When I first moved out on my own, I was literally broke. I had a laptop and a few hundred dollars in my bank account — that’s it. Luckily, I had just gotten a full-time job and was able to live the first month for free by house-sitting at a friend’s house (man, was that a lifesaver!). But still, I was broke as hell.
How I Saved with Debit When I Was Totally Broke
I knew I needed to do whatever I could to save as much money as possible to build up my emergency fund, so I made myself an incredibly strict budget and used debit to buy everything. By using debit, I knew that I could not go over my monthly allowance without risking going into overdraft.
This kind of mental game worked like a charm, and I was able to stick to my budget and save quite a bit of money, even though I was making the lowest salary of my career.
My Insanely Strict Budget
I’ve actually never shared my budget before, but I want to show you how insane my budget was when I was 24 back in 2010.
Just looking at this again kind of blows my mind. I can’t believe I lived on so little, but I was very determined to save and not get into debt.
What isn’t reflected on here is that despite me making only net $24,896.04 at my full-time job (which equals to gross $30,500.08), I did have a side-job as a teleprompter. I made $20/hour at this gig, but the work was never steady. On average, I probably worked one shift every two weeks.
Nonetheless, all that extra money helped me big time in reaching my savings goals. Whatever I made, I put directly into my emergency fund or RRSP. As much as I wanted to spend it, I told myself that it would do me more good longterm if I didn’t touch it. Thank god I listened to myself!
Why I’m Going Back to Debit to Get Back on Track
Fast forward 6 years, and my budgeting game is in a desperate need of an overhaul. Instead of using debit for my personal allowance, for the past few years I’ve been using my credit card. I do this because when I opened up my bank account with my current institution, they said it would cost me $10/month for unlimited debit transactions. Being the cheapskate that I am, I said “Eff that!” and started using my credit card in its place.
I thought this would be the smarter choice because not only would I be saving myself $120/year, I’d also be acquiring points with every purchase. I was wrong.
In theory, it could’ve been the smarter choice. But in reality, my spending started getting out of control. The freedom that a credit card gives you can be dangerous, and you need to be very focused and strict with yourself. I’ve tried a number of things to help me track and curb my spending, but at the end of the day it just wasn’t working for me. So, I’m going back to debit.
If You’re Budgeting Strategy Ain’t Broke, Don’t Fix It
Looking back, I don’t know why I altered my whole budgeting strategy just to save me $10/month. And it didn’t actually save me any money in the end because I started spending more than I’d allowed myself anyway.
So, to get back on track so I can continue to reach my savings goals, I’m going back to debit. I went into my financial institution yesterday and told them “I’m ready. Charge me the damn $10 per month!” And once they set me up with unlimited debits, do you know what they asked me? If I wanted a line of credit…#facepalm.
How do you budget the best? Do you use debit or credit for your daily and/or personal spending? Make sure to join in my Facebook group to join the conversation there too!