How to Live Life on a Budget and Stay Debt Free

Remaining debt free is not an easy thing to do. I am currently in the process of becoming debt free (except for my mortgage payment). I have tried to budget off and on for the past 10 years, and to be quite honest, until 2 years ago I was never very good at sticking to my budget.

So what changed? I got a new job 2 years ago. I am a commission only employee who only gets paid once per month. I guess you can say I was forced to change out of necessity. While, my plan may not work for everyone, it seems to be working for me.

First, my pay varies monthly so I don't know what my paycheck is going to be until I get it. The first thing I did was open a second checking account. This second account acts for my personal expenses (gas, food, personal needs, etc.). It's also with Bank of America and has the keep the change round up linked to the account. So basically, whenever I use my debit card, it rounds up to the nearest dollar and automatically transfers the change into the savings account. What a pain free way to save. I also automatically transfer $25 of that account into my savings. I know it doesn't sound like a lot, but it's $300 additional saved at the end of the year (plus interest)!

On Microsoft Excel, I prepare two monthly spreadsheet of my expenses. My personal expenses will vary monthly because of my income. The first spreadsheet includes mortgage, savings, utilities, car payment, insurance, cell phone, etc. The second spreadsheet is my other checking account and includes food, gas, beauty supplies, things like getting a hair cut, clothing (if I buy any that month), entertainment, etc. Because I get paid monthly, I have to make that money last until the first of the month when I get my new paycheck.

My friends laugh at me because if they invite me to a movie and I don't have the money in my budget, I tell them maybe next month instead of saying yes and charging the movie.

This takes a lot of discipline and I do occasionally slip up and charge something (nothing higher than $50), but I'm only human.