Are you struggling with debt you can never pay off? If you don’t create a plan for your money, you’ll struggle to pay off debt regardless of your income level. My guest this week is here to help. Ashley Patrick is the founder of the blog, Budgets Made Easy. Ashley and her husband paid off $45,000 of debt in 17 months. I sat down with Ashley this week and she explained how they managed to become debt-free and how you can do the same by following a similar plan. 

 

Welcome to the Maple Money Show, the podcast that helps Canadians improve their personal finances to create lasting financial freedom. Do you prefer to invest in socially responsible companies? If so, our sponsor, Wealthsimple, will help you build a portfolio that focuses on low carbon, cleantech, human rights and the environment. To get started with socially responsible investing, head over to maplemoney.com/wealthsimple today. Now, let’s chat with Ashley… 

 

Tom: Hi, Ashley, welcome to the Maple Money Show. 

 

Ashley: Hey, thanks for having me. Glad to be here. 

 

Tom: Thanks for being on. You have an interesting story that I wanted to get into. You paid off $45,000 in debt in 17 months. Can you tell me what that looked like at the time? 

 

Ashley: I was a little bit more intense than my husband, but the back story is he lost his job. We had just taken out a loan. The way it worked was we had 60 days to pay it back. But we had already spent the money and my husband was out of a job so how are we going to pay this back? We ended up owing thousands and thousands of dollars. And that really set me on a journey to not to want that stress ever again—to not worry about feeding my kids if my husband lost his job and not worrying about owing thousands of dollars. After searching online for ways to pay off debt, I came across Dave Ramsey and read The Total Money Makeover. I just dove right into it. We cut back on a lot of things. We sold things. My husband worked a lot of overtime. The job that I had at the time and the way our babysitter situation worked, I really couldn’t work extra so he worked a lot of extras. But I sold things that I could sell, managed the money part and he worked extra. At first, it was just small things at a time. I re-did our budget. I used to just write down what our income would be for each paycheck, what bills I would pay from each paycheck, and then what was left over we just spent on food, gas, eating out—whatever we wanted. We didn’t want for anything. And I realized that I really could pay back this money. Basically, I put it on a zero-percent interest credit card for 18 months. I was freaking out wondering how I was going to pay it off in 18 months and I ended up paying it off in 3 months. I was worried about 18 months and paid it off in 3 after I got intentional with the budget. That was the first thing I did. And I realized, “Hey, we do have money! We’re just mindlessly spending it on crap we don’t need.” That was the first step. And then as we went, we did more and more. You kind of gain momentum and just do it faster and faster. You build on each layer. It wasn’t like I just went in and one day just sold everything we had and did all these things at once. It was really over months before we took another step and did another thing and another thing. As we got toward the end of it, the last chunk was my student loans, which I had been paying on for 10 years. I had only paid off $3,000 because the interest rate was ridiculous. That was the last debt. And that’s when we really started to pick up more momentum and do more things like selling things and working extra. At that time, I also cut out some of our retirement contributions to just really help speed up the process. We ended up paying off that student loan in 10 months, which originally, I think we ended up cutting off something like a year off our whole, original debt pay-off date. We ended up cutting off about a year by getting more intentional, cutting out so much—like eating out. That’s still a big problem for us now that we’re debt-free and have money saved. We still eat out more than we should. That’s our entertainment for the most part, eating out. We just found a lot of different ways to save money, but also to make money because you can only save so much, right? As you get through that initial phase of learning what you’re doing and figuring out how to save, then you need to move on to making extra money so that you can speed things up even faster. That’s basically what I did to pay that off—long story, short. 

 

Tom: That’s great. I like that you sold a bunch of items because it’s something I didn’t do. I didn’t have a ton of debt, but I had debt and I basically tried to pay it all off by just cutting things out. And recently I did sell a bunch of things just to get rid of the clutter. It was stuff that sat in boxes. It was still unused even when I was in debt so if I had actually taken the time to figure out different ways to sell these different things, I could have paid off the debt so much quicker and have been so much more efficient with it. 

