Where to Begin...

Last post, I shared a little bit about our personal story of getting out of debt. I know for many, MANY people out there, that's a relatable story...at least the debt part. I know some of you reading this can't relate to life without debt. I know that because that used to be us. We were in student and some consumer debt, stressed out and unsure of just how to change our fate.

"But eventually we realized, this is our debt. Not anyone else's."

So where do you begin? Here's where. By writing down each and every unpleasant detail of how much money you owe (including interest rates), who you owe it to, and the minimum monthly payment required of you. And yes...that task alone can be so daunting and intimidating. I remember trying to normalize and justify our debts just to try to remove some stress from the situation. But eventually we realized, this is our debt. Not anyone else's. And what we also realized was that we couldn't justify them, normalize them or rationalize them any longer. We had to own them so we could take control. 

"Self-forgiveness can be a tall order."

The next step may surprise you. It isn't create a budget. We'll get to that in a minute. The next step is to stop living in the land of what you should've done differently. You already know what you should've done differently. That's what led you to the first step of writing down your debts. I know what I should've done differently (and there are so many things!), but you know what? That isn't the current reality. Reality is dealing with the position you are in right now while learning from your past decisions. It isn't fantasizing about the position you could be in if you had chosen something else. This is such an important and hard step because, let's face it: self-forgiveness can be a tall order. And believe it or not, this step can either be a terrific motivator or a huge anchor. Don't let it be your anchor. 

"...you get to make your money work for you."

Now, we've come to the part that I absolutely LOVE. Budgeting. I love budgeting because you get to make your money work for you. The first four items you budget for are: housing, utilities, food and transportation expenses. These items are known as your four walls. Once these are covered, you pay for the other bills like cell phones and then begin adding any extra available cash to your lowest bill first. Doing this will free up extra cash in your budget and then you'll begin putting that payment towards your next lowest debt and so on and so forth. This is known as the snowball method. Many attack the highest interest rate debt first (the avalanche method). This method is also effective, but it doesn't free up cash as quickly a lot of times. However, plenty of people successfully utilize this method! We actually had a debt that we did out of order because of this. I'll talk more about this item on a later post. If you can't meet your four walls, then you have to figure out a way to boost your income. This was also something we did that we will discuss in the future. 

Another word about the budget: logging into your bank account and "keeping track of your spending" without writing it down (or putting it into a spreadsheet) is NOT a budget. I used to "budget" this way too and guess what? If I had just sat own and had written out a budget by hand at the beginning of this process, we could've likely shaved several months off our journey. I just didn't believe it was that important. 

Next, make your budget realistic. If you eat out every month and spend $500 while still in student debt, clearly you need to scale that back. However, it's probably not realistic to go cold turkey. I'm using this as an example because this was our Achilles' heel in our journey - eating out. Our restaurant budget was never $500, but we still struggled to sacrifice here. We still love to eat out, but early bed times with The JuJuBe don't let us go out like we used to. (Maybe having a baby is the trick to cutting back on the restaurant funds! HA!)

"Know where your money is going so it will get to work!"

Lastly about the budget, make sure it is tight. Don't misinterpret what I'm saying and have it so tight that you forget something and go into overdraft every month. We leave a slight (and budgeted) buffer each month just in case I've overlooked something, but before each pay period, have your budget ready to go with each and every dollar assigned to a category. Know where your money is going so it will get to work!

So a quick recap: 

1. List all your debts, smallest to largest. Include who they are to and the interest rate. 

2. Deal with the present situation. Not the past decision. Learn from the past, but don't live in it. 

3. Make a budget that covers the four walls, works and is realistic.

 Thank you again for stopping by my blog! I greatly, greatly appreciate it. I hope I have helped someone out there who needs it. And if you still need help, I'm here in any way I can be! Thank you again!

Links to Budget Forms and Debt Pay Off Coloring Sheets:
https://cdn.ramseysolutions.net/media/pdf/forms/fpu-budgeting-forms.pdf?_ga=2.224240923.1822385388.1542674134-536774877.1541445949

https://debtfreecharts.com/collections/free-charts