• debtfreeandwealthy

Falling Off the Wagon

After having paid off almost $35 000 of debt in two years, we felt pretty good about our accomplishment. Instead of rewarding ourselves with a day at the spa or a nice dinner, we decided to go on a TRIP during the Holidays. We brought the kids to my parents and went on an adventure for 5 days, in a foreign country. We went all out; did all the cool activities; saw the best shows, and ate in world renowned restaurants every single day because "eh, we deserved it!"

Although for the most part, we were cash flowing the vacation, we had no idea how much we were actually spending. When we came back and did the math, we were appalled! We had spent $6 000 in 5 days!

We rolled up our sleeves and admitted to ourselves that we needed to get back to the plan and be "gazelle intense" again. This time, there would not be any trip (or other significant expense) until we were debt free. We had to go back to what had worked before, which is using cash only and tracking our money. What we found is that when we are expected to write all of our expenses in an app at the end of the day, we are much more accountable and we think twice before buying anything. "Do I really need this? Could I easily justify this purchase if my partner asks about it at the end of the week? Is it worth the time spent updating the budget?"

Also, using cash creates an emotional discomfort that does not happen when using debit or credit. The physical transaction hurts much more than a simple tap on an ATM machine.

The system that works best for us is to have budget dates before the beginning of each month. We wait until the kids are down, open a bottle of wine, eat some pizza and do a budget meeting. We look at what our predicted expenses are for the month, for each category of spending. As soon as we get our pay, we pay the bills and all the fixed expenses right away. We then withdraw $400 each, for our variable expenses.

We put this money in our wallet and we know that it is the only money we can spend until the next pay check. We use this cash for everything from groceries, to gas, to parking tickets, haircuts, etc. If there is no money left to spend, we just stop spending, or find another way to make more money (by selling things on Kijiji, for example.)

The hardest part is to stay motivated after months and months of sacrifices, and to resist the temptation to spend when all our friends and families invite us to expensive nights out, or vacations. This is why it is SO important to have a big WHY to rely on when we feel like splurging. What do we value more? Our family security or instant gratification? More time with our loved ones or nice stuff to show off?

As I am writing this, we are still a little under $30K in debt, and our goal is to be completely debt-free within the next year (while continuing to save for retirement and emergencies).

Let's be creative and try to have as much fun as possible, while being on "beans and rice"! We'll let you know how it goes!