Day 15: Debt and Budgeting



This pie chart, is simply a pie chart. I don’t know that it is an accurate representation of a budget. (PC:


I am not a financial adviser. I am not a fiduciary. However, a lot of the content here in this post is common, free, and reputable. This post may not be applicable to everyone’s current financial situation as social class is a convoluted social construct. I also believe that “pulling yourself up by the bootstraps” is a myth and is not the intention of my writing today. But, a lot of the information here has worked well for us, and has helped us form habits and we’ve stuck with them. Through these approaches, I feel this gets at the heart of minimalism. By organizing our finances, this has minimized our stress around money, knowing where each dollar is going and towards what. That has been an awesome feeling.

Graduation and Beyond

I graduated with my undergraduate degree in 2008. I had my first salaried position in 2009. With this new sense of purchasing power, I splurged on clothes, dinner, good times with friends, etc. Live a little, right? I also had five figures in student loan debt. What I was naive to: I didn’t immediately know what a good course of action was for paying down that debt, or what financial independence looked like. Thankfully, my partner at the time (now wife), provided me some great resources to get me started.

Enter Dave Ramsey. I believe Dave our experiences with Dave for handling debt and budgeting are really tough to beat. You have to conscientiously make a decision not to incur any additional debt, but especially consumer debt, where the interest rates can be much higher. After that, the steps are:

  • Baby Step 1 – $1,000 to start an Emergency Fund
  • Baby Step 2 – Pay off all debt using the Debt Snowball
  • Baby Step 3 – 3 to 6 months of expenses in savings
  • Baby Step 4* – Invest 15% of household income into Roth IRAs and pre-tax retirement
  • Baby Step 5* – College funding for children
  • Baby Step 6* – Pay off home early
  • Baby Step 7* – Build wealth and give!

*not covered in this post.

I personally swapped steps two and three early on. My loan payments were just losing their deferment status, and the area I lived in was fairly cheap to live. There’s some privilege to that, so let’s name it. For me, the goal was to quickly focus on getting 6 months of expenses into savings, then pay down my debts. Why 3-6 months? Because if for some reason, I lost my job today, I’d have a cushion to get myself back on my feet in that time. I’ll come back to steps 4+, in another post. But first, how did I get a plan to address steps 1-3?

Budgeting, my dear Watson!


See this lovely document? This was my lifeline in my early journey with budgets. We still use it. (Photo Courtesy:

This cash flow plan is probably the reason I see finances entirely differently now, compared to early-twenties Blu. My wife is really the one who deserves the credit, as she spent time helping frame this to me and explaining how it really helps with managing your money. Dave often explains that paying yourself first is an important step for financial freedom. So this cash-flow plan lines it out with this principle in mind.

The premise: put your monthly take-home pay in the top right corner, then fill out the form, completing all the categories. The percentages on the form are where Dave usually recommends you spend for a specific category. Some areas are more expensive than others depending on where you live, etc. Food may be more expensive in one city. Or, renting may be the only option in your area for example.  But, the percentages do help align whether or not you’re overspending on any given category. For us, it was and occasionally still is, dining out.

The envelope icon for subcategories denotes an area to pay for your purchases with cash. The reasoning is: cash helps avoid paying with a debit or credit card, where the impact of a purchase isn’t immediately realized. Cash leaving your wallet does help with curbing impulse purchases. I use my credit card for emergencies only. That’s it. If you’re curious, the envelope system is explained really well here. I personally use envelopes for a few of the categories: food, gas, pocket money, and gifts. The rest of the categories we don’t purchase often enough to warrant keeping it in cash. As we need an item, like toiletries, we grab cash accordingly on that given month, buy what we need and are done with it.

The end goal: we add up all the categories, then subtract it from our total take home pay. It should end up with zero. As the month goes on, we keep track of purchases, and pay attention to what’s in the envelopes. What’s next? At the end of the month, we go back in and double check what we actually spent in a given month. We did this usually when we were first starting a budget, or we were reevaluating our current budget or goals. An important piece, is: you do NOT, take money from one envelope to pay for something in another category. If this happens, reevaluate your budget at that month, and see if you’re under-budgeted on something like food, or if you’re over-budgeted somewhere else. Which brings me back to

This all doesn’t happen in the blink of an eye. After a few months of troubleshooting my monthly spending, and getting an emergency nest-egg (which you don’t touch under any circumstances, except for emergencies!), I was ready to start tackling my debt using a snowball method.


Protip: you’re pushing the snowball (your debt) down the hill, not running away from it. That’s the premise here.

Finishing the baby steps and learning how to walk…

After getting a good monthly budget, and my emergency fund stocked, it was time to pay down my debts. I knew how much I could throw to my debt on a given month. So I did just that. I consolidated my loans for a more competitive rate. I took on no additional consumer debt, and avoided using my credit cards. Long story short, by sticking to my habits, living frugally and responsibly, I had paid off all my debt by 2013. I still enjoyed life, traveled a bit, spent time with friends, celebrated special occasions and holidays. There may have been instances where I still overstretched my budget from time to time, because no one is perfect. But we were finally on the path to financial freedom. 

I want to cover more, but I think this post could drag on if I did. So, I’ll revisit some of the later steps and incorporate some other resources we’ve used in our pursuit of financial independence. Again, I hope you don’t take this as a one-size-fits-all approach, but if you adhere to some of these principles, I think you can find ways to make your money work for you, and not the other way around. Thank you for reading, and hope to see you tomorrow!

Warm Wishes,



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