If you have read this blog for any amount of time, you know that I’m a Dave Ramsey fan. I know that he’s not for everyone, but I like him. Having listened to his radio show and read some of his books, I noticed that he often comes back to this central question when analyzing debt. Do you have an income emergency or a spending problem? He usually starts by asking a person how much debt they have and what their income looks like. If a person is making only $1500 per month and has $2000+ in expenses that are basic needs, they have an income emergency. If you get the income up, the crisis will resolve. He usually recommends getting part time jobs, taking overtime, and looking for a higher paying job. Often, though, the problem isn’t the income, it is the spending. Many people spend beyond their means and wake up to realize that they are thousands of dollars in debt (if not hundreds of thousands of dollars in debt) with no savings.
Part of analyzing your family budget is answering this question for you and your family. If your problem is that you need your income to boost, map out a plan with your family on how to get there. If you have attended a college or university, realize that you should still have access to their career service office. They can help you with a resume and basic job finding skills. If your problem is spending, below are some ideas I’ve gleaned from Dave and others:
- Set up a family budget. It is always amazing to me how few people know how much money that they have coming in and going out and to where.
- Make sure you leave a small amount for “mad money”. If you don’t have any wiggle room, you are more likely to blow money as a retaliation of being so confined. Even if it is only $5 for each person in the household, it could help to give you a little more liberty in spending while being disciplined in other areas.
- Ask yourself if you are looking at needs or wants.
- Look at the big picture. Think about how freeing being debt free would be. If saving for a big purchase, visualize how it would feel to have accomplished that goal. Place reminders of those goals around your house so that when you see them you are motivated to keep going.
- Do some soul searching. If you are spending to fill some sort of void, gain a sense of awareness about that deeper problem. If it is for depression or marital problems, get help. If you are facing an addiction, seek out therapy or a support group. If it is because of peer pressure or “keeping up with the Joneses”, then analyze from where that anxiety is rooted.
- Be around positive, like minded people. It is much easier to stay on a plan for your family when you are around people who support you and your goals.