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4 Unconventional Budgeting Tips Our Parents Should Have Taught Us

4 Unconventional Budgeting Tips Our Parents Should Have Taught Us

Yes, I am a financial service and banking professional, but it may interest you to know to I have also struggled with budgeting a number of times. Like you, I’ve been flat broke at times due to one ‘story’ or another.

The biggest “story” I hear is, “if I had more money, then everything would be better.” But that is a myth and i can attest to it. When business was booming for me and I mean Blowing up!. Hell, my net monthly income was a mid 5 figure, yet I was still finding my self juggling my business and personal expenses almost every month. So let’s move away from the ideas, for now, that you need to either have multiple streams of income or start a new home based business to get a hold of your finances.

Over and over again I had wholeheartedly declared that I would no longer stray from my budget, but like an overweight child starting on a diet, I found myself facing and yielding to diverse spending temptations like they were cupcakes. Hmmpphh!

Here are a few typical things we often say when it comes to money issues:

1. Why don’t I ever have enough money?
2. Where did it all go?
3. Why can’t my family spend less? (Totally my favorite. LOL)
4. Wait, I’m broke again?
5. By next month, we will tighten up the reins, get on track and start saving.

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…I call them “money conversations.” They were all part of my arsenal. Tormenting me as though I was possessed by a thousand demons.

But the year 2009 came with a messiah in the form of a ‘personal effectiveness course’. The veil was finally pulled from my eyes, and I realized that I had been asking the wrong questions all along; making statements that only fueled the fire of my ‘money conversations.’ Oh! the years I wasted telling myself this garbage. Wasted years, indeed.

I literally had a mental block when the ‘money conversations’ topic was brought up in the course. My mind tried so hard to shelter myself from the pain already stuffed deep down, hoping the world would give me a temporary sense of happiness and fulfillment. It felt like the Visa commercials where the view from your hut overlooking the Tahiti is priceless, but to get that priceless moment; it’ll cost $10k for just one trip. See? Even the big wig ad agencies have played on our internal weakness of that need to buy stuff to help us get a temporary relief of our real inner pain. Sad, isn’t it?

…So how do we fix our budget issues?

Gotcha!

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You thought this article was really going to be about budgeting, right? Aww. Cute.

The bitter reality is that it is YOUR THINKING, you will discover to be the problem, not the money. YOU are the actual challenge. Even our parents at one point realized this bitter truth, either they thought it was to late or they just weren’t kind enough to pass it along.

Don’t worry; you weren’t born with this. It has been passed down your family line not by DNA, but by generational habits. It is like when you first discovers what “little white lies” are and how they could be used to your advantage, and gotten away with. That moment, one realizes that control over one’s choices is achievable and that, my friend, is where the fault lies.

4 unconventional budgeting tips our parents should have not only told us but showed us:

1. “If it is meant to be then it is up to me”

Take responsibility for all your budgeting short falls and get the “stories” out of your head. Your mindset will be paramount when getting your budget in shape! This should not be something you “have to do” but rather “get to do”.

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2. “How is this situation or transaction impacting my budgeting habits?”

Keep asking “the question.” While transforming your budget, you will GET opportunities to constantly ask yourself that specific questions and it is NOT okay to NOT answer it. The next time you are tempted to make a purchase, like concert tickets or that new purse ask “the question.” When you get a year end bonus and you are debating to pay down your auto loan or take that vacation ask yourself “the questions”. This budget tip may seem lame, but I assure you that when you challenge your subconscious habits with this question you will WIN this budget war.

3. You have landed on budget island, it is time to burn the ships and conquer your budget

Take massive and drastic actions NOW. Get a journal and take 10 minutes on the first page and write what your financial life will look like in 3 years when you conquer your budget challenge. Go through your bank and credit card statements and categorize the debit transactions. Look at what is essential and whats not. Now cut the financial fat and get rid of everything (for now) that is not essential. You will not reward your self till you can prove to yourself that you can responsibly manage your money.

Go to your bank and set up a “special” savings account that will set aside all the money that is left over from your income after you have paid your essential bills and obligations. This is easy to do since you know how much you make and how much you actually need to spend to keep yourself alive. and we call this my friend, a budget! WOW! For some of you this will be the FIRST time you have actually put this in writing and I want to congratulate you on taking the first steps to budget bliss. What you will find is that if you stick to this budget, you see the “special” savings account grow.

