Money for the Man – Paying Down Debt, Saving, and Budgeting Your Life
Money makes the world go ‘round, and as a man you must ensure you don’t go about without a financial plan.
A man who has his finances together is a man who will see social, economic, and family prosperity. Financial conflict is one of the biggest reasons for divorce.
The Gentleman’s Handbook is here to help you get your ass in line when it comes to your finances, and help you curate the lifestyle you both want and need.
In order to do so, there is a lot we have to cover. We have broken the most important aspects down and will be going over them here.
Thinking about Finances Properly
First off, we need to get you thinking about money properly. Money is a tool. It is your social and economic life force. Without it, you don’t have a home. Without it, you can’t eat. Without it, you can’t take that beautiful woman down the bar from you back to your place after buying her that favorite drink she has that costs $15 – trust me, those drinks are out there.
In order to play the game, you have to play the money game too.
Now, here at The Gentleman’s Playbook, we aren’t focused on being rich, or being stingy. A life of money can be quite empty – but it is what you do with that money that counts.
Think of money as a tool to leverage your goals, desires, and aspirations. Money is your ticket to a healthy and happy life.
Many people find that money isn’t like this – and that’s okay. Many think of money and finances as a burden, but we are here to change that outlook.
Whether you make thirty thousand a year, or a hundred thousand a year, you can live the lifestyle you want.
So, remember this rule – money is a tool to achieve an end.
The end can be a nice apartment, or nice car. It can be all organic foods, wind energy, or a vacation. It doesn’t matter.
To achieve your ends with your tool (money), this is what we will do:
- Set Your Budget – the 50/30/20 Rule
- Sticking to Your Budget
- Building an Emergency Fund
- Building a Savings
- Evaluate Your Debt
- Snowball Your Debt
We won’t go into discretionary investing today, that’s for another time here at The Gentleman’s Playbook. Today is about getting yourself financially free, sticking to a budget, and having a big ass savings account down the road.
Your Budget – the 50/30/20 Rule
Before you start snowballing debt or anything crazy, we’ve gotta get your budget straightened out. A solid budget equates to a solid life. Here at The Gentleman’s Playbook we want to help you get a kick start.
As men, we should keep things simple. That’s why we’ve broken your budgeting process down into three categories:
Further insight is of course necessary as to what constitutes each category, so we will easily break it down.
Necessities constitutes of all required bills and costs of living. To break it down for you, these could include, but are not limited to:
- Electricity and other bills
- Credit Card Payments
- School Loans
- Car Payments
- Retirement Fund
Pretty much any payments you must make every month are necessities.
Simply put, your savings is your savings. It is what you set aside for your safety nest in the case of emergency, unemployment, or if you want to make a big purchase such as a house.
Your savings – at the minimum – must cover at least 6 months of living costs in order to be considered a solid savings. If you lose your job or if you lose a spouse who helps provide for half of your cost of living, you must be able to cover yourself for at least 6 months to help find a new job or a higher paying one.
Once your savings covers half of your cost of living, then you can begin to extend it to a year of living, or add to it to cover a large expense without dipping into your 6 month emergency unemployment fund.
We will go more in depth as to how you can effectively save money later in this article.
Lastly, the discretionary category is all other expenses – going out to eat, on dates, getting a manly facial, even an extra savings to purchase the new Xbox or PlayStation would apply to this category.
The 50/30/20 Rule
Alrighty gents, now you know the definitions for our budget – so here’s the easy part. All your going to do is split your spending by percentage amongst the three categories.
- Necessities – 50% of Your Budget
- Discretionary – 30% of Your Budget
- Savings – 20% of Your Budget
Simple as that.
If you want to get the free Gentleman’s Playbook Budget Sheet, sign up for our email list, and it will be sent to you immediately.
We’ve conveniently broken down the Gentleman’s Playbook Budget Sheet so that you can place your CURRENT spending into it, and get a calculation as to where your current percentages lie.
From there, you can customize your budget to fit the criteria as set by The Gentleman’s Playbook to get your money where it needs to be.
Your budget should always be expended. Each dollar you earn has a job, whether it is a necessity, a fun discretionary, or for savings.
Sticking to Your Budget
Now that you’ve received the Gentleman’s Playbook Budget Sheet for free, we have to discuss how to stick to your budget.
If you haven’t gotten your free budget sheet, sign up here with your email to get it.
Sticking to your budget is tough, but with proper practice it becomes easy.
Always have your budget sheet accessible to yourself, and always know how much you have left to spend in your budget. Track your spending and categorize it by the three types we listed above. If you aren’t sure which category it falls under, label it “discretionary.”
If you exceed your budgets, you’re in trouble.
Actively tracking your categorical spending gives you a visual as to what you can or can’t spend.
Once you get the budget tracking down, and stick to your budget, you’ll find you have way more money than you think! Those Big Macs do add up, trust me.
I had a friend who spent over one thousand dollars a month on fast food, and he didn’t know it until I sent him my budget sheet and instructed him to track each dollar he spent.
Building Your Emergency Fund
Every man needs an emergency fund. What happens if your car breaks down, and you have a towing and repair bill that eats up your grocery budget? That would be awful.
By having an emergency fund, you can cover any unexpected costs to prevent yourself from going hungry or being late on your rent or mortgage payment.
Building your emergency fund with The Gentleman’s Playbook Budget Sheet is easy – just use that 20% of income you are dedicating to the savings category, and use it wholly for building your emergency fund.
Dedicated 20% of your income to the emergency fund monthly, until you get $1,000 stocked away – in cash only.
