Lose the extra weight from your budget by putting your spending habits on a diet. At the end of the month, you’ll have extra money that you can use to pay off some outstanding debt, and your budget will be slim and trim. Keep it up for six months or more, and your budget will be healthier than it has ever been.
When you diet to lose weight, you must burn more calories than you take in if you want to be successful. A spending diet is similar, although in this case, you must take in more money than you burn. About 15 days before the beginning of the next month is an ideal time to start planning. This way, if the unexpected comes up, you will be able to adjust.
1. Make sure that you have an existing budget. This can be a very basic plan that lists how much income you take in each month, minus your basic expenses, such as food, housing, gas and utilities. Add in any other monthly payments that you must make, for example, student loans or credit card payments.
2. Tweak the budget amounts in all other areas down to as low as you can go. Consider temporarily giving up some areas of the budget such as new clothing or entertainment. This diet won’t last forever, after all, and it is important to realize that you don’t have to be deprived, just eliminate or minimize the spending one month at a time. For example, if you love to read, use the library for a month instead of buying new books. If you love entertainment, check out all of the free concerts and events in your region instead of buying tickets.
3. Start the month with a full gas tank and a grocery shopping trip. You shouldn’t spend more than you normally would for groceries, but keep in mind that since you will try to make them last as long as possible, make good inexpensive choices such as a bulk package of chicken that can be frozen, rice and pasta, etc. Although food and gas are included in your budget for the month, challenge yourself to make the budgeted amounts stretch as far as possible.
4. Calculate your cash flow left over after the minimum expenses. Add in an additional ten percent for unexpected expenses that may arise, such as a car repair or a visit to the dentist. Your goal is to not spend more than this amount. This is your minimum “weight loss goal.”
5. At the end of the month, apply your extra cash to your outstanding debts. Start with the smallest debt first until it is eliminated. The monthly cost off that paid off debt should be applied to the next debt on your list. This is called the “snowball effect.” each time you pay off a debt, you will have a larger cash flow.
6. Losing weight takes both diet and exercise. Challenge yourself to find new ways to save (diet) and exercise (increase income). Hold a yard sale, do some babysitting, cut coupons, start a home-based business, etc. The results will be both immediate and long term.