Budget, Debt, Mindset

Budgeting and Getting Out of Debt Go Hand in Hand

When it comes to Dave Ramsey’s baby steps it is really important to take stock of where you are financially and figure out how to get ahead.
Once you’ve put away $1000 toward emergencies, there are two things you need to do in order to accomplish baby step 2, paying off all debt except your mortgage.
The first thing you need to do is create a budget.  This will allow you to see how much money you can allocate toward debt.  It also allows you to reign in spending if needed.
Once you have created a budget you will want to list out all your debts.  This is everything from your auto loans to credit cards.  I suggest writing out the limits, the balances, the APR, the minimum amount due and the due date.  Once you have this figured out, studies show that if you start with the lowest balance due, throw all you can toward that balance and make minimum payments on everything else – you will be so excited to see progress being made that you will be more likely to stick with what is called the debt snowball and more likely to finish out step 2.
If you haven’t downloaded the Simple Budget Worksheet or the DebtSnowballWorksheet that I created, this is a great resource that will help you to get your finances in order without getting too complicated.
When it comes to paying off debt, the fact is that debt holds you back from living your best life.  It keeps you from being able to pay for things you need when you need them, it chains you to banks, credit unions and companies that don’t necessarily have your best interest at heart and it creates tension.
Creating a budget, talking to your spouse and reviewing your debts will allow you to take control, start getting ahead and making progress toward financial independence.  You can’t really save or make headway until you put some money away.  And you can’t do that until you’ve taken time to pay down debt and become more financially aware of how you spend your money.