Kumiko Love managed to pull herself out of thousands of dollars of debt thanks to a three-step plan she devised and is now sharing on her blog, “The Budget Mom.”
Love, 33, was under a mountain of student loan debt that she struggled to pay off while raising her young son as a single mom, she explained to NBC News.
“I tried every budgeting method out there,” Love told the outlet. “Percentage budgeting, calendar budgeting, I tried the cash envelopes, I tried the half payment method, I tried monthly budgeting, and every single time at the end of the month I would come up short.”
Even though she worked in finance, nothing seemed to work. That is, until she changed her mentality and started to budget paycheck-to-paycheck, instead of the entire month.
“When I started budgeting my money by paycheck every single time I got paid, and I was allocating every dollar for a purpose when I received my paycheck,” she told NBC, “I started finding myself succeeding, I started finding myself actually saving money and having more to throw down towards debt.”
That is how her “budget-by-paycheck method” was born, and it helped her finally pay down her $77,000 in debt in about three years.
What’s the best thing about her method? It can be distilled down to three parts.
First, the Calendar Method: Love advises identifying the regular bills you receive each month, like phone, electricity and rent. Once you have them, assign the days they are due and the expected amount you will owe. (Don’t forget to mark days where you may see a jump in expenses, like birthdays and Christmas.)
Step two is the Paycheck Method: sit down and create a budget for each paycheck you’ll receive, and pick what bills you’ll pay for each paycheck (the first paycheck of the month may pay the gas bill, while the second will cover Netflix).
“First comes awareness, and then comes progress,” she told Good Morning America.
This will help to give each dollar a specific purpose.
Step three involves the Cash Envelope System: after getting steps one and two done, you’re left to figure out how much to set aside for things like groceries, gas, entertainment and outings. Then, each month, lower those expenses a bit. Spend $100 on gas every month? Aim to make it $90 the next.
You’ll then get cash out in the amount you designated for these bills and place them in envelopes to keep you from overspending. Whatever money is left over will be used for long-term financial goals.
“I am a firm believer that my budgeting method can work for anyone, no matter their income size or schedule,” Love told Good Morning America. “As long as you put in the work to make it personal and realistic to your own life, there is no doubt in my mind that you can be successful.”
You can follow Love on her Instagram page, The Budget Mom.