A few weeks ago, I shared a post about how we were able to get out of debt by paying off over $50,000 in debt in just over a year! After that post, I received some emails from quite a few people asking if I could help them try to get out of debt, too. I always begin by referring people to the Dave Ramsey series, “Financial Peace University”. But today, I decided to start a new project, and actually walk you through what we have learned from FPU. I’ll actually be walking a few people through this, as we go; so if you want to join me, just email me at AtHomeWithChristi@gmail.com, and I’ll be happy to add you to my class. So, let’s get started!
One of the first things that we have to do is find out where our money is coming from, and where it is going! Surprisingly, a lot of people have no clue how much money is going out each month, and to where it’s going. In order to be successful with becoming debt free, and as Dave says, “have you tell your money where to go instead of your money telling you”, we have to start by getting into the numbers! Really digging into the numbers.
Once you find out where your money is going, i.e. how much you are actually spending on eating out each month, or on groceries, entertainment, etc, it will be a lot easier to create a budget to help you stick with a plan each month. That’s what I hope to do here each week, is to help you see where your money is going, and how to get better control over it. Sometimes, seeing the numbers is a harsh wake up call, so be prepared when you start digging into your numbers.
If you want to seriously get out of debt though, you have to start with this first assignment “Own Your Mess”. This is the first assignment we will begin with, and then each week, I will add a new assignment, and share a few tips.
Are you ready? Let’s begin…
Assignment 1: Own Your Mess
First, we’re going to look at your spending.
For this, you will need to have your checkbook register, notebook, and pen. You will write down every penny you have spent on food, gas, school, tuition, books, eating out, etc. EVERYTHING!
Make categories on the sheet of paper for Groceries, Eating Out, Auto, School, Clothing, Household Repairs, Hair/Makeup, Entertainment, and Miscellaneous. We won’t cover any debt in this first phase. That will come afterward.
Go through your checkbook register and begin to write down the #’s for each category, for just one month. Total up each category.
Where is the majority of your money go, outside of your debts?
What can you do to change this to a more comfortable number?
It’s OK! You Can Breathe Now!
Next, let’s look at your Debt.
How much debt do you really have? This may surprise you when you actually put it down on paper. So let’s get started…
Grab your notebook and pen, and write down every single debt that you have.
This includes money that you owe a relative or a friend, credit cards, medical debt, bills you need to catch up on, and late fees at the library. EVERYTHING.
List the following for each debt:
- The total amount of debt.
- The payment date.
- If you’re behind and how far.
- The interest rate.
- The total amount and the monthly payment.
What is the total amount of your debt? _____________________
Remember to BREATHE!!! It will get easier! I promise!
The next step is to look at your Income.
Write in your notebook every source of income you have, and total that up for the month.
What is the total amount of your income? ____________________________
The biggest thing that I want you to look at this week is truly WHERE your money is going! Do you spend a lot more on eating out than you thought you did? Or what about entertainment? Or maybe your grocery bill is a lot higher than you thought it was.
When you start putting the numbers down on paper and seeing them in black and white, you can no longer hide the truth! Sometimes the truth hits us like a ton of bricks. For my husband and I, we saw that we were spending way more on eating out than we thought we were! And our groceries, for only two of us, was totally ridiculous! We HAD to get better control of our money in these specific areas!
We HAD to get a budget going! We had to CHOOSE to do this together. If we were not both on board, it was going to be a lot harder to get out of debt. And I will tell you now that if you both are not on the same page, you need to get there QUICK! There are going to be some changes that one or the other is not going to like, and if you both are not on board with this, trust me, it will get ugly!
So, take some time to talk about this. Pray about it. Talk about your goals. What do you truly want to achieve? Do you want to focus on just one debt? Or do you want to focus on reducing your groceries? Or how about eating out? Focusing on at least one thing, is better than not focusing on anything at all…and it will help you start working together on this! Once you start working together on getting out of debt, it will be a lot easier to get serious about getting out of debt!
That’s it for this week. Next week, we’ll look at your spending and start to put together a plan on how you can change some of those numbers, and actually create a budget. We’ll also discuss a few ways that you can actually stick to that budget! See you next week!