The Secret To Staying Out of Debt

We want to help you get out of debt and stay out of debt, but first, we need to think about why you got into debt in the first place.

Often times people will point to large tipping point events—a medical emergency, the car breaking down, a bout of unemployment, that last semester of school. This is the stuff that gets blamed for why we have the debt we have.

What We Can Control

But the majority of the time the big stuff it isn’t the whole problem. It’s the tipping point, but it really only exposes a deeper, more fundamental problem. Most of the time, our debt is the accumulation of a lot of little things that add up over time. If you aren’t following Rule Two: Embrace Your True Expenses effectively, you are vulnerable to debt.

Monthly Expenses?

When I talk to someone that is new to budgeting, I’ll ask them, “What are your monthly expenses?” And it’s a little bit of a trick question because I use the word “monthly.” They will tell me $3,000. Sure, OK, $3,000. And in their minds, anything beyond that number is fair game to spend. Except that our expenses are not a steady line. There is never a “normal” month.

Factoring in your true expenses—on a monthly basis—will keep you from leaning on your credit cards, and spending money that you don’t really have to spend because Christmas, and insurance premiums, and car repairs and a new dishwasher are just around the corner.

Embrace Your True Expenses

You would be surprised how few “emergencies” experienced YNABers have. Because when money is in the bank, just waiting to do it’s job, it isn’t much of an emergency after all.

You have to look ahead. You have to anticipate your true expenses. Here’s how it works out in real-life:

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