Guest post by Melanie from Mindfullyspent.com
In less than a year, we’ve eliminated a department store credit card, paid off our cars, and put ourselves on track to be completely free of consumer debt in just a few more months. We also paid cash for a major car repair and started saving for home repairs and some travel.
Changing our finances required something more than an Excel spreadsheet and a grand idea. Setting up a successful budget has repeatedly demanded two skills: 1. An exceptional level of honesty, and 2. An unflinching ability to stare the truth in the eye. Below are four ways that honesty was essential to successfully setting up a budget and paying off debt.
1. Where do we spend our money?
When I first set out to change my personal spending habits, I knew that I had to delve into the truth about the choices I was making with my money. Although it was terrifying, tallying up my monthly expenses was ultimately empowering. Once I knew what my spending habits were, I could identify exactly what I wanted to change. Taking this step convinced me: True financial honesty is the strongest weapon we have in creating and sticking to a successful budget.
2. What are our real priorities?
Weekend trips are a way of life for us. We enjoy exploring the Pacific Northwest and taking short trips to see friends and family across the state. When we made changes to start aggressively paying down our debt, we found ourselves scrambling to cover the costs of our occasional weekend trips. We might like the idea of forgoing small adventures in order to pay off debt and save money more quickly… but that’s not who we are.
We are happy to drive 10-year old cars, scrimp on the costs of clothing, eat at home, skip lattes, find free parking, reduce our grocery budget, quit the gym, and be content with our well-worn household items. However, weekend trips to see beautiful places are a huge part of what we enjoy about life. While we are committed to postponing major travel plans until all of our consumer debt is paid off (and until we can pay for those trips with cash!), short road trips are an essential.
By being honest with ourselves that our weekend adventures are here to stay, we can plan ahead to pay cash for them instead and ensure that we don’t accrue any new credit card debt for our occasional weekends away. Realizations like this one have helped us build a more accurate budget that suits our real priorities over time.
3. The intimacies of a household budget
Yes, budgets are sexy. And talking about our budget and our spending has been very, very intimate. Conversations about money were so hard at first! My husband and I each came with our own unexplored expectations and anxiety around financial issues, and it was hard to overcome these things and discuss them without our palms getting all clammy. With practice, it has become much easier to talk about our debt, the financial impact of our choices (we really, really, really wanted those Kendrick Lamar tickets, but… ouch!), and what we truly want for the future without feeling awkward or guilty (most of the time).
This openness and honesty has paid off in a big way. We are moving together in lockstep toward goals we set together, and it is way less difficult now when we need to discuss a money-related topic.
4. How can we do it better?
Being able to admit mistakes without throwing up defenses, beating ourselves up, or shirking off accountability has been crucial for keeping us moving in the direction of our goals. As we continue to learn more about personal finance, there are things I wish I’d done differently. I wish we had started putting money into an IRA last year, and I wish we’d looked more closely at our student loans when setting up our income-based repayment plans.
If I’d burdened myself with guilt when I realized my missteps, the weight of that guilt would be one more barrier I’d have to overcome before I could fix my mistakes. Human beings are imperfect. Being able to openly acknowledge how I want to improve without being overly critical has made it easier to refine the way that our finances are managed.
By being brutally honest, we’re building a better budget.
Our budget wasn’t perfect when we started this process. It’s still not perfect now, but the more open we can be about our limitations, opportunities, and priorities, the more we can continue to improve.
Melanie writes regularly about managing finances, time, and more in the pursuit of meaningful living at Mindfullyspent.com. She shares an itty-bitty home in the Pacific Northwest with her husband, her son, and their not-so- itty-bitty American Bulldog.
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