On a Budget - 4 Tips to avoid Debt

With the end of the year approaching, I'm sure many of you have considered trying out budgets or reviewing your finances for a better financial situation for the New Year!  

Henry reassessing his finances :)  

Henry reassessing his finances :)  

If you're feeling that little nudge in the back of your mind that something needs to change money wise- GIVE IN! Change your situation today and don't keep making the same mistakes and having the same regrets! I'm seriously so glad I stopped fighting budgeting. It's changed my life, let it change yours!

After you've found your WHY and set up your first round of budgets with your budget-keeping-partner-in-crime, here are a few other tips you can apply to help you stick to those darn budgets!  

1- Use a cash budget envelope system

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Okay, bear with me here. Most times when I suggest this option to people the look of "heck no!" on their face could be seen from China. I get it- it's less convenient to carry cash on you. It can be annoying to go to the bank at the first of each month and sorting it into envelopes for each individual budget probably takes forever right? Despite those minor annoyances- I kid you not, having a cash-in-hand-before-we-buy-something system has helped us stick to our budgets so well! The main motivation for it is that my husband and I decided we would NOT use our card (debit or credit) for purchases unless we ran it past the other person. Might seem over the top to some, but to Kyler and I, getting out of debt and meeting our savings goals calls for pretty serious measures! We'd rather put our money toward freedom than toward "stuff." But truly, if you keep using only cards as your payment options (without some kind of app that helps you regulate your spending of course) you will find it much more difficult to stick to your budgets. It's too easy to mindlessly swipe that card without actually thinking about how much you're spending. Having the actual cash is a physical reminder of "oh yeah, I only have $43 left- better pay attention to how much this adds up to." Every month I went over budget, I usually stopped using the cash and would just use the card. I'd justify it by saying I'd remember to swap out the cash from the budget so I wouldn't spend it again, but if you do that with every purchase odds are you'll forget here and there and spend more than you thought. Plus, small purchases add up to big money. Cash budgets give me the restraint I need to stick to what I promised to. 

Plus you get the perk of buying a cute wallet :)  

Plus you get the perk of buying a cute wallet :)  

2- Ask yourself "is this worth going into debt for?" or "is this worth putting off our savings goals?"  

While Kyler was in graduate school getting a JD-MBA and I was finishing up a BS in Psychology, we didn't have much money coming in but had a lot of school debt! We believed that this was a worthy  area to have debt because it was helping us better our situation overall, but that doesn't mean we took the debt lightly. We were comfortable being in moderate debt for school, but we sure didn't want to add any more than necessary to that debt. Before we would purchase anything outside of our tight budgets, we'd ask ourselves "is this worth going into debt for?" Is this dress worth adding to our debt? Is this date night dinner worth adding to our debt? Is this outside-the-budget Christmas gift worth adding to our debt? Now don't get me wrong, sometimes the answer was yes. There were absolutely some things we felt good about going into a little extra debt for. For instance, Kyler would buy me flowers every once in awhile because he believed surprising his wife and helping her feel loved was well worth the extra $10 every now and then. But it sure would have been different if he was spending $100 plus on these arrangements while we were scrimping by on everything else, know what I mean? We also had spent $200 one Christmas for food storage because it was important to us to be prepared and to be self reliant in that area. However, we didn't feel that it was worth going into more debt for nice furniture, an upscale home, fancy car, or even new clothes.

