Budgeting 101: A Planner's Guide to Eliminating Debt and Saving for the Future
I often hear people justify their purchases with the mindset that they will always have debt, so why not buy the (insert item here - shoes, dress, trip, etc.). This way of thinking is partly accurate – we live in a world that relies on borrowing and it is very common for people to have debt like a car payment, a mortgage, or a student loan. With that being said, debt is still troublesome for many people when it comes to what can be deemed as “unnecessary” purchases.
When people justify their spending this way, consumer debt creeps up and up.
Often, before consumers know what has happened, they are in over their head. In fact, the average Canadian owes approximately $22,000 in consumer debt. That is a frightening number, honestly.
While there are many Canadians with little to no consumer debt, those who do carry debt often struggle to crawl out of the hole they have found themselves in. Debt can be frightening, and some take a “head in the sand” approach when it comes to tackling it, myself included.
That is why I felt it so important to write a post about how to both approach debt repayment and budget better using your planner. I am not an expert by any means, but I wanted to share my methods in the hope that it would be helpful to you in your journey to a debt free life.
I am fortunate – beyond our mortgage, we only have my student loan left for debt; however, that is not for lack of trying on my part. While I always ensure my bills are paid, I am terrible with saving money. My husband, on the other hand, squirrels his money away and is always ready for an emergency.
Step 1 - Jot It Down
Get your bills out –
What do you owe?
When are your payments due?
What debt is incurring the highest interest rate?
What are your minimum payments?
Start with a scrap piece of paper and jot down bill amounts, due dates, and your total net monthly income so that you know what you have to work with.
I find it particularly beneficial to allocate bills to your paycheques based on when you get paid and when the bill is due. I get paid twice monthly, for a total of 24 pay periods in a year. I break down my bills based on their due date and then divide them accordingly. My first pay of the month covers things like internet, cell, and life insurance, while my second pay covers things like heat, lights, and my car insurance.
Whether your pay is weekly, bi-weekly, or on some other schedule, by proportionately dividing your bills up based on when they are due and when you get paid, you memorize very quickly when money has to be in your account and how much.
Once you have your notes down, it is time to open up your planner to your monthly view.
Step 2 - The Basics
I first want to recommend Venassa’s very simple monthly kit that she has in her shop. I use this kit as the basis for my budgeting when it comes to getting everything into the monthly view in my planner. This kit has excellent “Bill Due” stickers where you are able to jot down the bill that is due along with the amount, and place it on the day it corresponds to in your planner.
Using the notes you made in step 1, begin by writing down when bills are due and how much is owed. By getting this down on your monthly view of your planner, you are able to easily refer back to what has been paid and what is coming up in the near future.
As soon as a bill is paid, highlight or check it off on the monthly view so that you know it has been taken care of.
Step 3 - Plan Out Each Week
Now that your monthly view is complete, pull that information into each week of your planner. This allows you to have not only your high-level overview of what is happening in the month, but detailed information in each weekly layout. Because my planner is most often open to the weekly view, I like to be able to view my debt repayment and budgeting progress there as well.
Step 4 - Look at Your Debt
While it’s critical to make sure that your monthly payments are being made – mortgage/rent, heat, lights, groceries, etc. - it’s also important to think about the debt that you owe. I mentioned earlier that aside from our mortgage, I just have my student loan. I say “just” but I’ve been carrying it around for years. I like to daydream about what I could do with the exorbitant amount of money I’d have if I didn’t have to pay for my student loan. (Spoiler alert - I'd buy more planner supplies.)
That’s why last year I really dove head first in to getting it paid off much more quickly. I have plans for this money once it’s freed up from debt repayment – pad my savings accounts, save for my son’s education, save more for retirement than I already am. All very important financial goals.
Take a look at the bills you have to pay each month, and also look at your bills that fluctuate like gas and groceries. Once they’re taken care of, what is left over at the end of each month? If there’s money leftover, what have you been doing with it? Has it been going to savings? Have you been splurging on unnecessary consumer purchases? Did you use it wisely?
If you’re anything like me, you’ve been buying coffee on the way to work and also grabbing lunch a few times a month instead of bringing your own – that all adds up. Those small purchases have the potential to add up to hundreds of dollars that could have been used toward debt repayment. I recommend keeping track of those small expenditures and looking for way to save.
Get a travel mug and bring your coffee with you. Meal prep on the weekends so that you have quick, ready to go lunches for the work week. These small changes now could mean paying your debt off months, even years, earlier.
Step 5 - Be Consistent
Check in on your progress at the end of each month. Look at things like your ending bank account balance, your current debt balance, and if applicable, your savings account balance.
Even if you slip up, your planner can help keep you on track. By jotting down these figures each month, you’re able to flip open your planner and see your improvement. Even if it’s small progress, remember that it’s progress and it's uplifting to see that in black and white.
Budgeting Planner Supplies
Finally, I want to finish with some of my favourite Coffee Brain Plans products that have helped kick my debt repayment and savings plan into high gear. I’m motivated by the cute stickers to keep moving forward, and I hope they’ll have the same impact on you!
These "Bill Due" stickers are an easy and simple way to keep track of when your bills are due. I have numerous pages of these and use them every single week.
Specific Bill Reminders
I like that Venassa has not only generic "Bill Due" stickers, but specific ones as well. It allows me to cover all my bases. Do I wish I didn't have insurance and utilities to pay? Obviously. But if I have to pay them, then at least my monthly reminders will be so. freaking. cute.
Use these as headings in your monthly and then list your current debt and savings amounts beside each header. It will catch your eye quickly and you'll know where you stand each month.
Use the "budget" text as reminders that you need to sit down and work on your budget.
Cash Envelope System
I bought these the second Venassa introduced them to her shop and they've helped me so much. The envelope system is based on Dave Ramsay's method of budgeting, where you rely on cash to pay for things such as gas, groceries, and entertainment. Allocate a certain amount of money to these categories, then take the cash out of your bank and place it in these envelopes. When the money runs out, you don't have the option to dip into your bank account for more. By using cash instead of debit/credit, you've give yourself a tangible way to track your spending habits.
The best part about these envelopes is that they can be completely customized to your budgeting needs!
With the new year fast approaching, what sort of budgeting goals do you have for 2019?
Leave a comment below. I'd love to hear what you'd like to achieve!