I should be a-okie-dokie

I like budgeting. In as much that I usually keep a minimum 6 month projected budget. In reviewing it due to recent events, I found that I would be alright if I lost my job. I currently have 6 months of cash-on-hand reserves and another 6 months of investment assets. That's if I pay the minimum of everything on-time. Even after the year, I still have 90 days to get my stuff in order before banks get possessive. How did I get here?

Like dieting, no single budget is going to work for everyone (which is why there is such a market for all those books and seminars), but I have found a way to become a millionaire over time. The cornerstone principle is realizing that the experts have it bass-ackwards. Stay with me now; they tell you that you must pay off your debt before saving for your retirement. But how many people have the discipline to actually do this? How many of us sprint towards having zero debt for 1 or 2 months before falling back for another year? It is extremely difficult to escape the draw of debt. Debt is sold to us on TV and on billboards. Debt has become a solid pillar in our economy. So now, we are always chasing zero balance AND since we never get there we never start saving for retirement. Or maybe you do get to zero for a few months and then decide to buy a shiny, new, 2007 Nissan Frontier truck with your newfound cash.

So the plan that has worked for me for years is to accept that I have debt and to start saving to be a millionaire at retirement...RIGHT NOW. First thing. Open an online-only savings account and get $1,000 in it. This is your cushion and does wonders for your finanical peace of mind. Just having $1,000 in savings makes a huge psychological difference. Why an online account? If your savings is at the same brick & mortar bank as your checking account, transfers between the two are immediate, as quick as a mouse click, instantaneous. See that new iPhone...Hmm, I do have $1,000 in savings...WHERE'S THE INTERNETZ?!? Transfers between online and brick & morter banks can take days and gives you time to evalute whether you want to have your money in bank limbo.
Next, work your way up to $400+ per month (start at $100/month and work up) in investments and make it AUTOMATIC so that you don't see or think about it. It is also important that you build your savings account. Get enough for 1 month, then 2 months and on to 3 months as soon as possible. What's left, take care of your shelter/food needs and then spend what's left on your debts.

One side-effect of this is that I stopped using debt because I knew those balances were not dwindling quickly anymore.

EDIT: A second side-effect of this is you can plan to take out large portions (but less than 50%) of your savings at regular intervals to pay off & close huge chunks of debt while still being protected by your left-over savings.