A New Beginning

For some reason, I like to begin things on the 1st of the month or the 1st day of the week. Tomorrow is November 1st, so I will officially begin my Total Debt Payoff! I received my mortgage payoff quote in the mail a couple of days ago and I believe that paying off my mortgage within the next several years is definitely doable. The payoff is good through November 21st, and the amount is $57,958.17. Of course interest begins to accrue again after that date. I just wanted to know where I stand.

My other debt currently totals $59,679.34, so my total going into November 2008 is $117,637.51. (I have paid off $273.57 since beginning this – after deducting new debt I added when I made a catalog purchase and delayed the billing.)

Now when I say within the next several years, I don’t mean several as in THREE. I mean several as in 6 – 7 years. If I can manage to really begin living frugally – and this will need to be a lifestyle change, not just a temporary deprivation – then I should be able to pay off all of my debt in 6 – 7 years.

By living frugally I don’t mean giving up all of the things I enjoy that cost money. For instance, I gave up cable over a year ago, and got Netflix. ($18/month compared to $80/month) I LOVE movies and watching TV series on DVD! (I have since let Netflix go too and become a regular at the library.) I like taking roadtrips and eating out with friends. I won’t give this up, but I won’t do it as often. I can invite my friends over for dinner instead of us all going out to a restaurant. We’ve had some good times when we had dinner potluck style!

I am still working on how I’m going to manage my grocery shopping and planning my lunches and dinners. Once I create a plan for my meals, I imagine it will result in some weight loss too! I will definitely put more time into searching for and clipping coupons.

A major factor for me is going to be creating a realistic spending plan. In the past, I believe my biggest mistake was being too strict and not allowing for “entertainment” expenses or a petty cash fund.

I am also still tracking my spending – every penny! It will be interesting to look back and see just how much money I am spending on certain things. I also look forward to looking back a year from now and seeing totals and creating a chart that will show me at a glance how much is being spent where.

Cutting Up The Cards

I now know that I MUST do it. A few weeks ago I cut up my Target Visa and my Hooters Mastercard. (Yes, I actually have a Hooters Mastercard!) I have spent all my cash, and with two days til payday, this evening I used one of my credit cards to pay for pizza.

1.) I should not be eating out. 2.) I dang sure shouldn’t be charging it! In order to stop using them, I am simply going to have to cut them up. While I know that available credit does not equal available money, there seems to be a disconnect somewhere between my brain and my wallet. I don’t like to think of myself as a person who is irresponsible and has no self-control. I suppose this is why I have continued to carry credit cards for years, believing I could always stop spending whenever I wanted. So I intend to keep one Visa and one gas card in my lock box at home and I will get my scissors and cut up the rest! I will do this because I AM responsible enough to admit that it is what I need to do.

As I searched for an appropriate pic to include in my post, I came across this post. How appropriate and just what I needed to read right now! I love that a Bible verse is included. It is like confirmation. Never found a pic, but I did find a great new personal finance blog!

Emergency Savings

Today I opened a savings account that I will use for my emergency fund at a local credit union. I already have a savings account at my current bank with a few dollars in it, but there’s something about starting new that motivates me. Posting my progress here will also help me to build my emergency fund as quickly as possible because the 2% progress toward my very small initial goal is pretty embarrassing! Perhaps I will use my other savings account as a clothing fund.

Where did I get the $1,000 goal? Dave Ramsey. I agree with it because it is not an unrealistic amount that feels like I could never achieve, but it is enough to cover most of the types of typical emergencies I might experience. Most of my insurance deductibles are all $1,000 or less as well. I am interested in finding out how long it will take me to reach this goal. My next goal will be $5,000.

Clothing

I ordered a jacket and some clothing from a catalog and took advantage of the delay payment til January option. No interest if I pay it off before the end of January and I fully plan to pay it off when I receive my November bonus, but we all know this can be dangerous ground because stuff happens. I am still having justification trouble because I need clothes, but there is a very thin line between want and need. For some business & social purposes, I feel that a person needs to be presentable for the occasions. Clothes wear out, get ruined, etc. Plus, I am gradually moving over from a jeans & tee wardrobe to a more business casual / professional wardrobe. As my professional situation changes and as I do more social networking, it is becoming necessary to upgrade a bit. I have vowed many times to buy a piece of clothing every other payday or on some type of schedule, but the truth is – I am not a big clothing shopper. I still wear shoes and clothing purchased years ago. Thankfully I have a classic style that is more or less timeless. I rarely dress according to the latest fashions/fads. I will go for months and months without buying clothing or shoes, then when I need something to wear RIGHTNOW – luck often has it that I can’t find any good deals.

