Facing Your Financial Monster: The Pre-Budgeting Step Toward Freedom

Remember being a kid, convinced there was a monster under your bed? You’d lie there, heart racing, sure that if your foot slipped out from under the safety of your covers, it would snatch you. I remember those nights well, needing reassurance from a parent that everything was okay. But often, it wasn’t until I mustered the courage to peek under the bed myself that the monster would vanish. Getting started with tackling your debt can feel a lot like confronting that childhood monster. It lurks in the shadows of your mind, keeping you up at night with worry. Until you gather the courage to look it straight in the eye, it’s going to haunt you, threatening to grab your foot every time it dangles off the bed.

The Pre-Budget Phase: Peeking Under the Financial Bed

Before you can craft a budget, you first need to face what you’re up against. This is the “I-know-there’s-a-problem” phase, which usually comes before the “how-the-heck-did-it-get-this-bad” realization. Here’s how to bravely confront your financial situation:

Gather Your Tools: Whether you prefer a digital spreadsheet or good old-fashioned pen and paper, get your budgeting tools ready. Ensure you have all your account logins at hand—nothing can hide when you’re fully prepared.
List Your Accounts: Begin with your cash and bank accounts. Write down each one, noting the current balance. You can also include any investment accounts, should you have them. For example:

- Cash – $25.00
- Checking – $234.21
- Savings – $1002.67

- 401K – $3,024.05

Detail Your Debts: This part might sting, but it’s necessary. List each debt along with the outstanding balance, interest rate, minimum payment, and due date. Like so:

- Wells Fargo Personal Loan – $12,528.55, 7.25%, $335.78, due on the 15th
- Visa Credit Card – $5,238.88, 23.79%, $98.67, due on the 1st
- Mom & Dad – $1,000, 0%, $50, due on the 10th

Pro Tip #1 Take a deep breath. This is a list, not a life sentence. Try to make the list with as little judgment as possible. We can look back to find trends to improve for the future, but we don’t look back to judge or condemn.

Tally It Up: Start by adding up all the positive balances. Then, take a deep breath and total all your debts. This number might be daunting, but remember, you are taking control now.

The Moment of Truth

You’ve got your numbers, and yes, they might be painful to look at. But remember that childhood lesson: the monster isn’t as scary once you face it. Acknowledge your feelings—fear, frustration, maybe even despair—but also recognize this: you’re now taking the first, crucial steps to tame the beast.

Pro Tip #2 As you face your financial situation, remember to pace yourself. Breaking down the process into manageable tasks can prevent overwhelm. Tackle one account or debt at a time and allow yourself moments to process and plan before moving on to the next. This methodical approach not only helps maintain clarity but also builds your confidence as you progress.

Building Your Budget

With your financial reality in clear view, it’s time to move from fear to action. A zero-based budgeting approach is particularly effective here, ensuring every dollar has a purpose and is working toward your goals. Not sure where to begin? Check out my guide on Zero-Based Budgeting Simplified: How It Works & Why You Should Try It.

Looking For a Budgeting App? YNAB (You Need a Budget) is a web and app zero-based budgeting solution and is the budgeting app I use and recommend every single day. YNAB offers a free, no-commitment 34-day trial. Use the link below to get a second month free if you choose to pay for a YNAB subscription at the end of your trial.

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Linking Strategy to Action

Armed with knowledge, choose a debt repayment strategy that suits your needs. Dive into my blog on Debt Paydown Strategies: Avalanche vs. Snowball Methods to find the best approach for you.

Wrapping Up

Facing your finances head-on is the bravest thing you can do. Yes, it’s daunting, but just like the monster under the bed, it becomes less frightening when confronted. Every step you take from here is a move toward financial stability. Remember, it’s not just about managing money—it’s about changing your life trajectory.

Ready to turn the page?

Let’s do this together. If you need support or guidance, check out how my coaching services can help you master your financial fears and forge a path to freedom.