#Realtalk:  For 4 years we got our " new" (to us) clothes from DI (a store based in Utah that is like Good Will or other thrift stores) and to be totally honest it was really difficult for me at times. I saw the beautiful, new clothes my friends and family members were getting. I wanted those newer styles and colors. I felt funny going to DI and felt like I didn't want people to see me there because of my pride. But when Kyler and I would talk about what mattered most to us, getting out of our school debt was number one, and splurging on new clothes that I didn't need would keep us from that. Sure, you could argue that "just this once" it wouldn't have hurt, but remember my first On a Budget post? I'm NOT a natural born money saver. I can easily be persuaded to spend it. With my personality, it wouldn't have been a "just this once" kind of thing. I would have complained until it happened every time I wanted something cute. And that wouldn't have been fair to put on Kyler since I agreed to our tight budgets with full knowledge of what it meant. So for 4 years, I shopped at DI, and you know what, I didn't die 😉 and I still had my clothes needs fulfilled. I did find cute things and some of my current favorite dresses and shirts are from there. Did I have to let go of some pride? Yep! But did I agree to stick to it? Yep! Would I do it over again? Heck yes! It taught me so much about my dedication to my marriage and budgets, losing my pride and being humble enough to accept my financial reality at the time and making the best of a tight situation. I look back at our college years really fondly. They were hard budget-wise, but we became such a team and I learned way too many valuable skills to ever regret it! Plus that whole actually graduating debt free thing was pretty awesome. :) (PS I still shop at DI every now and then. You never know when you'll find an amazing deal! 🎉)

3- Avoid using or purchasing credit cards  

Image from wallstreetdaily.com

Image from wallstreetdaily.com

Now for emergency purposes, I think it makes sense to have shared access to one credit card in a marriage. I also understand that I have a very conservative view of credit cards and debt and it may feel extreme to some and that's just fine. To each their own! But I will tell you that not using a credit card for purchases and increasing our debt has been such a money saver for us! It often means we have to wait longer until we can buy what we want but honestly, I like having to wait. It teaches me patience - which heaven knows I need more of- and to be more grateful for what I DO have. This also means that I have avoided store based credit cards (think like Kohls cards or Old Navy.) Now, if you have a big budget for clothes and household items, these cards make a lot of sense for you because they can save you money and even earn you free cash. But, for those of you with tighter budgets, let my word of caution stand- these cards can be tempting because they offer free money, but they often give you that free money AFTER you've spent more than you would have in the first place. If your clothes budget is $30 a month but the card tells you to spend $60 in one purchase in order to get another $15, you didn't just make $15, you spent $30 over your budget. Now again, if you have budgets big enough to support this- by all means do it! It's a smart approach. But if you have tighter budgets, these kind of cards are just encouraging you to spend money you don't have. So please, keep that in mind. 

4- Avoid the trap of purchasing things "on sale" 

Sometimes, there are amazing deals that help us get what we want within our financial goals! But sometimes, we get distracted by something being "on sale" and we kind of forget that it's actually not a good deal, or even if it is, it doesn't mean we can afford it at the time. Often times, when I'm looking for a good deal, anywhere in the 30-50% is usually signs of a good deal. (Even more would be awesome!) But make sure to consider how much money you were originally planning to spend, what's in your budget, and if this item is rarely on sale. If it goes on sale regularly, wait until a better deal pops up or until you have more budget money. If this item rarely comes on sale, try to save up money for it so you're ready when it does. Honestly, do what you feel best about for your finacial situation, but just make sure your spouse is on board as well. Hint- if you stop telling him how much things cost and only say "it was on sale!" that might be a sign that you're spending a little more than you should be. (Speaking from guilty experience! 🙋🏼) 

These tips may not be the best fit for everybody but each of these helped us tremendously in decreasing our debt during school and they have continued to help us reach some pretty exciting saving goals since we've finished with college.

Crunch those numbers!  

Crunch those numbers!  

Oftentimes*, when it comes to budgeting, we are the only ones getting in our way- so step aside and reach that financial freedom! It's one of the best feelings in the world! 🎉🎉🎉

 

*I also realize that sometimes our spouses may not be willing to stick to budgets or may struggle with over the top spending habits. In these cases I highly encourage you to get into a marriage finance class, meet with a financial advisor or possibly even a marriage counselor. You and your spouses spending habits affect each other and your family, so it's important you become a team or find some other way to manage money so you aren't repeatedly associated with and affected by the other persons poor spending habits. Budgeting and being financially aware is a marriage saver- so take it seriously!