You might have been told at some point that you should be budgeting. But it sounded like a lot of work and so you never really looked into it. But now you’re older and ready to get wiser. So buckle up because I’m gonna tell you why YOU NEED A BUDGET.
A little story about how our family got our money in order.
Not long ago, our family was in financial disarray. We seemed to make enough money each month to pay the bills and buy the groceries, but whether or not we could afford to go out to dinner or buy another Lego set was something I just didn’t know the answer to. If we got to the end of the month and didn’t have enough cash to get to the next payday, we would just put things onto the credit card, half-reassuring ourselves by saying it was OK because we’d do better next month.
This was our life for several years until we finally decided it wasn’t how we wanted to live. Eventually my partner and I sat down and had a very difficult conversation about our finances.
We realized that we needed a budget.
It wasn’t easy but we made a plan to get our money on track.
Here are the four changes we made to get our finances on track
1. SHIFT SPENDING HABITS
We had to get control of our spending. I knew I couldn’t continue pay for anything and everything just to keep up with the Joneses. It was time for me to start saying no to some purchases, but which ones? Figuring out where we could afford to spend and where we needed to cut back meant that it was time for us to get a budget in place
We knew we needed a budget, but actually creating a budget sounded like the end of the world to my skeptical hubby. He thought he would never be able to buy anything ever again. But surprisingly he’s been able to learn how to say no to small, more frivolous items so that he can say yes to larger purchases that he’s saved up for. And now he’s WAY better at saving up for stuff than I am… who knew?!
2. TRACK OUR MONTHLY BILLS
In order to create a budget we needed to know how much we were spending. I created this spreadsheet (that we still use today) to track our monthly bills. This was a huge step for us. Every month at the beginning of the month, I sat down at the computer and pulled up the spreadsheet and checked off each bill as I paid them. Knowing this was done allowed me to know how much money was left over for the rest of the budget.
3. FACE OUR DEBT
We used to have an astronomical amount of debt. Student loans, a car loan, credit cards and more credit cards. We paid more in student loan debt each month than we did on our rent. We felt like victims and begrudgingly paid the minimums due each month on all of our debt, throwing extra money at them when we felt like we could afford it.
By looking at each individual loan I was able to see how long each debt would take to pay off. I’m not gonna lie, it was sickening to think about. But rather than look at that debt and feel burdened, I felt empowered. It was comforting to actually have an end date. It was a light at the end of a very, very, VERY long tunnel.
4. PLAN FOR THE FUTURE
Deciding to set money aside for large expenses was clutch in our financial makeover. Rather than wondering how we would afford big-ticket items, we finally had money in the bank when it came time to pay for things like our semi-annual car insurance, Christmas gifts, or the surprise need for a down payment on the minivan when we grew from a family of four to five.
How We’re Doing Today
We are still on our journey to become debt free and life has definitely thrown us a few surprises over the past several years (another baby when we thought we were done AND our landlord selling the house we live in when the rental market in our little town is insane – Hello Homeownership a few years earlier than we anticipated!). By implementing habits from the three changes listed above, we’ve been able to steer the course and keep our heads above water, financially, as we lean into the stage of life our family is in right now, all whilst learning about home ownership of our almost 100 year old craftsman abode that needs a heckuvalot of TLC.
If you’re reading this and thinking, I can totally relate! I want to get out of debt! I need a budget!
…I got you.
I have a free web class, Netflix style, that will walk you through How to Get out of Debt WITHOUT Feeling like a Tightwad.