Change is the law of life. And those who look only to the past or present are? certain to miss the future.? ? John F. Kennedy
Back in 2008, Tim and I made the decision to cut up our credit cards, pay off our debts and live a life that most people think is weird. We were making too much money to be in debt and constantly robbing Peter to pay Paul. We were unorganized and our money was floating away without us knowing where it was going. We established a budget and made a plan. Today, we build a new budget each month and will continue to do so for the rest of our lives. We know exactly where our money goes and we are able to save for our purchases and our retirement. As we look back to our pre-budget days, we can see that?there are several behaviors that contributed to a successful change.
Contentment
We had to learn to delay gratification. We needed to learn to save for purchases rather than just buying now and paying later. It was a heard discipline to learn and it is hard to teach to our children as well. We still do this today. Contentment from stuff, however, is a lot different from contentment with a bad situation. People who live pay check to pay check, should not be content with their current situation, especially if you make a good income. By establishing a budget, many people feel as if they have gotten a raise because managed money goes further than non-managed money. If you get a tax refund and do not plan where it will be spent or saved;?have you noticed that it just floats away? Think back to your last refund. Where did it go? We do not have to keep up with society in the great marketing game. Let?s be content to delay our purchases until we can afford them.
Communication
When we first began budgeting, Tim and I had to learn to communicate over money. We have opposite learning styles and interests, but we needed to learn to find a middle ground so that we could agree how to save, spend and give. Each month Tim prepares our written budget. I give him input before he starts about unusual expenses that will be coming during the month. After the budget is prepared, I will review it and either make a few changes or agree to it. Once we are in agreement, that is how our money is spent for the month. If an unexpected event comes, we review the budget and make changes mid-month. We take money from one category and add it to another category where we may be short. Communication is the key to this process before and during the month.
A clear plan
Before we were organized, we had a fuzzy plan about our financial future. We knew that we needed to save for retirement, the kids college, and our home. We didn?t want to have car payments or a mortgage. But, we did not have a definite plan to make all of these goals into a reality. When we paid off our debt and began budgeting, we were able to see where our money was going more clearly. We were able to allocate money to our savings goals, both long term and short term. We were able to give to our church and to ministries around the world. We were finally pointed in the right direction, our money had a name and a purpose.
This was and still is a process that we choose to do every day, month and year. It is our debt-free lifestyle and we hope that our children will continue the tradition as they grow and leave the house. It is a choice that we make everyday. It give us financial security and peace.
Tim and Kathryn Gerken are Financial Coaches in Newcastle, WA. They serve their community in the greater Seattle area with personal finance coaching and budgeting to help families and individuals achieve their financial goals.
Source: http://www.gerkenfinancialcoaching.com/2013/04/debt-free-lifestyle/
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