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The Average American is Drowning in Debt. Here’s Your Life Preserver

Today I have a guest post from Joseph Hogue over at MyWorkFromHomeMoney.com, talking about the scary state of debt in America, and how to overcome it. Enjoy!

how to save yourself from debtPaying off debt has become more than an individual goal, it could mean the very survival of our nation

I love the debt payoff stories you read on blogs. Following the story of how someone paid off a seemingly insurmountable amount of debt is not only hugely motivating but usually comes with some great ideas.

At the same time, reading these stories can be difficult for the millions of Americans that struggle with their debt.

Colin’s own story of paying off $21,000 in debt over 18 months relates to a long journey of changing his debt mindset, understanding his spending triggers and dealing with setbacks.

As exhausting and as frustrating as that debt payoff journey can be, it’s a journey we need to make, not only as individuals but as a country.

We talk about debt on an individual basis but it’s every individual that makes up our nation and the massive sum of that individual debt could soon affect everyone in ways we’ve yet to realize.

America Has Gone Overboard on Debt

The average American household owes more than $52,500 in debt and that doesn’t include mortgages. The average household pays a dollar of every $5 earned just to meet those monthly debt payments and people in 13 states owe more than they make in a year on average.

Debt in America has grown to Titanic-proportions and the ship is about to hit the mother of all icebergs.

You probably have a good idea of what all that debt is doing to your own life and financial goals. It leaves you little or no money to save for retirement. More than 40% of households report having less than $10,000 saved for retirement.

Not being able to save also means that you’re just one financial emergency away from having to severely cut back on spending or even a total financial collapse in bankruptcy.

Now imagine what that means collectively to the entire nation, a nation where 10,000 people reach retirement age every day but don’t have enough saved for basic expenses. It’s a nation that could soon see consumer spending, which accounts for 70% of the economy, take a nosedive because there’s just nothing left after debt payments.

Ditching our debt addiction has become more than just a personal goal, it’s become a national necessity!

How to Save Yourself from Debt

Sometimes, it’s just that harsh wake-up that gives you the motivation to change. Realizing how much your debt is costing you and how long it will take to pay it off can be one of those wake-up calls.

I got serious about paying off my credit card debt when I used a credit card payoff calculator and saw it would take 62 months and nearly $5,400 in interest to pay off the debt. I would have been paying half again as much interest on my original purchases if I kept to my monthly $250 payments instead of really attacking my debt.

So I ask you…

  • How much interest will your current debt cost you?
  • How long will you be paying off your debt with your current payments?

If that’s not enough to shock you into getting serious about your debt, create a mental picture of your financial goals and what your life will be like once you’ve paid off your debt.

This is an activity I use with investment advisory clients and it’s critical to helping you stay on budget and saving. If you can create a real mental picture, not some vague goal of retiring on a sandy beach somewhere, your goals become real and help motivate you even when you’re tempted to outspend your income.

  • What will you be able to do with that extra money that isn’t going to interest payments? What vacations will you plan and what other plans will you make?
  • What do you want to do on a daily basis once you’ve reached your financial goals or in retirement?

Attack your debt from both sides, from expenses, and from the income side!

Too many people think of their budget only as a way to track and cut their expenses. The sorry fact is that most people don’t make much money, not enough to pay basic expenses and save enough for retirement anyway. The solution is to look for ways to earn more on the income-side so you don’t have to cut your expenses to the bone.

  • Read up on side hustles like starting a blog or self-publishing that can make hundreds a month on as little as a few hours a week
  • Don’t feel like making extra money is something you have to do forever. Set small goals like paying off your debt or building an emergency fund.

Create a strategy to pay off your debt.

There are two popular strategies for debt payoff, the avalanche, and the snowball method. Which you follow will depend on whether you need more motivation or want to save more money.

  • The debt avalanche starts with listing your debts from highest rates to lowest. You make regular payments on all but split extra payments among the debts with the highest interest rates.
  • The debt snowball starts with listing your debts from lowest amount to highest. Again, you make regular payments on all but split extra payments among the smallest balances.

The avalanche method saves you the most money because you’ll pay off those high-rate debts first. The snowball method may cost a little more but it can be incredibly motivating to see those debts fall off your list.

