Learning to Live on a Budget

Hi everyone!  I hope the new year is treating all of you well so far and those resolutions are still intact! One of my resolutions for the year is to save our fully funded emergency fund in less time than we have calculated it.  Right now, it is calculated that it will take us about 29 months but I am hoping to do it before the end of this year.  We will throw all of our extra income into our savings so we can get there faster.  Some of that extra income comes from Corbin working at the cemetery his dad is in charge of, coaching for both of us and working at the golf course during the summer for both of us.  Most importantly, that extra money comes from tightening the purse strings on our budget which is what this week’s post is about.

When we started the process of paying off all of our debt, it was important to get on a budget since it was a crucial part of our plan.  As I mentioned in my last post, we had a very loose budget on that white board with all of our debt.  When I refer to it as a loose budget, I say that because we really only had our monthly expenses listed on it with the totals at the bottom of each column.  In one column, we had our debts and in the other we had all of our bills with due dates listed next to them.  It was helpful to know when money was going out throughout the month.  The problem with this “budget” was the fact that we did not have any grocery, gas, home improvement or restaurant expenses up there.  We really weren’t being honest with ourselves and all of the expenses we had.  They were not all needs by any means, except gas, but we were kidding ourselves if we thought eating out was just going to miraculously disappear.  What can I say?  We like good food!

In Dave Ramsey’s book, he recommends giving yourself 3-6 months to really get used to living on a budget and sticking to it.  Again, the entire process of getting out of debt is psychological and one of the biggest factors is changing behaviors.  In most cases of extreme debt, it does not have to do with how little or how much money you are making, but what you are doing with that money.  The same was true for us.  We were now a single income family paying off debt on only a teacher’s salary.  We knew it wasn’t going to be easy and our initial projections to pay off all of our consumer debt was a far away date I believe in December of 2020.  Getting that budget under control, though, made a world of difference.  Three years of difference, in fact.

Once we were a few months into the process of paying off our debt, I realized we needed to get more realistic about our spending.  I started recording everything in a notebook.  Every cent coming in and every cent going out was being accounted for, but sometimes the recording wasn’t done until the end of the month when we were already over budget.  Something had to give.  I think we really both noticed that our biggest area of overspending was going out to eat.  We really enjoyed spending time with friends and sadly, that needed to stop because it was always done at a restaurant.  That was the first thing we had to really cut back on that was difficult to do.  We ended up paying close attention to how much we were spending in that category and started scaling back.  There were the occasional McDonald’s breakfast trips, but we weren’t going out to the brewery for trivia anymore and we weren’t randomly going to restaurants when we didn’t feel like cooking.  

Learning how to exercise self-control in that area was difficult.  In the three years we had been married at that point, we had always behaved that way with eating out.  Don’t feel like cooking tonight?  Order a pizza.  Didn’t plan a meal for tonight?  Go out to eat in town.  Haven’t grocery shopped in a few weeks?  Go pick up dinner.  It was an awful habit and was equally as awful to try to break it.  We had many slip ups in that category and it took us a long time to really learn to say “no” to going out to eat with friends or just going out to eat as a family.  In fact, we still have slip ups now with it.  The entire process is still a work in progress, but we are getting there.  

The biggest difference for us in creating and sticking to a budget was downloading the app EveryDollar.  It is a fantastic budgeting tool that is with you at all times if you have your phone with you, and let’s be honest, most of us barely ever put the phone down.  Once we started using that app, things got immensely easier.  The app was created by Dave Ramsey’s company, Ramsey Solutions,  and was so well thought out.  It is centered around a zero-based budget meaning you account for every cent, or dollar, (get the name now?) that comes in every month.  There is a place to account for income and then underneath that, you have all of your subcategories to budget.  For instance, in our budget, our main categories are Housing, Transportation, Food, Lifestyle and Insurance.  Within each category, we have subcategories.  In our Food category, for example, our subcategories are Groceries and Restaurants.  Yes, we still budget for eating out every month.  It’s a work in progress, remember?  We budget only as much in every category every month as our monthly income will allow.  If we make $10k a month (we don’t make that monthly, by the way), we cannot budget $15k in outgoing expenses; we can only budget $10k in outgoing expenses.  If there is any left over at the end of the month, that money goes toward whichever baby step you are currently working toward.

 

Learning how to use this tool was the biggest difference for us.  Prior to using it, I realized we were not budgeting correctly.  We weren’t being honest with our spending AT ALL!  I tended to ignore writing purchases down because I knew it would put us over.  With EveryDollar, not only did I hold myself more accountable, but so did Corbin.  We could see each other’s spending activity within the app so we were able to remind each other where we needed to cut back.  It was a constant reminder of what we were working toward.  It also allows you to see how much you have remaining at the end of the month so you can automatically throw that amount toward debt or savings because you’ve already budgeted for it to be gone!  The best part about the app?  It is completely free!  There is a premium version that is $9.99 per month which we use now.  It links your bank account to the app so you can just drag and drop each transaction to its category.  I could do without the premium version, but, you guessed it, we budget for it so we know the money will be gone and it doesn’t surprise us.  We literally budget for the budgeting tool.  

With any other change in life, living on that budget took some getting used to.  It was eye-opening to see how much money we were spending on wants rather than needs.  Initially, I recommended to Corbin that we get rid of our satellite TV subscription because it was unnecessary and was costing us quite a bit per month.  It really took some convincing, but once we saw that line item in the budget for $125 per month, it was easier to let it go.  Guys, $125 per month over 12 months is $1500!!!!  Numbers do not lie!  Having that extra money to put toward debt every year made a good dent in our debt.  Even now, we don’t really miss it!  Not being able to watch sports is tough for us, but we have plenty of friends and family members who have opened their homes for us to watch our Spartans play!  Go Green!

Seeing those numbers in every category really woke me up to where the problem with our debt began and it was mostly behavioral.  Changing those behaviors and holding each other accountable made a world of difference in speeding up the process to get out of debt.  We learned to say no and we stopped rewarding “good behavior” with going out to dinner or buying something we “needed” because it wasn’t budgeted.  Being able to throw any extra from the budget each month toward debt allowed us to reach our goals faster.  When people ask us how we managed to pay off $72k in debt in 22 months, I always say that the budget was one of the biggest factors in making it happen.  One of the other factors was all of the extra income we provided for ourselves by sacrificing time with friends, family and each other.  I will highlight that in next week’s post and how sacrificing for a short period of time will free up time down the road.  

Thanks for reading!  I hope everyone has a fantastic week! If you are enjoying my posts, feel free to subscribe and they will automatically be delivered to your inbox every week!