Budgeting….where to start?
If you are reading this, I will assume that you are either just starting out with a budget or considering making one. If so, keep reading.
We are 3 1/2 months in to our journey to financial freedom following closely to Dave Ramsey’s Financial Peace University.
We are nowhere near perfect on our journey, but it’s WAY better than where we started. I mean, we have paid off over $7000 of debt so far, so we are definitely making progress.
I am totally proud of how far we have come in such a short period of time, and even more excited about where this journey is taking us, but I can’t help but wish I had known a few things before we started out.
These tips would have been so helpful on the front end.
Hopefully, I can help you get a head start on your own journey.
1.Discover your “WHY”.
Why do YOU want to get out of debt? What is your biggest reason?
What is going to make you work hard even when you don’t want to do this anymore?
Do you have big future plans and your debt is holding you back?
Maybe you have a lot of debt or maybe you don’t. Maybe you are just tired of spending your whole paycheck on bills.
Either way, you need a solid budget, and you need to stick with it.
2. Have a “dream” session
What would your life look like with no debt?
What kind of things could you do that you can’t do now?
Where would you go? What could you see?
Would you travel the world? Donate to charity? Help your community?
Don’t limit yourself here, and make sure you write this down. Consider making a “dream binder” to keep your ideas and thoughts.
Your binder could include pictures, magazine cutouts, inspirational quotes, or anything else to keep you motivated. You need a constant reminder of your WHY.
3. Get your spouse on-board
This one can be a little tricky if they are not as into this idea as much as you are. You have to be careful how you handle this.
The last thing you want to do is make them feel like you are restricting them, especially if they feel like you aren’t restricting yourself as much.
It’s all about the presentation.
Don’t just come out and say, “We are going to get on a budget, and this is what you need to do”. It will most likely not end well.
They have to feel like an equal partner with an equal say.
They need to see what’s in it for them.
Maybe have a “dream session” with them (casually) and let them dream big. You may also learn a few things about each other that you didn’t know. Win win!
I do understand that sometimes this step is just not possible. Sometimes people just don’t see eye to eye when it comes down to paying off debt and making and sticking to a budget.
If this is you, don’t throw in the towel completely.
It won’t be easy, but you can make a difference on your own.
Start out strong and show them that you are serious about doing this. Hopefully, they will get on board eventually.
If not, maybe you should consider marriage counseling or something.
After all, money problems are the #1 cause for divorce.
4. Take an Inventory of your Life
Before creating a budget, you need to take a real hard look at your lifestyle. What is important to you? What are you willing to give up, and what are non-negotiables?
A few things that we have given up include cable, eating out, and clothes shopping. I mean, we still get a pizza here and there, but it’s nothing like it was before, and it’s in the budget.
However, we were not willing to give up our kids’ extracurriculars. We feel like they need this to keep them busy.
Also, it helps them build character skills.
And childhood is so, so short.
We did, however, limit them to the activities they love the most. No more frivolous spending just because.
5. Mentally prepare for how difficult this will be.
Man, this one is tough.
In the beginning, it’s exciting.
You’ve done the dreaming, and the future is so clear.
Your plan is made, and you’re taking all the steps.
YOU’RE REALLY DOING IT!
Something comes along and completely pulls the rug out from under you.
It throws you off track, and knocks you 10 steps backward.
What will you do then?
This is something you need to prepare yourself for because, trust me, it will happen.
When we first started out with our plan to payoff all of our debt in 18 months (a very aggressive goal by the way), we were sailing right along.
We had our $1000 emergency fund and had started working on our snowball (shout out to Dave Ramsey!).
The bottom fell out.
Engine failed in my van. Cost $2700. We weren’t prepared for that and had to borrow it.
Fast forward 2 months…
Transmission in same van started to go out. Estimate was $5000. The was only worth $7000 when it doesn’t have a broken transmission, so now what are we suppose to do?
Let me add that we still owe a fairly large chunk on this vehicle ($15k) that is basically worthless and I can’t drive.
We decided not to fix it.
We took a couple thousand and bought a beater to get me by until we are out of debt and can do better.
It would have been so simple for me to just trade this van in for a new vehicle.
The old me would have done EXACTLY that.
I’m tired of debt.
I’m tired of giving all my money away to the bank.
I’m ready for a new life.
“If you always do what you’ve always done, you’ll always get what you’ve always gotten.”
So, you MUST be prepared for this.
Remember your why.
Know that tough times are coming.
Just know that you are tougher, and you can get through it.
Keep your eye on the prize, and push on through.
Now you are ready
Now that you have figured out why you are doing this, you’ve had a little time to dream, hopefully gotten your partner on-board, taken your inventory, and developed a plan for difficult times, you are ready to get started.
Take a deep breath.
Make the budget.
It’s the first step to improving the rest of your life.