The Budget: Year One

Let's just say that I wasn't raised in a very "financially aware" family. And unfortunately, neither was Dan ...

This resulted in both of us having to pay for our university educations completely on our own. It meant that when we had any money in our 20's, we had no idea how to spend it - we'd just blow it. It meant that "savings" didn't mean anything to us. It meant that as soon as we qualified for credit, we racked up a hefty amount of debt.

Things really started to go downhill (financially) for us 10 years ago - when Dan's dad passed away from cancer. It all happened very suddenly - he was diagnosed and 6 months later, he was gone. Dan and I adopted the belief of "anything can happen - make the most out of life now." So that's what we did - one of the main things was that we started traveling like crazy. And we've continued on with our travels ever since, making some super duper awesome memories along the way (not to mention, learning tons and really changing for the better along the way).

As fantastic as all of our trips have been, it's not like we actually had the money for them. We basically dug our debt hole pretty deep as a result of all of our travels (Europe 10x, Hawaii 5x, Las Vegas 5x, etc.) But it all came down to our "live now" mentality ... so we've been making the most out of life and doing what we love most - traveling, exploring.

But then my overall outlook on life/our future shifted and took a different turn. This happened after my mom passed away suddenly from cancer (in her case, she was diagnosed in December and passed away only 1 month later). It was a huge shock and really upset my life in many ways - it changed pretty much every aspect of me, including how I view the present ... and the future. It wasn't until I lost my mom that I really started to think about the future - not entirely sure why ... I guess I was to busy living in "the now". I suppose I had blinders on, but they came off when I lost my mom.

About 6 months after my mom passed away the haze began to lift a bit - and I knew it was time to start thinking about the future. That meant facing reality (= our debt) and figuring out an action plan. All of this resulted in us completely analyzing our financial situation ... and putting together a realistic budget.

Having a budget was a completely foreign concept to both of us us! But it was necessary. So I did a fair amount of research on how to set up a realistic budget (thank you, Gail Vaz-Oxlade) and got to it. It was a fairly substantial undertaking, but I figured it all out and last July our shiny new budget was in place.

In order for a budget to work, it has to be realistic. Our budget allows for everything we need as well as for debt reduction. We will be completely debt-free in just over 2.5 years, which is amazing. Our budget allows for all of our living necessities (of course) as well as for retirement savings ... and the cherry on top? We still get to travel!! (well, as long as we're willing to work hard and bring in the extra money for it)

Obviously we'd be debt-free a whole lot sooner if we were willing to sacrifice travel. But seriously, that's not realistic for us. But we're more than willing to sacrifice in other areas (ie. clothing, entertainment) in order to get our debt gone.

And so far, with year one of our budget complete, I have to say that we're well on our way and so far, it's a huge success. In one year we have:

• paid off several thousands of dollars in debt
• have not incurred any new debt
• paid off Dan's student loan in full
  
• contributed to our retirement savings
• got to go to our friends' wedding in Hawaii
• got to visit China (Dan was there for work so it didn't cost anything for him - and we saved enough for me to get a flight to go visit)

And in September, we're off to Europe for just under a month!

All in all our budget is great. I won't lie - it can be difficult at times (ie. when friends want to go out for dinner and we can't because we don't have it in the budget ... or when I feel the need to go shopping for new clothes) but overall, I gotta say - it's kicking ass. We're well on our way ~ hooray!