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I know… the dreaded “B” word.  Maybe it isn’t something fun to talk about, but when you have one that you can live with,  it can be a total game changer.   The first time we sat down to make out our budget.  It was PAINFUL.  Greg and I did some bickering back and forth and finally came up with something we could live with.   So when we first sat down we created 3 columns to our monthly budget sheet: Column 1:  We created this column for any debt that we owe that could potentially be paid off: Mortgages (our house and properties), school loans, medical bills, car payments (we no longer have medical bills or car payments). Column2:   Monthly bills: Electric, gas, cell phones, Internet, trash, sewer (anything you can think of that you pay on a monthly basis.  Column 3:  Other:  Groceries, Gas for cars, Compassion International (we sponsor 2 children) Church, Charitable organizations of your choice, child care.

What we do is add up each column and that is what we pay out every month.  The rest is left over for us to pay towards getting our debt down.   So essentially, you take the money you make (Income) minus the money that goes out (Debt/Bills) and what you have left over, you put towards debt to get it paid off faster.

Here is the other thing we were doing when we first talked about our budget.  We were paying extra money towards our home mortgage to pay it down quicker.    What we decided to do was instead, take that money and put it towards a bill that we could pay off quicker- for example we put it towards our medical bills initially.  The goal is to put any extra money towards the smallest debt you have in order to pay off that small debt as fast as possible. 


Dave Ramsey taught me that in The Total Money Makeover Then, when that was paid off, we put any extra money we had towards our car payments. We put it towards our Toyota Corolla and paid that off.  Then all the extra money we had each month went to the Durango (old blue is what I call her) and now that car is paid off. 


 We ended up paying off $78,000 of debt in under 18 months.  Crazy! That is how the debt snowball works.  It is amazing and it works incredibly well!      (The sheets in this post are examples of a budget.  It is a similar budget to what we were using when we started paying off debt.)  You can download your free budget sheets and get started today.

We used the 3 column approach because for us, we could separate the bills that we could pay off and not have to pay again from the bills we couldn’t get away from (cell phones, gas, electric, food etc.) We also looked at our spending to see how much we were paying on average to groceries, gas, giving to church and we created a budget that worked for us. Yours may look different and that’s ok.  It is unique for your family and whatever works for you is awesome! Creating a budget isn’t really something that is looked at in apositive way, although, I would go out on a limb and tell you that it is probably the best thing we ever decided to do (besides have kids of course).  It eliminated money stress and fights about money.  We also had a common goal that we were working towards and it made it fun for us.  We looked forward to getting paid and it wasn’t to buy something new… it was to pay off debt and get close to achieving our goals!

Here are some tips that we used to make the budget manageable:

Realize what is non-negotiable .  What can you not live without?  For Greg, it was sports leagues.  He loves people and in particular he loves playing in a church volleyball league.  He did not want to give that up so we budgeted for that.  I cannot give up coffee or shopping.  I put coffee in our grocery budget and we created a small amount that I could spend every month and Greg couldn’t tell me how to spend my money (bonus!).  We started with $30 for me because I felt it was reasonable and it was a challenge.  I had to really want something to spend my money on it.


Pad your numbers:  If you can, plan your budget on making the bare minimum of what you will make.  We are both paid hourly so we plan our budget according the least amount that we could make.  If you are paid a salary, then you pretty much know what you make from pay to pay so it makes it a little easier.  Then, pad your electric bill and gas bill a bit.  We allocate $100 for each of those utilities so we know we have some wiggle room.  The electric bill is lower in the winter while the gas bill may be a little more, but it all balances out.

Don’t get overwhelmed. It is easy to get overwhelmed when you sit down for the first time and look at the finances.  My best advice is to create a plan and take action.  You will figure out pretty quickly if it is working or not.  Stay on top of your money.  If it isn’t working for you, why?  What needs to be tweaked?  Go ahead and tweak it and try it out for a month or 2.  Make adjustments when needed.

Sell some stuff or find a way to make a little extra money.      In The Total Money Makeover, Dave Ramsey suggests that you can get the ball rolling to debt payoff if you sell some of your belongings.  We ended up trying this and to my suprise we sold around $1500 worth of stuff.  We sold some furniture we barely used and we had a garage sale to sell some other stuff.   We used all of that money towards are debt and I really feel that this gave us much needed momentum towards debt payoff.   If you don’t feel like you have anything to sell, just look around your home or consider selling services to something that you are really good at. 


Be patient and pray We prayed for help daily!  We knew that we weren’t strong enough to do this on our own.  Fortunately, God loves us and He gave us the support we needed to get started and be diligent in our quest to become debt free.  We are still working on paying off all of our debt, but we still use the same budget sheet as the one above.  


We keep the BIG picture in mind constantly.  When we are tempted to spend our money, we ask ourselves some questions.  Will this help us in pursuit of our debt free goals?  If not, then we do our best to avoid making the purchase.  Sometimes there are material possessions we want, but often we look at the cost and think about how hard we will have to work to pay for that item.  If it is beyond our means or it will require that we are away from family too long, it isn’t worth it for us.  Always keep the big picture in mind.  What do you want your life to look like in 1 year?   5 years?  What steps can you take today to get closer to that goal?

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