 

Ashley: Yeah, but it is what it is. You don’t have to do a soul-sucking fast, you know. If you’ve small kids, you may not be able to work three jobs to do it faster. It really depends on your own situation and your life priorities at the time and kind of weighing what’s important to you now. Is it more important to pay off the debt faster or is it more important to enjoy time with your kids and not stress about trying to sell things? Definitely, if you have stuff just laying around like that you can sell, yeah, do it. It’s so easy to sell on Facebook and other marketplaces. Especially if you have kids’ stuff. I’ve had the most luck with selling kid’s stuff, especially at a little bit higher prices. I mean, I sold pictures off my walls. I sold lamps… Anything I didn’t think I wanted anyone anymore, I tried to sell it. If someone wanted to buy it, they could have it. We also sold a couple of bigger items, like a trailer and a four-wheeler to help speed things up as well. So it wasn’t all little stuff. But, if I could sell it, I was trying to sell it, especially if I wasn’t going to use it anymore. 

 

Tom: Yeah, it makes sense to at least try. And you’re right, there are so many places you can list it now, online, for free. So take the time, take a picture, give it a quick little description and see what happens. 

 

Ashley: Yeah. And not everything sells. I have some stuff that I posted that still hasn’t sold. It’s still hanging on my wall. When I walk by it I think, “I should just get rid of that,” because nobody bought it but it’s still there.  

 

Tom: It’ll sell eventually. Now, it sounds like you were discovering budgeting and paying off your debt at the same time. But if you were to look at it now that you see the big picture of all of this, how would you lay this out? Does the budget help you pay off the debt or is it part of freeing up the budget? What comes first and how does that work? 

 

Ashley: Yeah, the budget really is the foundation because, without a money plan, which is all a budget is—I know some people hate the word “budget” like it’s a curse word. Some people say, “Don’t say the ‘B’ word” but it really is just the foundation and a plan for how you’re going to spend your money so you can be intentional with it. And that’s where the magic happens with paying off debt. Even if you don’t have a budget at all if you’re like me where you’ve laid out the bills for what you’re going to pay from each paycheck, but then just spend the rest, it’s not intentionally going to where you want it so you constantly feel like there’s not enough and that you’re living paycheck-to-paycheck. When in reality, most people I work with do have enough money. They’re just mindlessly spending it on Amazon, fast food, going to Wal-Mart and things like that. But when you can get more intentional with the plan, that’s where you can really make progress fast on saving or paying off debt. They go together. It’s really kind of hard to pay off debt fast if you don’t have an intentional plan and your budget is just your plan on how you’re going to do that. 

 

Tom: Yeah, when I was paying off debt, I didn’t understand a lot of this at the time. Basically, I did find myself in a bit of a cycle, where I was paying off a line of credit first but also spending at the same time. So things would go back on the line of credit. It was forward motion at least. I’ll just make up a number because I don’t remember but say I paid off $500, I might spend $200 and that ends up on there. It worked for me, but I realized it wasn’t an efficient way to do that. 

 

Ashley: It’s a little bit harder to do it that way. Along with the budget, you also have to get out of that cycle because a lot of people might be using their credit cards for groceries because they’re not sure how much they have in their bank account, or if they have enough to get through until payday. It’s hard to get more momentum if you’re still using a credit card. So, whenever you create that plan, you know how much you have to spend on food until your next payday. It kind of takes that stress out of it, too. Even if money is still tight, you know the numbers and how much you can spend on certain things. That kind of takes that stress away, too, and helps you gain that momentum faster with paying off debt 

 

Tom: When it comes to budgeting and even just tracking the spending, how detailed do you go? Because for me, I spend most of my money at Costco. My budget ends up being like this one line item where it’s kind of like, “Just spend this much a month,” but that means it could be groceries, clothes, or whatever other magical things at Costco that day. I know it’s a bit of a black hole, but I don’t want to sit down with my receipts and break it down to groceries and clothing and everything else. 

