How I Learned To Budget To Become Debt Free
When I was young, my parents were tight with money. While they spent money on fun things here and there, they didn’t waste much. Their parents had taught them the value of budgeting. And the lessons stuck. So, growing up, the importance of planning a monthly budget was deeply ingrained. Unfortunately, I didn’t learn the lessons as quickly as my parents had. By the time I was in college, I was already over $2,500 in debt (not including my school loans). And that was only the beginning.
“I Thought I Had More Money!”
Whenever I went to the bank or used the ATM, I was always left with the same impression: I always thought I had more money than the balance on the statement. In truth, I had completely lost track of where my money was going. Between my credit card bills and department store cards, money was going out faster than it was coming in. This went on throughout college. Oddly, after graduating and getting a job with a nice salary, the same thing continued to happen. Having a salary just meant I could buy more things more quickly.
I knew it was time to get a grip. My debt load was growing and becoming an issue. The time had come for me to create a monthly budget.
Why I Used Envelopes
I used envelopes to keep track of my money. It sounds silly, but it worked perfectly. I had an envelope for every expense: food, clothes, entertainment, books and more. At the beginning of the month, I put a certain amount of money in each envelope. Once I spent that money, that was it. There was no “borrowing” from other envelopes. There were no extra trips to the ATM. And I didn’t use my credit cards (or my debit card) to buy things. My budget was built on cash.
How Budgeting Saved Me
By using envelopes to budget my money, I noticed something interesting: the amount of money I was spending each month was falling. Small “money leaks” were no longer slipping through the cracks. That was a critical piece in eventually paying off all of my debts. I set aside money each month according to my budget. And I sent any extra dollars to pay off my credit cards. You’d be amazed at the impact that paying an extra $50 a month can make on your credit card balances!
In the end, my monthly budget saved me. Due to a few raises at my job, I’m making more money than ever. Plus, I don’t have to make any monthly payments on consumer debt. If you’re struggling with your own debt load, let me encourage you to create a reasonable monthly budget that you can live with. My budget helped turn my financial life around. I’ll bet it can do the same for you.
