How I went from broke and without hope to being a financially stable person with a working budget.

In 2018 I was $47,000 in debt when I applied James Clear’s “Atomic Habits” and Jesse Mecham’s “You Need A Budget” to acknowledge my situation and make a dramatic change.

Like many, I have long struggled with maintaining finances. It began with taking on debt in the form of student loans to pay for school. By 2017, I found myself amassing a pretty significant amount of credit card debt.

I owed as much as $7,500 to credit in addition to my $40,000 student loan. Payday loans forced me into the most extreme version of paycheck-to-paycheck living. It seemed inescapable, using each new pay to repay the previous loan.

I won’t lie. This cycle took a long time, a promotion, and subsequent raise at work to eventually break out of. It wasn’t easy, it got worse before it got better, and it left me battered. I had developed some seriously dysfunctional spending habits that I’ve spent the last two years trying to replace.

It is possible to turn this around. Since then, I’ve paid off all my credit card debt, and have been able to pay bills even during times when freelancing work was hard to come by.

Several Attempts at Change

I tried my best. I made myself budgets, I tried to add up all my bills and calculate how much I’d put into everything on my next pay. I tried using Mint to track all of my expenses so I’d know exactly where my money had gone each previous month.

No matter what I did, I was always playing catch-up. Inevitably, something unexpected would come up, and I’d be right back at ground (sub-)zero. Even if it went well, I was still living paycheck-to-paycheck.

The hardest part about budgeting like this is that missing your expenses not only feels like an absolute personal failure, but it can genuinely result in a small disaster response. Now you’re not only battling debt, but you’re battling raising cortisol and blood pressure levels at the same time!

By the time I managed to break the cycle in summer 2019, I had accumulated nearly $15,000 in debt between overdrafts, and credit cards. Thanks to a boost in my salary, I managed to qualify for a line of credit to consolidate my debt.

At this point, I decided I needed to make a serious change to rebuild.

Two Books Made a Difference

That September, I read two books that changed my perspective on budgeting. James Clear’s Atomic Habits and You Need A Budget by Jesse Mecham. Two seemingly unrelated books, but actually deeply intertwining in their themes of acknowledging the present situation, and executing change.

I undertook a zero-sum budgeting technique from the book You Need a Budget. In this budget, you follow a few rules:

Give every dollar a job. This is actually deceptively simple. Before you can give a dollar a job, you need to know your jobs. You need to identify and create an “account” for every fixed and flexible expense you have. For each account, you can set a goal for what you expect to spend in this category.
Only budget money you actually have. For a dollar to be given a job, it needs to exist. In other words, you can only budget money you already possess. You don’t budget your next pay because you do not have it yet. If you’re broke (like I was) you’ll be starting out with less than you need. It’ll feel scary if you try to budget for everything you need because you can’t. That’s okay. You can fill that job when you have some money to assign to it.
Roll with the punches. You can make your best guesses based on the data on-hand, but you can’t predict the future, and you will make mistakes. When an unexpected expense suddenly appears, you don’t need to panic or take on debt, because you already have the money for all of your other expenses, you can instead adjust categories, make sacrifices in other categories, and cover it.

Learning How Broke I Was

The shittiest a-ha moment came when I set up my budget. I realized that even though payday was just a few days earlier, I was already well over-budget in a zero-sum sense. I couldn’t budget this month’s subscriptions, phone bills, utilities, rent, and groceries.

It was honestly a bit disheartening. I wasn’t certain what I would do. I realized my debt payment goals were way higher than I could actually afford.

This was a harsh yet important moment of learning.

I was now aware of reality. I was now aware of why I was living paycheck to paycheck.

I didn’t have as much money as I thought.

Budgeting is a Skill

Like any new lifestyle change, becoming a budgeter was hard when I was first starting out. For the first several months, it was an absolute grind, and every time I thought I made progress, I’d make a few mistakes, or get a charge I wasn’t expecting and fall back behind. I realized on several occasions that I was too casual with my credit card spending.

The fact is, at the start I simply wasn’t good at it. I didn’t know how to budget well yet. I was not a great budgeter. And yet, I was a budgeter.

Learning to budget is the same as any other lifestyle change, like learning to exercise, or eat well. So it would stand to reason, then, that the steps you might use to become a better budgeter would be the same as if you were picking up any other skill.

When you first go to the gym, you are awkward and clumsy. You are weak. Truly — you simply are not strong yet, because you haven’t trained yet. You become strong gradually, by practicing. Any single workout doesn’t need to be the greatest. In fact, your first workouts will inevitably be less than ideal. You will be clumsy, you will make mistakes, you will struggle.

You could quite as easily break a collar bone in a skiing accident two years in, be off for 3–6 months, and regress to where you were a year earlier.