The word financial freedom is used pretty casually on the internet. The actual feeling is difficult to describe but it’s one of the benefits to paying off your debt and knowing you are on your way to reaching your financial goals. In our society where money is the #1 reported cause of marital arguments, not having to worry about debt or reaching those goals is an amazing change.

The secret to financial freedom is to owe yourself a debt. After you’ve paid off your debts, keep saving and investing as if you were paying a debt to yourself. Instead of paying interest on that debt, you’ll benefit from the return on your money.

I try to be an optimistic person but I’m not confident that the debt situation in America will get better before it gets worse. Fortunately, you don’t have to move the entire country to change. Changing your own mindset and turning your own finances around will help you avoid the worst of our debt-burdened future and create the financial future you deserve.


Joseph Hogue worked as an equity analyst and an economist before realizing being rich is no substitute for being happy. He now runs five websites in the personal finance and crowdfunding niche, makes more money than he ever did at a 9-to-5 job and loves building his work from home business. 

Dear Millennials, Learn How to Cook!

dear millennials, learn how to cook!Millennials and cooking. It doesn’t feel like a natural pairing.

Can you cook? Maybe some of the older millennials can, but a lot of us seem to have a serious lack of cooking ability. The best we can do is throw some stir-fry in a pan and call it a day.

To even get some cooking guidance, us millennials usually head straight to YouTube to watch the latest recipe tutorial. Cooking by heart has become a dying art. I also love a good rhyme…

This general lack of cooking knowledge usual makes us end up either eating some unhealthy processed slog or racing to the nearest fast-casual eatery. Chipotle, anyone? 

A 2015 Morgan Stanley study found that 53% of millennials say they eat at restaurants at least once a week, compared to 43% of Gen X-er’s or Baby Boomers.

Maybe it’s because it feels more convenient, maybe it’s because Chipotle is the ultimate love, or maybe it’s just to get that perfect flat lay Instagram photo. Whatever it is, a lot of millennials need to learn how to cook.

A lot of people think cooking and is a time-consuming process that involves a lot of tedious hard work. They think eating healthy on a budget is impossible. As with many things, learning to cook takes time and experimentation. While it can take some time to learn, it pays off in the long run. 

The benefits: you feel less sluggish, better mood, better energy, and you don’t have to agonize over constantly figuring out what to eat for lunch or dinner.

“But, I don’t have time!” 

“It’s too much work!”

I hear you, learning to cook isn’t some quick thing that magically happens within a few days. You probably won’t achieve Rachel Ray level skill right off the bat. Doing a few small things to start can help greatly.

Let’s go through some things to do to learn how to cook. So you can take your cooking skill level from kitchen clueless to organized prep pro.

Get Savvy With Grocery Shopping

Get a cash back app. Download a cash back app such as Ibotta, which gives you cash back for in-store and mobile purchases. Ibotta allows you to easily save money on groceries every week, without the need to clip coupons. 

How it works is you browse the app and find offers before you shop. Once you go shopping, you buy the products you selected and redeem your offers by taking a photo of your receipt. Ibotta matches the items you bought to the offers you selected and gives you cash back.

Once you reach $20 in your Ibotta account, you withdraw your cash and either send it to your Paypal or purchase a gift card through the app.

Make a list. Always be armed with a list when grocery shopping. It allows you to stay focused on what you need and limit temptations to buy extras. 

Shop at a low-cost grocery store. If you have an Aldi in your area, try shopping there for some or all of your groceries. Lots of people have mentioned the lower cost products Aldi has compared to other stores.

If you’re shopping at Target, sign up for the Target Red Card, which allows you to get 5% off purchases.

Buy more whole, unprocessed foods.

This includes proteins (ground beef, frozen chicken breast, tuna cans, cottage cheese, eggs, milk, whey)

carbs (pasta, rice, oats, potatoes, beans, apples, raisins, broccoli, spinach)

& fats (olive oil, real butter, mixed nuts).

Healthy eating on a budget. Greatist has a list of 44 healthy foods you can buy for under $1 each.

Start Meal Planning

You don’t have to be a meal planning ninja who spends all day Sunday in the kitchen whipping up 21 meals for the week. Talk about going 0 to 60 mph.

