In our last post, “How We Afford to Travel Full-Time“, we mentioned that budgeting was the #1 way we afford to do any kind of traveling. Budgeting allowed us to identify ways we were wasting money and/or areas we could cut back on in order to free up money for travel. Turns out, we were able to cut back and free up $637 a month in pretty simple ways!
If you want to see exactly how we freed up $600, you can grab a FREE copy of our PDF “How We Freed up $600 a Month to Pay Off Debt & Travel More”. Click here to be taken to the post, where you can sign up for the free download.
Budgeting helped us eliminate $100,000 of debt, save up $25,000 emergency fund and it completely changed our lives and our marriage.
We were able to pay off this debt in the following 3 ways:
- Home Equity. We decided to sell our house and downsize in order to use the equity to put towards our student loan debt.
- Sacrifice. As we stated above, we made a lot of cuts in order to free up money. We continue to sacrifice in order to afford the lifestyle of our dreams. We lowered our cost of living by moving into an RV in order to travel more, we purchased a 16 year old vehicle in order to pay for it in cash, and we are continually careful about every purchase we make. We don’t live like we are on vacation every day. Prioritizing and being willing to sacrifice are critical to financial success.
- Budgeting. We would be no where without the process we describe in this post. Budgeting is the first step to taking control of your finances and reaching any debt, savings, or travel goals!
We had so much success using both our budgeting process and the tool we created, that we created a program to share it with others. If you’d like to check out the program, called Finance Your Detour, you can click here. Otherwise, keep reading to get a general idea of the process we use and teach in our program.
The most important thing about budgeting for us is that we approach it as a team. We sit down together at the beginning of each month to review the prior month’s spending, and plan for the upcoming month. During this meeting, we both are engaged and provide input and are open and honest about our conversations regarding our finances and expenses.
Set Savings Goals
As with any goal in life, if you don’t identify exactly what you want, it’s impossible to get there. Whether we are building our emergency fund or saving for a big purchase or trip, we set a monthly goal for saving that will keep us on track for our larger savings goals.
For example, we are currently saving for a down payment on a mountain cabin in Colorado to serve as our home base when we aren’t traveling. We have a set amount of money we’d like to save by the end of the year, and we know how much we need to save each month in order to reach that amount. Putting money into savings is always our first step when planning for the month.
In order to reach our savings goal each month, we have to limit our spending. To do this, we budget a certain amount of money for each spending category we have and stick to that limit. We also plan for any unique expenses that come up each month – i.e. holidays, special occasions, large purchases – so that we can budget accordingly and try our best to avoid surprise expenses during the month.
Track Every Expense
Every single purchase goes into our budgeting tool. This allows us to know exactly where our money is going, evaluate trends in our spending, and identify ways we could cut back and save.
We check in with our budget throughout the month to ensure we are on track or make adjustments as necessary. Each months spending fluctuates, so our projections aren’t always accurate and require us to reallocate. It’s extremely important to stay on top of your budget throughout the month, otherwise setting a budget to begin with is in some ways, useless. This also allows us to stay in communication and both be on the same page all month long.
This is a very general description of the process we use to budget each month. We go into much greater detail and teach the specific strategies we use in our program, Finance Your Detour. Along with the video lessons we created to teach the steps, we provide worksheets for you to apply your learning, as well as the exact budgeting tool we designed and use. You’ll also get video tutorials to ensure that you know how to use the tool successfully.
We step you through implementing the same budget we use and are confident that if you are as motivated and diligent as we are, you’ll experience the same success and financial peace that we have. We surely don’t claim to be experts or have the best budgeting tool and process out there, but they are ultimately what helped us achieve our dream of eliminating debt and traveling full-time!
What budgeting process do you use or recommend? Or how can we help you start implementing a budget? We’re here to help!
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Great article. Definitely gives me hope! I just love you both.
A budget is must, corporations use it, large and small businesses use it, so why not a individual/couples? Basically individual/couples are entrepreneur’s. In short we use Quicken to track our expenses, generate numerous reports with a simple click and are able to use it on the cell phone, tablet and computer. Word of caution, Quicken is not too friendly with Apple products. We use to be impulse buyers many years ago (15+) until we realized where our money goes. Another bit of advice then I`m done, make it a daily habit to ensure entries are made, nothing is more frustrating… Read more »