Tired of living paycheck to paycheck?
I am! I don’t splurge much, but it is so hard to save. When I have a little extra I feel my family deserves a treat, such as dinner out or buying items we definitely need, but could live a little longer without. With my small paycheck, I didn’t think I could afford to put anything in savings while trying to pay down my debt, which never seemed to be shrinking. However things continually come up that needed some savings to cover, such as car trouble, so my debt just kept getting deeper.
Something needed to change, so I finally got organized and decided to start on the road to financial freedom, however long it might take.
How can I make my savings grow while getting out of debt on a small budget?
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| Sample budget |
Start by making a budget.
This year I wrote out a family budget. I listed each of my bills followed by the total outstanding balance and next to that, the amount due monthly, then the amount I will actually pay monthly (know your monthly income so you can be realistic). Include savings in your list of bills!
Think of your savings as a necessary bill that must be paid each month. Unexpected expenses do happen and this is in fact, a necessity, so treat it that way. Open a separate savings account so it’s not as easy to transfer money back to your checking if you find yourself doing that often. Capital One 360 Checking and 360 Savings are fee-free and earn interest.
I organized this list of bills by importance, and then by amount. For example I listed my mortgage at the top, then utilities, even average cost of groceries and gas, with credit cards and other temporary bills at the bottom, such as medical bills.
Pay more to one debt at a time.
I have already cut out any unnecessary cards, such as department store cards. I’m down to the basics except two credit cards. It’s best to decide what to pay down first to get out of debt. I use my credit cards to pay bills because I earn rewards and then I pay my credit card the lump sum of all those bills each month. I have to be very strict with myself to make sure I pay the full amount so as not to accumulate more debt.
If you can’t be diligent, it is not worth the rewards. It’s good to know your strengths and weaknesses! I will continue to use this card, so decided it would be better to pay something else down first.
My medical bills are temporary, as in, once they’re paid off, no more bill! So I decided to pay those off one at a time first. Beginning with the lowest balance, I would pay a little more toward that bill each month until it was gone.
Write down how much you’ll pay toward each bill every month.
It helps to write it down to see all in one place where my money goes. I lowered my food and gas allowance so I could pay more to the lowest medical bill. I would have to be more frugal when shopping and watch how much I drive, but it would be worth it to lower my stress while my bills go down. I planned to pay the monthly minimum to the rest of the bills, focusing on paying more to just one at time.
I recommend paying the lowest balance of debt off first, unless you have one with a very high interest rate. If so, focus on that one first as you’ll pay less in the long run by getting that one paid off sooner.
I’ve already paid off a couple bills and am chipping away at another. Not as fast as I would like on my small budget, but it is thrilling to watch each balance go down and finally disappear!
Help to pay the bills down faster!
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Think about giving yourself and your family this gift of less stress and financial freedom before you splurge on extra gifts this holiday season that will clutter your home and only bring temporary joy.
I was selected for this opportunity as a member of Clever Girls and the content and opinions expressed here are all my own.
This is great information. Budgeting seems to scare people but I find for me and my family, it's essential. I like to know where my money is going and when its coming.