I remember the time I completed my first Dave Ramsey budget. I was going through Financial Peace University and had just watched one of the lessons. My homework was to complete my first real cash-flow budget. After racking my brain for all my different bills, trying to estimate how much we spend on gas and groceries, and trying to decide on a number for all the other miscellaneous expenses, I was finally done. I was super excited to see how much money we had left-over to throw at our debt snowball.
What I was shocked to discover was that we had practically no money left-over to pay off our debts. I think the number came out to about $50–not enough in my eyes to make even a dent in our huge pile of debt. I hadn’t ever before felt “broke.” Sure, some months money felt tight, and we might not add anything to savings, but staring at that budget sheet caused my heart to sink. I knew that something had to change, I just didn’t know how.
What that budget made me realize is that before I was telling my money where to go on paper, I didn’t realize where it was going. My financial routine looked something like this:
Add up paychecks for the month
Add up all of our bills and payments for the month
Subtract bills from income
See that we have $600 left-over. Woo-hoo!
Sure, I knew that some of that $600 would have to go towards things like feeding ourselves and putting gas in the vehicles, but I never really faced up to how much those things cost. When I analyzed how much we were spending each month in those categories, I realized we really didn’t have much money left-over at all. I discovered that we were spending about $75 a week on groceries, $60 in gas for both of our cars per week, and some other amounts in random expenses like eating out, entertainment, etc. That means in gas and groceries alone we were spending around $540 a month! No wonder things felt so tight.
So what can you do if you’re in the same situation I was? Here are some steps to follow if you realize there’s not much left-over for your financial goals:
Figure out your priorities.
Decide which parts of your budget are non-negotiable. For you, this may include tithing to your church, having date night every Friday, or going out with your co-workers for lunch once a week. Decide what you really don’t want to give up.
Re-work the numbers, over and over again.
Once you’ve determined what you definitely don’t want to (or can’t) give up, then comes the fun part. Just kidding! Slashing spending may not seem like a lot of fun, but it is more than worth it. See what numbers you can change around and subtract from. For me, I was adding in numbers to the cash flow sheet because I felt like I should. Clothing is not something that we spend money on every month, but I had some cash allotted to this category in the budget sheet because it seemed like a good idea. Remove anything from the budget that you don’t already spend money on! You can work on creating good habits and new systems in the future, but for right now just work on what you’re already doing and improve it. Even subtracting just $10 from every category could add up to an extra $100 a month towards your goals.
This step is where you are really put to the test. Your will will be tried, and sheer strength and determination are the only things that will keep you going. Life has a funny way of getting in your way once you’ve committed to a goal. For instance, you may have decided to stop shopping for work clothes for a few months, and wear a few things that have been hiding in your closet instead. Only, when you pull out that blazer in the far corner, you discover moth holes all over it. Do not take this as a sign that maybe you weren’t meant for this whole saving money thing! Know going into it that circumstances and unexpected expenses will pop up out of nowhere and try to stop you. Tell yourself right now that nothing will derail you from your goals!
If you’re looking for an easy way to get started with budgeting, check out my highlighter budgeting method. This will take you step my step through creating your first budget, which is such an important step to paying off debt and saving money!
I know just how deflating it can feel when you finally create a budget, only to realize that there’s no money left-over to work on your financial goals. When this happens to you, realize that you are not alone. Take a few steps to figure out where you can “find” some money in your budget. Decide on your non-negotiable priorities, re-work the numbers as many times as it takes, and then commit to your new budget. Take things one day at a time–you got this!