The other day Alexis talked about how and why she has a budget. She mentioned that if she hadn’t set up a budget for herself at age 18 she “would’ve blown all of my money on clothes and materialistic items most likely”. Unfortunately, this is exactly what I did during college when I had absolutely no budget to speak of.
I was spending my money all willy-nilly and before I knew it, I had spent through my life’s savings of just over $5,000.
Here’s what happened and how I’ve turned my financial life around since then.
I Ate $5,000
When I got ready to go to college I was living in the dorms and I didn’t have a job lined up right away. Luckily, my parents graciously offered to pay for my tuition bill for most of my college education. I did have a lot of scholarships, so it wasn’t too pricey out-of-pocket.
Nevertheless, I should’ve done more to be careful with my money during my college years. I left for college with over $5,000 in my savings account and after my first year of college I had less than $1 in my savings account. The worst part is that I had practically nothing to show for this spending, only my “freshman 15” as I had spent the majority of that $5,000 on going out to eat with my friends and fiancé.
The next 2 years weren’t much better as I lived paycheck to paycheck and often had less than $5 in my checking account mere days after getting paid and paying my bills. I didn’t even have a savings account open because the minimum deposit was $100, and I didn’t have that much money. At this time I also started to rack up some credit card debt.
Luckily about a year after my college graduation I pulled my head out of the sand and realized what my financial mistakes had cost me. I had about $18,000 of student loans and consumer debt, plus a home mortgage of $120,000.
Since then I’ve made better financial decisions. I make a monthly budget and although I still tend to go out to eat more than I should each month, I know I’m way better off than I was when I had no budget at all. At least now I know when I’ve gone out to eat too much as I reconcile my spending and budget numbers often.
Just like Alexis said in her article last week, I will continue to set aside money for fun and that includes going out to eat with friends and family. Going out to eat is something I enjoy, but I don’t want it to get out of hand again and ruin my financial life.
Thanks to my budget and financial goals, I’m done living paycheck to paycheck. Now I’m paying off debt and re-building my savings so I can have a solid financial future.
Have you ever lived without a budget? What did you overspend on when you had no budget?