Student loans seem like a necessary evil these days and some people may even say that it’s “good debt.” I heard Dave Ramsey say, “If it’s good debt, then why are you so happy when it’s gone?” He’s totally right! I for one want to get rid of this “good debt” so that I can actually start living the GOOD LIFE! I get sick just thinking about how much I still owe and how quickly the interest increases. Ugh! I do not want to be 50 and still paying this crap off. What about you?
Before you say I’m crazy, hear me out because this is totally possible. I was able to pay $200/month more on my debt because of this exercise. I had no idea that I had that kind of flexibility in my budget.
Okay, so how do we find extra money to pay off those loans quicker? Let me show you 🙂
Step 1: Look at current spending habits
A. To reach the level of income and freedom that you envision, we must, first, understand where you are now. Print off your bank statements from the last 2 months and grab 7 different colored highlighters, pens, or colored pencils. We’re going to do some COLORING…. Er… kind of. Use your highlighters to highlight the following:
- Eating out (meals, coffee, snacks on the go, etc.)
- Household Expenses (mortgage/rent, electric, water, insurance)
- Vehicle Expenses (gas, loan payment, insurance)
- Extra trips to random stores (clothes, decorating, junk food, hair/beauty)
- Monthly Memberships (magazines, Netflix, gym, etc.)
Now, you should have a separate bank account for your business. If you do not, get a DBA or an LLC with a Tax ID Number and OPEN ONE NOW!
Anyway, do the same thing with your business bank account.
- Print off bank statements from last 2 months.
- Use a different colored highlighter to highlight the following:
- Advertising (photo shoot, social media graphics, running ads, etc)
- Rent (work from home? You can write off a % of your rent/mortgage)
- Cost of Labor (assistant or other contractors you have hired)
- Subscriptions (hootsuite, Quickbooks, etc)
- Training (books, seminars, etc)
Those are basics, you may have more categories that need your attention depending on your business.
Step 2: Where is my money going?
It’s time to be real and raw. Where are you wasting money? Are you stopping at Starbucks every day? Maybe you are paying for cable, netflix, hulu, and still renting movies? The extra $5 at the gas station adds up! Place an X next to every transaction that matches the description.
Step 3: Do the math. Does it add up?
Add up every transaction that you put an X by. This is the “WASTE” in your budget.
Take a sheet of paper and write that number as BIG as you can. What can you do with that amount? Is it serving you well being spent on a $5 latte at Starbucks? What about those multiple dinners out? Would you rather continue spending money on those things, or using it to pay off your student loans so you can expand your business and create the wealth and freedom you’ve always dreamed of?
Buy a $5 latte at Starbucks 4 days a week.
$5 x 4 lattes = $20
$20/week x 4 weeks/month = $80
1 month subscription to Hulu $10 + 1 month subscription to Netflix $10 = $20
You just gave yourself a $100 raise to put toward your freedom fund (aka: business advertising/training)
Step 4: Budget & Cancel
It’s time to make decisions on what you will keep and what you will get rid of.
Dinner out 1 night/week for date night = keep
Daily coffee from Dunkin Donuts = gone
Netflix & Hulu = Keep
Cable TV = Gone
Monthly subscription of Cosmo = Gone
Monthly subscription of Entrepreneur = KEEP (This is personal development = training & should be marked as a business expense)
Now call those providers and cancel, cancel, cancel
Super proud of you for taking this step!
P.S. Have you joined my FREE Facebook Group yet? It’s a serious group of people who want to build a financially strong business and life 🙂 Hope to meet you!