How to Repay Massive Amounts of Debt With a Zero Sum Budget

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A few years ago, I was successful at budgeting for the first time, and it helped me pay off my student loan.

I had tried budgeting before with things like but was never able to stick to the process.

So, I created my own budget method with pen and paper that helped me control my money instead of having it control me.

The budget I ended up creating was a unique take on the zero-sum budget. The main difference being that in the textbook definition of the zero-sum budget you use this month’s income to pay for next month’s bills.

I’m guessing right now you don’t have extra bill money laying around to get ahead by one month.

Ha! Neither did I.

Instead, I created a zero-sum budget method where you can use this month’s income to pay for this month’s bills by splitting up my budget and viewing it in pay periods.

This budget legit changed my life.

I went from making the minimum payment on my student loan to paying several extra hundred dollars on it each month.

So, of course.

I made a zero-sum budget workbook with my budgeting method that you can use to replicate the same technique. Grab the workbook here.


But, first, let me explain:


The Zero Sum Budget Explained

It’s called a zero sum budget because your income minus expenses, debt, savings, investments, etc. should equal zero.

The budget is more centered around the cash you’re bringing in than the cash that’s going out.

You look at your income and give every dollar and cent a purpose.

With a traditional money management system like, you make estimates of how much you’ll spend in each area for the month.

Then you monitor progress throughout the month.

For me, there’s too much gray area in this type of budget.

I don’t have the presence of mind to check my budget daily or weekly to make sure I’m on track.

This type of projected budget, in my opinion, gives you an overview of your spending, but not how it relates to the actual money you’re bringing in.

You can estimate all you want, but if what you spend sums up to be more than the cash you’re bringing in you’ll eventually rely on credit cards.

A zero sum budget gives you a plan that’s much more likely to curb your spending.

Way, way less ambiguity because you rely solely on cash that you’re actually bringing in.

This helped me increase my student loan debt payment leaps and bounds.

After coming up with a plan for each one of my dollars and cents, I was able to increase my student loan payment by an extra $300 which expedited my payment plan like no other.

Putting the Zero Sum Budget into Practice

Okay, so to create a zero-sum budget you add up your expenses + investments + goals, and then subtract that number from your income.

For modest income earners (a.k.a. someone like me who didn’t have an extra entire month of bill money to play around with), I split the budget into two week spurts by pay period.

When money flowed in from pay day, I put it towards each of my budget areas whether it was rent, debt payments, or other bills that had to be covered that pay period. The first pay period was very rent and bill heavy, the second was for savings, etc.

What I love about this approach is that you only need to check your budget each paycheck (bi-weekly) which is easier than looking at say every day to make sure you’re spending within your limits.

I always thought budgeting was tough, but this totally dumbed down version of the budget I did with a pen and paper is what I found helpful for aggressive debt repayment.

Get a Step-by-Step Guide to Creating This Budget…

Back to the budgeting workbook.

I put the basics above to get you started. I put the step-by-step approach I used in this workbook including templates.

The workbook is 50+ pages with tips on how to cut your expenses and how to improve your mindset to be a better budgeter. Find out what’s in the book >>> here!

— This post or page may contain affiliate links. Don’t worry, though. I only promote products that I’ve used or truly believe in.

Taylor K. Gordon is a writer and money blogger. She writes on how to live your best life without going broke.

  1. Reply Latoya @ Life and a Budget July 13, 2016 at 11:18 am

    For me automating bills out of one checking account works best. It cold be a little better because I need to reallocate spending from allowances. My hubby and I have our own checking account in addition to our household checking so we can each monitor our own spending. I hate having to look over numbers all the tI’m and found that by keeping the numbers consistent each month and coming from one account, it helps us avoid digging ourselves into a hole.

    • Reply Taylor July 13, 2016 at 11:23 am

      Yup, me too! That estimating each month just didn’t work for me. It’s a lot harder now that I have a variable income to do this. But it worked so well when I had the regular bi-weekly paycheck. Tiffany from The Budgetnista shared a percentage budget with me that I’m attempting. Where each time you bring in money you divide it by the budget percentages.

