Generally, in most families when the word budget is brought up, there is a very negative connotation. I feel this negative reaction is because most people feel they have to give up all the things they love, pinch pennies and live like paupers. I know this was my reaction when Greg first brought up creating a budget for our family. The truth is, we talked about it months before we took our trip to Virginia and I was really against the idea of creating a strict budget. I thought things were going ok at the time and why should be rock the proverbial boat by having to pinch every penny that came in our bank account?
Creating a budget can seem like such a daunting task and following a budget can seem even harder. According to Nerdwallet, the average American household has $15,762 of credit card debt and $130,922 of debt in some fashion. When we first started our journey to financial freedom and waged a war on debt, we were about $267,000 in debt. That was just personal debt. I have talked before about how we have a real estate business. This number does not even include real estate debt from our business.
When we got serious about our debt, we were able to pay off a large chunk of debt in only 17 months. We paid off $78,000 of debt in 17 months because we had such a huge mindset shift that we didn’t want to just keep paying bills. We started dreaming about what our future would look like if we didn’t have bills and if we could live off our real estate business full time. We voiced our dreams aloud and really started to get serious about our debt. That number from above has been drastically reduced. At this point, we now have about $172,000 of personal debt. We have our mortgage which is $109,000 and we have 2 student loans.
This may still seem like a huge number, but to us it is way more manageable than the prior numbers. We have made some changes in our real estate business also. We have been paying a significant amount toward one of our properties in our debt free process. Recently, we decided to sell that property as we feel it is at the top of the market and we want to pull the equity from the property to invest in other properties or pay off another existing property. We are in the process of selling right now and we have a buyer. We are hoping that all works out and the deal goes through. We should close on this deal in he next 20 days (fingers crossed).
Ok, so back to why creating a budget doesn’t suck. Have you ever felt like you were drowning in bills? Have you ever felt like you were stressed out about money? When you get paid, do you feel like all of your money goes to bills and you have nothing left over? Yeah, that was us too. When we took our trip to Virginia and we heard our friends talk about their financial situation, it seemed like they had everything figured out and I wanted to be like them.
I wanted to be less stressed about money and have money left over after paying the bills. I wanted Greg and I to be able to live the future lives of our dreams, but I realized at that time that it was not going to happen unless we really got control over our money.
That is when things changed for me. I knew Greg was right about creating a budget. I also realized that I was probably more serious about it at that point than he was. When we got home I read Dave Ramsey’s The Total Money Makeover and hit the ground running.
It has now been over a year and a half since we created a budget and I can tell you honestly, that we haven’t always stuck with it. I can tell you honestly that I hated it at times, but I can also tell you that we have felt less stressed about money. Here are a few things I have noticed about why creating a budget hasn’t been that bad.
Creating a budget- The positives:
- We noticed that once we got the debt snowball process started, (thanks to the The Total Money Makeover) things started happening quickly. Very quickly. We seemed to just have money to put toward debt. We knew where all of our money was going and we suddenly had extra money leftover.
- Once we had the extra money, we were very methodic about how we spent it. Instead of spending that money on stuff we didn’t need, we put it toward our dream of becoming debt free.
- We realized that once we stopped feeling sorry about our circumstances, took control of our money and took action, awesome things started to happen. We noticed our drive and motivation picked up significantly. We noticed that we would get excited for pay day to put more money towards our debt and we would be even more excited when we paid something off ( Hence the name Frame to Freedom.)
- We noticed that we started to appreciate stuff we already have. When you keep buying all new stuff, you don’t get to really enjoy the stuff you already have. Creating a budget put some restrictions on what we could buy, but honestly, I don’t feel like it was in a bad way. We now are able to appreciate more and realize how lucky we are.
- Our habits started to change. We noticed that by creating a budget, we were breaking some bad habits. For me, I was breaking shopping habits and impulse buying is now a thing of the past. I am grateful for that. I am grateful that we have much better control over what we are buying. Michelle at Making Sense of Cents also talks about breaking bad money habits and specifically talks about 7 of them. I think I was guilty of just about all of them before we started our journey.
Negatives of creating a budget:
- I am going to be brutally honest here. It was initially hard for me to get past what other people thought. Especially when it came to trading in my 2012 White Acadia for a 2004 Dodge Durango (Big Blue). I struggled with that. I still find that I feel embarrassed about my car at times. I then shift my mindset to what matters… our future. Our dreams matter more than a car. They just do.
- I can’t buy stuff when I want it. I have to use my personal money to spend on stuff like makeup and clothes and jewelry and when that money is gone, it’s gone. It took a while for this shopaholic to get used to that. I can honestly say that I have broken the shopping habit in that I don’t spend a lot of money on clothing anymore. I will buy well thought out pieces that fit my personality and style. For example, I found a pinstriped shirt I LOVED at JcPenny in December. It was $30 and I thought it was just too much for a shirt so I decided to wait. I saw that same shirt again in April and I had a coupon in hand. I got the shirt for $12 and spent money I was given for my birthday. It was a well thought out, calculated purchase and I know it is a good quality item that I will wear for at least a couple years or until it wears out.
- We don’t spend as much on vacation. I would love to go to the beach and rent a home on the beach for a week and just live it up, but that’s not what we are supposed to do right now. We could afford it, but we choose not to. We chose to become debt free and then we will celebrate with awesome vacations later. We budget for our vacations so we can pay cash and not go into debt.
We are not perfect with our budget and when we get off track, I find that I feel sorry for us and feel overwhelmed. It seems it is at that moment when something clicks and I get angry. I get angry that we got off track and then Greg and talk about how we are going to get back on track and recover the time or money that was lost. We realize that we have total control over where our money is going. Rosemarie over at The Busy Budgeter talks about one way to instantly improve your finances and it is simple… know where your money is going. Don’t over complicate the process if you are thinking about creating a budget.
The moment you realize that you have total control over your finances, your dreams, your health, everything changes. You find the motivation to get to where you want to be. For us, we still have a while before we pay everything off, but we have this control factor and this excitement to see things being paid off and getting closer to our dream of becoming debt free. Even though we have had a budget over the last year and a half, we have found lots of ways to have fun. I hope to share more of the fun with you.
Are you ready to take control of your money? Let me help you create a better budget. Click herefor your FREE checklist!
Learn to budget like a ROCKSTAR!
Learn how to set up a budget that rocks, stay motivated, reduce your monthly expenses, and leverage your money like a boss! You will learn how to master and create the life you want. There is no need to be stressed about money! Sign up today!