Money & Reality

I started off discussing our relationship with money back in July and now it’s time to take a close look at what we do with our money.  When I retired, it had been a while since I needed to be on a budget.  To me, the only way to do a budget, is to see where my money is actually going first.  I use Quicken as my tracking tool.  You can purchase it online for $70. I don’t use Quicken for bill payment as my bank offers that service for free.  Quicken offers a way to set financial goals and track income and expenses, but it is not set up as a debt eliminator education tool.

You Need A Budget (YNAB) is program geared at monitoring budgets with the specific goals of reducing debt and gaining control of your money.  YNAB offers blogs, education, and a free trial of their tracking program.  I have not used YNAB, but it is ranked well amongst debt reduction programs.  Dave Ramsey is another highly recommended program to help people get out of debt.  I have not used his program, but I know many folks in the minimalism community who swear by him.  Here is one families experience using Dave Ramsey to get debt-free.

The whole premise is without knowing where your money is going, you will not be able to gain conscious control of your finances.  I think the emphasis is on that word “conscious.”  I know it is easier to remain unconscious, but that won’t give you a powerful relationship with money, will it?  Gallup reports less than 1 in 3 Americans keep a personal, household budget.  So if you are serious about having a good relationship with money, you will track where your money comes from and where it goes.

I suggest tracking your current spending for 2-3 months and then taking a good look at your spending patterns.  You will want to determine your fixed costs such as housing, utilities, food, loan payments, and transportation.  Then see if you are in the red or the black.  If you are in the red, is that due to fixed costs or are you spending money that you don’t have on other items?  Once again, I know this part can be painful, but the more you can keep judgements out of it and just be present to what you see, the better.

I will remind you that I had $17,000 of debt and worked my way out of it, but then debt started creeping back into my life.  That was my wake-up call to the fact that although I could pay off my debt, I would not remain debt-free unless I changed my spending patterns.  To change your spending patterns, you have to track them and then be willing to look at what they show you.

If you want to have a life of freedom, joy and happiness, you need to be real about your spending.  We live in a world that says “spend, buy this to be more sexy and live the life of your dreams” and where credit has allowed us to spend money we don’t have!  To get out of debt, requires assessing where you are at, understanding how you got there and developing a plan to get out.  It also requires persistence, so a program with structure and possibly joining forces with others in a similar situation is a good idea.

If debt is something that has been haunting you, now is the time to decide if you are ready to do something about it.  Debt picks away at our mental and physical health and robs us of our freedom.  I believe to be fully healthy and alive, this is an area that needs to be addressed.

Don’t worry.  There is hope on the horizon!  Next month I’ll be sharing creative ideas for cutting expenses on that path to being debt-free.

Here are the steps to a healthy financial life:

1. Assessing your relationship with money.
2. Tracking your spending (getting a dose of reality).
3. Cutting expenses on the path to being debt-free.
4. Increasing your income on the path to being debt-free.

What are ways you’ve used to track your budget?

Are there other tools you’ve used to get debt-free?

Please share below in the comments.  Thanks! 

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