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"On Sale" Still Leads to Debt

As planned, I talked to Leah on Friday morning. She told me about going to check out Dave Ramsey’s Financial Peace University, which I understand to be a great program, but I think at the end of the day, all financial planning processes and debt reductions strategies come down to the same general principles: Spend less than you make! Again, I can't help but state the diet analogy: If you want to lose weight, you have to eat fewer calories than you expend. But Americans keep buying the hottest new diet book, looking for an easier, softer way.

So I'm more focused on whether Leah is writing everything down that she spends. She says that she is, but she’s writing it down after the purchase, then using her limited time to split those numbers out into categories, rather than just writing down every purchase as she spends, which is what I’ve advised. She admitted that she knew she wasn't getting out of this what I wanted, which is to be adding it up as she goes, so she won't spend more in a month than Eric brings home. As for breaking expenses into categories, there’s nothing wrong with that, but it’s what people do to figure out how much they spend in different areas. Right now, Leah needs to spend less in every category.

With what Eric brings home, after rent and utilities, car payments, gas and insurance, that leaves around $1,350 for everything else: Food, clothes, gifts, etc. That's if all of Leah’s unemployment goes to debt, which is what I recommended to them. I know it can be done, but I need Leah literally to be keeping a running tally all month long so when she hits $1,000 or so, she stops spending for the month.

There are huge behavior changes necessary for Leah, and I'm just not sure she is willing to make them. She's fantastic at buying her necessities on sale, using multiple coupons, etc. But if you spend more than you make, it doesn't matter if it was all on sale, it still leads to debt.

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