I started setting and following a budget two years ago. In a sense, I was pretty much forced into it when I finally came to grips with the fact that I was spending more than I was making. Before the month ended, I needed to resort to my credit cards to cover expenses and at the same time, I wasn’t aware of where the money HAD gone. Just that it was gone and my credit card balances were magically increasing.
Fast forward to today… I am completely free of credit card and consumer debts. I still set and follow a budget every month partly because I’m still working to pay off my student loans but mostly because I got hooked on the freedom I found budgetting afforded me. I started out believing that my budget restricts me and found out later on that it actually does the opposite!
How following a Budget set me free
1. I am free of credit card debt.
I paid off $7000 in credit card debt in 7 months while I was working to complete my Bachelor in Nursing last year and working a part-time position. I was able to do this because having my budget helped keep me disciplined and focused on this goal. Every month I included in my budget $500 solely for debt repayment. Keeping a budget also helped me spend less than what I earned and any extra money I had left at the end of the month, I was able to put towards those credit cards.
I’m also able to pay off my student loans quicker than I planned. I recently eliminated one of my student loans three months earlier than scheduled. One more to go!
Related post: How I Paid Off $7000 in Credit Card Debt in 7 Months
2. I am free of stress when it comes to spending.
No longer do I swipe my cards and stress out whether it was going to get approved or not, whereas you can probably imagine how stressed I was before when I used my credit cards for covering my deficits. Some months I was afraid I didn’t even have enough to cover my basic expenses.
Now, I know exactly how much I have in my accounts and how much I can spend in each category to stay under budget.
3. I am free to jump on opportunities right away.
Opportunities are sometimes fickle and most times, we may not see them coming. Opportunities can pass us by if we don’t act on them quickly enough.
Having my budget allows me to determine right away if I can afford an opportunity requiring me to spend money. For example, my recent trip to Charlotte to attend Fincon15 wasn’t planned ahead. I received word that I was awarded a scholarship to attend just two weeks before the conference. First thing I did was check on my budget. Because I strive to stay under budget all the time, I usually have surplus at the end of previous months that accumulate in my account. That surplus is either used for student loan repayment or extra money available for months where our income isn’t that much. I spent $2360 all-in for this trip and that money was there sitting in my account as surplus! I didn’t even have to touch my savings or carry balance on my credit cards. I was able to jump on this opportunity without stressing about where that money was going to come from!
4. I am free to splurge on big-ticket things and experiences.
As disciplined as I think I’ve become, I still do have big-ticket wants and guilty pleasures. For me lately, it’s anything that adds value to the Smart Woman blog; courses, conferences, freelancers, etc. Other pricey things I’ve personally spent money on include designer handbags, shoes (I absolutely adore shoes!), travelling comfortably (think fancy hotels and relaxing experiences) and personal development courses and books.
Another thing my partner and I splurge on are cars. My partner is a HUGE car-guy. This is his passion, his talent and where he spends his extra time and energy. Some people think we are unreasonable in this and may go against a lot of stuff in personal finance, but “unreasonable” to me is spending money you don’t have to support something. Because we follow a budget, we’re able to support our hobbies and wants. And because we follow a budget, we can, most times, foresee when we need to adjust accordingly – either cut our expenses (which often means two of the rides are garaged) or increase our income. You only live once and we strive to make the most of it by surrounding ourselves with things we really do enjoy.
Here’s one of the ways we enjoy our rides: Cruising with other car-guy friends!!
Don’t have a budget, and want one? Try this!
If you don’t have a budget yet or if you’re looking for an awesome app to help you track your budget, try You Need A Budget (YNAB). You will love it! (after having to learn how to use it first 😛 )
I am a ‘credit card budgeter’ (which means I pay for EVERYTHING with credit card and pay the balance in full every month). YNAB is especially useful because you can just sync all your credit cards and debit cards to the app – the app then downloads all your transactions straight from your statements so you can see it all in one place. Then you can tailor your budget as the month goes or change it up for the next month.
The other thing I like about it is that my partner and I can do our budgetting together. We log on the same account on our phones and as we’re spending, we can input our expenses in real time (then ‘reconcile’ it later when the charge shows up on the app). This way, we’re both working together to make sure we stay within our budgets.
Warning: It does take some patience and a bit of a learning curve to get started. I was super frustrated and took me awhile to figure out how to use this app. But YNAB has great support to back you up. You just need to be willing to learn then you’ll unlock all the awesome stuff YNAB allows you to do. Give it a shot!
Do you set and follow a budget? What are some changes you’ve noticed in your life and finances since you started to budget, if any? Has following a budget set YOU free too?