March has been an interesting month. I've tried hard to stick to a really strict budget. I didn't fully succeed, but I've been pleasantly surprised by the fact that it wasn't as difficult as I thought it was going to be.
I think it helped that I got to that 'sick and tired' moment that The Former Mrs Jones talks about on her YouTube channel, that prompted her to get on board with Dave Ramsey's 9 Steps to Financial Freedom. I've had a lot of those moments in recent months and the penny has finally dropped.
I myself am not actually committing to Dave Ramsey's programme, as I don't really have a lot of debt to pay down and prefer to chart my own journey, but it is a useful tool to measure your success by and therefore every now and then, I do check where I am in relation to his steps. Here's my not quite complete version of them.
1) £1000 Emergency fund
2) Debt Snowball
3) Save 3-6 months expenses
4) Invest 15% of income for retirement
5) Save for kids college education
6) Pay off mortgage early
7) Build wealth and give
I am personally taking an approach that attempts to tackle several of the steps simultaneously rather than in the order Dave Ramsey suggests. In this sense, I'm trying to save and invest for retirement and my daughter's education, keep funds available for emergencies and regularly give some small amounts of money to charity (in addition to my time volunteering at the CS)
(Please note, that I may have mixed the order of some of these steps to suit my own personal priorities. I also think there was another step about buying a car with cash, but as we own our car outright, I didn't include this one in my list. I'm not sure what the other missing one is though. If anyone knows please enlighten me. Again, it may have been one that didn't seem relevant, perhaps titheing, which isn't a particularly common activity here in the UK or at least I don't know of many people who do it. Please refer to Dave Ramsey on YouTube for the proper 9 steps in his plan)
Anyway, as I said, I'm not strictly following Dave Ramsey, but I am taking a lot of notice of Budget Girl who does follow the Ramsey plan, and charts on her YouTube channel, how she is paying down her student loan debt. In particular, I am paying attention to her detailed budgeting methods. She is very inspiring. I'm so enjoying seeing her debt go down each month. She truly deserves to be debt free for all her hard work and positivity.
She argues that the ability to budget is like a muscle, that grows stronger with practice and focus. I like this analogy and find it does make perfect sense. As a consequence, I am flexing that muscle in an attempt to build it up over the next six months.
Although in March I partially succeeded in sticking to a strict budget, I was still left feeling like I was treading water, if not going backwards and couldn't see to when the light would appear at the end of the tunnel, so on Sunday I decided to plot a strict budget for the next 6 or 7 months and see where it would take me.
I kept the Food budget at £400, Household at £50, Home £20, Me £25, LB £25 and Misc. £50 and tried to account for any known upcoming big birthdays, events, foreseeable expenses. According to my calculations, if I stick strictly to this budget for the next six or seven months (until September), I should get where I want to be, in terms of being in control of my finances and living firmly in the black and within my means, rather than using credit cards and my overdraft to get by each month. (Although I do pay them off every month and never pay interest) This is a terrible habit that I've formed over the past 10 years and I'm trying very hard to break it and start paying for everything in cash or with a debit card. (Unless purchasing online, when I will still use my credit card)
In some respects, sticking to such a strict budget for so long seems a bleak prospect, but I think the built in small budgets for me, home and household should help me stick to it, as they do allow a little room in the budget to buy the occasional treat for myself or to enhance our home. I think I'm finally in a mindset to tackle this financial turnaround strategically and I'm going to do my darnedest to crack this thing.
Of course, there will probably be lots of things that crop up that I haven't accounted for, which will more than likely blow my budgets, but I'll just have to cross those bridges when I come to them. Having focussed on what I want to achieve, and having potentially created a path through the jungle of my current finances, I now just have to follow it to hopefully achieve my aim and the prospect is making me feel much more optimistic. I will be keeping a very close eye on my progress each month and I'll let you know if I'm sticking to the plan and achieving the progress I have predicted. Wish me luck.