Adulting 101: Budgeting and Money Management
At the ripe age of 23, my boyfriend and I bought our first home; a feat that seems near impossible to most people my age. I’m not kidding when I say that nearly every person who hears this says “how in the hell did you manage that?” and since I like you, I’m going to let you in on a few secrets as to how we made this happen.
Before I dive in, I’d like to give you a bit of background on the whole situation. I did not have student debt and I understand that this is not the case for everyone. I was very fortunate and am very grateful that my post-secondary schooling was not a financial burden that I had to carry. We bought a new build house which we did not have possession of (or have to pay for) until 2 years after we bought it. We both work full time jobs in which working overtime (and getting compensated for it) is possible and often times, the norm.
Now down to business.
We set a goal
We knew that the next step in life was moving into a place of our own. I had graduated university, the roommate had finished trade school and begun his apprenticeship and our parents were getting sick of us (jokes). We decided to start looking at the options we had, used a few mortgage calculators found on the website of big banks and solidly decided that there was no hope in hell that we could ever afford a house.
But, if you know me, you know I don’t fail. I either win or I learn and I’d be damned if we didn’t come out on top in this battle against life and a terrible economy. So we persevered and set the goal of buying a house before we turned 25.
We developed an action plan
If I’ve learned anything from Gail Vaz-Oxlade, it's that the absolute first priority in managing your money is to pay down your debt. While I didn’t have school debt, the roommate had debt from his private trade school (nothing but the best, obviously) and we had some consumer debt, aka credit card balances, to take care of. I blame it on my exorbitant Christmas gift giving style.
From there, we needed to figure out how much we could afford to allocate to debt repayment so we developed a realistic budget using the budget spreadsheet HERE. We made sure to include all of our expenses from car payments to union dues and everything in between.
Once we figured out what we were spending each month on incidentals and fixed expenses, we deducted this amount from our net income (the value once all of the taxes and deductions have been made - thanks government) which gave us our “profit”.
Finally, we divided this profit amount into debt repayment, savings and actually living life. Because we were fast tracking our debt repayment we used 50% of this amount and allocated the rest as we needed it. We used cash and debit only - our mindset became “don’t spend money you don’t have” and we saved credit cards for emergencies only.
We put the plan into action, and learned some lessons along the way
I used a calendar to map out when automatic payments were scheduled to come out of our account, we set up automatic transfers to savings accounts and made it routine to transfer funds on payday each week to all of the credit cards. I was checking my banking app every couple of days to make sure all of my calculations and projections were matching our budget. Within 6 months, all of our consumer debt had been paid back and we could now use debt repayment funds for savings. We were closer than ever to reaching our goal!
We didn’t travel as much as our friends or go on dates more than once a month; I won’t sugar coat it - it’s hard to have a life when you’re paying off debt and saving for a HUGE purchase. We didn’t go to clubs or bars unless is was a special occasion and some days it felt like we were the odd ones out. However, I learned very quickly that the worst thing we could do on the pursuit of our goals was to compare ourselves to people whose goals didn’t align with ours. We learned to be okay with the fact that our friends weren’t in the same place as us in life so we lived vicariously through them and supported them in their journeys as we prepared for one of our own.
But there's more!
I’ve barely scratched the surface on how I found budgeting bliss but the internet tells me that obnoxiously long blog posts get ignored so I made you a gift.
I want you to learn how to build a budget like a pro, to avoid having stress sweats every month when you’re trying to make ends meet, so I put together The Catchall’s Guide to Budgeting and it’s only for VIPs.
All you have to do is gift me with your email address and I’ll gift you with the guide! It’s that easy!
And don’t worry, I won’t spam you!
Let’s learn to love budgeting together!