Lets assume that you’ve finally decided getting out of debt is a priority. You know that saving money in the monthly budget by cutting expenses is a key component to the debt payoff process. But where do you start? What is the best place to start chopping away at your budget?
The Headache Factor Equation will help you determine which spending categories to cut first.
Not all categories are created equal. For some expenses, you can find money savings quickly. Others are going to take a little more time and effort. Some budget cuts will be easy to endure while others might lead to some family frustration at the lack of spending for that category.
In order to better identify the best places to save money in the monthly budget, I’ve created what I call the “Headache Factor Formula.” This equation takes into consideration three factors that are each scored on a scale of 1-5, with 1 being positive and 5 being negative. The lower the cumulative score of the three factors the better when determining where to start saving money first.
What are budgets?
It didn’t deter us however from trying again…and again…and again. Interestingly enough, we found that after several months of trial and error, certain expenses always drifted to the surface first. It was apparent that we were drawn to some spending categories more readily than others because they represented fundamental needs for our family each month.
At some point it dawned on us that we needed some clarity about the process. We needed to narrow the field and focus on certain priorities in the budget. By doing that, it became obvious what areas of the budget we needed to focus on first.
The first attempt we made at budgeting years ago was a nightmare. Our intentions were good and what we did seemed logical at the time. However, after a few short months it became apparent we could not put together successful budgets.