I want you to set a 12 month goal of what that balance will be and what you will spend 30% of that on to really pamper your self. Do you have it? Great! Now add that to your journal as a goal! I want you to look at your first journal entry and that goal everyday for the next 12 months. You should write in that journal every day and record at least 1 thing you did that helped you get one step closer to your financial destination and how it makes you feel. I also want you to enter in at least 1 thing that you are grateful for that day at that moment. because when you have an attitude of gratitude, great things happen!

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4. Get a coach or an accountability partner

This last one is for the people who know they will need to get a push to get their budget under control. I find it funny that people seek out someone to help them get into better physical shapes or even to become a better actor or actress, but they never think about getting a financial coach or just having someone who will hold them financially accountable. Enlisting the services of a financial coach or accountability partner will increase your success rate by 72%. And some of us need all the help we can get.

I assure you that from the moment you start taking on your real inner challenges, your budget will flourish. Face your fears and get to work!

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Last Updated on July 10, 2020

The Definitive Guide to Get out of Debt Fast (and Forever)

The Definitive Guide to Get out of Debt Fast (and Forever)

Debt can feel crushing, like a weight that is always weighing you down. Looking at those numbers, it can feel as if you’ll never get out from under it. However, if you really want to learn how to get out of debt, it is possible with a great deal of focus and self-control.

Getting out of debt isn’t impossible. Like any big goal, all that it takes is an action plan to identify where you are and creating a plan to zero out your debt.

Identifying All of Your Debts

The first part of paying off your debt is getting a complete picture of what you owe. When you have everything written out in front of you, it makes it much easier to create an action plan. Depending on how much you owe, it might also help you realize it’s not as bad you might have originally thought.

Here’s how you can get started identifying your debts:

1. Own Your Debt

Before you start identifying all of your debts, take a moment to process that you have debt but want to get out of it.

Forgive yourself for any past mistakes, missed payments, or overspending. It might be painful to accept how much debt you have at first, but you must own it.

2. Make a Debt Tracker

It’s astonishing how few people ever created a tracker to understand their total debts. Most likely, it comes from not wanting to accept the guilt of having debt, but, if avoided, it can make it nearly impossible to get out of debt.

Open up a new Google or Microsoft Excel sheet and list out all of your debts. Start with the name of the creditor, interest rates, total balance, loan term length (if any), and the minimum amount due each payment. This will include student loans, credit cards, and any other type of debt owed.

3. Get Your Debt Number

Once you’ve made your debt tracker and taken the other steps, identify your total payoff number. This is crucial, as you will have a starting point and a clear goal that you are trying to achieve.

Prioritizing Your Debts

All debt is not created equal. It’s imperative to understand that there are different types of debt.

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1. Understand Bad and Good Debts

Bad debts are usually paying for things you want instead of always need. While there might be some emergencies that max out your credit cards, often times it’s excessive spending[1].

There are three main types of bad debt:

  • Credit Card Debt: The average American household owes over $16,000 in credit card debt!
  • Auto Loan Debt: According to CNBC , the average auto loan in the US is $30,032!
  • Consumer Loan Debt: Consumer loan debt isn’t as common as credit card and auto loan debt, but it’s still considered bad as interest rates are usually between 10-28%.

Good debt is identified as investments in your future. Here are three common types of good debt:

  • Student Loan Debt
  • Mortgage Loan
  • Business Loans

2. Decide Which Debt to Pay off First

Once you know each type of debt and their interest rates, you can begin to pay off debt quickly.

Focus on paying off bad debt first, regardless of if it is a credit card or auto loan. Start by paying off the loan with the highest interest rate first.

If you have several credit cards with different interest rates, you want to focus on the one with a higher APR. You will actually save more money by eliminating the card with the highest interest rate.

3. Don’t Pay the Minimum Amount

Paying the minimum amount digs you into a hole as interest rates will offset your payment. Even a small amount more than the minimum can help you pay off debt much faster.

Removing Obstacles to Pay off Debt Quickly

Creating a debt tracker and prioritizing a plan is simple, but avoiding temptation can be difficult.

1. Set a Reminder to Track Your Debt

“If you can’t measure it you can’t manage it.” -Peter Drucker

It’s so important to track your debt to ensure that you get it paid off quickly. Similar to working out and measuring your results, you need to track your debt constantly. Start with a weekly reminder, where you sign on and log your updated number. Did you increase, decrease, or stay the same?

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Regularly tracking your student loan balance can be incredibly motivating, as well. You will get a huge confidence boost each time you see your total debt amount decreases.

Set weekly and monthly goals so you can have short term wins and keep the momentum going.

2. Hide Your Credit Cards

If your biggest debt is credit cards, you need to eliminate temptation and remove them from your wallet.