 

Ashley: Absolutely. What I typically tell people is to not overthink it. I use the Wal-Mart example a lot, but it works for Costco, too. If you are getting household items, food, all these things on a regular basis, just do it as costs. I just put everything as groceries. I don’t break it down into household. Now, if I get clothes—I even ring stuff up separately. Now, I’m not going to do it like 10 different times, but if I have mostly groceries and household things and a few items that are gifts or clothes, I may ring those up separately. Or, whenever I’m tracking my expenses and just don’t feel like dealing with that day or have too many different things, I write everything down in an expense tracker. That really helps me stay on track with my categories. I make a little note and just roundabout numbers. It doesn’t have to be super-specific. It could be $60 was spent on clothes. Try not to overthink it because I’ll have people that want to break it down too much. They’ll have toilet paper, paper towels—and that’s all household stuff. You’re going to get that stuff every month. I have dog food that I always get at the grocery store and that’s in my grocery budget. But then I have dog food and other animal food that I go to an animal store for so I have a separate budget for that store. Try not to overthink it. If you’re getting the same things every month when you’re getting your groceries, just put it in the grocery budget. But if you’re getting clothes and stuff that might not be in “every single time” thing, maybe not. You could do that in a separate transaction because it’s a little bit easier but don’t have to do it that way. You could just make a little note on the tracker. 

 

Tom: I assume it probably depends on the person, too. Just how much of a shopping problem do you have and then how much do you need to make sure you’re fully aware? Because you don’t want unnecessary expenses to get swept under the grocery rug because you go to Wal-Mart. 

 

Ashley: Yeah, exactly. But, if you’re getting all that stuff with your groceries and still staying in your grocery budget, that’s fine. But if you’re going over your grocery budget because you’re grabbing all this random stuff, it really is about being aware and mindful of your spending. One of the things I do when I shop is use a calculator so I can keep track of what I’m spending and find out I really don’t need some of the things. I put it back when I realize I’m getting kind of close to going over my budget. But it really does help you with that mindfulness aspect of it. Just putting your budget on paper or in a spreadsheet is only going to get you so far. You still have to be intentional with your spending, mindful with your spending and know where you are spending. You can’t just set it and then not look at it again until the end of the month. That’s not going to work either. 

 

Tom: I like the idea of actually adding it up as you go because then you feel it. You realize that you’re adding more money to this bill instead of being shocked at the end when it’s $100 more than you would have guessed it was. 

 

Ashley: Oh, yeah, definitely. I’ve done that numerous times. You go in for one thing and $300 later you say, “What happened?”  

 

Tom: Exactly. What about the income side of this? What are the different kinds of income and how do you piece all this together into a budget? 

 

Ashley: Well, the income is where you start. I like to do budgets by paycheck instead of by the month. The month is fine for an overall view of where the money’s going to go and what your month is going to look like overall but you really need to know how much each paycheck will be and what bills to pay out of each paycheck because when the month starts, you don’t have that whole monthly income unless you get paid once a month. So, if you get paid more than once a month, you need to know how much you have for food and gas until the next paycheck. Just because you say you have $800 for food this month, you don’t have it on the first of the month. You may have so much out of the first paycheck and then so much out of the second paycheck. So know your income. And I know it can vary for people but just kind of base it off your lowest expected amount. If you’re commission-based or majorly commission-based like realtors, where they get like a huge check one month and then nothing for two, what I recommend for that is to figure out how much you need for each month. For your regular expenses, you can save. Have a buffer, spending money. Pay yourself that each month out of that one big commission check. Put it into a separate account. Pay yourself with one account and have another account to pay your bills and stuff each month. That way you’re not living high one month and then broke the next two months. You can kind of space it out. That’ll really help with stress in-between big commission checks. But for most people, if you work a regular job, get paid hourly, your paychecks are generally going to be the same. And if you’re going to have some overtime, bonus, or something like that, you can plan for that accordingly whenever you get it but your base pay is generally going to be the same. It may not be down to the penny every single time, but that’s overthinking it a little too much. If it’s within a few dollars each time, that’s fine. The budget is the same every month if that’s the case. Or course, if you’ve got some variation in there with some commission checks or over time or different things like that, you may need to set some of that extra aside in another account so that you have money for those low months, depending on what your expenses are and how much your low months will be. That way you’ve got that covered and you’re not having to use the credit card and stuff during those months when things are lower. 

 

Tom: It’s interesting that you brought up real estate agents. I used to know some realtors probably 15 years ago. And I guess it’s because of that irregular income but even though they were making really decent money, they would complain that they couldn’t pay their bills. In a career like that, you get that big payment and now you’re also expected to have the right kind of car, clothing and everything else. 

