Guest Post: How to Get a Month Ahead with Your Finances

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Hey all, today we have a great guest post for you all! Mrs. Picky Pincher is the blogger and money-saving maven at Picky Pinchers. She writes about living the good life while paying off debt.

In the summer of 2015, I was newly married and horribly broke.

My new husband and I wanted to start our lives together. We had big dreams of buying a home and living happily ever after in quaint suburbia.

But oops–we also had $45,000 of student loan debt, two car payments, and $14,000 of credit card debt. With all of these monthly payments, there was zero money to save at the end of the month. We lived paycheck to paycheck in a vicious hand-to-mouth cycle.

Frankly, it was exhausting. I can’t tell you how many nights I stayed up late, crying into pints of ice cream and saying, “I wish…”

Once I realized our dream of home ownership couldn’t happen with our finances, I got angry. We made three times the average income for a family in our city, and yet we still couldn’t buy a house? That was B.S.

I got mad about my money, and that’s when things changed.

Mr. Picky Pincher and I sat down and made what we now affectionately call “The Escape Plan.” We made a road map to stop living paycheck to paycheck, get out of debt, and retire early.

It was ambitious, but we knew we could do it. Our first step to financial independence was getting a month ahead with our finances. We knew it was crucial to build up our savings in case of an emergency, like job loss or an unexpected bill. So, in the fall of 2015, we hatched our fiendish financial plan to get a month ahead.

Read Next: How to Budget on a Low Income

How to get a month ahead 

When I talk about getting a month ahead on our finances, I don’t mean that we pre-paid all of our bills for the month. Being a month ahead means you have enough money in savings to cover all of your expenses for one month. This is a big financial milestone and gives a lot of security. I was worried to death about losing my job and not being able to pay the month’s rent.

Here are the steps we took to build enough savings to cover one month of expenses.

Cut expenses like cuh-razy

I kept hoping a giant bag of money would fall out of the sky and land in our laps, magically solving our problems. Unfortunately, that didn’t happen, so I actually had to find ways to save the money we already had.

The easiest way to start finding “extra money” in your budget is to cut expenses. It’s crucial to take small steps here so you don’t feel like you’re depriving yourself.

In the beginning, we cut:

• Restaurant bills: I realized we were spending $1,000 a month on food for two people. Ouch! We stopped our daily restaurant habit and started cooking at home more. It was a change, but I was inspired by the insane savings.
• Entertainment costs: We loved going to the cinema, but the cost of tickets and snacks made us rethink our pricey pastime. We instead started going to our local library and renting DVDs and books for free.
• Silly expenses: I used to pay ridiculous money to get my hair done. I also spent money on BirchBox, magazine subscriptions, and treated myself to a new pair of shoes when it struck my fancy. I didn’t need any of this stuff; it was just making me poorer. Out it all went.
• Energy bills: We switched to LED light bulbs, got a smart thermostat, and covered our windows with blackout curtains.After we started seeing the savings trickle in, we became bolder with the expense-cutting. It was time to play in the big leagues.

Next we cut our:

Increase income (if you can)

Soon after we began our savings journey, I got a job making a whopping $17,000 more a year.

Instead of blowing my income increase on a new car, badass television, or a new phone, I socked it away. We did absolutely nothing with that extra money except put it in our savings account. We continued our small, happy lifestyle and enjoyed seeing the figure in our bank account steadily rise each month.

Check out this awesome list of easy ways to increase your income on the side.

Work it

It’s funny; after doing all this hard work, it felt like a bag of money suddenly did fall from the sky. We had a significant amount of “extra money” lying around and it was time to put it to work.

Our first step was to build a buffer in our checking account. Our energy company loved to send surprise extra charges on the bill and I was terrified they would over-draft our account. We started small and aimed to have a $500 buffer in our checking account. We agreed not to touch that buffer unless it was an emergency. It was like insuring ourselves against the pesky nuisance of over-drafting our account.

Second, we started building our savings account. This was the big moment! Mr. Picky Pincher and I added up all of our monthly expenses to see how much money we would need to save. After the final tally, we needed about $3,000 to meet our goal of being a month ahead of our expenses.

Thanks to cutting our expenses and increasing our income, we were able to meet our savings goal in 4 months.

Once we had a checking account buffer and some actual savings, we decimated debt like it was our job. We paid off $14,000 of credit card debt and realized our dream of buying a house–we even paid the $16,000 in cash to renovate it. We paid off my $25,000 student loans in July, and we’re on track to pay off Mr. Picky Pincher’s $45,000 loans by early 2018.

The bottom line

We want to know: Are you a month ahead with your finances?