It’s the first week after Christmas, and for many it’s the longest financial stretch of the year. While this isn’t my usual tax related post, it feels timely. January is often when most people consider their finances.
Money Mindset & why it matters
Your habits come from your beliefs.
If you believe:
“I’m bad with money” Then you are.
“I’ll never get ahead” Then you won’t
“Something always goes wrong”, Well this one’s true, something inevitably will go wrong but making sure you can get up from it, that’s up to you.
“My debt is too big. It would take years. What’s the point?”
This is one of the most damaging money beliefs that’s keeping you poor.
Maybe it won’t be paid off in 12 months, maybe it’s going to take 24 months, 36 months, sometimes longer and that feels overwhelming but truth is that time time will pass whether you act or not.
You Don’t Have to Live Miserably to Fix Your Money Situation
Another myth:
“My life will be boring and miserable.”
Not true. A good financial plan includes living your life. In my opinion, any financial advisor that’s zoned in on the coffees, has missed the big picture. That’s not sustainable. Having said that, I’m not a qualified financial adviser (maybe the real QFA’s are cringing). I’m an accountant and tax advisor and what I’ve learned is this: if your financial plan doesn’t fit your actual life, you won’t stick with it. Simple as that.
Why Budgeting works
A budget is not about restriction. It’s about steering your money. Without a budget, your money goes wherever life pushes it be it on bills, subscriptions, impulse spending, stress purchases, emergencies etc.
With a budget, you decide where the money goes before the month begins.
A budget is basically the steering wheel.
Why You Need a Savings Fund Before Aggressive Debt Payoff
Many people rush into paying off debt as fast as possible but then something happens and the car doesn’t pass the NCT, a medical or vet bill, phone dies etc. Theres always something. The point is that without savings, you’re one emergency from falling back into debt.
That’s why you build a starter emergency fund first. Start with €1,000–€2,000 (or one month of expenses if possible). This isn’t a fund for holidays, it’s a fund for emergencies so your progress doesn’t collapse if something goes wrong.
Only after that safety net is in place should you attack debt aggressively.
two popular Debt Payoff Methods
The Debt Snowball
- List debts from smallest to largest balance
- Pay minimums on everything
- Pay any extra money off the smallest debt first
- When it’s gone, roll that payment into the next one
This method builds momentum and confidence fast.
The Debt Avalanche
- List debts from highest to lowest interest rate
- Pay minimums on everything
- Attack the highest interest debt first
This method typically saves more money mathematically but many people stay more motivated on the snowball method. The best choice? It actually doesn’t matter. It’s one you’ll stick with and do consistently.
“I Always Pay My Credit Card Off”
This is something that you hear often, many people will have a large credit balance at the end of every month and they’ll pay that off when they get their salary. they’ll say that they don’t carry debt so there’s no problem. Actually, that is a problem.
What that really means is that they’re spending money ahead of time, they’ve no cash buffer, no margin and no protection for when something happens.
If you don’t have cash reserves, you are more fragile than you think.
How to Budget (Simply)
Know Your Numbers.
Write down your monthly income. Fixed expenses (rent/mortgage, DDs/bills, health insurance, etc.) Variable expenses (food, fuel, coffees etc.)
Before the month begins, decide:
How much goes to debt, savings, the necessities & to enjoyment.
Track it once weekly to see what’s on track and what’s going off the rails.
Adjust, Not Quit!
I think this where people go wrong and give up. Their planned spending doesn’t match their actuals and they get demoralised and give up. The actuals not matching the budget is very normal, that’s the point of tracking it and making adjustments. Eventually you get very accurate and you get very good insights into where your money actually goes.
Again, I’m not a financial adviser, I’m a tax accountant who works with people’s real financial lives every day. And the truth is, the people who do best long-term are the ones who build simple systems they can actually live with.
This is your year to do that.
Example debt repayment plan and summary:
-Lisa
Lisa Lokasto 
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