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.
Why was that? Because we found ourselves hit with a January hangover effect. We watched as the majority of the presents our kids received lie dormant in the corner of the room, not being touched. I would say that over 80% of the toys my wife and I purchased for our kids each Christmas were played with a couple of times and then left to collect dust. That was frustrating considering the money we shelled out for them.
