Budgeting: the key to Debt Reduction

Let me start off by saying I used to truly hate the whole concept of budgeting.  When I was growing up, I was always told things just weren’t in the budget that I wanted.  So I wandered through almost fifteen years of my adult life making money, paying bills, and living paycheck to paycheck and never knowing where the money went!  I understood the concept of keeping to a budget…I just didn’t do it.  Well, to be honest, while I understood the ideas, I was very fuzzy on the details of just HOW to make a budget.

Then, I found Dave Ramsey and got onto the Total Money Makeover plan.  In his book, Dave shows you exactly how to do up a workable budget, and even includes blank budget sheets that you can use!  I made my first budget ever on 29 December, 2006…yes I really did write down the date!  LOL  It really was that momentous of an occasion.  And I discovered to my surprise that we really do earn enough to live on plus reduce our debt!

I found out that I am like a lot of people once they have done the first budget.  I looked at my  income, looked at my outgo, then looked at the difference between the two and wondered Where has all of this money gone every month? On my first budget (for January 2007) there was over $600 that didn’t have to be used to pay bills!  Where had all that money gone each month I didn’t do a budget??  I have no clue…

In the last six months, that “extra” money has risen to about $1000 every month since I used it to pay off my credit cards and credit union loan.  We are now going to use that to pay off the truck loan in less than a year (see yesterday’s post on the truck payment).  Then I will have over $1500 per month to SAVE.  Dave Ramsey’s debt reduction plan really does work!

So the very first step to reducing your debt load is to get on a budget and live on it!  If you need help making a budget, try out Dave Ramsey’s My Total Money Makeover site on the free trial…the forum members will help you out on what you can trim from your budget if you find too much month at the end of your money, and they have installed a budgeting software program that is pretty cool for those of y’all who love to do it on the computer.  Personally, I kept my budget low-tech on a dry erase board LOL  Even if you do your budget on a napkin, still draw it up…it really is the first and most important key to your debt reduction plan!