My first post here more or less summarized this subject. Debt can happen to any of us at any time, knowing how to budget your money and resources is an art that needs to be constantly practiced and refined to keep debt from infiltrating our lives and consuming us.
Understanding it is Normal to have Setbacks
We are all human so having financial setbacks is normal. Most often it is credit that initiates these setbacks, and before we know it we can find ourselves struggling time and time again. If you are having financial difficulties, it can also affect things that have real importance in your life – your work, your marriage, and even your family. You may find you need to take a second or third job, just to try to keep your head above water. Setbacks play negative roles and left untreated, can destroy our lives. Yet, they are a normal part of life. We need to learn how to best overcome any setbacks.
Setbacks Are Just the Roadblocks of Life
Like anything, budgeting is a process we must learn and things crop up in that process to send us in other directions all the time. Some major setbacks that can happen are:
- Credit Cards
- Medical / Dental
The first big setback I encountered in life was after graduating and starting work, I asked my stepdad how one goes about “establishing credit”. He went ahead and helped me get my first card at the Rockland Trust, a local bank in my hometown. It had a $200 limit. However, over the years that one card led to more cards and soon they were maxed out – taking a personal loan out the first time and paying it back with automatic payment withdrawals from my paycheck. The next time I borrowed money from my stepdad, and ended up taking a second job to pay him back. The result of that setback cut into my family time. Previously, it was a prank phone call that scared me, Realizing at this point being just lost and had to find my way out alone. It caused me to snap at my younger sister, who I realize now had nothing to do with my problem. Then one snowy day my stepdad came out and talked to me, but it was one statement he said that made all the difference, “I love you girls more than you know, but I always thought you and Chris (my youngest sister) would be the ones most likely to succeed!”
Now I felt a new feeling I had let him down with his expectations of me, and I had to figure a way out. Only I could do this now. That night I took a good look at myself, and it has made the difference.
Focus on Exactly What You Owe and To Whom
That night after work and having supper, I went into my room and pulled out all my records and paperwork to see just who I owed and how much. I made a folder for each source with a tab showing who and how much. I also made a list in excel and totaled up the amount. Feeling shocked! Wondering how could I have spent so foolishly, so much? I had a couple credit cards I forgot about and never used – those I immediately cut up and mailed back to the supplier with a letter closing the account. Felt good scratching a couple things off my list, but how was I ever going to pay off what I managed to accrue in expenses, Well, I had to inventory what I actually had to see if I had anything available to put toward this debt line.
Balance Your Available Resources for Survival
Now I had to sit down and figure out just what I had available in the bank and savings, even my pocketbook change. Could I pay off another debt source somehow. A few hours passed in frustration and suddenly I realized I had won a $1,000 IRA through a radio show about ten years back and forgot about it. I checked and it was now worth $1,500.00.
Well, believing that the source of the phone call was real and perhaps had to do with a payday loan (BIG MISTAKE) that I took out to make a payment and was paying back $100 each paycheck with exorbitant interest I went to the bank to withdraw money from the IRA, despite being under 59-1/2 at the time, so the bank took out the necessary tax and penalty for early withdrawal and I paid off that loan – never to go that route again. I also took out enough, nearly closing it, to bring all my cards current.
Next I listed all my monthly expenses in a small notebook (my stepdad showed me his, and how he paid them each month.) Being computer-literate I ended up setting up a worksheet to use for that purpose. I could check off when I paid my monthly necessary expenses; and then apportion the remainder of my income towards my credit cards. I did this for a year, and sitting down to do my taxes the following January 31st, I gasped and screamed, “I DID IT!”
Do As the Wealthy Do – Budget Wisely
Having my first ever “Ah-ha” moment like that I realized that for years before credit cards – our grand parents and their parents before them didn’t have credit cards – they bartered and saved up for what they wanted. The wealthy folks in society don’t used credit cards to buy everything outside their means – they budget what they have and stay within their income. That my friends is the key to being debt free. Budgeting is not easy and setbacks are to be expected – as we practice and learn more, budgeting will become second-nature and you will get better at overcoming those setbacks.
At this point I look forward to hearing your comments and opinions, please share them below for we can all learn together as we master the art of wise budgeting.