Budgeting 101

I'm starting at the very beginning because I am a slacker when it comes to budgeting, but to get out of debt you HAVE to set up a working budget!!

1.  Get your spouse on board.
It may not be easy but if only one of you is following the budget you will get nowhere. . . fast.
My hubby took a little convicing. Life can sometimes seem happier if you hide your head in the sand.
 I promise you life is better when you can see where you are going.

2. Make a list of your expenses.
Mortgage, car payment, insurance, groceries, medical expeses, savings, donations. . .
Where does your money go?

3. Split your list into bills you pay each month and bills you pay periodically (every other month, once or twice a year). Figure out how much you pay per year and divide this # by 12.

4. Don't forget to add in other annual expeses such as Christmas, birthdays, car and home maintenance, etc. Make your best guess. Then add up these expeses and divide them by 12.

5.  Next, figure out how much money you make. What is your true monthly income. If your income isn't a steady salary, take a look back at your previous paychecks and make your best guess.

6. Stand back and take a look at where you stand. The optimal budget would be perfectly balanced. You would have $0 left over when all is said and done. This isn't easy to do.
If you are spending more than you make, take a hard look at your expenses and see where you can cut back. If you have extra money left over, apply that money to your debts!
If your debts are paid, apply that money to a savings account or investment. (yay!)

7. Now that you have your budget written out, stick to it!
If you are going to make a purchase, make sure it is in your budget. If it isn't, don't buy it, or find a way to move things around in your budget so that it fits.
-This has been the hardest part for us. We tend to be Saturday impulse shoppers. And we are magnets for clearance sections of our favorite stores.
One piece of advice that we are learning to follow: Just because it is on sale doesn't mean you should buy it! You may be saving 80% on that pretty new dish set, or new shoes but if you don't need dishes or shoes you aren't saving anything.

Strive to be debt free.

A prison is something that holds you captive.
It can be made of cement and iron bars, or it can be a vice like drugs, pornography, or debt.

I don't want to be a hypocrite, I am currently in debt. We are still paying for our car and we have 2 credit cards that we still owe on.  But compared to where we were a few years ago our position has vastly improved! We are slowly, and steadily digging ourselves our of our debt prison.

Society today convinces us that debt is a necessity to get where we want to be in life. If you want a nice car you have to have a car payment for the next 3-6 years. If you want a nice house you get a 30 year mortgage. Almost every department store has it's own buy now pay later plan. It's an instant gratification world out there.
And we fall for it.

The credit card companies are making billions of dollars off of interest and fees just so we can have that pair of shoes a month earlier than we would have if we paid cash.

 I was thinking today about happiness and what would make me a happier person. Paying off my debts was at the top of the list. In the last 2 years I have paid off 3 credit cards! (happy dance) There is NOTHING that compares to the feeling of sending in that last payment! I can't wait until we can send in the last payment on our car and our last 2 cards.

When I had my oldest son we went from a 2 income household down to 1 income. Our biggest mistake was not preparing ourselves for the change. We talked about it all the time but we never sat down and prepared a budget for just one salary. Old habits die hard and it took all of our savings and some credit card debt before we finally adjusted to our new life.

I read a popular book that has helped more than anything else. It is Dave Ramsey's "Total Money Makeover". The concepts are simple and straightforward. Don't buy what you can't afford. But sometimes it takes hearing the stuff you already know out of the mouth of an expert to make it really sink in.

If you have debt you want to get rid of, you have to read this book!

I'm planning on paying off the rest of our debts withing the next 2 years (hopefully sooner) and knock down our debt prison walls for good! We no longer use our credit cards and we haven't missed them even a little bit. We can do this!

Being debt free = happiness!