By Daniel Rodriguez | Dr. Budgets
Do you spend your money with intention? Creating a budget is about prioritizing where you want to spend your money and how you are going to fund your goals… whether that be to travel, buy a new car, save for a house, or save for retirement. Rachel shared with us how she was able to pay off $14,000 in debt in 11 months and how life is different now that she is conscious of her spending…
Rachel’s Background
I work for a financial services firm and have been with them for seven years doing employee leadership development. Before I started in this industry, I worked in retail at a high-end department store. I wasn’t making a lot of money, but felt that I needed to be dressed well. Plus, I liked fashion and shopping.
I would put clothes and other small expenses on my credit card, and, after years of this, my debt started to snowball. I wasn’t making much money, so I was only making minimum payments on my credit cards while continuing to add to them. I think my total debt balance wasn’t because of one big splurge, but an accumulation of many years of small, poor decisions. Mostly, it was just me living outside of my means.
Money wasn’t overwhelmingly stressful, but it was a constant cause of stress. I had a lot of debt, but felt it was manageable. I was able to pay the minimum or sometimes a little more than the minimum. There wasn’t a point where I couldn’t make monthly payments, but I also couldn’t envision a point where I could pay it all off. And, I was adding to it here and there, so it wasn’t going down.
I felt like I never had a plan… money just came and went. At the end of a pay period or end of the month I would get an alert that my balance was low, and sometimes I would overdraw my bank account. I would often think “I’m an adult with a good job. I shouldn’t be in this position.”
I had three credit cards with balances and a personal loan, and the combined total was about $14,000.
Deciding to Work with Dr. Budgets
I knew I needed to do something, but there aren’t a lot of options out there. I’m in the financial services industry and I have access to thousands of financial advisers who can help me… if I had money. But, I didn’t have money, I had debt. Financial advisers don’t typically do budgeting. So, I tried setting up my own budget with online tools, but learned that those tools are useless unless you learn how to use them and are consistently utilizing them to look at your spending.
I found out about Dr. Budgets through a friend… I said, “hey, what’s this?” She told me about her and her husband’s experience with their money coach and I thought it might be the accountability I needed.
Working with Dr. Budgets
After the first consultation, I had pretty much decided I was going to work with my money coach. In our first session, we looked at my last three months of spending and it was in my face where I spend the most money. That helped me to identify the things that are important to me (that I want to keep spending money on) and the things that aren’t – it helped me to spend with intention.
For me, that was a really good experience. People might think it is tedious, emotional, or embarrassing… but it wasn’t. I realized this process wasn’t about cutting my spending, it was more about redirecting my spending. Yes, I had to cut in some places, but that savings would then go to something that was more important to me. I knew that I would have to make sacrifices to achieve my goals, but I felt good about that.
I think that working with Dr. Budgets is really positive, supportive, and realistic. We started every session by looking at the progress toward on my goal (my goal tracker) and ended every conversation with accomplishments and recognition – which was a good jump off into the month.
Another thing I really liked was having somebody to talk to about financial decisions. There were situations where a “spend” was coming up or I would need to talk through a financial decision I had to make, and I knew I could talk to my money coach. I had a partner I could talk to – somebody who wasn’t telling me what to do, but giving me a perspective and allowing me to make the decision. That was helpful.
There were a few times when I received some extra money – a couple of bonuses and a big tax refund – and I talked to my money coach about what to do with it. For the tax refund, I decided to allocate all of it toward debt reduction because it didn’t really feel like money I had earned. But, for the bonuses, I decided I would put a huge chunk toward the credit cards, and also go on a little shopping spree (without using credit cards). Before, I would have paid down debt but then also treated myself on my credit card – and then I’d be worse off than before!
Success!
I paid off my debt, credit cards and the personal loan in 11 months, and I was able to buy a car! I was also able to go to Belize for a week with a friend (without using my credit card!). If I wasn’t working with Dr. Budgets and still had credit card debt, I probably still would have gone on the trip – but I would have put it on the credit card.
My money coach helped me to create a plan and held me accountable. He made me feel like it was achievable, and I never felt like there was any judgment. He mapped out different timing options to achieve my goals (shorter timeframe and longer timeframe) and what I would need to do to get there – and I did it even faster than the shorter timeframe option!
Now, I have built up some savings and I’m still continuing to save. Every month, I have money in my checking account. I don’t ever have to think about money… it’s such a nice feeling. I’m thinking about the things I’m buying and not whether or not I can afford them. Being out of debt has relieved some anxiety. It was never overwhelming, but just a little bit all the time.
My next goal is to invest with a financial advisor because I have money now! And since I’m in the financial services industry, I want to take advantage of that.
Also, I have money in my budget to contribute to charities and nonprofit organizations I support. With everything that’s happened lately, hurricanes and the fires in California, I feel good being able to say “yes! I have money to give to that” without guilt.
What would you tell someone in a similar situation to yours about Dr. Budgets?
I would highly recommend working with Dr. Budgets… and I already have told people.
If you’re thinking about it, just have the conversation with a money coach and don’t be intimidated or embarrassed by the process… it’s simple. Doing the work is not always easy, but it’s achievable. And it’s WELL WORTH IT.
Anything else you want to mention?
Just talking about money allowed me to put it out in the open and feel less shameful about my situation. I can talk to my parents now about money and debt. I’ve talked to others and learned they’re in similar situations. Many people go through difficult financial times, but don’t talk to anyone about it. It’s such a cause of anxiety for people. Even if you don’t talk to a money coach, talk to somebody. Money doesn’t need to be a source of stress for you.
Conclusion
It is amazing to see what someone can accomplish when they truly set their mind to something. Rachel was able to pay off her debt much faster than anticipated because she focused on her spending habits every month and allocated a big chunk of extra money toward her debt consistently. Now she is driving around in her new car and building up her savings. How awesome is that?! If Rachel has inspired you to get out of debt and you need some guidance, please contact us or schedule your complimentary consultation.
* For client confidentiality, we changed the name of the person to “Rachel.” Everything else is factual.