another hint.....manage your family like you would your own business, always seeking a high profit margin while maintaining quality of life and general well being for those you are responsible for, family, rather than employees. Again, simple things that we take for granted everyday can increase your D-factor.

Some interesting feedback; I had a client recently share with me that they figured that by doing their grocery shopping at a Food4Less, instead of their local Whole Foods, they found their monthly grocery bills to reduce by 300.00! Another client shared that they reduced their 4 chiropractic visits to just once a month and replaced the 3 visits with some Yoga, stretching along with some mild walking and their back was doing great, not to mention their pocket book...they saved 25.00 a pop per visit. The 3 eliminated visits increased their discretionary by 75.00 every month, plus did I mention gas savings from driving across town for the appointments :).

You may find that after giving this a try just once. That you can create and extra couple hundred dollars in discretionary money every month just by paying attention to what you need to spend to be content, vs. what you actually have been spending.

Its simple and very easy.

Once you are aware of what your true expenses are on a monthly basis, you will be ready to start to plan your budget for the rest of your life. That's correct, your ongoing family business plan, highlighted and driven by the Money Merge Account system.

This is what you do:

STEP 1 (RECAP). Determine your actual discretionary income following the above steps 1-6

STEP 2. Visit our payitfaster website at: http://www.payitfaster.com/hvhgroup

STEP 3. Watch the video on the site first, its a quick 15 minutes, that's all. The video will explain what the Money Merge Account System is designed to do.

STEP 4. Scroll to bottom of page and click on "Request Your Free Analysis".

STEP 5. Simply complete each screen to the best of your ability, hit next after completing each page. You will only need to know very basic information such as (your gross and net take home pay, spouses as well; mortgage information, your current rate, payment, escrow's if any; balances and payments for car loans and credit cards; and your discretionary amount)

Advice, if you determine discretionary income is 1000 for you, then list a range of 800-1000 in the analysis. This gives you a cushion in case of unexpected costs.

STEP 5. That's it. When you complete the analysis your information will come to me for edit. I will then review the findings with you.

Taking the findings from your analysis we will provide yo with a custom long term strategy to reach your financial goals.

The Hoskins Van Horn Group, making Amercian's financially stronger, one family at a time!

Live with Abundance