Digging Out of Debt

Apr 29

Digging Out of Debt

ARE YOU IN DEBT AND DON’T KNOW WHAT TO DO? If you’re feeling discouraged or overwhelmed, know the power is within you to change your circumstances.Anyone can do it.I’m all about visualizing and thinking positively, but sometimes, you also need to do the work. Some miracles don’t happen overnight, but we can make them happen. My life is living proof. Start simple.

The best thing my father ever did for me was to teach me how to set up a household budget.  Unfortunately, he waited until I was divorced with two children to raise before sharing this wisdom with me.  I could have used the advice a little earlier :)

Following these principles, I never had to foreclose on a house or declare bankruptcy, and my credit score is great…

  1. Set goals.  Have a reason, beyond not getting evicted, to not spend every dime you make.
  2. Before you make a budget, track your money for one month.  Every penny.  That’s the only way you’ll know where to cut and where you need to increase amounts in categories. It also helps you know what categories you need.
  3. Save for expenses that you WILL have, but rarely budget for, because they are not regular, monthly amounts like rent, food and gas. Estimate what your expenses will be for irregular purchases and bills like car repairs, clothes, car registration – all that stuff we hope will go away if we ignore it – add it all up and divide by 12, then save that amount each month in a savings account BEFORE you pay any other bills, PAY YOURSELF. That way, you won’t need to pull out that credit card. EVER.  Pad this amount a bit, because there will always be unexpected expenses like the airline ticket you need to buy because Great Aunt Sally died and you have to go back for the funeral, or you broke your leg and your insurance didn’t pick up all the bills.
  4. In fact, pad every account a little bit, so you’re not caught with your pants down. It’s so much fun to push that extra “left over” cash into your savings account at the end of the month, or better yet, your IRA.
  5. Learn to say NO. Well-meaning friends and relatives expect you to go out to eat, buy expensive presents, put on that baby shower, go wine-tasting, etc.  DEFINITELY budget for recreation, but don’t be guilted into doing things you can not afford to do.  True friends will understand.
  6. Once you have tracked your expenses for a month, create a simple budget in Excel, or just on a piece of graph paper.  Income goes on top (underestimate this) and Expenses go underneath (overestimate these). The last box tells you your bottom line – Income minus expenses tells you you either need to make more money, or spend less money. No magic formula. Just common sense. You don’t have to balance your checkbook to the penny – just keep track as you go through the month, of what you are spending. You can always move amounts between categories – as long as that bottom line doesn’t go negative!  One month you may splurge and buy a $200 jacket. Well, that’s fine, but you’re eating hot dogs and macaroni and cheese for a while, right?
  7. Don’t let your ego get in the way. If you need an extra $500 a month, get a second job. You’re not too good to flip hamburgers, babysit or drive a taxi.

You can do this!

I can personally attest to the value of keeping a budget. The simple skills my Dad taught me have seen me through several very tough times – some of my own creation, and some that hit me out of the blue. Many years ago, I spent every dime I had saved (over $40,000) and every dollar of credit I had to help some family members who were in crisis. This was before the health care act took effect. It took me a decade to do it, but I became debt free and able to achieve several of my personal dreams by taking control of my life – creating and sticking to a budget. It’s not always easy, and I am not perfect at it, but I do not feel like a victim when life throws a huge boulder in my path. I know I can climb over it, find a way around it, tunnel under it, or blast it to smithereens! I hope this little piece of personal history inspires you to do whatever you need to do to take charge of your financial situation, get out from under debt and achieve your dreams.

Happy Budgeting!



  1. Randal /

    Marvelous, what a blog it is! This web site
    gives useful data to us, keep it up.

    • Thanks for stopping by, Randal – glad you are enjoying the site. What question would you write for a Saturday Salon?

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