It’s that time again for us to reevaluate our budget. As I had mentioned in an earlier post, we have decided to work hard to become completely debt free. We are following the 7 Baby Steps to Financial Freedom from Dave Ramsey and are in step 2 with a bit of step 4 & 5 mixed in.

January 2010:

Although we have not made a huge dent (down 6%) this month in our budget we have seen some unbelievable things happen that we are so very thankful for. Things that will really change the future for us.

To start, I’ll remind you that we had brought our debt down to 17% but were hit with a new set of college loans that came due putting us back up to only 5% down from our original starting point. Well, we have just found out that my son has been offered a very large (75%) grant to attend college next year. With him being our third to go to college in a very short time span, I can not tell you how absolutely thrilled we were. We are so proud of him and his accomplishments and feeling such a relief that a big portion of his tuition is covered.

Then the next thing to happen was I did my taxes. For the first time in many, many year, we are getting a very nice refund. Which, when we receive it, will be plunked right down to reduce our debt.

So, although we did not make a big impact in our monthly reduction for the month of January we see very positive things ahead for us.

The one thing I want to point out is this. As many of you know, we use a cash system to pay for our bills. Keeping cash in envelopes as well as virtual envelopes that go towards bills. This system has worked wonders for us and has held us accountable and forced us to stay focused and on track. So much so that when we found out about our refund we did not hesitate to say it was going just to pay off debt. There have been many times where we would have taken the money and used it pay our monthly expenses that we were falling behind on making it disappear in the regular bills as quickly as it came. But because our budget is in order and we have stuck to it, we are able to act as if it was never there and just use it to reduce our debt. Our hope is that one day when this happens, we can just add it to a savings account instead of getting rid of debt. But for now, I’m happy I don’t need it to pay my monthly bills.

Do you keep a budget?  If so, share your tips to stay on focus.

“The amount of money you have has nothing to do with what you earn. People earning a million dollars a year can have no money and people earning $35,000 a year can be quite well off. It’s not what you earn, it’s what you spend.”
-Paul Clitheroe

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