Kumiko Love managed to pull herself out of a debt hole of several thousand dollars in size thanks to a three-stage plan that she developed herself. Love, 33, owed college tuition. She also had several consumer loans, which she tried for many years to repay unsuccessfully. The situation was complicated by the fact that Kumiko was a single mother. How did she manage to get out of the situation?
Debt of 77 thousand dollars
“I tried all the budgeting methods,” Love says. - I tried to spend a certain percentage, live on the financial calendar, used the envelope method and many others. But by the end of the month, I still exceeded the limit of my expenses. ”
Although Kumiko worked in the field of finance, it seemed that she would not succeed. This was so until she changed her attitude towards money and began to plan her budget based on her own salary.
“Each time I received payments, I distributed funds for some purpose. I got rid of all the credit cards and did not buy anything if it went beyond my capabilities. I began to live within our means and suddenly it turned out that I was able to pay off my debt, ”the girl says. So she had her own method, which helped her pay off a debt of $ 77 thousand in three years.
Pros of the method
What is the best thing about Kumiko's approach? The woman’s method allows you to predict in advance all current expenses, such as buying gifts, paying rent and electricity. The most important thing at this stage is to plan everything as accurately as possible. Do not forget to indicate the expected increase in spending before the holidays - for example, for the New Year.
The second step is related to the distribution of funds received. Sit down and make a spending plan for each payout you receive. People rarely get paid only once a month. Most often, it is divided into several parts, and it is more reasonable to consider not the total amount, but all payments separately. “First comes awareness, and then progress,” says Kumiko. If you know how much you get, you can make every ruble work for yourself.
At the third stage, the system of money envelopes is activated: you already know how much you will receive and how much money you need to allocate for a particular purpose. Food, bills, entertainment, medicine - for all categories you need to allocate your money envelope and put the necessary amount into it. In no case do not go beyond its borders, and it is even better to reduce spending every month. Do you get an electricity bill for 1000 rubles? Try to get a receipt for 900 next month. And all the free money you need to use for long-term financial purposes - the formation of savings and loan repayments.
Opinion Love
“I firmly believe that my budgeting method will work for any person, regardless of their income or work schedule,” Love says. - As long as you follow your advice, you will have the opportunity to achieve your goals.
Is this method so good?
In my opinion, the Kumiko method deserves attention, since it takes into account all the necessary factors and allows you to draw up an individual cost plan. But I do not think that it will suit everyone without exception. What other methods exist to improve financial condition?
- If you have several loans, try to repay them using the "snowball" method. To do this, you first need to close small debts, and after that the released funds should be directed to a larger debt. This method allows you to reduce anxiety by reducing the number of loans.
- Avalanche StrategyThis method, on the contrary, advises first to close large debts with the highest interest rates.
If you have money problems, then there are dozens of ways to fix it. Just keep trying, and sooner or later you will succeed.