With this being the second month of my Broke On Purpose Journey, I’ve found a few things that have proven to be very important. The first being Communication. This is especially important if you’re on this journey and either married or living with a significant other and you combine finances. Being Broke on Purpose takes teamwork. If one of you is working to pay off debt and the other is out there accruing debt than the system just won’t work. The second most important thing that I’ve learned is that this is a MARATHON, and not a RACE. Last month we did amazing by paying off over $2500 in consumer debt. This month I would love to be able to repeat that, but I have to be realistic and remember that each month will not be the same yet with that being said every little bit counts.
The third thing I realized is that while you’re trying your best to pay off your debt you have to be willing to reward yourself at the same time. Last month I sacrificed everything as I was testing myself, but I made sure my husband still got his monthly spending allowance. Even if the reward is as small as a new $5 nail polish, or you want to stop in and get a quick drink at Happy Hour to unwind at the end of the month allow yourself a small reward to celebrate the success of the month. With that, here are April Goals for being Broke on Purpose.
List Your Debt:
Listing your Debt is probably the hardest thing you’re ever going to do on this journey. Listing your debt requires pure transparency and honesty. Some Skeletons may come out of the closet, there may be some shock, discouragement, arguments, and possibly even tears. This is not the time to place blame as you and your partner should be in this together. You are going to have to communicate and what you should address is why the debt is there, as Dave Ramsey likes to say “Debt is not the problem it’s the symptom”. The first step to solving a problem is admitting you have one. Now that you’ve admitted what your problem is and you’ve committed to solving the problem the next step is to tackle it by creating a budget.
The Budget:
Several of you have asked me how we did I pay off $2500 in debt in 30 days. Where did the money come from? How are we doing my budget? I want to be as transparent as I can possibly be with this process, however my husband and I have decided not to share our total take home pay as there are some things that should remain private within your household. What I can share with you is how we do our budget, where we’re cutting back, and what we’re doing to make extra money to put towards our debt. The Budget is the most integral part of our system.
I used to do my budget using Microsoft Excel while this worked well for me it was a bit time-consuming going through my bank statement weekly and reconciling what we spent. When Dave Ramsey released his new site called EveryDollar.com I jumped at the chance to use it, as it’s an interactive website that allows you to give every dollar a home so that instead of chasing your money every month you know exactly where it’s going. There is even an iPhone app which allows you to take your budget with you everywhere you go. I love this site because it allows you to easily see what you’ve spent in each category and how much money you have left. It also tells you what percent of your income is being spent in each of the categories where you’ve set up your budget. For instance, we currently spend 35% of our monthly income on all Housing-related expenses which is shown in the picture below.
One way we’re able to pay off so much last month is because we went through our Budget and looked at where we could trim the fat. We have a lot of categories that are heavily cushioned with extra money like our train and gas budget. We currently have $510 budgeted for transportation, minus what we put aside for car repairs. With the low gas prices, we only spend about $180 each month as it’s now cheaper to drive than to take the train, and my husband has been working from home more often. This gave us an extra $330 to put towards debt. We also cut back on what we spent on groceries by shopping for only things we need. I’ve also been taking on a lot more side jobs as it relates to Social Media and Blogging. I’m even going through my closet to see what items are just sitting in there collecting dust, but are in great condition to sell.
What are you April Goals for being Broke on Purpose and what are you doing to achieve them? Share with us in the comments below!