 

Ashley: Yeah, they do. There really is a status with realtors, for sure. They need to look the part. And I don’t know if that is really a societal thing or if they do that to themselves as a group. Do they put that on each other? That I don’t know. From a marketing perspective, do they need to look that way and put on a show like that? But I can see how that could be really stressful. I know a lot of realtors that are constantly buying and selling their own houses and upgrading their lifestyle as well. So, if you go a month or two months with not selling a house, that could be super stressful. I really like the idea of having that separate account and knowing what your expenses are so you know how much to pay yourself each month out of that separate account. And keep it separate so that you don’t just mindlessly spend it because that is so, so easy to do. 

 

Tom: Yeah, my guess is it’s a bit of both. There are probably some clients that the impressed by looking successful, “Look at me. I’m great at this,” but I’ve got to tell you, for every real estate agent I’ve ever had, I can’t tell you what car they drove so I guess it didn’t work on me. 

 

Ashley: Me either. That kind of stuff has never impressed me. But, where I live is a very affluent area so I definitely see that a lot. I can’t say it’s all of them. I would say it seems to be a lot of them in that career field that kind of put on that… What am I trying to say? 

 

Tom: Keeping up with the Joneses? 

 

Ashley: Yeah, yeah. My mind was on blank. 

 

Tom: We covered the income side of it and the expenses. Now, we’re literally dealing with what’s left. How do you see the budget taking control there when there’s a certain amount left after income and expenses? What’s next? 

 

Ashley: That’s where the magic happens with paying off debt and saving money. That’s where you need to be really intentional with your plan because it’s easy to say, “Okay, I’m going to pay these bills and then I have $1,000 leftover for whatever.” You’ll just mindlessly spend it so if you can create a plan for what is left over for things that don’t come up every single month like Christmas, birthdays, anniversaries, vacation—or if you are commission-based, you need to set aside money for taxes. Those types of things that you can kind of plan for. And what’s left after those regular expenses that just don’t come up every month can go towards whatever saving goals that you have or paying off debt. And that’s how you can do it really fast when you get really intentional with what is left over. Some of that is going to be a matter of priority right now. You may say, “Christmas is so many months away. I have time. I can pay for Christmas out of a bonus.” Or if you get paid biweekly you get two extra paychecks a year, you can set money aside out of one of those, “This money now is going to go to pay off the credit card because it’s high interest,” or something like that. I like to just pay for that kind of miscellaneous expenses or non-monthly expenses instead of having so much each month come out of my budget. But you could do it either way. You could say, “Okay, I want $1,200 for Christmas so each month I’m going to set aside $100.” That works for a lot of people. If I want $1,200 for Christmas, I just fill it up as fast as I can and move on to the next thing because I like to try and keep my budget simple and not with 100 things coming out every month. That’s just what works for me but I know a lot of people do like to have so much per month for each thing. Then you just put it into a separate account where you won’t mindlessly spend it. Maybe even in a different bank so it’s even harder to get to if you that extra barrier to mindlessly spending it. That is where you can make progress really, really fast—is with what is left over. 

 

Tom: What if someone looked at their income, their expenses and there isn’t anything left? Or even worse, maybe they see that their expenses are higher than their income and that’s why they’re going into debt. What do they do then? I assume it’s probably a mix of a couple of things between income and expenses. 

 

Ashley: Well, there are only so many things you can do, right? You can decrease expenses or you can increase income or a combination of both. You can try and lower any bills that you can possibly lower. That may not be very many of them, but if you can lower your TV bill, cell phone bill or your insurance or cut out some things that aren’t a priority… I hate to say it, but if your kids are in a bunch of activities and you really can’t afford it, then maybe you can cut that out for a little bit. But the biggest thing is increasing your income. So what can you do to make money? Nowadays there are hundreds of ways to make money online whenever you want. You don’t have to be at a desk for hours on end. You can work when the kids are asleep. You can work in the morning. There are tons and tons of ways to make money online. There really is no excuse to not make extra money if you really want. If you know how to listen to this podcast on your phone, you can make money online. You can do it. It doesn’t take a whole lot of tech skills. I am not tech-savvy at all. I screw stuff up all the time when it comes to technology and I have a full-time income online. If I can figure it out then almost anybody else can figure it out. 

