money This Mom Paid Down More Than $111K in Debt and Is Now Teaching Others How to Budget
Real Moms, Real Money - Allison Baggerly
Allison Baggerly and her husband paid off over $111,000 of debt in two years while raising two boys on two teacher salaries. After their success, Allison founded Inspired Budget to teach women how to budget and live their best financial life.
Mom of two, Allison Baggerly loved to spend. The former teacher says she couldn't resist purchasing unnecessary items during weekly errand runs. She and her husband, Matt, a fellow teacher, lived paycheck to paycheck. Then she got pregnant with their first child, Evan.
"We were two teachers, and I thought that we would never really struggle with money even though we were living paycheck to paycheck," says Baggerly. "But I always figured we'd be able to pay our bills. Then I realized that we didn't have enough money left over to be able to pay for daycare for when our son was born."
The pregnancy served as a reality check and motivated Baggerly and her husband to review their monthly finances. It was a tough pill to swallow. "I felt a lot of guilt, a lot of shame," Baggerly reflects. "I wondered how I made it to adulthood and didn't know how to budget." Between the two, they carried more than $111,000 in debt, which was split between their respective student loans and a car loan too. The debt payments alone—before folding in additional responsibilities like their mortgage and weekly grocery expenses—totaled to around $1,400 each month.
The Baggerly couple got down to building a budget. At first, it wasn't pretty. "It was awful. It was terrible," Baggerly recalls. "Within a week, it was just completely unrealistic. We had this goal and this dream that we wanted to reach. So we cut out everything and lived so simply, which is great as an idea." In execution, it was a disaster. Swinging from spending extreme to saving extreme was too much for the duo to swallow. "It was a shock to my system," Baggerly explains.
Baggerly made sure that it was next to impossible to overlook their family budget. She placed the family budget on the fridge, the debt payoff calculator resided in the master bedroom closet. "I would hang the budget on the fridge. I would look at it every day. I hung our debt payoff calculator in our master closet so I could see it," Baggerly says. "I also took about 10 minutes every single day to check in on my finances. I would compare what my bank said with what I actually thought I had."
To further help conserve funds, Baggerly and her husband moved to a smaller house, which ultimately, turned out to be a major pro, even if at first it was a difficult decision. Other cost-saving measuring included forgoing big family vacations and resisting the urge to buy expensive furniture and home decorations.
Over time, Baggerly got a hang of the budgeting thing. "I became an expert on our budget plan. I became an expert on my personal finances—mine are going to look different than anyone else's. I would check in on my finances daily." It took Baggerly and her husband a little more than three years to pay off the family debt. That time was not without its challenges, which compounded the importance of the methods that Baggerly implemented in the first few months of her journey. "When I wanted to get off track, I had a visual chart where I could see how far we have come."
Finally debt free, Baggerly figured she'd never want to think about budgeting again. But she found herself unable to stop spreading the gospel of money-saving. "I really just thought that this was going to be a season of my life, something that I was invested in. Once I reached my goal, we'll be done," Baggerly recalls. "But I couldn't stop talking about budgeting. I couldn't stop trying to inspire others, until one day my cousin basically told me, 'Allison, you've talked about this so much, it's time for you to take it to people who really need to hear it.'"
Her business, Inspired Budget, an online personal finance management platform, was born. "I started Inspired Budget with the entire purpose to help women who felt stuck like I did and didn't know where to go," Baggerly says. "That's what Inspired Budget does: I teach women how to budget, how to save money, and how to pay off debt so that way they can live their best financial lives."
Three years later, the mom of two is busy running the thriving business. "Starting Inspired Budget has allowed me to take the dreams that seemed silly, that seemed like I would never be able to achieve, and see them as a reality—as possible," says Baggerly. Here, she shares advice for other aspiring entrepreneurs who might be digging themselves out of debt.
Create a Tag Team
For Baggerly, ensuring that she and her husband were in lockstep regarding their budget and overall financial goals was paramount for their success. "Be on the same page with your partner, especially whenever it comes to your spending, but also your debt payoff," Baggerly suggests. This took the form of holding weekly meetings for the two to review everything from their budget status to upcoming kid activities to even weekly meal planning.
Plan (and Adapt) for the Future
Predicting any big (and potentially, recurring) expenses can help guide the development of a successful budget. For Baggerly, this was especially true for daycare for her two sons. "Have a plan for the future in terms of big expenses such as daycare," she says. "At one point, we had two kids in daycare and we were paying over $1,500 a month in daycare expenses alone while we were paying off debt."
With her older son now out of daycare, Baggerly has retargeted those expenses and directed them toward savings. "One of my children is out of daycare. We took the amount we were paying on daycare for him, and sent it straight to savings," she explains. "Now my second child is going into kindergarten, so we are going to take the money we were sending to daycare for him and we're going to immediately put it toward savings."
These strategies can have major payoffs—literally. "As your income level grows over time, continue to live the lifestyle that you were living before and then take that extra money and put it toward debt or put it toward savings," Baggerly recommends.
Use the Debt Snowball Method
Jumping feet first into budgeting can be overwhelming. To begin successfully paying down debt and increasing savings, Baggerly suggests implementing a snowball budget method. "Using the debt snowball method is a really great way to pay off your debt whenever you just aren't feeling motivated or need extra motivation along the way," Baggerly says. "Essentially take your debts and order them from smallest to largest, and pay them off in order, regardless of their interest rates."
This can lead to noticeable changes in finances—and be an ongoing source of inspiration. "It gives you a quick win. It gives you a moment to celebrate because hopefully, you'll pay off that first set within the first couple of months," she continues. "And it helps to see that you can make traction, that this is doable. You are capable."
