Fight Interest

What’s Not To Like?

For some reason, the word budget seems to bother most people.  For this reason, some writers have resorted to calling it a spending plan.  Perhaps it is the math, or more likely just the discipline of it (budgeting is not easy or fun).  But get this, budgeting is one of the most important things you can do to reduce debt.  Yes, to be successful on the Money Journey, you must prepare, maintain and live by a budget!

A budget gives you a clearer path to where  you’re going.  As a result, you’ll make better decisions.  You wouldn’t close your eyes while driving, would you?  I didn’t think so.  Trying to manage your money without a budget is really the same thing.  You’re bound to hit something and not be prepared for it.

Life Has A Way

Has this or something similar ever happened to you?  I had a steady job that paid me enough to cover my rent, food, gas and insurance.  I didn’t have a budget.  My car, which was paid for, broke down and needed $600 in repairs (almost as much as I made in a month).

I also had just received my first credit card offer.  I applied and was approved with a $1500 limit, more than enough to cover the repairs.  I had my car back a few days later and a slab of plastic in my back pocket.  Life was great!

Now my stops for dinner at Pizza Inn increased in frequency.  Where I would have driven on home for dinner when I was low on cash, I now had plastic.  I hardly noticed the balance tick up because the payment was so low.

Three months later, I was in a fender bender.  With the low relative value of the car, even this small amount of damage was deemed to total the car.  After the deductible, my insurance company wrote me a check for just under $500.

I didn’t want another clunker, which is all the $500 could buy.  And now that my credit card balance was over $1000, I knew I didn’t have enough available credit if the clunker broke down.  So I bought a more expensive car and took on a car note.  With a wreck and a more valuable car, my insurance went up.  Where I had been in a comfortable position, I was now squeezed.

I figure I ended up paying over $2000 to repair a car that was at best worth $750.  Why?  Because I hadn’t planned for my car to break down (despite being a clunker) and I turned to debt as a solution before assessing all available solutions.

In short, I didn’t have a budget.

I hope you’ll follow this Budget Series.  We’ll discuss how to prepare, maintain and live to a budget.  Not fun, but well worth it!