How did my husband and I get into $50,000 in debt? It wasn’t because life’s circumstances happened and justified us borrowing money. It was because we lived beyond our means and didn’t even know it. Our budget deceived us.
We had a budget on paper somewhere that included our fixed monthly expenses (bills where you pay the same amount every month) and our variable expenses (bills that come every month, but the amount varies). It balanced just like it should.
I remember the day in June 2006 when the light bulb came on. Our life costs more than our fixed and variable monthly bills. Christmas comes every year and we buy gifts. Winter comes and we need gloves. Summer comes and we need new shorts. My tooth needs a crown. The brakes go out and they need to replaced. Those things happen. They happen whether I have planned for them or not.
We calculated how much we spend annually on those non-routine things – car repair, medical bills, vacations, clothes, home repair, home furnishings, etc. We divided by twelve to get a monthly amount and added it into our budget as a monthly expense. Holy smokes! Our budget had been lying to us. It didn’t balance after all.
Your turn: Figure it out for yourself. Has your budget been lying to you?
I am starting a new feature on Pocket Your Dollars. Every Thursday (or Friday?) I will share a nugget about my family’s journey from $50,000 in debt to financial freedom. My heart’s desire is to inspire you and equip you to reach your dreams by getting out from under financial pressure.