It wasn’t so long ago that I was drowning in debt.
And by drowning I mean like falling down a well. No bucket to sit in, no rope to pull me up, no shovel to dig my way out, no super-spidey-man-suction-cup-hands or feet. I was stuck.
Or so I thought.
After hitting pretty close to my rock bottom, one day I said enough was enough. By mistake, really, or perhaps divine intervention, I stumbled upon this talk radio guy during a trip driving through Texas (that I paid for with a credit card). I began to listen as caller after caller yelled their celebratory “I’M DEBT FREE!” screams. They seemed genuinely exuberant! And who could blame them? They had broken free from their debt bondage. I began to dream…
What if I could one day be free, too?
How would that FEEL to have all that weight and stress lifted?
“Nah, not you,” the voice in my head would bark back. “You’re a single mom and a teacher. With medical bills. And two kids to support. And somehow send through college. Change the station.”
But I didn’t change the station.
This radio guy, named Dave Ramsey, was pretty cool. He was a straight shooter. He had a sense of humor, and a gift of telling it like it is to people who seemed to really need to hear some tough love. In addition to the “we’re debt free” people, there were other callers. All of them were riding on the struggle bus like I was, and LOTS were worse off.
The advice was pretty much the same for each of them. You need to avoid debt like the plague. I was beginning to see that. And I realized I could not continue on my current path. I needed to put an end to the outflow of money that was already earmarked to go somewhere ELSE before it even came in. Now THAT would surely feel like I’d given myself a raise. But just how was I supposed to accomplish that?
As I continued to listen, I realized how tired I was of getting to the end of my money WAY before the end of my month. This debt-ridden “normal” in America was all too common. The majority of my teacher friends lived on plastic… eating out, shopping for new clothes, seeing a movie, buying furniture. Well, if that was “normal”, I wanted out!
Then the dreaded B word came up: The BUDGET!
Considering myself a bit of a math nerd, I was used to the concept of a budget. I realized, though, that if I REALLY knew how to budget properly, I wouldn’t have been in the mess that I was in.
I knew this wasn’t the way to manage my money. In fact, if I was honest, I wasn’t managing my money at all. It was managing me.
After much trial and error (and I’m still a work in progress) here’s a breakdown of what I was doing all wrong – and what I did to shift my thinking, and my actions, to give myself a better shot at finally giving myself that raise.
My 3 Budget Blunders That Kept Me In Debt (and the shifts I made that began to change things):
Budget Blunder #1) Not Having One.
I call this, “looking in the rear view mirror, rather than up ahead”.
My “budget” was always more of a recap of what had already happened every month, AFTER I had spent the money. Almost every month, I’d get to the bottom of my list of expenses and after subtracting my income, sighed with disappointment at the thought of carrying over yet another negative balance.
The shift: After adding up every dollar of income, I assigned EVERY dollar to a category BEFORE the month began, and made sure the total of “in minus out” added up to exactly ZERO (including saving to my rainy day fund). Again, this had to be done before the month began, and there was a lot of adjusting to do until I got really good at it. Since a teacher makes no overtime (a topic for a different day), it was fairly simple to know how much was coming IN. It was what was going OUT that I had to keep my finger on.
Budget Blunder #2: Being a bad babysitter.
If I was to tell my money what to do, I had to “babysit” those dollars more carefully and make sure they stayed in line. Just like any good babysitter or parent, sometimes you have to say the word, “No.”
The shift: I tried an envelope system to tangibly separate my categories, and said, “No” to borrowing money from one envelope to pay another. This was not that easy! It took a few months to really get used to. BUT, I learned so much about myself with this step alone – mainly that it was actually possible to have money leftover before the next paycheck came in! In my very first month, I had $600 left in my envelopes, unspent! Talk about giving myself a RAISE! There sure is something to be said about not wanting to part with your cold, hard cash, something the well-marketed credit card companies know very well!
Budget Blunder #3: Not putting away the plastic.
Once I committed to the envelopes, I was doing pretty well, but I continued to rationalize my way to using credit cards, mostly paying off the entire balance each month. I need my reward points, I’ll pay off the whole balance when the bill comes, yaddah, yaddah, yaddah…
The shift: Cash (or debit cards) only. I am still working on this one, but I am a thousand times better today than I once was (I did go from 4 cards – that were pretty close to being maxed out – down to 1 with no balance).
So What Have I Learned About Debt Through All This?
We don’t fall into debt instantly, and we won’t get out overnight either, but here are some great principles to live by if you want to get that “raise” you need by dumping the debt for good (thanks, Dave Ramsey!). I share with you my “Money Manifesto” here, in hopes someone else out there could use a little help, too!
To dump my debt and give myself a raise, I will…
- First and foremost, acknowledge that I am just a steward of God’s money that He has allowed me to earn with the gifts that He has given me in this life1.
- Give every dollar an assignment at the beginning of every month2 so I can tell my money where to go and not just wonder where it went.
- Plan ahead to avoid unnecessary splurges and impulse buys (disguised as unbelievable bargains I just can’t live without)3.
- Use some kind of system (especially when first starting out) to physically SEE my spending, whether it’s envelopes or jars, or whatever it takes.
- Realize that I spend more when using plastic, and that cash is a good thing. :)
- Give myself grace the first few months of following a real budget. I won’t be perfect, but I’ll get closer every time.
- And finally, visualize all that I’ll be able to do when I’m free of debt, including pouring generously into my retirement, helping my children as they enter adulthood, and donating to causes I believe in4 .
Just like with weight loss, becoming intensely goal-driven and taking action IS the fast track to success. If you believe you can do it, follow these principles, and really get intense about kicking your debt to the curb, in no time you’ll get that raise you deserve!
Do you have a debt free success story that could help someone else out there? I’m always looking for more tips and tricks, so please comment and share!
To your debt-free life,
Scripture referenced above:
- (Psalms 24:1-2) The Lord owns the earth and all it contains, the world and all who live in it. For he set its foundation upon the seas,and established it upon the ocean currents.
- (Luke 14:28) For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it?
- (Matthew 6:21) For where your treasure is, there your heart will be also.
- (1 Timothy 6:18) Tell them to do good, to be rich in good deeds, to be generous givers, sharing with others.