06 Dec Freezing credit
OK guys, time to buckle up…
On our regular budget blueprint, we always put debt directly below essentials. Making it stop #2 for our dollars. Why? Because you need to get debt out of your life.
But debt allows us to realize our dreams faster, visit far-flung locations, and shuttle our families around in safe and reliable cars, right? At least that’s what all those high-budget ads would have you believe. Unfortunately, it’s just not the full picture. We’ve been conditioned to believe that credit cards and auto loans are just a natural part of everyday life. But don’t fool yourself into thinking a credit card company cares about your dream vacation. They’re in the money-making business. And they ARE smarter than you. They know the easier they make using their product, the more likely you are to use it at the exact moment you shouldn’t. As anyone with a load of credit card debt will tell you, this is the opposite of freedom.
Through debt, we get things now and pay for them later. This preys upon one of our deepest human weaknesses; always wanting to have our cake AND to eat it too. And with credit cards and student loans and car loans, you can get pretty full. For a while at least…until it’s time to pay the piper.
I get it. Putting your hard-earned dollars towards debt is one of the LEAST fun things out there, right alongside paying taxes. But if you’ve ever thought “Dang, giving my hard-earned dollars to someone else every month sucks” then join the dump-debt club, my friends! Transitioning to paying for things with money you have is the best. There are no bills to be afraid of. No collectors to dodge. No futures to sabotage. You are free to do EXACTLY what you wish with every paycheck that you work for; it’s a fabulous feeling.
That’s why we put debt payoff just below rent and groceries and above things like investing into your retirement. Investing while carrying debt is like running a marathon with weights tied to your ankles. For goodness sake, you need to unshackle yourself, and then continue the race. If getting rid of debt gets top billing in your world, it will happen. As Dave Ramsey says “You can wander into debt, but you can’t wander out”.
So, then the question becomes, which debts to pay off and how.
Well, here’s a video for you dears, where we answer that exact question. : )
Next time, we’ll tackle Retirement!
Like Julie Andrews says, let’s start at the very beginning.
It’s a very good place to start.
Most budgets take the form of a list. Whether it’s in a spreadsheet or just on a piece of paper, your expenses will show up in some sort of top-to-bottom fashion. To be a total budgeting boss, you have to get the order right, starting with the most important things at the top. Maybe that seems elementary. But I can’t tell you how many budgets I’ve looked at that are not set up this way.
Humans have a limited amount of willpower. Studies show that we succeed when we create the proper environment. We do not succeed when we have to constantly fight against our surroundings. It’s this science that resulted in a container of Nutella surviving an entire year in my pantry. Because it was in the back, hidden behind canned beans.
Just as out of sight is out of mind; top of sight is top of mind.
So, when we budget, we need to take care of what some people refer to as “the four walls” first. People sometimes like to try and get fancy with it. But just ask yourself the following questions and you should be good to go:
The answers to those questions are what go in the top section. Thankfully they should be the easiest expenses to isolate. For example, your mortgage payment, your electricity money, your gas money, your grocery money…those should be showing up here. These are NOT always your “bills”. I have plenty of bills that are not essential. Like life insurance, Netflix, or our counselor. None of those are essential to my continuing to eat, have shelter or get to work.
Make sense? Good.
Next time, we’ll go to section #2. Debt!
I love saying this word out loud to the groups that we speak to. I can immediately feel the crowd shift uncomfortably and I can almost hear the voices in their heads start to pipe up.
“I should maybe do that someday.”
“I don’t really make enough money to budget.”
“Oh yeah, I have MINT for that. Check.”
“I make a pretty good income, I’m fine.”
“Maybe on January first…”
I know that voice all too well because I heard it all the time. But even though I was the “we-need-a-budget” instigator in our marriage, I was the worst at sticking with it. I’m just one of those people that really enjoys starting projects, not finishing them. It just seemed like every time I’d jump on the budget bandwagon, a week or two later, I’d fall off and get trampled over. At the time, I just couldn’t figure it out why. It’s not like budgeting is a hard concept. But after going through countless tries and helping other people build out their own budgets, we’ve figured out something important.
A budget includes all the categories you spend money on, but an EFFECTIVE budget has them in the RIGHT ORDER. Why? Because visuals are SO important. For us creative people, the idea of going into a black and white excel spreadsheet every day is about as appealing as going to the dentist.
It was out of this realization that our “Best Budget Blueprint” was born. Our hope is that you take advantage of our years of budgeting experience and use this to create a budget that you’ll actually stick to. We did. It works.