All this to further explain why I made my recent purchase. I got a $99 leather coat for $59.40, a nice wool blazer, and a few more items at great sale prices! Ultimately I plan to be in a position where I have money set aside for clothing. I also need to start paying more attention to fashion tips, sales, and discounts and other ways to save on good, quality clothing & shoes.

Frugal Living

I made it another day without wasting any money! I packed my lunch, and although I left work late, tired, and hungry, I resisted the urge to stop for fast food. I suppose I could get used to this eating at home thing. Is it possible that I feel healthier already from not eating so much fast food? With each day that passes, I feel more motivated to achieve my goals. I like that there is money sitting in my checking account and it is not dwindling during this week between paydays. It’s like there is some part of me that has to SPEND the money if I know it is there. I’m going to continue my baby steps and gradually take additional steps toward frugal living.

What Not To Do if You Can’t Pay Your Bills

Today – of all days – I came across this article on the Oh My Aching Debts blog and it was right on time! I think some of the things on the list were written with ME in mind! There have been many times when I didn’t have enough money to pay the total amount due on a bill, so I just took what I had and went shopping or out to eat, or some other dumb money-blowing thing, instead of paying what I could.

Because of my new mission to get out of debt and actually have a positive net worth in the future, I have made little vows like if I am too lazy to pack my lunch, then I will just have to suffer until I get home. I did that today. All I had to eat was a Nutri-Grain bar and a bowl of oatmeal at work since they were already in my desk, and all I have to say right now is TOMORROW I WILL BE PACKING MY LUNCH!!! I came home and couldn’t cook fast enough! (read: did NOT stop for fast food!) I am VERY proud of myself though. I even turned down an offer to have someone pick up some lunch for me from a nearby restaurant. You have to know me and how much I love food to know just how difficult that was.

Anyway, if anyone else can relate to this, I recommend checking out the post on Oh My Aching Debt. It is for people like us!

Some other things that come to mind are renting movies, carrying cable, extra cell phone services or higher rate plans, manicures, pedicures, even hair salon visits!

Salary Increase

At this time I cannot even plan for an entertainment fund, grocery fund, etc. To be honest, I am still robbing Peter to pay Paul and sometimes putting groceries on a credit card. On paper, my outgoing is more than my incoming and it is the skin of my teeth. . . my side hustles. . . my cute smile. . .the grace of God that is getting me by – with NO reporting lates!!! Although I don’t appear stressed on the surface, this is stressful living. I want to get to a place where I have enough money in my checking account to put my bills on autopayments and relax knowing there is always enough money in the account to cover them. Right now I am still checking my account daily in case I have forgotten something that my very small cushion won’t cover.

A few months ago, I went from making $27K to $32K and will begin making commission within the next month. Praise God! My annual income may quite possibly more than double. $5K is a lot in a lump sum, but spread over bi-weekly paychecks after taxes, nets me about $135 extra per paycheck. My mid-term goal is to live within my salary and put ALL of my commissions toward paying off debt and saving. First, I’ll need to use commissions just to get to a place where I can pay all of my monthly bills and expenses with my base salary. So I’ll need to come up with a plan for this. . .

Personal Finance Psychology

Sometimes I will actually stay at home to keep from spending any money. Even if I plan to go on a “free outing” it is too easy to end up eating out with friends or stopping by the store for a “necessity” or making some other impulsive move. Today I found an AWESOME website, Blueprint for Financial Prosperity, that I’ve become somewhat hooked on already and came across this article. Jim features a tip from Trent of The Simple Dollar about wrapping his credit card in a picture of his children to remind him of why he shouldn’t spend as a simple example of “the power of psychology”.