 

Tom: Yeah, I’ve said before, the old second job used to be delivering pizzas and waitressing and things like that. Nowadays, you could be signed up for something like Uber and just in your free time, turn the phone on for a few hours. You can make it work better with your lifestyle and it’s pretty easy up work. 

 

Ashley: There’s UpWork, there are freelancers, there’s tons and tons of websites that you can go to just to make extra money. You don’t even have to have a special skill like graphic design. You could make more money if you do but you could do customer service, be an assistant for somebody like me. I have a couple of different people that help me online and they just work whenever they want. They didn’t know what they were doing. I just trained them to do what I wanted them to do. It really is pretty easy. If you know how to use Google Drive, Google Sheets, Google Docs—and if you don’t, just Google it. Watch some YouTube videos, they’re really easy to use. If you can do that, you can make money online. 

 

Tom: And on the expense side, one thing I wanted to suggest, too, is if someone’s feeling like it’s really tight—you kind of hit on it with children’s expenses, you just have to be a little more realistic about needs versus wants. I’ve seen people who say they have no money but they’ve got a premium cable package and a phone with more data than they need. If you take a real look at some of the stuff, you can find places to cut without cutting everything. Maybe you can get rid of the cable and keep the Netflix. There is leeway there. But yeah, sometimes people look at all their current bills and consider it all needs. 

 

Ashley: Absolutely. And keep in mind that it’s temporary while you are working to pay off debt because sometimes it can feel like you don’t want to give up that stuff. But if you think about it in terms of just giving it up for one year, you could pay off a credit card, so is that worth it? It really can take sitting down and thinking about it in those terms instead of thinking you’re never going to have cable again or your kids are never going to play gymnastics again or something like that. When you think about it, when you just get rid of it for 6 months or a year, that’s how much faster you can make progress on your goals, whether it’s saving or paying off debt. And sometimes it just takes running the numbers. There are online calculators to help you do that, too. You can put in your debt and how much you have to put towards it now and then you can put in, “Okay, if I have an extra $100 a month, how much faster can I pay it off?” I’m amazed by how it works because even just $200 extra a month can cut a couple of years off of your debt. Just think about it in terms of that. What am I willing to give up now (temporarily) to get closer to my goal or faster to pay off this credit card or whatever it is? Am I willing to make that sacrifice temporarily? Because I can get it back later. It doesn’t have to be a forever thing so that can kind of help with the mental side of that. I do see that a lot. People identify wants as needs. And really, the only things we truly need are shelter, food, clothing and transportation to work so you can make money (if you’re not working from home). Those are really the main needs. Of course, medication, and child care so you can work—things like that. But generally speaking, your overall needs are pretty limited. Most of the things we want or say we need are wants. 

 

Tom: Yeah, like entertainment and TV. One of the things we always talk about is the expensive coffees and these things you can cut back on. I know a couple of people who, with all these new streaming services out there, are actually just rotating through them. They might have Netflix for 3 months until they’ve watched everything then they’ll cancel it and switch to Disney Plus and watch up for a couple of months until they’re caught up. And they keep rotating. It sounds like a hassle to me, but it’s definitely something that can work.  

 

Ashley: And you can get free trials so you could even create new email addresses and things like that to get in the free trials. But sometimes the trials are only a week so you’d have to watch a lot of TV in seven days. But there are ways to save money. Like you said, you don’t need all the streaming services because then it’s basically the same price as cable. You could just kind of rotate them. I like that idea. You could find ways to save money or still get what you want without sacrificing everything. If you’re getting drive-through coffee every single day, cut it down to two days. You don’t have to cut it out completely but you can cut it back and you don’t have to do it overnight. You could say, “Okay, next week I’m going to do it three times a week instead of five.” And then the week after, you’re going to cut it down to two and then the next week one. And you’ll find that it’s really more of a habit that you’re doing. You’re not really thinking about it. It’s just a habit because you do it all the time so if you build new habits to replace them, it won’t feel as much like a sacrifice. 

 

Tom: I hope we’ve encouraged someone to start budgeting if they’re not and really go after this. What are some tips you have for staying on track because you could go in with a lot of motivation, but if you do feel like you’re deprived or if this just isn’t working for you, how can someone stick with this? 

