This week Gail continued her advice on debt repayment, focusing on snowballing payments. Our next task was to create a budget with numbers from our spending analysis. We also finally have a use for our 500 items and Gail gave some of her life advice to start and to end our week.
Gail’s answering our questions!
Gail let us know this week that in November she will be answering our questions. This is your chance to have your money questions answered by a professional!
Email your questions to: firstname.lastname@example.org
Time to turn things around
Snowballing Your Payments
Gail describes snowballing as the most efficient way to pay off your debt.
What you will do is pay the minimum payment on each of your debts except for your debt with the highest interest rate. For this debt you will be making a payment above the minimum.
Once this expensive debt is paid off, you will take the amount you were paying towards that debt and apply it to the next most expensive.
Creating a Budget
Budget is one of my favourite words! I am a self-proclaimed budget nerd. I like to look at creating a budget like a puzzle where I need to make all of the financial pieces fit together.
Gail has us creating a budget this week from our spending analysis information. For the budget, you will need the worksheet which you can find here: MoneyProblems.ca
If you need to catch up on the spending analysis worksheet task, I’ve compiled a summary of the spending analysis in my Week 35 Recap including a link to the worksheet.
Main points from Gail for your budget spreadsheet:
- Input your net income after deductions–the actual amount you take home.
- Your budget must balance. There cannot be any negative numbers at the bottom of your spreadsheet.
- Use the average spending numbers from your spending analysis worksheet for your budget, but realistically adjust these numbers for your income. (Any reduction also means you will also have to reduce your spending.
- You must save something. Saving for your future and emergencies is necessary for financial independence.
- You must be working to get out of debt. No paying only the minimum payments.
- If your debt repayment is taking a large percentage of your income, adjust your budget or find ways to make more money.
Visual Budget Exercise
At the beginning of the year, Gail gave us a list of supplies that we would need for the Money Master Class. This included 500 things. It could be anything from paper clips to pennies. I picked up some pretty pink crystals from the dollar store that I can reuse for crafts.
We finally have purpose for these 500 things!
Now that we’ve created a budget, we can use these 500 things as a visual aid to balancing and tweaking our budget.
Reflections and Life Lessons
One of the many reasons I love following and learning from Gail Vaz-Oxlade is that she looks at a person’s life as a whole. She makes the connections between financial health and mental health and well-being.
Gail ended this week with some of her life advice.
Debt Repayment Chains
Way back in January, Gail had us create a visual picture of our debt. If you weren’t following along back then, you can read about this task in my Week 4 Recap.
How do you feel about budgets? Do you use one regularly?
Missed last week? Find it here: Week Thirty-Seven Recap
New to the Money Master Class? There’s still time to get started!
Check out this Twitter Archive to see all of Gail Vaz-Oxlade’s #MoneyMasterClass tweets from the start.
Find the resources, spreadsheets, and quizzes here: Money Master Class
Check out my weekly recaps to get caught up.
Start here with the Money Master Class Intro and Week One Recap
Check out Gail Vaz Oxlade’s books here:*