Budget

The First Step to Managing Your Money Better

The First Step to Managing Your Money Better

If we look at the scope of life there’s a few mainstay pillars that are consistent in individuals. These pillars are areas most of us focus on or which impact us greatly. I would categorize them like this:

  1. Spiritual

  2. Family

  3. Career

  4. Finances

  5. Health

I’m willing to bet that every decision you make (good or bad) on a daily basis has one of these five pillars in mind. The lifestyle we live, the clothes we where, the jobs we work, and the values we have are all by-products that show how these five areas are progressing in our lives.

With a new year always comes new goals. There’s a good chance you have a goal pertaining to one of these five pillars:

  • I want to go to church a couple of times this year. I want to learn more about what follows this life.

  • I want to start a family or take a next step in a personal relationship.

  • I want to earn a promotion, change jobs, etc.

  • I want to go to the gym or simply stop drinking soda.

  • I want to handle my money better.

Each goal will differ per person, yet the reality is the same. The only way you and I will attain any goals if by self-discipline. If I want to grow closer to God, I have to read His Word and talk to Him. If I want to become physically fit, I need to go to the gym.

If you want to manage you money better, you need a budget. There’s no other way around it. If you ever thought one word could instill fear in an individual — then you found it with the b-word.

In my experience, most people are intimidated by budgeting simply because it appears as a difficult undertaking. Budgeting is a process.

The first step is simply figuring out where your money is going. An effective budget tells your money where to go, so it’s imperative to layout all income and expenses.

No, You Don't Need More Money

No, You Don't Need More Money

If your boss offered you a raise you wouldn't look at her and say, "Nah, I'm good. I really don't need any more money."

Instead, the second the "r" word echoed off her lips you would immediately think about whether or not it is socially acceptable to break out in your favorite dance moves.

Raises, promotion, and an increase to your good ole' wallet is something all hard-working employees desire. Our happiness and livelihood can unfortunately come to depend solely on the chase of the elusive dollar. We prove it by our constant go to saying -- "If only I had more money..."

I literally felt that collective pause in your breathe when you read that! Hey, at some point in our lives we've all said it.

We have even justified our financial lack to why we couldn't do things. 

"I don't have enough money to pay off my debt."

"I don't have enough money to go on vacation."

"I don't have enough money to start a retirement fund or save."

So, we work hard and patiently wait for more. Naturally, the more we have the better we'll be ... right? 

Not so fast. 

Our financial journey has been a big part of our lives. We recently wrote about it. I never woke up one day and decided I would passionately protect and handle my finances. It didn't say, "intense budgeter" as my future life aspirations in the my high school yearbook.

Instead, it happened naturally. I received my first paycheck of $180 and opened up Microsoft Word and told the $180 how I wanted it to be broken down. The same system I do today. It's the same system that attributed to us paying off over $70,000 in debt in 4.5 years. 

I've had the experience to meet with a lot of individuals on budgeting. It's likely the top reason people pursue to meet with me -- yes, even over other pastoral engagements. Throughout the many money-centered conversations, there's always one resounding statement: "If only I had more money..."

However, more money doesn't necessarily change anything. In fact, let's talk about a few myths.

How We Paid off $70,000 of Debt in under 5 Years (BTW, we're not rich)

How We Paid off $70,000 of Debt in under 5 Years (BTW, we're not rich)

I remember when I decided to go to Dean Junior College in Franklin, MA. It was the only college that accepted me. In the midst of being ecstatic that someone actually wanted me at their college, I didn't care how much it cost because everyone had student loans.

One year at this junior college cost me $19,500. With the incentive to do well, I transferred to LSU, which cost around $18,000 over the next three years. Once Kayla and I got married and the grace period of student loans concluded, we owed around $70,000 to cover our four degrees (graduate and undergrad) along with one vehicle loan.

But, everyone had student loans. For the most part, this is accurate but it doesn't mean we necessarily liked it.

Newly married with multiple degrees we were staring at $70,000 of debt while making under $38,000 on two incomes. In fact, over the last five years we've never made over $60,000 in yearly income. This is important to note because we paid off debt while making under $30,000 per person. 

Before we talk about the lovely "B" word, I want us to talk about our perspectives when it comes to being financially free. The budget is the least significant part of debt payoff. It's a system. But, the system can't be executed without willing individuals operating it.

Let me also give a disclaimer: We never went through an organized financial process -- like Financial Peace University with Dave Ramsey. In fact, I never heard of Dave Ramsey until years into our system. There's many things I agree (and disagree) with him and his philosophy.

The important thing is to find a system and strategy that works for you. That's the best one!

Here's four strategic things we did to pay off our debt: