Hustle Budget Repeat

The Best Thing I did in The Midst of My Debt-Free Journey

My debt free journey began shortly after my daughter was born. My husband (now ex-husband) and I were drowning in debt long before then, and after years of trying (and failing) to pay off high-interest car loans and credit cards (most of them belonging to him) on my income alone, I came across the book, “The Total Money Makeover” by Dave Ramsey and his popular debt snowball method.

What is the debt snowball method?

It’s an approach to paying off debt by:

Prioritizing your debt either by interest rate (highest to lowest) or debt balance (lowest to highest)
Focusing on paying off one debt at a time by putting any extra money you have towards that debt while continuing to pay the minimum on the rest of your debt
Once a debt is paid off, rolling the money you would’ve spent on that now zero balance debt towards your next debt, essentially creating a “snowball” of money to throw at your debt
Continuing steps 1-3 until all your debt is paid off

Seems simple enough, right? I thought so too. After introducing my husband to the book and the plan that would get us out of debt, my husband half-heartedly agreed that it could work, despite his belief that being debt-free was “impossible”. He made it clear that he wasn’t going to be an active participant in this endeavor, but if it was something that I wanted to do then he wasn’t going to stop me.

I was bound and determined to get us out of debt…

Ramsey mentions the importance of agreeing with your partner on the budget in chapter six, but my husband refused to be on any kind of budget. I was bound and determined to get us out of debt with or without my his help, so I did my best to stick to the budget without it noticeably affecting him- if he was going over to a friend’s house for a BBQ and wanted to pick up some steaks and a few cases of beer, then I did my best to adjust the budget so that he could. I clipped coupons. I shopped for sales. I did whatever I could.

I chose to prioritize paying off our debt by our lowest to highest balances, and everytime a balance would hit zero I’d bring that zero-balance statement to my husband, so excited, hoping that he’d see that being “debt-free” wasn’t just reserved for “rich people” who could afford to buy everything in cash. Being debt-free was (is) possible for anyone. But he refused to see my vision for us. Even just writing that hurts because it truly was MY vision for US. It was never OUR vision for US.

His money was his money and my money was our money…

Throughout our marriage, my husband held part-time jobs here and there (jobs he usually picked up only after a fight over money). He didn’t like to work, so naturally, when he did work, his money was his money. It went towards expensive new clothes, jewelry, video games, upgrades for his Jeep and motorcycle, or anything else that he wanted. On the other hand, the money I earned was “our” money, used to pay for the rent, utilities, both vehicle loans, his motorcycle loan, insurances, cell phone bills, gas, groceries…everything. If he, the baby, or the house needed anything, the money I earned paid for it, and if I chose to “waste” our family’s money towards my impossible dream of being debt-free, then that was “on me”. I was always grateful whenever he picked up a job here and there even though none of the money went towards our household expenses or debt.

Paycheck after paycheck I’d labor over my beautiful self-created debt snowball spreadsheet. I was so proud of it, especially the tab I reserved for debt that had been paid off. What I chose to ignore was how much new debt had been created over the years and how many more new credit cards had been opened. I usually didn’t find out about a new credit card until the bill came in the mail. The reasoning behind it? Mostly, my husband had maxed out the ones he already had and “needed a new one”. Years passed and the cycle continued. Then, in the midst of my debt-free journey, I did the best I could have for both my daughter and I.

I filed for divorce.

My daughter was 6 at the time. By this time, I was broken and afraid, and even though I had a few supporters in my corner, I can honestly say that there were more people against me than with me.

Don’t mis-interpret this. To be clear, I didn’t decide to get a divorce just so that I could be debt-free. I decided to get a divorce for reasons that included years of physical, sexual, mental, and emotional abuse, but for the purpose of this blog post, I want to shine a light on something that I didn’t even know existed until recently.

Financial abuse…

It wasn’t until years after my divorce was finalized that I learned about “financial abuse”. Even though I wasn’t aware of this type of abuse, it is something that I lived through (even before my marriage) and know all too well. Even after knowing that I wanted a divorce, my husband put me down as a cosigner for a brand new Harley-Davidson motorcycle and had the dealership FedEx the loan paperwork to me to sign, saying he “deserved it”. That was when I knew for sure that no matter how hard I worked, no matter how much money I made, I would never be able to get ahead in life with him by my side. If I stayed in this relationship, I would always be struggling to provide the basic necessities for my daughter while her father dressed in expensive clothes, drove expensive vehicles, and rode expensive motorcycles. Don’t get me wrong, luxuries like those in life are wonderful when you can afford them, but we couldn’t. I couldn’t. There were times when my ex knew exactly what he was spending my paychecks on even before it hit our account, and I was left to figure out how I was going to provide our daughter with her basic necessities until next payday.

When you become a parent, you give up your right to settle…

I had justified staying with him for so long for many reasons. The biggest reason was my daughter. I used to tell myself that if being used, mistreated, and unhappy in my marriage meant that my daughter could live a “normal”, happy life with both of her parents in it, then I could make that sacrifice for her. I remember confiding to those closest to me about the physical and mental abuse. When they’d ask why I stayed in the relationship, I’d cry and say it was “for her”. What I didn’t realize at the time was that I was settling to be less of the mom I knew I could be. I heard someone say once that when you become a parent, you give up your right to settle, and I whole-heartedly agree with that. Looking back on my life before my daughter, I settled. I settled on everything- cheating boyfriends, poor living conditions, low-paying jobs, disrespectful bosses, family who used me- everything, but I especially settled in my marriage, and over time, I realized that I was settling on less not just for myself, but also for my daughter.

