I started budgeting several years ago when I got out of grad school and found myself in about $35,000 of debt; 20k of student loan debt and 15k of a car loan. At first, I didn’t know any better, I thought 35k didn’t seem so bad. And in all reality, I know I’m lucky to have gotten out of both undergrad and grad school with only 20k in student loan debt.
Throughout grad school, I took for granted taking out student loans because I knew I was going to work for a university that qualified for Public Service Student Loan Forgiveness . What I didn’t realize at the time was that over the 10 years that I would have had to make minimum monthly payments, I was going to end up paying more than if I just dumped every extra dime I had in to my debt. So, I made a budget. Don’t get me wrong, PSLF can be an amazing loan forgiveness option and to this day I help people navigate the steps of the process, but for me the numbers didn’t work out in my favor.
I started writing down every single bill, purchase and expense in a notebook. I tried out online tracking tools, but I didn’t feel a compelling responsibility to those online tools like I did the physical act of writing out each number. I told myself I’d just track my spending until I was out of debt. I calculated that it would take me about three years with my entry-level income if I stayed to that budget I made so many years ago.
Two and half years later, I made my last debt payment.
That was four years ago and I still write down every single purchase I make. It has become part of my life. It taught me to care about how I was spending my money so that I could not live paycheck to paycheck.
Budgeting, or at the very least tracking your spending, is the one of the most important steps towards financial freedom. I wouldn’t have been able to start this journey toward FIRE if I hadn’t started budgeting so many years ago. So if you don’t want to spend your life working for someone else, start tracking how you spend your money and save every cent you can.