  2. Reply 4 Things to Start 2017 Off Right – Musings of Mind and Matter December 31, 2016 at 1:37 pm

    […] a wealth of great tips for financial freedom. I went with the zero-sum budget method as outlined here as well as signing up for saving through the Digit App that I learned about in her post […]

  3. Reply Hilary Boslet January 6, 2017 at 11:16 am

    Another suggestion for you. I have done this for years after I got myself out of some debt.
    I get paid on the 1st and 15th of the month. I pay my mortgage and HOA on the first of each month. I pay all my other bills on the 15th. I have called each of the vendors I do business with (State Farm, Verizon, Century Link, etc..) and have the due date changed to the 15th. They actually give me a few days grace period, but I pay everything on the 15th. It’s a really stress free way to know what’s coming and what I need to do.
    I also use budget billing for my Xcel (gas & electric) bill. If you have lived in your home for at least a year they will average the monthly bill. Yes, the summer may be a bit higher than the actual bill, but when the winter is really cold, I don’t get smacked with a crazy high bill.

    • Reply Taylor January 6, 2017 at 11:21 am

      Hilary, Hilary, Hilary… THAT IS AN AMAZING IDEA! I hadn’t even thought about calling in to adjust the due dates, but it makes perfect sense. Because it’s tricky to finesse your bills split between pay periods. Before moving to Atlanta all of the places that I rented from up north had utilities included. So, this is the first time I’ve received utilities bills. I wasn’t sure if averaging the bill would be a real savings, but I’m going to look at it closer. Thanks for that tip! P.S. I’m going to add your adjusting dates thought above too bc it’s mega valuable.

  4. Reply Kelsey January 6, 2017 at 4:55 pm

    After a ridiculous year, I’m ready to get back on the “pay off my debt” train. I’ve had for a few years now and love it, but always am frustrated because I am estimating what I “might” spend, whereas with this zero sum version, I know exactly what I should expect to spend every 2 weeks. Makes perfect sense to me, and seems like a great way to start the new year off right!! Thanks for a great post.

    • Reply Taylor January 6, 2017 at 5:08 pm

      Hi Kelsey! Thanks for stopping by 🙂 I agree, I refer to for a big picture view of all of my accounts in one place. But, from day to day it’s harder to budget your money that way in my opinion.

      If you prefer apps than writing down your budget, LevelMoney and Mvelopes are worth a look. Both kinda follow this same zero sum approach. LevelMoney tells you how much “spendable” money you have after your other expenses which is like the allowance idea above. And with Mvelopes it’s like a virtual envelope budget system which is when you withdraw cash for all budget line items. When you run out of cash, you know you’re tapped out in each budget category for the month.

      Also, Hilary’s comment above is epic about changing your bill due dates so you can allocate your money for each pay period much easier.

      Cheers to budgeting and paying off debt this year!

  5. Reply C January 31, 2017 at 1:57 pm

    I’ve done this for years, except my zero sum is $660.07. Its the amount I need in my account for the 1st of the month in order to cover all the automatic payments and I track it on a rolling 12 months. Every month money gets “transferred” to things like mortgage, bills, property taxes, credit card payments and savings accounts. The numbers change as needed so that I can always end at $660.07 or more. The goal is that my savings number increases as I keep my credit card amount low for each paycheck. I get paid bi-weekly though so rolling total works much better for me.

    • Reply Taylor January 31, 2017 at 2:59 pm

      Just like Hilary’s comment above, this is another GREAT way to approach it.

      The textbook definition of zero-sum budgeting suggests getting ahead by a month which wasn’t feasible me. But, the idea of keeping enough in your account for the automated payments the beginning of the month is very, very smart and doable.

      It’s funny how we have access to tons of innovative tools for budgeting, but just a simple strategy can have longevity.

  6. Reply Life Commentary - "Oh S&%t, I Broke My Budget" - Life and a Budget February 21, 2017 at 6:53 pm

    […] How to Repay Massive Amounts of Debt With a Zero-Sum Budget – Tay Talks Money […]

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