When I tell my story, there are a few things people assume. The most common assumption is that I got something (money) out of the divorce. Truthfully, I did get something. The best thing. I got my daughter. However, I didn’t get any money out of the divorce. In fact, my ex made a lot of demands during our divorce process. A lot. One was that I paid for his lawyer fees, which I did. Another was that I agreed to no child support from him, which I did. He went so far as to demand that our divorce agreement stated in writing that he would never owe any child support. Of course, my lawyer literally laughed out loud at that. She said that no judge in their right mind would agree to that, and that all he would get in regards to no child support was my word that I wouldn’t have the courts enforce it. I gave him my word, and now, four years after my divorce, I am so proud to say that my ex-husband has never paid a single cent of child support to me, and I’m not mad about it. I’m not even mad about the year he demanded that I pay him child support when my job relocated me to a foreign country and I wasn’t allowed to bring my daughter.

I became completely debt-free literally months after my divorce was finalized.

Though, that wasn’t the best part. The best part was the healing, and now thriving, that has happened since my debt-free journey ended.

How To Make a Spending Plan (or Budget)

BUDGET

Do you hate the “B” word?

Some people absolutely hate the word “budget”, and I get it. Being on a budget is like being on a financial “diet”, and even though we know that a good budget is important in improving our financial health, the feelings of restriction and deprivation can sometimes be so overwhelming. So, let’s change our mindset- instead of seeing a budget as something that controls us, let’s see it as it really is- a tool that WE CONTROL to help us reach our goals. Being in control of our money means being in control of our lives, and who doesn’t like the sound of that? From here on out, we’re not “on a budget”. We have a SPENDING PLAN. We plan how much money goes to what every day, week, month, and year. We are not controlled by our budget. Instead, we control our spending plan.

*Continue reading, while I crawl off my travel-size soapbox (slowly)*

How to make a spending plan (or budget)

Know your income. How much are you expecting to make in a week, in two weeks, in a month?
List out all of your fixed, variable, and other expenses. Note any hard due dates (this will be helpful later when we go over making adjustments to your spending plan), and don’t get stuck here. If you don’t know exact numbers, just make your best guess and move forward. Keep moving forward.
Subtract the total of your expenses from your income. What did you find? Are you planning to spend more than you make? If so…
Analyze and make adjustments to fit your goals. We all have big dreams, but sometimes, the goal is just to put food on the table, and that’s okay.
Rinse and repeat this process as often as you need to…even after you’ve reached those big dreams.

Ready? Good. Let’s do this!

Know your income.

If you are a salaried employee and/or rely on one full-time job as your only source of income, this part will be easier for you since your pay won’t tend to fluctuate drastically from month-to-month. If you are an hourly employee and/or rely on a few different jobs as your source of income, then do your best to guesstimate how much you’ll be getting paid. Also, think about how often you get paid. Is it weekly, bi-weekly, monthly? This is good to know when planning to pay fixed expenses that are due on specific days of the month.

List out all of your fixed, variable, and other expenses.

Guesstimate (Guess + Estimate) Your Numbers

The two basic things you need to know in order to make a spending plan are: how much money is coming in (your income), and how much money is going out (your expenses). If you are just starting out on your financial health journey and have absolutely no idea how much money is going out, don’t worry. Like on any journey, you will find yourself changing in some ways, and your spending plan will be constantly changing with you. At this point, let’s just make our best guesstimates and move forward. Keep moving forward, always.

What Are Your Expenses?

A few different types of expenses that you may consider when planning out your spending plan are fixed expenses, variable expenses, and “other” expenses.

Fixed expenses are your regular expenses (your bills). You expect them to be due around the same time, and you expect to pay around the same amount for these bills. Examples include your rent/mortgage, utilities, trash service, phone/internet, car loan, insurances, subscriptions, credit cards, etc.
Variable expenses can be regular expenses as well, but for the most part, they do not have a due date, and the amount spent likely varies from month-to-month. These expenses include money spent on things such as gas, groceries, clothing, entertainment, personal care items, home/school supplies, medicines/co-pays, etc.
Other expenses include any outgoing monies that do not fit in either your fixed or variable expenses. Some examples include money spent on a vacation/staycation, personal loans to family/friends, paying for expenses due to an accident that the insurance company does not cover, etc.

Now that you have a rough idea of your numbers, let’s put it all together.

Subtract your total expenses from your total income.

Once you’ve written out your spending plan, what did you find? Are you planning to spend less than you make or are you planning to spend more than you make? If it’s the latter, your plan needs some tweaking (not twerking, although that might be fun too).

Analyze and make adjustments to fit your goals.

We all have big dreams, but sometimes, the goal is just to put food on the table, and that’s okay. After creating your spending plan (and you should do this often), take a good look at it. Do you really NEED to spend the amounts you’re planning to spend on the things you’re planning to spend it on? Does your spending plan align with your goals? If not, then are your wants getting in the way of your needs?

Also, look at other things that may be getting in the way of a good spending plan. For example, are all (or most) of your bills due at the beginning of the month, leaving you eating fried egg sandwiches and ramen (one of my favorite meals, by the way) until your next paycheck? Something like this can be an easy fix- call the company’s customer service line and ask if they’ll work with you to move your due dates around. Worst case, they say no and your bill stays where it has been. Best case, they say yes! You won’t know until you ask, so just do it!

Whatever your analysis and adjustment phase turns up, be honest with yourself and remember, this is YOUR plan. Take control of it.

And finally…

Rinse and repeat this process as often as you need to…even after you’ve reached those big dreams.