Extra Money You Already Have
My Story
I’ve heard multiple Ramsey Personalities (and Probably Dave, himself), say, when you live on a budget, it’s like getting a raise. I didn’t understand what they meant, until I got to that point. But, let me backtrack for a moment and then come back to that.
When I found Ramsey, I was at a low point in my financial life. I had a decent government job and pay, but all of a sudden couldn’t make the minimum payment for all my bills. I had to do a forbearance on my student loan to buy myself some space to catch up. One of the first things Ramsey said, was cut up my credit cards and I did- the same night. Then, it was to get on a budget, commit to spend only the money I have, eliminate unnecessary bills, save up $1000 for an emergency fund, and then throw everything I have at my debt. Those aren’t necessarily his baby steps, but a combination of things I needed to do, to begin my debt freedom journey. And it worked for me. That one-month forbearance on my student loan, helped free up money to pay off some of the smaller credit cards. That, plus spending less, freed up money I didn’t know I had. After I paid my minimum payments, I had extra money to throw towards getting rid of my credit card debt and eventually my hefty student loan. It really was like getting a raise.
Lesson #1: Live on a Budget
If you aren’t doing that right now, make that a priority. Then commit to spend only the money you have (no borrowing, no credit).
Lesson #2: Spend Less
Find a way to spend less money by eliminating unnecessary incidentals from your budget. Keep the things that truly add value and get rid of things that may be conveniences but your family can really live without (at least for a while). For example, ramp down to one instead of 5 subscriptions.
Lesson #3: Maintain Your Standard of Living
When you get a cost-of-living allowance (COLA), an annual increase, a raise, a promotion, a bonus, or an award, maintain your standard of living. I’m not talking about continuing to live in poverty, if that’s your situation. But the reality is most of us aren’t in that position. Most of us get our increase, treat ourselves that first pay period or two and then subscribe to some club, plan, or service; upgrade our vehicle; ramp up our wardrobe or shoe collection; or something else. After those first one or two paychecks, we never really get to see and enjoy the increase anymore, because we gradually raised our spending concurrently. At the end of month, we still break even or are still over-extended.
Now, when you get your increase- whatever form it comes- maintain your standard of living. Use that money to throw towards savings or debt elimination depending on where you are in your journey. You should 1) save $1000 starter emergency fund, 2) fully max any employer match retirement savings, 3) pay down your debt and save 3 to 6 months in a fully funded emergency fund.
If those things are in place, then by all means, enjoy the fruits of your labor- including raising your standard of living a bit. But keep in mind that if retirement is 10-15 years away for you, and you haven’t been intentional in preparing, you should do so now. You may live 20,30,40 years (or more) in retirement.
Conclusion
If you are at least 40 years old and have progressively grown in your career, you have likely wasted tens of thousands of dollars by not being intentional in spending. But today is a new day and new opportunity. No matter where you are on your journey to financial wellness, you can choose to make better decisions and still transform your future into one that is bright. You can chose to live on a budget, spend less money, and maintain your standard of living until you create a stable financial foundation. If you need help, there are people like me who care and can help. You don’ have to do it alone.