Start out by arming yourself with some knowledge about the ways to meal plan and foods to eat. This could include accounts to follow on social media, meal planning YouTube videos, and meal planning websites. Some of my favorite websites right now are Budget Bytes and The Minimalist Baker.

Budget Bytes offers tons of budget-friendly recipes and simple meal plans.

The Minimalist Baker offers a lot of meat-free recipes, which let’s be honest, is great since buying a lot of meat can end up being really expensive. Do some of the recipes even if you aren’t a vegetarian.

Great resources to meal plan:

MealPrepPro (paid, $5.99/month): This app lets you input the number of calories you need per day and gives you a big visual list of different meals you can prepare. Each meal includes the ingredients you need and how to prepare it. You can mix and match the different meals to create a full week long meal plan for you. Once you’ve done that, you can click to add all the required ingredients to be imported into your shopping list, which you can use when you go to the grocery store.

The app includes a color-coded graph that shows you what days you are preparing food and when you are reheating and eating. The prep days differ depending on how you arrange and choose which meals go into your weekly meal plan.

$5 Meal Plan (paid, $5/month): $5 Meal Plan is a weekly meal plan service focusing on meals that can be made for around $2 per serving or less. The meal plans are sent out weekly and you pay $5 per month (after a 14-day free trial). Each menu includes a shopping list of things you’ll need.

There are different symbols on each meal on the menu. The symbols indicate which items take 20 minutes to prep, which are freezer friendly, which can be made in a slow cooker, or in a pan. You can also prep and cook many of the meals on the weekend so you can reheat and eat for when you’re busy and tired on weeknights. For an additional $8 a month, you can get specialty menus for those on a vegetarian diet.

Invest in a Cookbook

Cookbooks can be a good go-to source to have when it comes to meal planning and learning to cook. You don’t always want to tap and touching your phone to look at the recipe instructions while you cook.

It may seem weird to get one nowadays since you can just easily Google a recipe. However, there is something to said for having a printed book that gives more than just the recipe. More work, effort, and description usually go into a cookbook. They usually go more into the food culture and way of life of different recipes, which can be great to read.

Some popular ones to consider:

Good and Cheap: Eat Well on $4 a Day

Budget Bytes: 100 Easy, Delicious Recipes

Have Go-To Meals

These are the meals you can make whenever you come home exhausted, without anything prepared, and with a strong urge for getting pricey take out.

Have a list of about five simple go-to meals you can whip up for when you think of what to eat. Meal planning takes time to get into a rhythm with. These meals can be lifesavers to your budget and help you combat excessively eating out.

Think about healthy budget-friendly things like stuff with chicken breast, rice, beans, tortillas, and pasta.

Compile Your Resources

Some nice notepads and books can go a long way in helping make the process less dull and more fun. Stock up on some notepads, ebooks, and food containers so you so your cooking adventures can run consistent and organized.

 


Are you a millennial? How would you rank your cooking skills? 

6 Best Travel Resources for Budget Travel

best travel resources for budget travelAmericans spell it traveler, most others in the world spell it traveller, whichever way, here are six best resources for the budget traveler.

When I first started traveling, it felt super overwhelming. I didn’t any idea what the best travel resources were for budget travel. All I knew was that I wanted to do it as inexpensive as possible.

I mean, I wasn’t going to be one those ultra budget backpackers who slept in a tent in some random location. Getting to sleep in a cheap hostel with unpredictable guests and levels of noise? Now that’s my jam! haha.

Jokes aside, I didn’t have much of an idea of the best travel resources I could use as a backpacker on a budget. Whenever I would look around on Facebook groups or through Google searches, I would be inundated with lists detailed dozens or even hundreds of things. Talk about getting overwhelmed.

Slowly but surely, I started to find a small handful of things that have been super helpful not only to me, but many other budget travelers as well.

The resources below have helped me so much in being able to not only save money while traveling but also allowing me to travel to new places. A lot people get into the mindset that travel has to go a certain way. The typical scenario of booking a standard hotel room, using a large and common travel website to book flights, and overall thinking that travel is expensive.

Travel does cost money however you slice it. But it doesn’t have to be expensive. Through a little savviness and being resourceful, you can cut down on the cost tremendously.

Read below on the top travel resources for budget travel.

