Finding More Money to Apply Towards Your Debt

After you have made your budget you may find that you just don't have any extra money for paying your debt off faster than making the minimum payments. Now is the time to get focused, a little creative, and crazy!

Many years ago I served as missionary for The Church of Jesus Christ of Latter-Day Saints for two years in the area south of Santiago, Chile. I began in a small rural community called Peumo. I remember visiting people in homes that were about 30 feet by 30 feet with only two interior walls enclosing a 4 foot by 4 foot bathroom (see diagram below). It was not uncommon to see a husband, wife, children, and sometimes a grandparent all sharing the same house often with only a sheet hanging from the ceiling to provide privacy for the married couple. Some homes had a television, all were older models, and most people did not have telephones. Most people rode bicycles or took public transportation anywhere they needed to go.

I tell this story so you can seriously look at your budget and ask yourself what you can do without for a while so that you can eliminate your debt! Ask yourself what do you HAVE to have versus what you WANT to have. Do you really need cable television, Netflix, a data plan on your cell phone, and to eat out for lunch? Hey go crazy, how about cancelling your cell phone for a year or two while you get rid of your debt. We had a friend co-present at one of my financial management classes and she has never owned a cell phone. Think of the money she has saved over the years by avoiding this financial stalactite.

When my wife and I decided it was time to get our financial lives in order we realized we were in a house that was too big for our britches. While we loved the neighborhood and the house the 30 year mortgage didn't fit into our financial plans. It was a sacrifice to move but the definition of sacrifice is the act of giving up something valued for the sake of something else regarded as more important. The financial peace we received by not having such a huge mortgage has been well worth it.

Your sacrifice doesn't have to be forever, just long enough to eliminate the consumer debt and get you back in charge of your finances. So if you feel like you don't have any extra money I want you to think inside the box, that is, remember a 30 x 30 box where people live very happy lives without much of the 'stuff' we 'need' in our lives!

Just Learn to Grow Debt Free!

The dreaded B word - Budget

When I teach financial management classes I love to look at the attendees faces when we talk about budgets. Some actually grimace at the very mention of the word. Then I ask them to share words they associate with budgeting. Constraining, stressful, dreaded, limiting, and painful are just a few. I usually have one or two attendees from a previous class in attendance and I ask them to describe how they now feel about budgeting. Empowering is probably the most common. Empowering, really, a budget can be empowering. Yes, because you are telling your money where to go instead of watching where it went.

Last year Dave Ramsey's national radio show started doing a live video feed of the program at http://www.daveramsey.com/show/videos/. Whenever I have the time I try to listen to the program and have noticed a pattern, even Dave points it out. Everyone who is debt free has one thing in common - A budget!

How do you begin using a budget?  First, I recommend going to Dave's web site and downloading the quick start budget. This is a very simple and basic budget that won't overwhelm you on your first attempt. It just covers the basics and gets you familiar with the concepts. If you are married use this as a good starting point to learn how to work together as a team.

Next it is time to work on the the Monthly Cash Flow Planning found on the same web page. This is where you write down everything and begin to really tell your money what to do. You will spend more time on this form than you did with the quick start budget. Make sure you include everything in this budget. For you debts write down the minimum payments and later we will figure out how to pay them off faster.

Congratulations, you have done your first monthly budget. Now every week review it to make sure you are on track and before the beginning of the next month create a new one for the upcoming month. As you become more comfortable with creating a monthly budget you may decide to shift to different format than Dave Ramsey's forms. The important thing is to find what works for you.

Happy Savings!