 

Ashley: Well, know that you’re going to screw it up. It’s going to take practice building that routine and those habits. Those first couple of months, you’re really just figuring it out so don’t beat yourself up. Just get back on track and keep going when you screw up because you will. And then just find ways to stick with it, which could look differently for different people. One way I like to do it which I’ve already mentioned is to use a calculator while shopping. Another thing you can try is using cash envelopes. There are ways to do it digitally because I know some people really don’t want to carry cash. So there are digital ways to do it. But basically, you set aside a specific amount for a certain category. And the theory is, you’re supposed to stop spending in that category when the cash is gone and that takes practice. So know that you’ll overspend and have to take it from another cash envelope or another category. Once you get in the habit of it, it works really well. The other big thing you should do is track what you’re spending because you can’t really stick to the plan if you don’t know what you’re spending. They used to have the chequebook registers where people had checks and would write down what each check was for. It’s the same concept. You’re going to just write down what you’ve spent on your card. I would put what category it is for and how much is left in that category next to it. That just helps me see where I’m on track for it. And then the total of how much I have actually left in my bank account. Since I do the paycheck method, I’m actually paying bills two weeks ahead of time so my bank balance really isn’t my balance, if that makes sense. I write down what I’ve spent and how much is actually left after the bills that haven’t cleared yet. If you’re just starting out, I would highly recommend you do that a couple of times a week and then cut it down to weekly and then at least biweekly. I like to do it the night before a paycheck and then the next morning I’ll update it with how much the paycheck was and everything’s kind of ready to go on payday. Then I run my errands, go to the bank, do all that stuff. But that is a habit that I’ve developed over years so, you really have to kind of find that routine that fits you and your work situation. But I would highly recommend writing down what you’re spending a couple of times a week when you’re just starting out because you will be shocked at how quickly it adds up if you’re not being intentional. And if you wait until the end of the month you can’t course correct. If you had a bad week you can still stay on track and move things around in your budget for the rest of the month. But if you wait until the end of the month, it’s too late. You’ll say, “Oh, I overspent by $1,000,” and you can’t fix it now because it’s too late. I really like writing it down when you’re just getting started instead of using an app or a spreadsheet. There’s something about writing it down that just really helps ingrain it in your mind and build those habits. And studies have shown that by writing your goals down, you are one and half times more likely to achieve your goals. I just really like writing things down when you’re just getting started and then moving to a spreadsheet or an app to just kind of stay on track with the overall picture. But I really like writing things down. 

 

Tom: I like the idea of tracking this and I like that you mentioned how if you’re not watching it throughout the month yet, you end up $1,000 over. Just like how we said in a store you can end up $100 over. You can’t wait till it’s over to look back at it. Thanks for all the advice. Can you let people know where they can find you online? I know you have some spreadsheets too, so tell them about those? 

 

Ashley: I do have a spreadsheet, but I do have a printable plan or two because writing it down is important. So my website is, budgetsmadeeasy.com and then all my social stuff is Budgets Made Easy. I do have a free budget starter kit that has a printable guide and a checklist. It has monthly budget-busters which are categories for each month that people typically forget. It’s really kind of a starter kit for you and it’s free if you go to budgetsmadeeasy.com/start. And if you sign up for that, you’ll get a special offer on my paycheck budget spreadsheet. But that is a limited time offer whenever you sign up for the starter kit. So there’s a couple of different options for you there. But remember to write it down. The printable budget guide in the starter kit will kind of help you do.  

 

Tom: Great. Thanks for being on the show. 

 

Ashley: Thanks for having me. 

 

Thank you, Ashley, for sharing your debt payoff story and for leaving us with some helpful tips for creating a plan for our money. You can find the show notes for this episode at maplemoney.com/156. Are you a member of the Maple Money Show Facebook community? If not, I’d love to connect with you there. It’s a great place to ask a question or share a recent money win to encourage others. To join, head over to maplemoney.com/community to share with the group. As always, thanks for listening. I really appreciate the community we’re building both on the Facebook group and the personal messages and reviews I’ve received. It’s been especially nice to be able to connect with so many people over the past year when we can’t see each other in person. I look forward to seeing you back here next week.