Budgeting can be a sticky subject and is often uncomfortable for most people to address. I find it to be incredibly fascinating. I review our accounts daily, enjoy investing money into our savings and am eager to pay off our student loans. Now that we’ve settled in, have a cozy pad to call home and have major purchases (i.e., new car, moving expenses, most traveling expenses) behind us, we’ve been refocusing our efforts on budgeting.
A few years back, we found a method that worked well for us, as we’ve continued with it since; tracking our expenditures and budgeting our monies for several years now. Except for a few splurge occasions here and there due to weddings, outings and other travel, we aim to adhere to our budget guidelines in order to put money into savings each month while continuing to pay off student loans (and now, a car loan).
Recently and after a little inspiration from financial author, Dave Ramsey, I decided to take a different approach with our finances. In the past, we’ve focused most of our energy on paying off our student loan with the highest interest rate. We’ve managed it really well and have paid off a large portion of this particular loan; however, our other student loan, with a lower interest rate and lower borrowed amount seems to have slid to the back seat.
Making just above the minimum payment on this loan, I couldn’t help but wonder if we needed to reevaluate our methods, as we’ve seen little progress with it decreasing. Now, with a small car loan to account for too, timing couldn’t be more perfect for a budget adjustment. Instead of continuing to make crazily large payments on the loan with the highest interest rate, we’ve decided to try something new.
According to Dave Ramsey’s Debt Snowball Method, attacking the loan with the lowest amount owed and really focusing on paying it off, will build confidence and motivation to continue the effort elsewhere.
Keeping that goal in mind, we’ve altered our loan payments slightly. Now, we are putting those extra bucks each month toward Mr. Buck Williams, our new whip. We’ve also adjusted our monthly expenditures and have delineated between categories we spend the most money on, like food, climbing trips and delicious beer. We’ve calculated our net pay between the two of us and have capped these categories with certain dollar amounts, hoping to adhere to these budget boundaries even more than in previous months. It will also help us to gain a better idea of what we can afford and what we can’t. I’ve taken a slight pay cut with my new job and we pay a bit more in rent than when we were living in Idaho. Revisiting our budget and updating it accordingly has me excited about managing our monies in the best, most effective way possible. Mr. Ramsey’s inspirational methods have us already monitoring our finances and prioritizing them a little differently, making our debt seem much more manageable.
It’s a pretty cool process and I look forward to calculating the newest totals next month. I’ll be sure to share our thoughts and any challenges we find along the way.
So, how about you? Do you adhere to a monthly budget? What works well for you and your family?