The fact that you inevitably start off weak is not a matter of opinion, it’s a fact, and pretending it isn’t true doesn’t help. Just try deadlifting 315 pounds after six months away from the gym and find out.

Like any skill, getting better at budgeting requires regular action. Ideally daily, at least weekly.

But don’t stress if you miss a weekend when you’re out camping in the Algonquins with a half-functioning lamp, no cell service, and a hungry family of raccoons trying to steal your bag of hot dogs while you try to scare them off with your marshmallow spit roaster.

Everyone has their rough patches and bad weeks.

Eventually, over time, you will get better.

Getting to Zero

My second a-ha moment came after about two months of trying and failing to budget only money that I had ahead of time. I’d just gotten back from my aforementioned camping trip (yes, the raccoons got my hot dogs — talk about unexpected expenses!)

I had gotten paid on Friday while we were away. I’d pre-payed for (most of) the weekend’s supplies, and so I hadn’t touched that pay yet.

I sat down, refreshed, but anxious, about making sure I had enough for the month ahead.

I went into YNAB and started to budget.

The month before I’d gone a little over-budget and had built up some hot fresh credit card debt. I added it to my expenses in my budgeting app, moved the money in my accounts on YNAB, and made the actual payment to my credit card.

Then, I started going over my fixed expenses. I budgeted for my rent, my internet, phone bill, hydro, water, gas, Netflix and Spotify subscription, gym membership. Everything I remembered, and everything I’d forgotten about over the last several months too.

Then, I went over to my flexible expenses and started to allocate money there. I had found about what I’d spent in each category over the last several months of under-budgeting, over-spending, over-budgeting, and still over-spending (funny how the spending’s rarely under unless you’re on top of things, eh?)

I quickly added to my budget. $200 for groceries, $60 for coffee, $20 for writing supplies, $60 in case I decided to brave it out of my house to get a haircut.

Pretty soon, I’d budgeted all my money and sat there. I could more or less pay for all my bills. I wasn’t balling. I’d had to cut a few nice-to-haves (wouldn’t smoke that joint I was thinking about). But, I had enough. I had summed to zero that month.

It didn’t feel great, but it felt pleasant.

I couldn’t quite put my finger on it, but I felt good. Then I realized: I felt at peace.

I wasn’t worried about anything financially, because I had been able to budget for everything that I would buy that day. Even the nice-to-haves that I didn’t really need, like that haircut I knew I wasn’t going to risk my life on in the pandemic.

Starting Over is Okay

This wasn’t the end of my struggles. Remember, budgeting isn’t a one-and-done task, it’s a habit, and like with any habit, you will mess up. Anyone who has been attending the gym for a few years knows this as well.

Inevitably, you find yourself forgetting to track properly. At several points in this process, I failed to keep up to date and found myself with 100s of expenses I didn’t know how to add, or dozens of expenses I had lost track of and couldn’t figure out why I was over-budget.

At first, I was hard on myself. I saw these mistakes as personal failures. I would try and fail to catch up. After that failed a few times I’d give up. It would sometimes be weeks before I owned up, and hit the restart button on my budget.

As I got used to budgeting, however, I learned that the easier I was on myself, the more likely I was to stick with my budget. Sure, I might make mistakes and fall behind, but I’m not going to beat myself up over it.

So, now, when I fall out of the habit, I’m comfortable either making some emergency adjustments to get in sync or (if all else fails) hit the Make a Fresh Start button in my budgeting tool, YNAB. Doing so restarts me to a mostly-blank canvas with my open account balances to budget with, and my budget categories listed at zero.

To extend the gym metaphor just a bit further, this would be akin to starting your 12-week program over if after the first two weeks you took an entire month off, as opposed to trying to catch up on a month’s worth of workouts (good luck 🚑).

Saving for Dreams

My third a-ha moment came just a week after getting my first budget to zero. I called the bike shop where I had taken my old bike several weeks earlier. The parts were on backorder and it still wasn’t ready.

Annoyed, I started perusing Kijiji for new bikes. My old bike had been rusty and broken for years, but I’d never thought I’d be able to afford a replacement. That’s when I found a nice bike for just $400 for sale outside of the city. I looked up the make and saw that the bike was a great deal. It was an older bike (10 years) but it had all-new parts. It was $1,000+ new!

I called the guy, and he said he could sell it to me for $300.

I really wanted it, but how could I afford it? I’d already budgeted all my money…

But, I opened my budget up anyways and thought about it. I moved the $60 out of my haircut budget that I wasn’t risking my life to spend. I took $40 off my coffee budget (Nabob was on sale, why buy Starbucks?). Before long, I had $300 pulled out of my nice-to-haves. I even pulled out another $25 to cover the bus fare there (and back — in case the bike was rusted to bits).