Some people have gone to extreme measures by freezing their credit cards. Why? This would create an ice block around your card, which would require you to chip away at it slowly. This will give you time to think if it’s the best idea to buy that thing you’re about to buy.

3. Automate Everything

Willpower can be a huge downfall to paying off your debt. By automating your bills each month, you will ensure that willpower isn’t involved.

4. Plan Ahead

Getting out of debt will require some sacrifices, but with enough planning, you can make it work.

For example, if you know that you have a friend’s birthday or family dinner coming up, plan ahead for the costs. Whether you need to cut back on spending the week before, pick up a side job, or meet them after dinner, do what is needed.

5. Live Cheaply

The only way to get out of debt is to make some sacrifices on your spending habits. Find ways to save money each month so you can apply that amount to your outstanding debts. Here are some ways to save money each month:

  • Live with roommates
  • Cook dinners and prepare lunches for work instead of eating out
  • Cut cable and choose Netflix or Amazon Prime
  • Take public transit or bike to work

Finding the Lowest Interest Rates

The higher your interest rates, the harder (and longer) it will take you to pay off any debt.

If possible, you want to find ways to lower your interest rates to help get out of debt quickly. Here’s how you can get started:

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1. Maintain a High Credit Score

Your credit score will have a large impact on your ability to refinance your loans and receive a lower interest rate. If you have a low credit score, it’s unlikely you will be able to refinance your loans. Use these credit tips to increase and maintain an excellent score:

  • Never miss a payment
  • Don’t exceed 30% of your credit limit
  • Don’t sign up for more than one card at once
  • Limit hard inquires, like auto-loans and new credit cards
  • Monitor frequently with free credit-tracking software

2. Find Balance Transfer Offers

Start by opening a free account on credit.com. Credit.com offers you the chance to open a free account and see what type of balance transfer offers you can receive. Some of your existing credit cards might already have 0% or lower APR balance transfer offers available.

Contact each of your credit card providers to ask about lowering your rate for a one-time balance transfer offer[2].

If you do take advantage of this option, make sure that you use a balance transfer and not a cash advance. Cash advances have a ton of high interest fees (15-25%, depending on your credit card) and will only compound your debt problem.

How to Get Rid of Debt Forever

Setting up a plan, removing temptations, and getting the lowest interest rates is the first step to get out of debt.

1. Keep Monitoring and Adjusting

Once you have a plan, don’t get comfortable. Track your debt payoff plan and make the necessary adjustments when needed.

Monitor your credit scores with a free site like CreditKarma. The higher your credit score climbs, the more likely you will be to secure a new, lower-interest loan.

2. Earn More Money

There are only so many ways to save money. Instead of clipping another coupon or making sacrifices for your morning coffee, find ways to earn more money!

Think about it…it is much easier to find ways to earn an extra $1,000 per month than find $1,000 to cut from your budget.

Here are some examples of ways to earn more money:

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Talk to Your Boss

Have a conversation with your boss about current salary and/or commission rates. If you’re not satisfied or want a change, don’t be afraid to look around at other positions. Some of them might even have a student loan debt reimbursement plan!

Start a Side Hustle

This could be coaching students on the weekends, driving for Uber, or taking paid online surveys. There are tons of ways to make money outside your 9-5. Now that you have a clear plan to pay off your debts, you’ll be more motivated than ever to figure out creative new ways to earn money.

Build an Online Business

There are so many websites and blogs that earn money from ads, affiliates, and other online products. Find your niche and get started.

3. Celebrate Your Wins

As you progress in your debt payoff journey, don’t forget to celebrate your wins. You need to always reward yourself for the hard work and discipline that is required to get out of debt.

While you shouldn’t celebrate so big that it increases debt, make sure to factor in little rewards to keep you motivated.

4. Set New Financial Goals

Eventually, with a plan and these steps, you can rid yourself of your debt. Once you do, make sure to celebrate your monumental achievement, but don’t stop there.

Now, you can focus on acquiring wealth and increasing your net worth. Set new financial goals so you have a new target to aim toward. Here’s how to set financial goals and actually meet them.

These could be anything now that you are debt free! Think about where you want to travel, buying your first home, or saving for your future retirement. Just like before, make sure that your goals are specific, measurable, and achievable.

Conclusion

Congrats, you can now set a plan in motion to finally pay off your debt quickly (and hopefully forever)!

Remember, if you want to get out of debt quickly, it’s not always easy. Just like any big goal, there will be sacrifices, challenges, and problems to overcome.

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Featured photo credit: Pepi Stojanovski via unsplash.com

Reference

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