Occasionally on our debt free journey things go off the rails. Whether it’s because we had a month that we had unexpected car repairs, or because I hit a funk over the summer, getting off track with our budget happens from time to time. But the end game of being completely free from debt is the same no matter what part of our journey we’re on, and so I have to get back on track with our budget. Here are the 7 steps I use to get my budget back on track after a financial setback.
Stop Excessive Spending
Whether you started spending in cash, on your debit card, or you started swiping your credit card again, it’s time to reign it in. It’s hard to get a complete picture of your finances again when you’re spending excessively. It won’t be easy, but keeping your long term financial goals in mind will help.
Evaluate the Damage
Look back at your bank statements, and even credit card statements. Did you stop contributing to any sinking funds? Did you reduce your savings? Did you add any more debt? It’s hard to work towards your financial goals if you don’t have a complete picture of how far off track you got.
Set A Budget
Go back to your basics and set a budget. Once you have your budget, keep on top of it daily or weekly. If things change at the beginning of the month, you’ll be able to easily modify the budget for the rest of the month by staying on top of it. This is much better than trying to do damage control to your budget at the end of the month.
This is where it’s time to get serious. Look at every single expense that you’ve got throughout the month, and compare that to your income. Start making some decisions about what could go if you have a month that’s tighter than others. And as always, if things aren’t adding up, it’s okay to say no to certain things.
Set Savings Goals
Aside from your long term financial goals, what are some of your short term savings goals? Now is the time to set some shorter financial goals to help you feel the momentum of gaining towards your long term goals. For instance, if your long term goal is to buy a house, a short term goal could be to save $10,000 in the next 10 months towards a down payment. To help keep track of your savings progress, use a savings tracker.
Use Cash to Stick to Your Budget
And stick to those cash budgets! If you got off track by swiping your debit or credit cards again, leave them at home. I won’t lie; this is the hardest step. It requires you to remain focused and disciplined. To help stay focused, have a no spend month. Don’t be afraid to acknowledge the small wins when they happen, and of course, celebrate the big financial successes you have.
Stay Focused, But Keep Grace in Mind
When you’re feeling discouraged, remember your long term financial commitments to yourself. At the same time, don’t be so hard on yourself. If this particular season of life is filled with repeatedly using and replenishing your emergency fund for unexpected repairs on your car and replacing your dishwasher that had it’s last straw, then don’t focus on not being able to pay down as much on your debt. Instead, focus on having the cash on hand to pay for these repairs, rather than adding to your debt.
What are steps you take to get your budget back on track? I’d love to hear in the comments below!