Yahoo Finance Jade Warshaw: How I Went From $450K in Debt to Debt-Free in 7 Years
According to recent data from LendingTree, the national average credit card debt for American consumers in the final quarter of 2023 was $6,864. If you’re overwhelmed by your debt, it may be time to consider following a budget and creating a plan to earn your financial freedom.
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Money expert Jade Warshaw paid off $460,000 of debt with her husband Sam and shared her best advice in the book, “Money’s Not a Math Problem.” Warshaw also recently appeared on GOBankingRates’ Live Richer Podcast with Jaime Catmull to discuss the steps you should follow to pay down debt.
This article will review the biggest lies about budgeting, according to Warshaw, and share why debt is not simply a math problem. Here are three lies about budgeting that are preventing people from saving money.
Lie #1: Budgeting Is a Form of Punishment That Restricts You From Spending
A budget is a plan for your money, and Warshaw believes that people avoid this word since it feels like a punishment. The myth is that budgeting is a negative and limits your life options. In reality, a budget isn’t a punishment, and you must reframe how you approach your money management habits.
Warshaw wants you to view your budget as custom organization for your money. Your budget can allow you to choose how you spend your money, and you may even find funds you didn’t know you had by analyzing your spending habits.
Early in the podcast, Warshaw mentioned how you can wander your way into debt, but you can’t wander your way out. If you want to pay off your debt, you have to create a financial plan that forces you to be accountable for your spending. She wants you to create a plan by trusting the person giving you the budgeting advice. If the financial expert advising you has demonstrated that they’ve gotten results from budgeting, you’ll want to try what worked.
There’s someone out there who knows more than you, and it would be wise to seek guidance from them. This also means that you should get your partner involved if you are in a relationship.
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Lie #2: Budgeting Is Best Done Alone
If you’re married, it’s essential to remember that you shouldn’t budget alone. Warshaw noted how budgeting and paying off her debt with her husband allowed them to live the life they dreamed of. However, many people feel like they should budget alone..
Warshaw spent seven years paying off her debt with her husband and noted that it doesn’t happen overnight. The good news is that by getting your partner involved in budgeting, you don’t have to feel like you’re alone in the journey.
Lie #3: A Budget Is Just a List of Your Debts
Warshaw shared how many people assume that a budget is simply a list of their debts and that the rest of the money is up for grabs. Just because you paid your rent, phone bill and utilities, it doesn’t mean that the remainder should be treated like a free-for-all.
She stressed that a real budget is a financial plan in which every dollar has a job before the month begins, and you know where every dollar goes. This means that there’s much more to your budget than simply listing out how much money you owe.
Additional Budgeting Lies
Warshaw shared a couple additional budgeting lies you should be aware of. Don’t buy them.
Additional Lie: Budgets Are Embarrassing
Similar to the point of budgeting feeling like a punishment, you shouldn’t be ashamed that you’re tracking your spending. Warshaw believes in following the loud budgeting trend seen on social media, where you’re transparent about your financial goals with your social circle. Warshaw stresses that you shouldn’t feel embarrassed or guilty about setting boundaries when managing your money.
Additional Lie: Budgets Are for People With No Money
Too many people feel that budgets ruin financial status and are for those who are “bad with money.” Warshaw wants you to view a budget as self-care since you work hard for your money. Your budget will help you figure out where your money’s going so that you can work on your daily habits.
Setting Up Your Budget
In an article on the Ramsey Solutions blog, Warshaw stated that she’s a proponent of zero-based budgeting for a financial plan. A zero-based budget is where your income minus your total expenses should equal zero for the month. The goal is to give every dollar a purpose or a job so that you know exactly where your money’s going.
The good news is that there are numerous budgeting strategies and apps out there, so you can find a plan that resonates with you. Once you’ve created your budget, you should consider utilizing the debt snowball method to approach your different balances. The debt snowball method that Dave Ramsey has popularized is where you emphasize paying down your debt with the lowest balance first so that you can build momentum. This approach varies from the debt avalanche, where you focus on the highest-interest debt first.
However, all that matters is that you ignore the common budgeting lies holding people back so that you can make an effective plan for your money. If you would like additional advice on paying down debt or budgeting, check out some of Warshaw’s articles or purchase her newest book.
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This article originally appeared on GOBankingRates.com: Jade Warshaw: How I Went From $450K in Debt to Debt-Free in 7 Years
