pay down Alabama title loan

How to Pay Down Your Loans with the 50/30/20 Rule

When entering uncharted territory without some kind of guide or map in hand, it's pretty easy to get lost. The same is true with our finances. Let's face it, we know how to spend money easily enough, but managing it is uncharted territory for a lot of us. For example, if you are working to pay off your Alabama title loan, should you pay more than your minimum amount due?

That's why a budget is so necessary. But not just any budget. You need something a little more specific. Something to pave the way for your dollars so that your cash flow moves through all the right channels. Introducing, the 50/30/20 rule.

Of course, there are several different ways to go about budgeting. But since the 50/30/20 rule has become such a popular budgeting tool in the last decade, we figured why not? It simple and effective enough that it seems like the only practical way to do budgeting right. And let's face it, we could all use right-way budgeting tactics in our lives these days.

Made popular by U.S. Senator Elizabeth Warren, the 50/30/20 rule was originally proposed as a solution for the many Americans who struggle with money. The secret behind its popularity is really no secret at all. The 50/30/20 rule is so simple, anyone can follow it. It simply divides your income in three easy-to-remember parts:

  • 50% - needs
  • 30% - wants
  • 20% - savings

Simple right? That's why it works so well! It is easy to follow and it allows you to take control of your total income with just three simple steps. But for the sake of this blog, let's dive a little deeper into the 50/30/20 rule and try to see if we can gain a better understanding of what meant by needs, wants, and savings.


While needs may vary among different people, we can all agree on several things that would easily fit into the needs category:

  • Shelter: We all need a place to lay our head. Whether you're renting an apartment, paying on your own home, or shacking up with a roommate, you need money to pay the rent/mortgage every month. This is perhaps the most core need we can all agree on.
  • Transportation: No matter where you are, you will always need funding for transposition. Everything from walking to driving costs money. Shoes need to be replaced the same as tires do. Buses and subways require that you pay a fee to ride. Even bicycles need occasional maintenance, which costs money.
  • Utilities: Utilities cover a variety of things we all need; gas, water, electricity, internet, cable, and even cell phones all fit together in this category. You won't go too far in life without any of these things (except maybe cable). Even the internet and cell phones are quite essential these days.
  • Insurance: Whether you're covering your car, home, health, or your life, insurance is necessary enough to be considered a need. You can't even legally drive a car without insurance. Home insurance is very necessary since your home is the most valuable asset you have. Life insurance is necessary when you have children or loved ones to leave behind. And health insurance, well, that goes without saying.
  • Credit: Many would argue over this one, but the fact is, we all have loans to pay back. You need a mortgage loan to pay for your home. You need an auto loan to pay for your car. And yes, you need credit cards to cover a lot of stuff in between. It's a double-edged sword sure. But it's necessary for most people.

Remember, it's easy to get confused about what's considered a need. For example, housing is a need. But not a big house. Also, an auto loan is a need, but not when you're using it to drive home a brand-new Porsche. Itís important to consider how you're approaching these needs and to only stick with the basics. Rule of thumb: always live within your means and never try to live large when you're working in the electronics departments at the local Target.


Wants are just that, things you want (but can live without). However, wants can get pretty confusing too. For example, I may consider a weekend-vacation a need if months of the Monday thru Friday grind are leaving me feeling the need for a break. But my partner may disagree and say we can go without the vacation this year. Is a long-overdue vacation a need or a want? You decide. But for most instances, wants are pretty clear-cut:

  • New clothes
  • Multi-media: movies, video games, albums, etc.
  • Hobbies
  • Gym membership
  • Online subscriptions
  • Magazine subscriptions
  • Starbucks
  • Tattoos and jewelry
  • Restaurants and bars

These are just a few of the things that safely fit in the wants department. I know what you're thinking, but Starbucks is a need! We all need our caffeine kick in the morning, but believe it or not, there are more affordable ways to fuel up than pulling up to the corner Starbucks. Can anyone say, Mr. Coffee?


Though it might the smallest piece of the budgeting pie, it happens to be the most important. Many people will even go as far as downsizing their home to save more. Saving money is absolutely necessary if you want to keep your finances on the up and up. You need to save money for several reasons:

  • Retirement: One day, you're going to retire. Hopefully sooner than later, but that all depends on how much you're able to save in the coming years. You won't be able to work forever, and you're going to need to be able to support yourself without a job. Social security helps a little, but it's not nearly enough to cover all your post-career expenses. Ask your employer if they offer 401(k) benefits. This is the most common way to save for retirement and it's easy too. Start saving up now, so you can have a brighter future to look forward to.
  • Unexpected emergencies: Always expect the unexpected. As you may have guessed by now, things rarely go according to plan and sometimes, having extra money in the bank is a great way to combat those unexpected scenarios that seem to play out at the worst possible times.
  • Home repair: Your home is the most valuable asset you have. Take care of it. You never know when something is going to break in your home that can't wait around for you to get the money to fix it; leaky roof, pest infestation, broken appliances, broken A/C unit, etc. These are just some things that could go wrong within your home that only money can fix.
  • Car repair: Your car is your only source of transportation. You need it to get to work, to your son's baseball practice, to pick up groceries, etc. If your car breaks down, you can't afford to wait to get it fixed. It won't be long before your boss begins to wonder if you're coming in to work. Having money saved up will allow you to get your fixed now so you can get things rolling again! Are you starting to see why saving money is important?
  • Security: Overall, having money saved brings security. It's just nice to know that if something goes wrong, you have the money to turn it around.

title loan in Alabama


Use these simple guidelines to get started on your journey to financial wellness today. It's easy and very, very effective. You could even speak to your employer about using your direct deposit to split your income into different accounts. This could help make the budgeting process a little easier for you. But if you happen to run into a financial emergency before you've had a chance to build up your savings, you could always reach out to a short-term cash lender near you for quick and easy financial relief options. Good luck and happy budgeting! 

Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.

Louis Tully

Louis Tully is a full-time finance writer offering financial expertise to everyday consumers. He understands the core values of finance and used his writing talents to share his own experiences with money to his readers. His articles teach how financial failures can easily become successes by making new habits and creating realistic goals.