Skyscanner

I used to never understand how people were able to get great flight deals. I thought it involved either obsessively checking flights nine times a day or signing up for a dozen different airline emails and just waiting.

Once I found Skyscanner, getting good deals on flights got a lot easier. Instead of using a big travel search platform like Expedia, I started using Skyscanner for most of my flight searches.

Skyscanner is great because it allows you to not only search for a destination you have in mind, but you can also put “everywhere” in the destination box and it will pull up a list of places (low to high) that you can travel to.

I used this a lot when I was living in Thailand and figuring out cheap places to travel to. Now that I’m back in the states, I use it to see where the cheapest flights to places in South America are.

As with a lot of travel planning, you have to be savvy and not just rely on one site. Skyscanner is great but I always make a point to check out Google Flights and Kayak as well.

Skyscanner, and also Kayak, have “hacker fares” where you fly different legs of a round-trip flight on different airlines. If you’re okay with not always flying direct, then you can get some good savings.

Airbnb

Who would want to stay in a bland hotel room when you could stay in a more spacious and accommodating Airbnb instead? The great thing about Airbnb is the variety of spaces offered, with the prices being comparable or even lower than traditional hotels/motels most of the time.

You can stay spacious rooms, full apartments or houses, Airstreams, trailers, and even tree houses!

I like Airbnb because of the flexibility it has. I used it to book an inexpensive room in Astoria, Queens for $35 a night when I took a trip to New York City a few months back. All the traditional hotel rooms would have cost $100+ a night.

Often times, you’re able to interact with the host and get recommendations on best places to visit and eat at. Always great to get the perspective of a local.

Click here to get a $40 credit towards your first stay!

Booking.com

Booking.com is a site you can use when you are on the search for a traditional hotel, motel, or guesthouse. Sometimes Airbnb doesn’t work out, you can’t find the right spot, or the offerings are sparse in an area. Booking.com has plenty of offerings, often with low prices and no extra fees.

The interface of booking.com is really nice, letting you see all the features a place has (WiFi is probably at the top of priorities, amiright?). A great thing about the site is you can usually book a place without having to put down a deposit.

World Nomads

Travel insurance is essential. It’s weird to think about what would happen if you were to get injured or really ill while traveling, but it’s something you have to plan for. Most health insurance plans don’t cover you while you’re traveling. Even if they do, coverage might not be the best.

I have used and loved World Nomads for my travels. Their coverage is great, reporting claims is simple and they have great customer service.

Make sure to read the terms and fine print on any plans you’re considering to make sure it’s right for you.

Click here to get a quote for travel insurance!

Couchsurfing

What better way to find out more about a place than to spend it with a local? Couchsurfing is a community of travelers where you can search and find free accommodation across the world.

Although it’s way more than just free accommodation. You can use it to find community events, activities to do, and meet up with people.

Travel Reward Credit Cards

What? Credit cards? Those are evil!! Well, not exactly…

I swore off credit cards for the longest time because I thought getting one would immediately spiral me into horrible high-interest debt.

Luckily, that hasn’t happened, haha. I set up a financial foundation for myself before even touching credit cards. This involved getting on a budget and developing a debt payoff plan for my student loans.

Once that groundwork was laid, I went into the world of credit card sign-up bonuses. You see, there are lots of credit cards out there that offer sign up bonuses in the form of airline miles, travel credits, hotel credits, and more by spending a certain amount within the first few months of opening your account.

It’s usually something like “spend $3,000 within the first three months” or “$2,000 in the first three months” etc.

I’m not a credit cards expert. You’ll want to follow The Points Guy for that. Credit card rewards can help get rack up airline miles and travel credits to use for travel based on the typical monthly spending you’re already doing.

Get on it if you can!


What resources do you use for budget travel? Anything you’ve found to be super helpful?

So, What’s the Catch?

how to set actionable goalsThere comes a point when you just have to look at how things are and work with what you’ve got.

Money is like this in a way. People have lots of opinions on how best to navigate personal finances.

Which is the best way to set actionable goals? Do you do the debt snowball or debt avalanche? Should you have an emergency fund or not? Are side hustles all that important? What about privilege?

One of the top things people say whenever there is an impressive debt payoff story, rags to riches tale, or financial breakthrough is “So…what’s the catch?”

