Have you ever been in a situation that feels really hard, but you KNOW it’s the right choice? That’s us right now. We made some difficult choices that are putting us on a path I’m proud of. Intentionally deciding what you want the most isn’t easy, but it is worth it!
I’ll preface this by saying I am not typically a Dave Ramsay fan. I find his advice too unnuanced at best, and sometimes outright problematic. However, I often watch finance videos on youtube with my morning coffee (nerd, I know) and this one from Dave Ramsay was suggested to me. For whatever reason I watched and actually enjoyed it.
It got me thinking about how I sometimes feel guilty spending money while I have debt. I want debt freedom so that that feeling goes away.
In a sense, I feel that my money isn’t really my money yet…. because I owe it to someone else (in this case the Canadian government for my student loans).
I try to strike a balance and enjoy life while paying it off, but the “Your debt is an emergency” article from Mr. Money Mustache continues to haunt & inspire me. I always say I’m a black and white thinker, yet I try to follow this grey middle path of financial intelligence with just a touch of “you deserve it”.
I was curious what our monthly budget would be if we GENUINELY cut back everything we could.
The result surprised me. I don’t consider myself spendy, but we could still shave more than a thousand a month off.
Sure, you need groceries. That category remains in the budget. Can you decrease the amount though? You need to eat a balanced diet, but don’t NEED meat or cheese.
You need gas for your vehicle, but could you decrease it by driving less? Biking more?
So many spending categories can be decreased or eliminated entirely if you truly had to.
When I was playing around with the numbers, I realized there was a lot of fluff we could still cut. That “fluff” happened to be a lot of my enjoyment and happiness though. Taking my financial goals too far has been a problem in the past, and I didn’t want to go back to that.
I knew the budget was unsustainable long term, but what about for a short while? It WOULD help catapult us to debt freedom. How do you know if it’s worth it though?
This made me look at everything, and sparked a conversation with my husband.
We decided to go a bit radical.
Decreased our budget to the bare bones.
Pulled out the little bit of cash we had in various accounts.
Sold many things we weren’t really using, including our teardrop camping trailer.
If I only put the minimum payments on my student loans, I had 138 months left.
On this new plan?
I’m estimating we will be debt free in less than 4 months.
That’s INSANE to me, and so so exciting.
Intentionally deciding what you want the most:
So, what is my suggestion for you if you’re working on a big financial goal?
Take your budget and slash EVERYTHING. Literally everything you can. Get rid of everything that isn’t an absolute need. THEN decide what deserves to be added back.
Look at what that budget will cost you monthly. Compare that to what you’re bringing in monthly. The difference between the two is your spread: money that would be available for your financial goal.
Let’s say your bare bones budget is $2000 a month, but you earn $4000. Awesome! You have a $2000 spread.
Let’s then pretend that you have a $10,000 debt you’re trying to pay off.
If you follow your bare bones budget, you can be debt free in 5 months ($10,000 / $2000).
Perhaps you feel extremely sad about cutting out your $200 a month dining out fund though because you genuinely get so much enjoyment from going to dinner with friends.
Adding that $200 to your budget reduces your monthly spread to $1800. To become debt free while continuing to dine out would take 5.5 months ($10,000/$1800).
You have a choice- is going to restaurants worth being in debt an extra 2 weeks?
I’m different than Dave Ramsay in that I don’t think deciding “Yes” makes you a dumb or bad person.
I believe one of the most important things you can do is decide in life what matters most to you.
This exercise forces you to examine that however.
You will no longer be mindlessly spending $200 a month on restaurants because that’s your budget…. you’ll be deciding if restaurants are worth an extra 2 weeks of being in debt. Do you want restaurants more than you want debt freedom?
You might want both, but what do you want the most?
When we realized how much we want debt freedom, we felt it was worth a sparse few months (along with selling items and emptying accounts).
Are we cutting things I truly care about? Yes, and that stings a bit. However, cutting them for a short period of time feels worth it. If I had to lose them for 2 years I would likely choose the opposite answer.
The more I’ve read debt & finance advice, the more I’ve realized that there are many “right” ways to do it.
I think this budget exercise is worth doing because it adds an intentionality to your choices. You can keep as much “fluff” as you want, but you’ll see what you’re sacrificing by doing so. If the extra time is worth it, do it!
Intentionally deciding what you want the most should not cause guilt. Like Paula Pant says “You can afford anything, but not everything”.