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Be Debt-Free Combining 3 Simple Budgeting Methods

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Counting Money for Simple Budgeting Methods
A budget. Often when I hear people doing their debt-free scream on “The Dave Ramsey Show,” they say the secret to getting out of debt is creating and following a budget. No fancy tricks, no gimmicks—just simple budgeting methods.

I’d never been motivated to deal with the details of a budget. I thought I could keep things in my head and try not to spend too much, and we would be okay. But we weren’t paying off our debts, so I finally found a reason to start a basic budget.

Since the summer, we’ve paid off almost $12,000 towards our student loan principal. I credit most of that to getting organized with a budget. I hadn’t really viewed hanging onto debt as an organizational problem, but starting a budget has helped me see our finances are where I can be messy. And now a budget is my tidy, Kondo method.

There hasn’t been one single technique that’s worked for us. Instead we’ve combined at least three simple budgeting methods to reach our goals:

1. Charting Income and Payments

These helpful outlines of our spending and income are in the front of our budget binder. There are two charts:

– Income Schedule: Lists all the money we have coming in regularly each month and on what dates. I write the amount of the income that comes in bi-weekly and weekly, and then an average for the paychecks that fluctuate. (You could include child support, social security, or alimony here.)

– Bill Schedule: Charts all the regular bills we pay with the payee name, the date due, and the amount charged. I also include details like which ones are on auto-pay.

These charts help me see the nature of our increase and expenses so I know how to structure our budget. With these charts, I can then use a monthly payment checklist each month.

2. Creating a Zero-Based Budget

The budget that works best for us is the zero-based budget, a method where your income minus your expenses equals zero. It doesn’t mean we actually have zero dollars in our account as we start each month. It just helps us make a plan for every dollar we gain each month. I make a handwritten one quickly to plan for bills, groceries, and other expenses, and then we know if we can make extra payments towards our debt that month. It also helps me see where we could sacrifice to meet our goals.

We have to make a new budget each month, whether I like it or not. Thanks to my chart, I know which bills will be charged that month (since some are billed quarterly or bi-monthly), and I can factor in birthdays and holidays for that unique month.

3. Tracking with a Budget App

I write down our budget, but then I enter it into an app on my phone and track our spending that way. I love that an app allows my husband and I to collaborate easily on the same budget, and that I can add a purchase immediately on my phone no matter where I am. I’m most comfortable with the free Every Dollar App, but I know some people prefer You Need a Budget or another similar app.

 

If you find one method isn’t working for you, change it up! Talk to friends and family, or learn online from people with experience like Kumiko Love @thebudgetmom. It took some trial and error for us to finally settle on this combination of methods, but they’ve felt right for us.

Which budgeting methods work best for you? Why?

 


Paying All the Bills – It Feels Good

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I spent some time last night, going over my finances, making plans for next quarter and just generally reviewing my financial status. This was prompted by a record breaking income week this past week…woohoo!

But anyways, as I was doing this walk through my finances, I logged on to each of my bill sites. And all of them have a $0 balance. I’m not behind on anything. I don’t owe any late fees.

And yes, I know this is where I’ve been the last year or so. But I still don’t take it for granted. I am so grateful for it.

There’s just something about being able to pay your bills on time, even if you don’t have much left over afterwards, that is so freeing. And after years of not being able to do that, I feel so blessed every time I receive a bill and I can just log on and pay it.

Because of my non-paying client, I am not where I wanted to be or planned to be this month or year end. But I’m in a better place than I thought I would be after taking a $4,000 hit.

I’m going into the year end and new year with high hopes of doing even better next year than I have this. With the knowledge that persistence and hard work do pay off. And knowing that I can do this.

I’m gunning for my last two debts…car loan and student loans. There is nothing I want more then for them to be gone. I’m ready for whatever comes next as I face the last year of having a child at home in school (at least high school.) Lots of changes coming and I’m open to whatever the future holds.

 


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