Those Debt Payoff Stories

Everyone loves a good debt payoff story. The sensational ones where a person paid off a big amount of debt in a small amount of time.

I don’t think I have one of those, depending on who you ask. I graduated university with $21,000 in student loans. I paid off those student loans in 18 months, at the age of 22, partly while living abroad in Thailand.

I’ve been congratulated on doing such a thing. Critical comments have been about how that “wasn’t even a lot of debt” or “there must be a catch”.

Indeed there is a catch to my debt payoff story. The “catch” is that I worked overtime at my blue collar job, worked seven days a week while in Thailand, set actionable goals, and upon being sick of looking at my debt, paid off the remaining amount with a large part of my emergency fund.

No matter how a person paid off debt there is always some critical comments. If the person makes a high salary then people complain that it was easy for them because of it. If a person side hustled their way to debt payoff, then people complain about the person having to do side hustles to pay off debt.

A former co-worker once said to me “Well, I’d like to see a debt payoff story where the person worked a regular job and  didn’t make a high salary or do side hustles to pay off their debt!”

While I understand their sentiment, I’m not sure they will ever see one those due to this thing called math. You have to grow the gap between your expenses and income in order to pay off your debt. That’s what it boils down to.

Yes, it can be annoying when a lot of personal finance news stories focus on middle-class couples with good paying jobs who suddenly had a ~~magical epiphany~~ and decided to stop wasting money.

Although, when you break it down, paying off a lot of debt or making significant financial progress comes down to it.

Income – expenses = the gap (focus on growing it)

Do The Actual Work

Sometimes people put too much focus on one area while neglecting the others. This is really true when it comes to talking about (touchy?) subjects like privilege.

Privilege is a real thing. Some people have a leg up on others when it comes to situations and opportunities. Not everyone is able to live at home in order to save money on rent. Different socioeconomic backgrounds have advantages. The list goes on.

However, when you choose to solely focus on that one area, you start to miss out on other opportunities that could come from when you put in the work.

For the longest time, I was angry with the fact that other people had their parents pay for cars for them and pay for part of their college. Meanwhile, I had to work as a dishwasher, work lots of hours, and save up for months to buy my first car at age 17. I had to pay for my college education on my own through the use of loans and working. I didn’t even have a laptop for the longest time. Instead, I had had to go to the public library to use one.

Things didn’t start improving until I sat down, acknowledged my situation, and made a plan for growth from there.

You can choose to sit idle and focus on your limitations or you can make a plan based on what you have.

Put What You Learn Into Practice

I’m part of a few blog and business groups on Facebook. There was one massive online business group I was a member of. In the group, I would constantly see people posting critical responses of other business owners.

The post would catch on, attract hundreds of comments from people agreeing, and then a few days later the same type of post would pop up and the cycle would repeat itself. While criticism of things can be good at times, when you’re constantly doing it, it can give you a false feeling of having actually done something.

It’s kind of like when you read a self-help or motivational book. You go through it, highlight a bunch of motivational quotes in it, and talk about it on social media. While that’s great to do, it’s even more important to put what you learned into practice.

Related: The Problem With Motivational Quotes

Don’t just read some book on entrepreneurship and share quotes from it on social media. Use what you learned from the book. Test things out, see how it works. You’ll learn a lot more when you’re in the process of doing rather than reading self-help book after self-help book over and over.

The Cautionary Tale of the Underpants Gnomes

Gotta go to work, work, work, work! We won’t stop ‘til we have underpants!

-The Underpants Gnomes (South Park)

You don’t want to look back several months or years from now and realize all you’ve been doing is collecting underpants.

What the heck am I talking about, you ask?

It’s a concept I learned about in the book Level Up Your Life by Steve Kamb. In the show South Park, there is an episode where a group of gnomes sneak into people’s houses and steal their underpants and take them to a large underground cave each night.

The gnomes are stealing the underpants so they can have a mass collection to use when they build a highly successful business. When a gnome is asked why he is collecting underpants, his response is, “Collecting underpants is just phase 1!

When someone follows up with, “So what is phase 2?” The gnomes are confused and just say, “Phase 3 is profit! Phase 1 is collecting underpants!”.

They know what Phase one is (collecting underpants) and phase three (highly successful business) but they don’t know the critical phase two.

