3 Keys to Success
- Create a spending plan. There is no substitute for following a budget or a spending plan that enables you to make the most of your money.
- Give yourself time. In many cases, getting out of debt can take several months or even years of self-sacrifice to enable sufficient margin to overcome the debt.
- Examine your heart and honestly assess the situation. Financial debt is a heart issue and needs to be defined. With a trusted financial coach or accountability partner, you can tackle and resolve the underlying heart condition.
Stop thinking of a spending plan as a financial straightjacket, but consider it as the key that unlocks the gate to financial freedom. A well-constructed and implemented spending plan puts you in ownership of your finances rather than your money owning you. Have specific financial goals. When you set goals, you are committing to what you want out of life by planning to save and spend money on those things. You can have short-term financial goals (like saving up $1,000) or long-term financial goals (like buying a house or investing for retirement).
Life happens: cars break down, refrigerators die, and insurance costs rise. Although you can’t know when an unexpected expense will occur, rest assured it will occur. “Oh no!” expenditures happen to everyone. For your plan to be successful, it must anticipate those expenses. That means setting money aside for the unexpected. Failing to plan for these costs is a surefire way to throw a budget into turmoil when the “Oh no!” happens.
Some months may be simply dreadful. Your property tax comes due, you have a dental expense, and the mechanic says all four tires on your car need to be replaced. Aaargh! You just feel like giving up or that your situation is hopeless. Giving up on your budget won’t improve your financial situation; in fact, it’s likely to make it worse. When you feel overwhelmed or that you’re failing, it’s important that you adapt, rework the plan, and press on.
Sometimes, a spending plan won’t work for the obvious reason that there are insufficient funds to provide money for an emergency fund or pay down debt. What could you do? Shop for cheaper insurance. Scrap your subscriptions that you can do without. Do whatever you can to lower expenses. On the income side, sell things you no longer use or need. (Many utilize yard sales, eBay, or Facebook Marketplace). Picking up extra income-producing work in the evenings or on weekends can provide a good short-term boost as well.
For many, accounting for every expenditure can seem tedious at best. However, failing to track cash is like the small dripping faucet that soon floods your whole house. The simplest method for tracking the outflow of your money is to use an envelope system for cash spending, such as putting cash in category-specific envelopes and spending from those envelopes. Getting receipts for everything purchased with cash or your debit or credit card helps you to track your disbursements. The simpler your spending plan method is, the more likely you will stick to it. So keep it simple with an app, envelopes, pencil-and-paper, or whatever system works best for you.
If you’re married, it takes the two of you to be like-minded to commit to a jointly managed spending plan. Whenever there is a conflict, the key is to go back to the planning process. There must be agreement on the plan before there can be agreement in actual practice. A budget will not be successful if it is planned by one person and imposed on another.
You are not defined by your debt or your past decisions. You don’t have to allow a feeling of shame or inadequacy to hinder your debt-free journey. Give yourself grace as you start a new chapter in your financial life marked by contentment, humility, and generosity.
You will experience setbacks, but having an accountability partner or financial coach can encourage you during those moments and is the key to getting back up and sticking to the plan. Getting out of debt means experiencing small wins every day as you turn your back on your desires with an eye and focus on a bigger purpose of impacting your family, community, and the world.
