Before my wife and I got married we had the money talk. We understood the value of living on less than what we made.
There were two things we were in agreement on. First, we never wanted to be in debt (except to own a house). Second, we wanted to live on my salary alone, that way when we had kids she could stay home with them.
When we were married we had some debt. When I say we, I mean me. It wasn’t a lot, but it was still debt. We agreed that we were not going into any more debt and that we were going to get out of debt within a year.
After the honeymoon we moved and I went on the job hunt. Before we even received our first paycheck we created a budget.
We decided where each dollar we made was going to go. We decided how much we would spend on eating at restaurants, how much on groceries, etc.
This is the most basic definition of a budget: See how much is coming in. List what will go out and make sure there is a (+) on the bottom line.
When it was time to spend money we would ask the budget. We let the budget say “no” that way neither my wife or I had to be the bad guy. If we wanted to make a change to the budget we would make that decision for the next month.
Here are 6 action items to move on when creating a budget and divorce your debt:
Draw a Line:
This is simple but profound. If you want to get out of debt, you have to stop taking on new debt! Divorce yourself from spending more money than you bring in.
Account for Every Dollar:
If you make $3,000 a month, budget for $3,000. The point is to tell your money what to do. If you have some room in your budget apply it to your current debt.
Assess Needs and Wants:
When you put your budget together, separate what you need to have and what you want to have.
You need to buy groceries and pay rent. You want to go to the movies and eat out. This is life on a budget! (TWEET)
Look at the bills and expenses you have and see what you can get rid of or cut down. Maybe it’s your cell phone bill, you might not be able to get rid of it completely, but maybe there is another monthly plan that costs less.
You are in debt, you are trying to keep your head above water while you have a weight tied to your ankle. It’s going to feel uncomfortable, but this is a battle you can win!
Know Your Date:
Keep your eye on the finish line. Know the day you will be debt free. Circle it on the calendar, tell your friends about it, look forward with great anticipation to it.
Here is some hope for you… because we have put these principals into action and we set out our goals. We were debt free in just over a year after marriage, I finished my University degree debt free (paid in cash baby!) and my wife is now able to stay at home with our kids.
Our oldest is almost 3 and mommy has been able to stay home since the day she was born!
It isn’t easy, but it is possible.
If you want out of debt you can be.
If you want to set goals and hit them, you can.
Just put a plan together and start moving.
What would you do if you were debt free? OR What have you been able to do because you are debt free?