Talks about finances can be stressful and overwhelming especially when you don’t have any idea how to start. Yes, I know the exact feeling because I have been there myself. And every time I thought I’m moving forward, things are happening that leads me to take a step or two back. It is frustrating!
It’s even more upsetting when you spend time mapping out a budget plan only to find out that you forgot to include some categories in your budget that needs to be there. Ugh!
I am very well aware of how stressful it was but this is all part of learning and getting things in order. We simple move on and start all over again until we figure out what’s working and what is not.
Last December, I made a promise to myself that I’m going to make things happen in 2019.I will stop the cycle of living paycheck to paycheck and start my mission on eliminating debt. Therefore, I sat down and start reflecting on my finances. I started figuring out what and where the problem is coming from. After that I finally came up with necessary steps I should take to improve my finances.
First, I started tracking my expenses.
Sometimes we often forget to include the littlest amount of money that we spent because we thought it was only $1. However, it is very important in determining where did your money went. When it comes to tracking your expenses you can use app like Mint, EveryDollar, or you can use pen and paper for that.
For me, I started using a pen and paper because it allows me to be more responsible in tracking my expenses. Whenever I make a purchase I would ask for a receipt to keep a record of it just in case I won’t be able to write it on my tracker right away. I also include my online transactions such as bills. For a month, I religiously wrote my expenses and it gave me an idea how much I’m spending on food, gas , and utilities.
Second, I created a budget.
Tracking our expenses gave me a better picture to where our money went every month. With that being said, I was able to determine what is our fix and variable expenses are and how much we spend on them every single month. I also figured out what expenses can we cut off, negotiate and substitute. In short, I have made a concrete plan to where every dollar should go.
I budget based on my paycheck that I receive every month and my husband’s share to our expenses. Yes, my husband and I don’t join our money together and we’re comfortable with that. We’re both on the same journey when it comes to getting our finances in order but there are things that isn’t working for us so we leave things that way.
Third, I stopped using credit card and start using cash envelopes.
When I came across about cash envelopes couple of years ago, I gave it and I FAILED! Big time so I went back into using not only debit card but also credit card which has gotten more debt. Why did I fail? Oh well, it’s because I simply don’t know what I am doing.
When it comes to using cash envelopes, I have learned that this is for you expenses that you overspend mostly and that you want to gain control over your spending habits. These are also your expenses that can be purchase using cash as the word itself implies.
Because I wanted to get better at my spending, I decided to give it another try and this time it was a work in progress. I decided to take my credit card out of my wallet and hide it somewhere safe. I made my own cash envelopes that includes groceries, gas, personal, kids, fun and miscellaneous. And each time I get paid, I fill them up with the assigned amount.
Fourth, I eliminated unnecessary bills/expenditures.
Reviewing your expenses is something I have neglected for years. I have wasted a lot of money by paying bills that I no longer use. That is why it is important to review your bills an often as possible to avoid waste of money.
We have canceled our cable subscription few years ago because we aren’t really watching a lot of programs when we’re at home. Another bill that I have eliminated is my gym membership. Paying for it while not really going for work out is a waste of money. My family saved money by putting my health insurance benefit on hold. My husband has health insurance coverage from his work.
When it comes to cutting back your expenses, do it little by little. For example, you eat out 3 times a week, you may want to do once a week instead. Don’t do it all at once because for sure you will fail. Maybe you can try substitution instead of elimination. Just like substituting your cable subscription with Netflix or Hulu.
Fifth, I stopped investing.
When I did all the cutting and eliminating some of our expenses, still it didn’t create much of a wiggle room. Our income is enough for our monthly expenses but not enough for savings and extra debt payments. With this reason, I sat down and reviewed our finances again.
I, then, ended up making one of the hardest decision in my life. I stopped investing in the condo unit I purchased back home. Luckily, I was able to find a friend that will continue paying the condo until we find a buyer. I was so ready to give it up and lose all the money that I have put into it but I’m saved by the bell.
Did I regret investing on a condo unit? Totally! I could’ve used that money to pay my debts. Or I could’ve have contributed it to my retirement instead. Investing on a property is a big mistake for me because I am financially unprepared for it.
Sixth, I began crushing my debt.
Finally, after eliminating unnecessary expanses, I started building our emergency fund. I made this a priority before making big payments to our debt. Because life happens, it’s important to be prepared when circumstances occur.
My main goal for getting our finances in order is to crush debt so we can achieve financial independence. I always wanted to be worry-free when I go to bed at night or when I wake up each morning knowing things are being taken cared off.
With the help of budgeting, I was able pay one credit card and a loan. Now I’m currently working on my second credit card, a personal loan and a car loan.
How do I do this? I throw every extra dollar that I can find towards debt while I keep on building our emergency fund. I also become more intentional with our spending and making sure that our basic necessities must be our priority.
Lastly, I stuck to my plan and kept on going.
Getting your finances in order needs a lot of work. It won’t improve overnight that’s why it needs a lot of patience and determination to succeed. Sticking to your plan even when the going gets tougher everyday. Things will get better as you become more committed to achieving your goal.
Some days will be harder too but if you keep going you’ll get to where you want to be in no time. There’s one quote that motivates me every now and then. When things doesn’t go the way as I have planned I kept on going back to this quote so I can move forward instead of going back to where I started.
“ I already know what giving up feels like. I want to see what happens if I don’t.”