Found money. It’s a great feeling when you win money you weren’t expecting or receive a monetary gift on a special occasion. Many of us might take that opportunity to do a little splurging and go shopping with all of it. However, there may be another way.
Especially if you’re in a situation where you are trying to pay down debts, a great rule of thumb to follow is the half and half rule. When an unexpected windfall happens your way, take half of it and put it toward something you’re trying to pay down, and treat yourself with the other half. This way, you still get a treat you weren’t expecting, but you can be fiscally responsible, as well.
This half and half rule can also be applied to your job. Let’s say you get a raise, or you take a new position that pays you more than you’ve been used to bringing home. Take the difference between what you’re making now vs what you were making then and calculate how much half is. You can then take this amount and apply it toward bills you are trying to pay down, with no real direct impact to you, because you’re still benefitting from the raise, and able to pay toward debts as well.
You can expand this into many different areas of your life. If you decide to sell a few things you no longer need or use, half and half can easily be applied to this. Received an inheritance? Same thing. You may even decide occasionally to put it all towards paying down debt, and that’s fine too.
A trap that many people fall into when they try to tackle debt is that they cut out all discretionary spending….and inevitably in a moment of weakness, they impulse buy something, only to add to the debt they are already trying to pay down. This is why it’s important to allow yourself treats along the way. It’s not unlike dieting… if you never allow yourself to cheat occasionally, it makes sticking to the plan that much harder!
Give half and half a try, and see if it helps you to reach your financial goals sooner!