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Erase Debt, Budget and Purchase the Things You Want

To Purchase Things You Want

The word “budget” or “budgeting” conjures up all kinds of images of boring people, people who do not buy anything, maybe even dumpster diving at the extreme end. However, properly utilizing a budget leads to just the opposite. Once you free up money with your budgeting it is time for you to spend or save it the way you want to. This does not mean to go on a spending frenzy and waste away all your newly freed up money. But you can start to target those funds to things you need and things you want. And to be able to do it all without putting a single dime on a credit card.

You do not want to pay off all of your debts and then turn around and start purchasing things on credit card again. Thinking that you can handle it better now that you are out of debt. This will only guarantee that you fall back into debt all over again. What you want to do is to start creating line items or categories on your budget for purchasing things that you may need as well as the things that you want.

Where before most of your line items were for debt repayment, now a lot of your budgeted items can be for the things you need or want to purchase. If you have children you will probably want a category for their education fund. If your car is falling apart create a category for the new car fund. Better yet if the car is newer and in good shape definitely create a new car category in preparation for the next car purchase whether that will be 2, 3, 5 or 10 years down the road. Imagine saving up enough cash to purchase your next car out-right instead of taking out a car loan.

Think about a vacation fund. Everybody wants to go on vacations. And guess what? They cost money. But save a small amount every month in a vacation fund and you will never have to bring a credit card with you to the beach, Disneyland or your next ski trip.

Budget just to save money. Hopefully by the time you get to this step you already have an emergency fund in place and fully funded. Continue to contribute to the fund. At some point you will have to use it so you might as well keep enough funds in it to keep the fund going if you encounter any rainy days.

Already maxing out your 401k at work? Then budget to put money into an IRA. It never hurts to have a lot of retirement accounts. Or just budget money into an “all-purpose” fund that you use for anything you want. This would be for things that have not already been budgeted for. It is for the unexpected last-minute purchases that come up. For example, a dinner out with an old friend or family member that is in town. This sort of purchase is NOT an emergency so it should not come out of your emergency fund. But have some sort of slush fund to cover such things.

As you can see budgeting is not just for the dull, dreary task of paying off debt. It can and should be used for building wealth and for anticipated and not so expected purchases. And it can be fun to watch your money grow using a budget to help you. So remember to budget, erase debt and build wealth.

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