Kumiko Love, known as the 'Budget Mom' shares a plan that helped her to pay off her debt worth thousands of dollars in a period of only 3 years. Love is now sharing her strategy with the readers to help them bring their finances in order.
Kumiko Love, a 33-year-old from Washington managed to eliminate thousands of dollars debt with the help of a three-step plan that she carefully devised and is now sharing the strategy on her blog 'The Budget Mom' to keep your finances in order. Talking to NBC, the young mom explained she was under the mountain of thousands of dollars debt because of the student loan when she was in New York struggling with her son as a single mom. She said, “I tried every budgeting method out there. Percentage budgeting, calendar budgeting, I tried the cash envelopes, I tried the half payment method, I tried monthly budgeting, and every single time at the end of the month I would come up short.”
Love was never really good with budgeting and stuff and tried every method she could to save up money to pay off the debt but no matter how many tactics she applied she was not able to get the hang of it. It wasn't until she embarked on a journey of finances and started her career as a financial counselor that she learned some valuable information and instead of budgeting whole month she started to budget paycheck to paycheck. Love shared the information on her blog with 1.5m followers to benefit them too and it's been shared over 141,000 times.
Love told "Good Morning America," "I really want to teach my readers [they can] have this life they truly love, but living in a way where it's not putting them in debt. It's about showing what that looks like in a real person's life, which is why I share my real numbers with my readers."
She told NBC, “When I started budgeting my money by paycheck every single time I got paid, and I was allocating every dollar for a purpose when I received my paycheck. I started finding myself succeeding, I started finding myself saving money and having more to throw down towards debt.”
This is how Love's “budget-by-paycheck method” came into being and helped her to pay off $77,000 debt in just 3 years.
Love has explained her budgeting process very precisely on her website. She writes on her site, "My budgeting process incorporates three different methods -- the Calendar Method, the Paycheck Method, and the Cash Envelope System. Trust me, no one in the world had printables or worksheets that incorporated all three of these methods into one system or template. So, I decided to design my own. I am a firm believer that my budgeting method can work for anyone, no matter their income size or schedule. As long as you put in the work to make it personal and realistic to your own life, there is no doubt in my mind that you can be successful."
Love has been sharing the techniques out there on her blog and has been benefiting other women with her clever hacks. The most brilliant part of her plan is that it can be broken down into 3 steps.
The first step of her plan is the Calendar Method. In this method, the budget mom advice sorting out the bills that you receive each month like electricity, gas, phone, etc. Once done with this, assign the bills the dates they are due and the expected amount to be paid. Also, do not forget the dates where there is a jump in expenses like special holidays.
The next step is the Paycheck Method. So before you budget, you must know where your money is going. Now sit down and budget each paycheck accordingly and pick the bills that you will pay with the paycheck. (the first paycheck of the month may pay the gas bill, while the second will cover Netflix). She told "Good Morning America," "First comes awareness, and then comes progress." This will help to give every penny of yours a purpose.
Step three is the Cash Envelope System, now that you are done with the first two steps, you are left to figure out how much money you need to set aside for miscellaneous expenses like the gas, groceries, outings, and entertainment. After sorting this out, you now need to set a target by lowering each of these expenses. Like if you spend $100 every month on gas, set the target to $90 for next month. You’ll then get cash out in the amount you designated for these bills and place them in envelopes to keep you from overspending. Whatever money is left over will be used for long-term financial goals.
Love says during this 3 step process it's very important to keep track of your ever-increasing net worth to make sure you're making progress throughout your budgeting journey. This means that you don't increase your expenses even if your income increases. She says, this way, "you'll truly have the extra income to throw at financial goals."
Through her smart tactics, Love was able to pay off a heavy debt of $77,000 in debt which included $32,000 in student loans, a $16,000 car loan and some credit card debt. Love has heard from the followers of her blog saving for big parties, car maintenance funds, a pet adoption or for annual property taxes. Once you start budgeting your expenses in the 3 step process by planning a calendar and marking your paychecks accordingly you can probably save up more money and plan in on bigger financial goals.
Love told "Good Morning America," “I am a firm believer that my budgeting method can work for anyone, no matter their income size or schedule. As long as you put in the work to make it personal and realistic to your own life, there is no doubt in my mind that you can be successful.”
To get on with your next budget plan follow Love on her website "the budget mom."
Image credits: thebudgetmom