A few months ago I mentioned I had been starting to follow the Dave Ramsey budgeting and financial planning method. I am pleased to report it is working really well! I traveled in February and March and my husband and I couldn't figure out how to keep up with the budget we had started in January. We noticed a difference. Money walked away...about $1000 wandered off into stupid, unplanned for purchases. That money could've been used towards paying off my car loan.
Lesson learned. We need a budget! Not only do we need a budget, through trial and error trying to find or rhythm with this program, we found we need the envelope system. The good, old fashioned, "there are $500 for food this month, $500 goes into the food & household envelope at the beginning of the month and when it's empty, it's empty" method. We run the following budget line items off of the cash only envelope system: food & household, gas, bus, entertainment, VB blow money, and my husband's blow money. The rest is debit and we reconcile the books at the end of the month (cuz I am too lazy/distracted to reconcile as we go).
Facts: my husband and I are living on 1 full time income (I just this month picked up some part time work that will cover 1 bill/month). We are living at only a few thousand dollars a year over the federal poverty line. But, with this considered, we have successfully paid off $5000 in debt since January. We have no credit card debt, and we are nearly finished paying off a car loan (on a 2012 I bought in 2013!) and after that will follow Dave Ramsey's "debt snowball" concept and apply all of the car loan money towards the student loan to pay that down too! That means within the next 12 months we will be 100% debt free and can start saving for a down payment on a home and retirement!
This has been challenging, it has caused arguments. But now after 7 months, I can say we have a really good system in place. Our finances are in check and we even have extra money every month to throw at debt. This is after we have put money towards saving for gifts, saving for travel, saving for French class tuition, saving for car repairs, saving for dental, saving for medications, saving for clothes. You get the idea. I highly recommend you give this method a try if you are having trouble managing your finances or if you find yourself with a lot of debt.
Even if you aren't much of a reader, Dave Ramsey's radio show is broadcast for free from his website. It's not a bad listen (if you can ignore the 3% of the time he spends on his extreme right politics) and you can learn a lot about winning at money. Here's his website. "The Total Money Makeover" and the workbook were what we used and found it to be enough information.
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