How We Paid Off Our Car in 24 Months
Creating a budget changed the trajectory of our financial future.
The most important thing a budget can teach you is financial discipline. How to take control of your money, and make it do what you want. Here are a few things my husband and I learned through creating our first budget.
- Our Normal Cash Flow on a Monthly Basis
Seems elementary, right? My husband and I never bought anything we couldn’t afford, always living within our means, but it wasn’t until we totaled our income on paper that we really understood how much money was flowing through our hands on a regular basis.
Why is this important you may ask?
As we created our first simple budget, we realized we had the ability to save more than we had been through our first year of marriage. Because we never actually SEE the exchange of money, we buy, buy, buy and do not feel the financial impact as long as our basic needs are met. Seeing the numbers on paper helped open our eyes to our financial potential.
2. Money Management
With numerous accounts and various bill dates, this can be intimidating and overwhelming when it comes to financial management. For us: our water bill comes every other month, garbage bill is quarterly, student loans come out on the 14th, car loan on the 5th, our credit card bill is due at the beginning of the month (but for last month’s purchases), mortgage end of month, utilities’ cost varies…how do you keep it all straight?!
With all of the variables mentioned above, it was hard to ever really know where we were at financially at a given time.
Getting organized, we were able to create a spreadsheet on what bills come out when and how much we could expect. By keeping our eyes on our average bills and amounts we were seeing hit our account, we were able to catch two mistakes within two months – totaling an additional $100! If we had not been watching our account, we would not have even known that money was missing and would not have gotten the money refunded.
This is your hard earned money that someone is trying to take from you. Don’t let your complacency or laziness pull money from your account.
3. How to Create a Plan
As a millennial, coming out of school, loans can be daunting. It seems like you are just getting started in the world but you are already two steps behind. Once we laid out our budget, we were able to identify different areas we could cut back our spending and where we could afford to add extra money to pay off our debts.
When we developed goals and created real plans with payoff timelines, the motivation was unreal. Watching the balance of our loans go down each month has been so exhilarating! We could feel the progress as we inched closer and closer to financial freedom.
With focus, discipline, and determination we paid off my car loan 3 years early and are on track to pay off my husband’s 10-year student loans in 2 years!
It’s time to reclaim control of your money and start putting it to work for you instead of it telling you where it will go.
What are some successful habits you have found when it comes to managing your money and eliminating debt?
We want to hear about your smart financial decisions!