Debt and budgeting

I’m a worrier. I worry about money and want to hold on to enough of it to make me feel safe. That’s why I have emergency funds for my emergency funds and overdraft protection for my overdraft protection. We started out around $30,000 in debt, not counting the house (which had no equity built up due to the type of loan we had). We are down to just the house now, with three months of expenses in the bank. I still worry about going back into debt. We were there for so long. But, the budget helps. It reminds me that we are still saving. It lets me plan out how much we’ll have over the next month and what we can do with it. I can put the amount going into savings in big, bold, colorful ink at the top of the page and look at it every time I start to get twitchy. And it’s not fancy. It is a basic map of where the money is going though.

Now that we’re out of the weeds some, it’s calming to make a budget and see the money flow. It was much harder when we were in the thick of payments to everyone because we had no real direction. We were paying what we could to whom we could whenever we could. It was a big ol’ mess. It was scary to do a budget because I tried to account for every penny and ended up feeling overwhelmed by the amounts that were going out. I felt like we didn’t deserve any play money because we were already in so deep. I wanted to save some, but every time we got a little ahead, something would happen and we’d have to resort to the credit card to rescue us again. I read financial planning books like crazy and they all told me that I had to have an exact accounting every month for my budget. I could understand tracking everything for a couple or three months to see where it’s all going and figure out where we could cut, but I couldn’t account for every penny in advance.

I hated the idea of saving for clothing and car repairs every month whether you needed it or not because it seemed like that money would be better spent paying off debt. It never occurred to me to start with creating a buffer, and then paying off debt. It worked for us though and gave us just enough wiggle room to be able to pay things down. It seemed like, once we got rolling and started seeing balances go down, fewer emergencies popped up. Really, because we had that bumper, fewer things seemed like emergencies. It’s not an emergency when you can pay it off.

The biggest lesson I took from all of this is that you really do need a plan for your money. Even if you don’t write out exactly where every penny is going, at least write out your goals and post them somewhere. Every time you hit a milestone, write it on that paper. It’s motivating.It keeps you on track. Our goal was to pay off bills so I wrote each bill and its amount on a piece of paper and, every time I paid one off, I’d mark it through and write the date next to it. I had a plan as to how I was going to pay things off (the snowball method), and I stuck to as much as humanly possible. Now it’s fun to write out a plan for my money because I get to see how much I’m saving each month rather than how much I’m spending on repaying debt.

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