Disorganized and Living On the Edge

Aaron and his wife are living on the edge each month. They'd like to buy a house but want to have a clean slate first. Dave helps Aaron figure out the best way to start getting organized.

QUESTION: Aaron in Connecticut and his wife are disorganized with their bills and living on the edge each month. They’d like to buy a house but want to have a clean slate first. Dave helps Aaron figure out the best way to start getting organized.

ANSWER: The good news is when you start managing your money, when you start telling it what to do, you’ll feel like you got a raise. Plus you’ll have this sense of control, whereas right now you have this nagging sense of guilt or regret in the back of your head, like you have a financial hangover every month. All that gets cleared up, and it’s really not difficult. It’s certainly not intellectually difficult. It’s kind of like saying, “How do you lose weight?” You exercise more and eat less. We know what to do; it’s the doing it part.

Here’s the concept. Stephen Covey says in his book The 7 Habits of Highly Effective People that the number-one habit of highly effective people is they’re proactive, meaning they happen to things rather than things happening to them. In your case, you’re being reactive. You pay a bill when it comes in. Every time something pops up, you write a check instead of starting with a plan. The other thing he says is one of the other highly effective habits is to begin with the end in mind.


Let’s pretend you were going to build a house. You don’t just go, “Hey, let’s put a house over there.” You get halfway up and say, “I really wanted a two-story. This tri-level thing looks weird. Let’s tear it down and start again.” You wouldn’t do that. Instead, you would have a blueprint. You would write down a detailed plan of what the house was going to look like on paper before you built the house.

What we’re going to do here is see what the month looks like before the month starts on paper. You put your income at the top of the page, and you give every dollar a mission—every dollar an assignment, every dollar has a name—down the page until it’s gone. The first thing we do is say, “Okay, how much are we going to spend on food at the grocery? How much are we going to spend on food at restaurants? What’s the lights? What’s the water? What’s the cable bill? What’s the house payment or rent? Do we have a car payment? What do we spend on car gas?” You just start going right down the page, and every dollar has an assignment. What’s weird is as soon as you do that, let me tell you the first thing that’s going to happen. You’re going to want to smack each other and go, “What have you been doing with all the freaking money? Because it’s not showing up here.”

When you write it down, it gets really disgusting. It screws with your mind. You really have so much room that you don’t realize. When you’re disorganized, I can promise you you’re impulsing your butt off. I was. There’s going to be a lot of self-policing and marriage policing going on here. Now we have a contract. This is what we’re going to do with money. We’re not doing anything else with this money this month. If we’re going to do anything different than what’s on this page, we have to come back together and change the page because the budget is now the boss of you once you finish it. You’re the boss of it until it’s done, and then it’s the boss of you. You tell your money what to do on paper, and then once it’s on paper, the paper tells you what to do. It’s your out-of-bounds marker, and your wife has the whistle. You’ve got a whistle for her too.

It’s our agreement. We’re going to stick to our agreement because we want to win. We don’t like losing. We don’t like making this much money and having nothing to show for it but stress.

You are so ready to do this. This is going to be so easy for you. Let me give you the warning though. It takes 90 days. The first month, you’re going to suck at it. You’re going to have 18 emergency budget committee meetings. You’re going to have to go back to that paper and fix it 20 times because there’s stuff you don’t know. You’ve never done it. You’re going to mess it up. The next month, you’ll have about nine emergency budget committee meetings. The next month, you’ll have about three, and it’ll actually start to work. You’re going to get pretty close by the third month. It takes most people 90 days. It’s just a little trial and error.

There’s no way for me to give you the perfect thing for your life. You’ve got to figure out your life, and it’s your life on paper. It’s going to increase communication in your marriage. It’s going to get rid of these fights. It’s going to get rid of this nagging sense of regret. It’s just so much power in this simple thing of doing a zero-based budget. That’s where every dollar has a name. Income minus outgo equals zero. John Maxwell says a budget is people telling their money what to do instead of wondering where it went. My buddy Zig Ziglar says if you aim at nothing, you hit it every time. That’s what you’ve been doing. You’re not going to do that anymore.

I’m going to send you a copy of the book The Total Money Makeover,/i>. It’s got the budget forms in the back. You can hit our website and check out some of our tools. We’ve got free tools there for some basic budgeting stuff. The big deal here is make your money behave ahead of time before it leaves. No dollar is allowed to escape without going on assignment from you. It’ll change everything. You can get organized really fast. It’ll take you two or three hours the first time you do it. I spend maybe 10 minutes a month on our budget. There’s nothing to it. Of course, once you don’t have any bills, it’s a lot easier too. You pay off all your debt, and it’s real easy.