Budget to Pay Off Debt | Budgeting Couple

What would your life be like without the crushing weight of the debt that you currently carry on your shoulders? What could you do with the hundreds of dollars you spend every month on monthly payments (much of it in useless interest that only enriches the banks rather than paying down your debt)?

For most people, the idea of living free from debt sounds like a fantasy — but that isn’t how it has to be. Budgeting Couple can show you the road to your own personal (debt-free!) success story, and teach you how to budget to pay off debt.

What Does Having More Money Mean For You?

More money in your pocket every month gives you more freedom and less stress. It’s as simple as that. In practical terms it can mean things like:

●       Not worrying about how you’re going to get through Christmas without a loan or piles of debt and still make your kids happy

●       No longer arguing with your spouse about small (or large) expenses and letting money woes create unnecessary friction in your marriage

●       Not stressing when your dog gets sick and the vet bill comes due

●       Not having to panic when the “Check Engine” light comes on in your car and you know you’re going to need some costly repairs

●       No more juggling bills and deciding which ones you can let slide this month until you can afford to catch up again

●       No longer waiting on your tax return to replace things like a broken-down washer or a dying refrigerator

●       Having the security of a nest egg in the bank where you can access it when your child needs new glasses, there’s a special trip you want to take, or some other unexpected expense comes up

So many people have fallen victim to the idea that the “American Dream” and “a lot of debt” go hand-in-hand that nobody ever questions the equation. The reality, however, is this: As long as you’re still making monthly payments to the bank on your bills, you don’t have the financial freedom to live your life the way that you want.

The reality, however, is this: As long as you’re still making monthly payments to the bank on your bills, you don’t have the financial freedom to live your life the way that you want.

Why Most People Fail To Pay Off Their Debts

There are basically three reasons that people fail, despite their best efforts, to make headway paying off their debts.

1. They think the only solution to their debt problem is to make more money. However, that eats away at their free time until they don’t have any and they burn out. The increased income means increased taxes. The amount of money that comes in is never enough to make a long-term dent in what they owe. (See: How to Live on Less Money)

2. They embark on a journey that is all about self-deprivation and — once again — they burn out. Unless you have the mindset of a literal monk, you will quickly grow to resent “living to work” rather than “working to live.” If you take away all of the good things in your life that you enjoy (and that cost money), you’ll quickly lose all motivation to keep working so hard.

3. The frustration (or exhaustion) from working all the time and living in a deprived state ultimately leads to overspending. It might start with a simple reward at your favorite coffee shop or a well-earned meal out. Then, disheartened because you’ve fallen off your money “diet,” you relapse. You buy those shoes that you’ve wanted. You hit a sale and pick up new clothes. You lose track of your spending again.

Is it any wonder that people feel trapped inside a maze of debt?

It’s no way to live, but people of all income levels are often caught in this exact cycle. In fact, the more income you have, the easier it may be to fall into this cycle — simply because of the amount of stress you are under at any given time.

What’s The Secret To Getting Out Of Debt?

You have to learn how to budget correctly. But — and pay attention to this because it’s important — a budget is not a means to punish yourself or your family for your past financial mistakes or excesses.

Creating a responsible budget to pay off debt does not mean getting rid of everything that you enjoy simply because it involves spending money. It’s about prioritizing your spending so that you maximize the enjoyment you have in life while simultaneously keeping your eye on your financial goals.

The basics of responsible budgeting include the following steps:

  1. Take stock of your existing income from all sources.
  2. Decide, as a couple, your financial goals, whether that’s $10,000 in the bank or simply having zero debt.
  3. Look at your basic needs and allocate a portion of your income toward those basic needs each month, such as your mortgage and utilities.
  4. Allocate a specific — but reasonable — amount of money toward your financial goals, whether that’s paying off your debt or building your savings, or both.
  5. Deciding, as a couple, how you can spend whatever is left over — guilt-free — in order to get the most out of your hard-earned income.

When you don’t have a real plan to get out of debt, it’s very hard to enjoy the money you spend — no matter what you are doing. The shadow of your debt just seems to loom larger and larger in the background of your mind, especially as you get older.

If you give in to deprivation and call it the “cure” for your money woes, however, you may end up with a healthy savings account — but an unhealthy life that is devoid of the joy that money can grant you. Either way, you’re in a situation where your money is controlling you rather than one where you are in control of your money!

Instead of letting money rule your life and stress you out, learn what it takes to make your money becomes a source of pleasure. Start budgeting — not depriving yourself — and learn to spend money the right way.