Things have been ON POINT in my debt free journey the last few months! Here are a few of the highlights:
- I had enough discipline to apply 100% of my work bonus to my debt!
- I finally paid off my last credit card!
- I have made two big chunk payments down to my car so I have equity in it for the first time since I drove it off the lot in October of 2016!!
- My total debt number is below $10,000 for the first time since I was 20 years old!!
Those are some AWESOME wins for me that were definitely the result of consistent focus and having a game plan. And that game plan is called a BUDGET.
Did my saying the word ‘budget’ just then make your stomach flip? Do you think that’s the worst word ever? Does it seem daunting just thinking about doing one?
I hear you. I thought the same thing before I did my first budget way back in September of 2017.
Let’s look at it like this. Successful businesses have a strategic plan.
Making a budget for yourself is like a strategic plan for your money. You’re just telling the money where to go.
I just made my May budget so I thought I’d share some of the things I took into consideration when deciding where my money was going, and some of the compromises I made to help me stay on track.
First, I determined how big of a chunk I want to put towards my car. My big goal is to have that baby paid off on August 15th!! The balance on it right now is $7,647.19. Not factoring in interest, I need to make a payment of $1,911.79 each month to pay it off by my goal. I rounded it up a little bit to $1,950 and put it in my budget.
Then I put all my other standard monthly expenses in there. Rent, gas, groceries, car insurance, internet, utilities, life insurance, dog sitter for my work travel trips.
I have a Netflix account, pay $5.99 for CBS All Access, and I also have a gym membership that is $21 each month. That’s it for memberships or subscriptions. In scaling back I cut out the yoga membership, cable, renting a garage for my car, Amazon Prime, magazine subscriptions, Stitch Fix, and probably other things I have totally forgotten about.
Now comes my ‘sacred cow‘. A sacred cow is something that even when you’re budgeting and paying off your debt, you still want to allocate funds for it. For me, the sacred cow is attending my boyfriend’s races and traveling to see him. He lives in Bend, Oregon and is a full-time triathlete. It’s a non-negotiable for me to be at all of his races. Next in the budget I make room for airfare, lodging, and rental car if needed, and my dog sitter.
Whatever is left goes in my bucket that I call ‘sports and entertainment’. This is my catch-all for if I want to meet up with friends for dinner, buy a nice cappuccino, tickets for anything, gifts for anyone, race entry fees, or treat myself to new clothes or books.
As you can imagine, since the sports and entertainment bucket is the last thing I factor in, it can get pretty small. That’s when I start to make it into a ‘fun’ challenge.
For two months in a row, I challenged myself to not buy any non-consumable items. (Basically meaning clothes or books.)
For the month of May, I’m challenging myself to a ‘Dry Month’. (Aka – no booze.) With it being patio season it’s easy to fall into the habit of meeting friends for outdoor drinks. By making it a dry month I’ll be sticking to club soda with lemon and lime… which no one ever charges you for so all you need is tip money.
Before I put my May budget together I was hoping to use $100 of the sports and entertainment money to buy a couple pairs of shorts and a couple tank tops to kick off the start of consistently warm weather… but I had to compromise there. So now that I have everything listed out, I’m letting myself buy one pair of shorts. If at the end of the month I have enough left over I’ll buy the other few things I wanted.
Dave Ramsey is soooo right when he says making changes with your money is 80% behavior and only 20% head knowledge. Making this road map each month helps me keep my BEHAVIORS in line with my GOALS. There’s no way in the world I would have made this much progress on my debt free journey without it!
Here are the numbers:
Starting debt number: $40,611
Current debt number: $7,647.79
Percentage paid off: 81.16%
Amount paid off: $32,963.21
You want to take a stab at doing a budget for the first time? Here are two awesome things to help get you started.
Download the Every Dollar app. I just use the free version and it is SO helpful.
And here’s a podcast episode by The Minimalists that really helped me get going!