It is so easy for me to advise others on what I think they should do to get out of debt and manage their finances, and I KNOW what I should and shouldn’t do, but knowing is one thing; doing is another. I would love to hear more psychological tips for curbing spending habits!

Short-Term Goals

I am a list person. I make grocery lists, to-do lists, shopping lists, wish lists, and more to offset my bad memory, so of course I also make financial goal lists. I believe one of my biggest mistakes in the past was setting my goals too high, making it too easy to subconsciously feel like they were impossible to achieve, then giving in to self-destructive financial habits. So I’m going to try to set realistic goals for the 4th quarter of 2008. By the end of the year, I plan to:

• Save $1,000 to begin an emergency fund
• Track my spending until further notice (started yesterday)
• Get accurate figures on ALL of my recurring expenses (utilities, etc.)
• Get reliable figures on my variable expenses (gas, personal care, etc.)
• Use 2 & 3 above to create a firm financial plan for 2009.

I really have to work on patience. I look at that list and it seems so small, like something I need to just do right now or within the next day or so, but I think I did too much guesstimating in the past. When writing down every single purchase, I will likely be shocked at just how much money I spend on “stuff” and how quickly it adds up! When I created a spending plan once, my outgoing was hundreds more than my incoming. I guess for a while it was just easier not to face it. I have always had little “side hustles” like selling things on eBay, making and selling craft items, earning extra money by creating basic websites, etc. And other times I just juggled funds and robbed Peter to pay Paul. So yes, I definitely need to keep it simple, be patient, take my time, and make sure I get all my ducks in a row. This time around I fully plan to be successful!

The Ugly Truth

My financial house is in disrepair! Admitting that I have a problem is the first step, right? The truth is, I sometimes feel like a hypocrite because I give wonderful financial advice to my friends, family, and acquaintances. The problem is – I don’t always follow my own advice! I think that most of the people who know me would probably be shocked if they knew just how much debt I am in because my financial habits are the opposite of who they know me to be.

A lot of money has flowed through my hands and I don’t have a whole lot to show for it. As I grow and mature and different things become important to me, I have decided to get my finances on track. I firmly believe that God needs to see that I can handle what I have before He can bless me with more. I am already truly blessed to be a homeowner (homebuyer) with my accounts in good standing – considering my frivolous history with money.

I am putting together a plan of action. I will tweak it as I go along. The first part of my plan is to come up with a strategy to pay off my debt. I have created an Excel spreadsheet with all of my credit card, personal loan, medical, student loan, and automobile debt. It includes all of my debt, with the exception of my mortgage, that I can actually pay off completely. I have not included my mortgage on this list for two reasons:

• I don’t know the actual payoff amount as of today. I know I can request it, but I’ll need to call during the week (today is Sunday). I will call tomorrow and order the payoff – IF there’s no fee. If there IS a fee, I won’t do it now because I see no logical reason since it’s not like I can actually pay it off right now.
• Although it is a high dollar amount, I can fully see myself paying off the other debt within the next few years. Having a smaller goal allows me to see the light at the end of the tunnel sooner and it’s encouraging. I will list my mortgage payoff as a separate goal.

My debt payoff amount is $59,952.91. I can believe it, but I can’t. Whew! I keep reminding myself that $23,049.25 is my 2008 Honda that I purchased a few months ago in June after my old car died and the mechanic I had already given close to $2,000 to over the past year was honest enough to tell me that he could take my money again, but my car was a piece of crap and he recommended junking it. Did I have to buy a brand NEW car? No. So I won’t make any more excuses for that.

$18,673.38 of my debt is student loans. Now this wouldn’t be such a bad thing except that I still don’t have a degree. But I’m not wallowing on past mistakes; I’m moving forward, right???

I will use a snowball method, but will also give weight to the debt with the highest interest rates. I figure if I receive a $2,000 net bonus at work and can either completely pay off a card with a 20% interest rate and a $2,000 balance vs. a card with a 10% interest rate and a $980 balance, then putting the difference toward the $2,000 card, I’ll do better to just completely pay off the card with the higher interest rate.

My truth really IS ugly. I will list all of my recurring bills (home & auto insurance, utilities, etc.) on a different spreadsheet. Right now I think I need some comfort food.

Be Blessed!
CFO