This happens when you read some amazing self-help book, watch an inspiring TEDx talk, or hear of somebody doing something amazing.

Don’t get stalled in the phase one stage of watching or reading something inspiring and then go, “Well, it’s easy for them!”.

Bottom Line

This post isn’t some call to “hu$tle harder” or “grind more”. It’s a call to acknowledge the situation and limitations you have and moving forward set some actionable goals. 

It may take longer or be harder for you to reach your goals compared to others, but small or slow progress is better than nothing.

What’s the catch? It’s figuring out your phase two and making a plan from there.


How have you been able to get past your limitations and setbacks? What is your phase two?

A Step by Step Guide to Get Started Budgeting

step by step guide to get started budgetingThe idea of budgeting can be a polarizing thing.

A lot of people are put off by it because of preconceived notions and confusion about how to best go about it.

If you had mentioned the word ‘budget’ to me a few years back, I probably would have looked at you strangely and dismissed it. Because, hello, who really wants to sit down and do the tedious task of looking over your spending.

Thankfully, budgeting doesn’t have to be some tedious mind destroyer if you don’t want it to. It can actually be pretty fun to do. It’s all about picking the right system and tools that work best for you.

My first foray into budgeting came when I was 18 and in my first year of college. I was working a lowly food prep position at McDonald’s and trying to figure how my money kept vanishing into thin air.

So, I downloaded the free budgeting tool Mint and got to work tracking my spending within the service. Suddenly for the first time, I was able to monitor my transactions while making goals and assigning set amounts to different spending categories.

It was kind of like a game of sorts. Being able to see how savvy I could get by staying within my set amounts for spending categories. The most prominent one being the food and groceries category, because let’s be honest, that one was a chaotic mess of late night drive-throughs, takeaway coffee, and one too many pizza deliveries.

Mint was cool but over the years, I started to want something more. To see what else was out there. Through some trial and error, I started to find my groove with budgeting.

So far, its led to hitting some pretty sweet financial goals. I was able to ditch a blue collar job I hated, move abroad for a year and a half, pay off $21,000 in student loans within 18 months, and build up a good-sized emergency fund.

If you’re ready to get organized with your money and better work toward your goals then keep reading. Here’s a step by step guide to budgeting.

Start Tracking Your Spending

Do you know where you’re money is going every month? Not in the vague “oh well I think I spent around this much on entertainment…” but in the “I spent this exact amount on entertainment last month”.

It’s easier for your money to feel like it just disappears when you’re not actively tracking it. $11 here, $18 there. It doesn’t feel like much until you add it all up.

Tracking your spending combats that. It makes you more conscious of spending decisions so you can prioritize better on what matters most to you. And hey, maybe that priority involves buying concert tickets or getting a dog. It’s all up to you!

Everyone has different priorities but tracking one’s spending is helpful to everyone.

There are a few ways to do it. You could use an Excel or Google Sheets spreadsheet and input it manually. For online options, a free tool like Personal Capital lets you track your spending as well as monitor your overall financial picture.

Figure Out What Motivates You

You can’t start budgeting if you’re not sure what your motivations are. A lot of people falter with budgeting because they don’t have a clear reason why they’re doing it.

Think back to some big achievements you’ve done (maybe it was getting a dream job, hitting a fitness goal, or saving up for something) You probably had a strong reason why. Channel that same inner grit into your financial goals. You’ll have a much better shot at sticking to your budget this way.

Figuring this out can take some time (i.e. it’s not something you can sit down and do within a half hour). Think about your ‘why’ during moments when you’re getting ready for bed, taking a shower, or other idle moments.

To help you stay motivated, employ some of the tips below:

  • Figure out a plan for what to do when temptation arises
  • Enlist friends help by telling them your motivations
  • Use visual reminders (whiteboards are good for this!)
  • Surround Yourself with disciplined people (personal finance facebook groups can be great for this!)

Create Financial Goals

The main purposes of a budget are to help you become mindful of your spending as well as helping you reach your financial goals in a more organized and strategic manner.

No more wingin’ it and hoping for the best. The stuff that gets measured gets improved.

Think about what financial goals you want to accomplish. These could include:

These are typical goals that people often have in common. Don’t forget to think about other goals you may have. These could include saving up for a new computer, education expenses, a new phone you want, books, or any number of things.