I emailed the guy immediately, and the next day I took the bus out to Etobicoke to meet his wife (he was at work) and check out the bike, I rode it in the parking lot for a minute and instantly wanted to hand over the money before she realized they had made a mistake. She insisted I ride it around the neighborhood to be sure.

I quickly exchanged my money with the woman, thanked her profusely, and started my two-hour bike ride home. It was the first truly enjoyable bike ride of my life. The bike’s aluminum frame was so light it felt like I was floating. I outpaced cars!

Best bike ride of my life.

This is the moment I truly realized the power of budgeting. I didn’t have any more money than before, but because I had a tangible plan for how I would spend every single dollar, I was able to take advantage of an opportunity. Because I knew what each dollar was for, I was able to weigh my options, make sacrifices, and ultimately choose what I wanted.

Now, I’m a budgeter, and because I’m a budgeter, I am also a happy biker.

Embracing Unemployment

A few months later, I encountered the most inspiring moment that proved to me the true power of being a consistent budgeter.

I had left my full-time role at an agency to become a contract consultant in order to take advantage of what seemed like an excellent opportunity. After a few months of having worked with them, the agency I was contracting through had an incoming client whose project they wanted me to lead.

In order to free me up for the contract, they had ended my time with my previous project and requested that I take a one-week “vacation” (unpaid of course) while they settled things with the new client. While unexpected, I decided not to put up too much of a fight, as this was the nature of contract work.

Unfortunately, things took a turn for the worse. The client and agency were undergoing contract negotiations, and they kept postponing my start date, week by week until I had found myself without any income for over a month.

In the past, even missing a single paycheck, let alone a month’s income would have thrown me into distress, thrown off my budget, possibly even spiraling me back into debt. This case was no different, I was completely screwed in terms of my budget, but I had three things that helped me bear it:

My zero-sum budget. I hadn’t budgeted the money I was expecting to earn yet. So, when I had budgeted for that month, I had the money available for that month. Even in these unfortunate circumstances, I had enough money for the month ahead. I was able to roll with the punches and make some adjustments.
My goals for every single category ready. I knew exactly how much money I was missing in order to fill the remainder of my budget. I knew exactly what I wanted to budget for. I had to make some cuts, sure, but after doing the math I knew I had enough runway in my budget for at least two months (more than enough time to find a new contract).
An emergency fund of $2,000 that I had saved in my TFSA in case an event like this were to ever occur. This money was available to me and would extend my runway for another month in an absolute emergency, without ever touching debt.

If I hadn’t had been a budgeter, I would have had to take out a loan and take on debt to survive. Ironically, this would have put me in a position of dependence where I would have needed to continue working with that same agency because I would need to pay my creditors.

Instead, I was able to calmly evaluate my options, reach out to my network, and apply for several jobs. I even took a short four-day camping trip that I had already budgeted for (though I might have skimped on some hot dogs this time).

By the time that agency came back trying to push back for the fourth (and definitely the last) time, I informed them that I would be beginning a new freelance contract the next week.

Being a budgeter gave me the power to decide effectively.

Being a budgeter made me a better businessman.

My Budgeting Journey is Just Beginning

I may have come a long way in the last two years since 2018, but I have a long way to go. I am happy to say that I have paid all of my credit cards in full, and even when I had late payments freelancing I was able to calmly pay my bills because I had already budgeted well ahead. In the future, however, I still have to tackle the dragon: paying my $30,000 student loan.

With the tools I have at hand, I know it will be just a matter of time and discipline. I plan to continue to maintain a weekly (ideally daily) habit of updating and adjusting my budget in order to continue to make progress each and every day. To re-affirm that I am, in fact, a budgeter.

What to Do Next

So, if you’ve been trying to budget but always find yourself struggling and falling back, here are some next steps to get control of your debt today:

1. Understand where you are.

Take an afternoon to go through all of your accounts and determine exactly how much money you have, owe, and need. Any news here is good news, even if it’s disguised as bad news.

For this, I use and recommend YNAB, the budgeting tool built by Jesse Mecham’s You Need A Budget team to fit the model of the book perfectly. The product does cost money, but you can use investing money into a habit to stick with it.

This video helped me get started with YNAB’s interface:

2 . Start to learn about budgeting.

As silly as it may seem, listening to podcasts, reading, and talking about budgeting helped me build this habit properly. I became extremely motivated.

Jesse Mecham, the author of You Need A Budget, has an excellent podcast with quick five-minute tips on how to budget:

I also really recommend you check out out the book itself, as it has a great step-by-step guide to figuring out your current situation:

Good luck!