How to Get Out of Debt While Paying Bills & Saving Money: Quick Money Tips for the Financially Challenged

woman budgetingIf you’re anything like me, keeping a monthly budget can be really difficult. I start off the month well-intentioned but end up completely  off-track once expenses and social events start rolling in. Plus, If I’m honest, I like to spend money far more than I enjoy saving it. Both of these tendencies combine to create a sizable and intimidating issue for me when it comes to covering my monthly expenses and meeting my financial goals.

Over the years my income has steadily increased but my debt and savings either stay the same or go in the wrong direction. And that’s not entirely due to my emotional habits around spending. It also has a lot to do with being confused about how EXACTLY do I tackle this monster of a problem and it what order? How do I get out of debt? Do I save my nine month emergency fund before I start paying it off? Or should I put 10% of my income toward both at the same time? And if so, how do I live without 20% of my income when I’m having a hard time meeting my expenses with 100%? Plus, what EXACTLY constitutes an “emergency” and should I continue to save and pay off my debt when I’m in an “emergency” scenario?

To help navigate through all of the advice scattered out there in books and personal finance websites, I have compiled some quick and really simple budgeting tips from Dave Ramsey’s Guide to Budgeting. These are all low-tech and low-fluff to help focus on the KEY strategies to get in better control of personal finances without getting overwhelmed or confused.

Quick Tip #1: Follow DAVE Ramsey’s 7 Baby Steps

Instead of making a crazy, technical budget and thinking off all the financial decisions that need to be handled, Dave suggests starting with these 7 Baby Steps. Start at 1 and then work your way down the list:

DRamsey Real Baby Steps

Quick Tip #2: Start Early

Dave recommends making your budget a few days BEFORE the month starts, even if you haven’t been paid yet or aren’t sure what your income will be. Need a place to create a FREE online budget? Click here.

Quick Tip #3: Write it Down

Whenever you make any purchases make sure you write it down and add it to your budget that day. Don’t rely on memory, account balances, or weekly receipt round-ups.

Quick Tip #4: Cash Flow Emergencies

If an emergency comes up try to cash flow it before tapping into your emergency fund. Ramsey says:

“If you can cut up to 10% off items in your budget to pay for something that comes up, then cash flow it. Otherwise, go for the savings.”

For example: If you need $200 for an emergency dentist appointment, go line-by-line through your budget [groceries, entertainment, gas, clothing, etc.] to see where and if you can take 10% of what you have already budgeted to cover the  expense. If you can’t cover it all without using 10% or less, cover what you can from the cash flow and then use your emergency fund to cover the rest.

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Reduce Stress By Learning One Rule: The Difference Between Goals, Projects, and Tasks

Before we move on to the next step in the Git’er Done Series, I would like to explain the key distinctions between Goals, Projects, and Tasks.

A GOAL is a MEGA-PROJECT made up of two or more projects

A Goal, no matter what that goal is, is comprised of many related projects that MUST be completed before the goal can be achieved. Think of a goal as a Textbook.

A PROJECT is a MEGA-TASK made up of two or more tasks.

A Project is one group of related and required tasks bound together by function, clarity, or structure. Think of a Project as a Chapter in a Textbook.

A TASK is an ACTION.

A Task is an indivisible and elemental action that does not require any planning or context. Think of a Task as a Word…in a Chapter…in a Textbook.

Granted, you can complete Tasks (to-dos on a to-do list) without having done any planning or having any context of a bigger picture. However, a Project, and therefore a Goal, cannot be completed until all of the required individual Tasks are discovered through research, knowledge, or guidance and then completed.

This may all seem like an unnecessary splitting of hairs but it is one of the reasons many of us become overwhelmed and/or give up on our goals all together.

Knowing the difference has a profound psychological effect on how we approach our goals and react to setbacks and here’s why: Most think of a Goal as a Task, or ONE thing can be completed if they work hard, smart, or long enough. In fact, a Goal can’t be “done” because it is an outcome, an effect of multiple Projects made up of multiple Tasks. This fundamental misunderstanding leads the most well-intentioned of us to both over-commit and under-prepare.

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Git’er Done Priority & Goal Setting Series: “The Power of Focus” Step By Step Pt. 1

I am of the mindset that it is impossible to plan anything, solve problems, manage time, or reach goals without having a daily habit of reviewing and tracking your priorities. I mentioned in my previous post that I have had a series of setbacks and that is largely because my daily routine of setting, reviewing and tracking my priorities were neglected and then postponed indefinitely. For the last two days I have been working on getting organized so that I can create a plan to get my medical and financial life back on track and running as smoothly as possible again.

Over the years I have learned many different tools that help to do exactly that and I’d like to share some of the best systems with you over a series of posts that I’ll refer to as The Git’er Done Series. In this series, each blog post will go over one system in detail. Try one or all and see which you like best and standby as I try to combine them all  into one easy (and hopefully digital) system.

Initially some are more complicated than others to learn and get started but they all work really well and quickly (about 5-20 minutes a day) once you get the planning stages completed (about 2-5 hours). It may seem time consuming but I can’t stress how helpful this process is. Although I feel like my life has spiraled out of control, these systems work so well, that as I have been reviewing my goals from previous years, I see have met almost all of them even though I got distracted and fell on difficult times.

To make this a bit easier for you all to follow along, I created four worksheets that I reference below and they can be found here. You can either print them out and then fill them in by hand or you can type in your answers in Microsoft Word and then print out the completed copies. Give it a shot and let me know what you think in the comments below. Also, let me know if you think a corresponding YouTube video would be helpful.

Here we go….

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