How I Got Out of Consumer Debt: The BUDGET

OK, prepare for at least a week of celebrating and looking back since it’s pretty sure hubby’s credit union will process the LAST truck payment we will ever have tomorrow.  I thought I’d start off by revisiting the crucial key to my whole get-out-of-debt journey: THE BUDGET!

Yes, that nasty ugly “B” word is what it took for me to get our money under control.  That bad word that evokes unpleasant images of bread and water and privation is what made it possible for us to send huge honkin’ debt repayments each and every month.  Our budget was our lethal weapon against our debt!

Until I made up the first realistic budget on December 29th, 2006 I didn’t think we made enough money to cover our expenses.  It was a huge eye-opening experience to look down at the numbers in the budget and realize we made about $600 more in a month than what was supposed to be going out.  We made enough money to last to the end of the month, but we weren’t tracking our spending and usually ended up with about five days at the end of each month where we “had no money.”

That was a major wake-up call.  I had been asleep at the wheel for the first fifteen years of my adult financial life.  Dave Ramsey often says the first budget you make won’t work.  The second budget you make might work a little, but it usually takes until the third month of budgeting for things to start going smoothly.  I didn’t feel like I had that luxury, so I FORCED the very first budget to work.

I will have to give my teenage son credit where credit is due: he lived under my Draconian budget for the first three months in relatively good humor.  Yes, my first three budgets were actually the nightmares the dreaded “B” word tends to conjure up.  I was feeling very insecure, especially when the heat broke and cost more than my emergency fund had to repair in the first month.  Hubby was in Korea at the time, and missed out on the experience of my super-tight budgeting.

After the first three months on a budget, I had killed off the small debts and began to relax a little.  I started to budget in a few little fun things again as I found I had about $350 more per month to work with after killing the small balance stuff.  I had also discovered the thrill and satisfaction of killing off debts … and was hooked for the long-haul needed to knock out the big balance debts.

And there are the two things that have sustained me over the past fourteen months: the determination to get it done and the tool I needed to accomplish it!  The determination was vital as we have worked since the beginning of August on our last debt: the truck note.  Eight months actually feels like forever when you are watching a $17,000+ debt go down to zero.  The budget was the big hammer I used to knock that debt out for good.

So, how can you use a budget to get out of debt yourself?  Especially when the first one isn’t “supposed to” work?  I think the trick is making your budget as realistic as possible the first time.  Go through your account ledger and see where you spend money.  Go back at least three months to find spending patterns, and also to remind y ourself about quarterly bills.  Wrack your brain for every possible bill you can think of that might come due in that month.  Write it all down.  If you have more month than money - it is time to prioritize.  It will also be the time you take on a part-time job … but that is another post.

The biggest beef I have with some “financial experts” is the idea that you can get out of debt without a working budget.  I can’t see how that can be true.  Hubby just quipped, “No budget, no success,” after asking me what I am writing today.  I whole-heartedly agree with his assessment.  Determination will keep you going during the long haul to get out of debt, and budgeting will give you the blueprint you need to actually do it!

Your budget doesn’t need to be fancy (mine still isn’t), it just needs to be realistic and workable.  If you don’t have a budget right now, grab a pencil and paper, and have at it!  If you’re a nerd, you just might come to enjoy the budgeting process and the feeling of control it gives you over your money.  I speak from experience on that last point.