Updated almost 6 years ago on . Most recent reply
Budget to dig myself out of debt now up and running
Let me start with a little background on why I am posting this as it strikes me as a bit of a random post to just throw out there. The weekend of the 9th through the 11th I had to drive from Corpus Christi, Tx. to Clayton, N.C. and back. This gave me roughly 42hrs behind the wheel. I chose to use some of that time to listen to an audiobook that I have been meaning to listen to for a long time, Robert Kyosaki's Rich Dad/Poor Dad. To say that it was mind-blowing and eye-opening would be a gross understatement. I made up my mind then and there to change things in my life, dig myself out of the hole that I had gotten myself and my family into due to my bad financial habits and my ignorance of how money actually works and started devising a plan. As soon as I got it back home I wrote out my plan and forced myself into action. My 1st step was to post on bigger pockets (I have been a pro member for months now and have never posted or been active). I also found and signed up to go to a local REI meeting (I am somewhat shy and I figure that this will force me to come out of my shell and network with others who are in the real estate investment). Goal #3 was get a handle of my finances by developing a budget and stick to it to pay off all my debt so that i can position myself to be able to invest. This is the 1st step to my goal. I have created a budget, it is nothing fancy, I used a word document to list out all my bills and expenses as well as the due dates for the payments. From there, I created an excel spreadsheet making sure that I pay myself 1st and foremost every single paycheck (I am setting aside 20% of my paycheck to pay off debt) and to track where my money is going. In addition to this, I have downloaded an app to my phone that will allow me to track my income and expenses real-time (not sure if stating which one it is would violate forum rules so i will refrain from doing that). Now comes the longest part of my goal, i have to stick with it.
So, why post about it? Several reasons. 1.) it was one of my action items so I had to get it done. 2.) accountability. It helps a ton to be held accountable and the way I figure it if people follow my post or my progress, I have to stay accountable to more than just myself and my family. Finally 3.) advice. For starters, does everyone budget for things like going out every once in a while or should I just laser focus on paying off debt. Currently, with 20% going to debt payoff which I will pay myself first, I still have a little bit of money left over, its not much but its something. Do I roll that into the 20% to pay off my debt faster? Do I use that to maybe take the family out once or twice a month? what have you done and how has it worked
Next question, what should I pay off first? Largest debt or highest interest debt? Part of me is saying "get rid of those large debts first but if I have a smaller debt that is charging me more interest, should I get rid of them first?
Doing this has opened up more questions and I am assuming that is a good thing. I am currently reading "How to invest in real estate" as one of my goals but I think after I am done with that one I am going to find a good book on budgeting to make sure I am doing it right.
Most Popular Reply
@Rigoberto Medina there are two schools of thought on debt pay down one is highest interest rate first the other is lowest balance first. If those align for you then go that route. One thing you can add to your budget quit paying for a bp pro membership, roll that into debt repayment and as for your leftovers money if put that towards the debt too.