Money Series: How to Stick to Your Budget, Save, and Pay off Debt

Money Series: How to Stick to Your Budget, Save, and Pay off Debt

Money Series: How to Stick to Your Budget, Save, and Pay off Debt

Welcome to part 3 of our Money Series.  If you’re just joining in and haven’t had a chance to check out parts 1 and 2 you can do so here:

Money Series:  Money Affirmation….Will yourself into Financial Freedom.

Money Series:  How to Budget Plan and Gain Control of Your Finances.

In part 2 we learned how to create a budget.  By creating a budget we know exactly were all of our money is going.  We also learned that when we can keep track of our money we can spend more intentionally.

In this part of the series we are going to show you what to do with the extra money you find in your budget.  We’ll also introduce you to a great method for sticking to your budget.

Let’s start with a plan for sticking to your budget.

Stick to your Budget

Most people use bank cards or atm cards to pay for items.  We have gotten out of the habit of carrying cash for various reasons like they’re safer and more convenient.  I think these are both valid arguments and I would have to agree.  But,  what’s not convenient about plastic is keeping track of the amount of money we spend.

When we use plastic we tend to spend more money.  So,  for me,  cash is King when trying to stick to your budget.  Carry cash.  This way there is no guessing about how much has been spent or how much is left for spending.

It part 2 of our money series we created spending categories and now I’m going to show you how to use the Envelope Method to keep track of spending in each Category.

The Envelope Method

Most of us find it hard to make a budget that works.   But,  knowing how we spend our money is a major step to financial freedom.  Taking the time to map out a budget and stick to it takes discipline and sacrifice.  The Envelope Method is a great way to keep budgets on track.  Have you heard of it?

Here’s how it works.

So,  you’ve sat down and written out a monthly budget.  After you have written out your monthly budget grab a few envelopes. They don’t have to be fancy,  plain envelopes will do.

Now,  label each envelope with your spending categories.  For instance, entertainment, groceries, clothing, gas, salon, etc.  Next,  take the money that you have budgeted for each category and stick it in the envelope labeled with that category.  For example,  if you have budgeted $150 per month on entertainment stick $150 in the entertainment envelope.  Continue stuffing your envelopes until all of your envelopes are filled with the cash allotted for that category.

Here’s the deal.  You must be disciplined.  Once you spend all the money in an envelope that’s it for the month.  Do Not take money from a different envelope to spend on a category that it was not budgeted for.

Now,  you may find that at the end of the month you have some envelopes that are empty.  You will also have envelopes that still have money in them.

You can do one of three things with the left over money.

  1. Put the extra monies in a savings account.
  2. Pay Down Debt
  3. Roll the money over to next month’s envelope


Creating a Savings for your self should be at the top of your list of things to do with your excess money.  Always pay yourself first! 

If you look at this budget there is 100$ left after expenses.  You can pay yourself that 100$ a month until you have at least a 1000$ emergency savings fund.

Your emergency fund is not to be touch for any reason other than emergency.  Your car breaking down is an emergency.  A trip to Cancun is not an emergency.  Think of this money as your safety net.  So only use it for emergencies and replace the money if used.

Pay Down Debt

Once you have established an emergency fund,  start paying off debt.  Take that extra 100$ per month and apply it to your smallest debt.  For instance, If you have a credit card with a balance of 5000$ and another with a balance of 1000$ add the extra 100$ to the minimum payment you are making on the card with the 1000$ balance.   Continue to pay the minimum balance on all your other cards until the 1000$ debt is paid off.  Then,  take the 100$ plus the minimum payment that you were making on the now paid off 1000$ debt and apply it to the 5000$ card payment along with it’s minimum payment. (Minimum + 100$+minimum = payment)

Continue using this method until all of your debt is paid off

You’ll be out of debt in no time.

Roll it over

After you have established a fitting emergency fund and paid off your debt you can roll the extra money left in your envelopes at the end of the month to the follow month’s envelope.

Once you get a handle on your finances you will find that money isn’t as sparse as it use to be.  Over time you can change the amounts in each category and you may even decide to eliminate certain categories so that you can spend more in another.





photo credit: cafecredit Saving Plan via photopin (license)

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