Think of both short-term and long-term goals you would like to hit. Make sure to look at what you value as you commit to your financial goals.

If you’re a movie buff who loves going to the cinema every week to see the latest, then cutting out going to the movies isn’t going to go over well. Cut back in other areas and brainstorm ways to do things cheaper. If you like to eat out a lot then download an app like MealPrepPro. Use something like MoviePass if you see a lot of movies.

Get small and specific with the goal. For example, saving for retirement is boring. Saving for retirement so you won’t have to live on $1,200 a month and eat beans and rice for every meal is better. You feel me? Good.

Studies show that setting small goals and checking them off motivates us to accomplish those big hairy audacious goals (BHAG) like paying off student loans or saving for something big.

Ask yourself:

  • Why exactly do I want to achieve this goal?
  • How will my life look differently by achieving this goal?

Select a budget system

Envelope method: Revolves around using cash only. You withdraw the amount of money you need for the month, put it in envelopes, and then once the money inside the envelope is gone, that’s it. You have to wait until the next month starts before spending in that category again.

Zero Sum budget: You give every dollar a job. Your budget should be zero at the end of the month. This budgeting style can help if you have a habit of mindlessly spending money on things once you pay all of your expenses.  

The awesome book, Zero Down Your Debt goes more into this. The authors used this budgeting method to help them get out of $50,000 of debt and go on to work for themselves.

50-20-30 budget: A percentage based system where 50% goes to your needs, 20% goes to your savings and debt repayments, and 30% goes to your wants.

Category budget: You assign amounts to different categories and aim to keep spending under that amount.

Choose your tools

I’ve used a selection of different tools in my budgeting journey. As I mentioned at the start of this post, I started using Mint when I was 18 and in my first year of college. For simplicity, pen and paper have also been used.

The pen and paper method didn’t work for me too well since it was completely manual. Sometimes life would get busy and I would totally forget to write down my spending. Using an online service like Mint really helped keep me on track. Currently, I’m on a free trial of You Need a Budget (YNAB) and seeing how I like it. Testing things out for the win! 🙂

Below are some different tools you can use to budget.

Pen and paper: Simplicity sometimes beats the rest. If you like writing out your expenses by hand and keeping track of spending and receipts, then you could just use a simple pen and paper or write in a notebook to budget.

Excel spreadsheet: Spreadsheets really make some people jump for joy. They can be pretty great since you’re able to input your spending and have it push it to the appropriate category and total everything for you.

You need to have Microsoft Office installed on your computer. Alternatively, some budget spreadsheets also work in Google Sheets (the free excel alternative).

Mint: Mint is that popular budgeting tool you’ve probably heard about countless times, but never really learned more about. Lots of people use it because it’s a free cloud-based service (rather than remember where you put your excel spreadsheet on your computer.) that is simple to use and categorizes your spending. 

You connect your bank account and set goals for your finances. Sign up for a free account

YNAB: You Need a Budget is similar to Mint, but it employs the specific approach of building a zero-sum budget and giving every dollar a job. It allows you to set goals, track your progress, see your spending trends over the long term and teaches you to live on your income from the last month. You budget based on what you have already earned.

It’s a paid tool that costs $6.99/month. A free 34-day trial is offered. Judging by some Reddit threads and online comments, a lot of people swear by YNAB and its many benefits compared to Mint. Sign up here

Personal Capital: This free financial planning tool allows you to budget and also monitor your net worth. You can get a full picture of your financial life by syncing your bank accounts along with your investment accounts and any assets or liabilities you have.

Sign up for a free account and get started with monitoring your spending, savings rate, and being able to monitor your overall net worth.


Whew! A lot to go through to build a budget. It’s all worth it though. Going through the steps listed and you’ll be well on your way to building a budget that works for you.

Budgeting isn’t about restricting yourself. It’s about giving your money a plan. As with a lot of things in life, budgeting doesn’t come without making a few mistakes here and there. Use this step by step budgeting guide and experiment based what works for you.

Forgive yourself, break down your goals, and create some daily actions. It’s how you get successful with budgeting. Let me know how it goes!


How did you get started budgeting? What tactics and tools worked best for you? 

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