Once you’ve hit this emergency fund, we can start doing your debt snowball as mentioned down below a few sections.
Building your Savings
Only begin your savings after you have created your $1,000 emergency fund. That 20% of your budget will go into your savings account. It can be cash savings, or just start a savings account with your bank.
Save 6 months worth of living expense. So, if it costs you $1,500 a month to live, you should save up $9,000.
After you save for 6 months of living, hop back to that emergency fund and get another $1,000 in it, then come back and continue to save 20% of your income in your savings account.
Use savings for if you lose your job, or you need to make a big payment like buying a car or a down payment on a house. NEVER let your savings dip below the 6 months of living you have saved up. Imagine your savings is negative 6 months of living, and once you save up that 6 months, your savings is now an even $0.
Once you reach a savings of 6 months of living, its time to pay down debts.
Evaluating Your Debt
The biggest mistake a man can make is lying to himself.
Let me tell you the lie mistake I’ve made in my short years on this planet: “I’ll pay it back when I’m paid next.”
I had this mindset for the longest time once I was out of high school and on my own in my career and college. I would always tell myself I’d pay back that $50 bar tab when I get paid next week.
I didn’t. I let it sit there accruing interest, paying the minimum $35 on my Discover card, racking up more and more each month until my card was maxed out.
My biggest tip to you when it comes to evaluating your debt and your behavior with debt is this: do not use any credit unless you plan to pay it off immediately. Only use credit or go into debt if you already have the money.
Example: we purchase our groceries on each paycheck we get. We set aside $200 to get our food, and instead of using our debit card or cash – we use our credit card. HOWEVER, we preserve that $200 we actually possess in order to pay that grocery bill back to Discover in full.
We never use more credit than money we have budgeted. Why? Because that’s how you max out a card.
The process is simple.
- Set aside $X for groceries.
- Use your credit card to make this purchase.
- Hold the money you’ve set aside.
- Pay off the card with that money you set aside when the credit card bill hits.
Now, we advise that you don’t use credit at all for anything, unless you are a highly responsible individual. It took a lot of self-control in order to manage our debt the way we do.
Take a look at your debt, right now.
If your credit score is in the shit, or you are utilizing over 30% of your current available credit, STOP USING YOUR CARD AND STOP GOING INTO DEBT.
From here on out, you’re only using cash or what you have in your bank to spend according to your budget which we have outlined in this article.
Before we get to that, let’s talk about a concept called snowballing debt. The famous Dave Ramsey discusses this in his book, The Total Money Makeover.
Gents, snowballing your debt is a simple concept.
Write down all the debt you owe by account, and organize them by amount, as well as the monthly payment.
- Amazon – $500 in debt – $25 payment
- Discover – $1,000 in debt – $40 payment
- Student Loans – $15,000 debt – $150 payment
This is barebones and just random numbers, but you get the point. Now, once you’ve reached your savings of 6 months minimum, and also have an emergency fund of at least $1,000, you can start to snowball your debt.
The concept is like this: take your smallest amount of debt, and aggressively pay it off. Take the same amount you were paying to that small amount, and pay that to the next amount, adding it to the minimum payment.
That’s confusing to some, but we will break it down and show you how to actually do this effectively.
By now, you should have your savings built, your emergency fund ready, and all is well. You’ve been paying the minimum on your cards and not using them at all.
Take the 20% you were putting into your savings, and make that the new minimum payment for your lowest amount owed on a credit card.
In this example, Amazon is who we owe the least to, with $500 owed and a $25 monthly payment. If in this example, we also only make $2,000 a month, 20% of that is $400. That’s what you’ll pay to Amazon, on top of the existing minimum. Your new Amazon payment is $425.
The month comes around, bills are in. You pay Amazon 20% of your income + the minimum $25. You now only owe $75 to Amazon – easy, right?
Month 2 hits, you pay the minimum on all other cards, and $425 to the Amazon cards. You paid off the card, with $350 to spare. This extra goes on to the Discover card you owe $1,000 on. This card gets $350 left from the Amazon surplus + the Discover minimum of $40 in this example, and knocks you from $1,000 owed to $610 owed.
Month 3 is here. Now, previously you paid $425 to Amazon (20% of income + minimum payment). This is your new payment to Discover, but add on the $40 minimum. You will pay $465 monthly to this card.
- $610 owed – $465 paid = $145 remaining on the card
Month 4, same thing. Except Discover is paid off and you have a leftover of $320. Add the student loan payment listed above to this, and pay that loan $470.
Month 5 hits (trust me this is the last example for snowballing), and you now have the 20% of income ($400) + the old Amazon payment ($25) + the old Discover payment ($40) that you will add to the minimum $150 for the imaginary student loans here. You pay student loans $615 monthly until they are paid off – about two years.
See how easy it can be? Take time to mull that over.
Just add 20% of income to your lowest debt payment (after you’ve got your emergency fund and savings built as outlined above), then take the lowest monthly debt payment, and that 20% and you now pay that to the next, adding the minimum payments to your debt snowball until it is all gone.
We know that some of this article was long-winded, but we also know how valuable the process was to all of us here at The Gentleman’s Playbook.
Hopefully you walk away with an understanding of proper budgeting, money management, and how to pay off those pesky debts. We will be going more in depth on some of these concepts in the future, no worries.
In the meantime, get your free copy of The Gentleman’s Playbook Budget Sheet, and see how your finances hold up to our budget plan. Make adjustments, and live life like the man you want to be – debt free, and with a scotch in your hand (minus the guilty feeling of the cost, since you’re within your awesome budget).