I’ve Paid For This Twice Already…

Archive for the ‘goals’ Category

Several months ago, I set some goals on this blog to complete in 2007, 2008, and 2009 regarding our debt reduction. Being that 2007 is about to draw to a close, I wanted to evaluate our 2007 goals and see if we met them, and see if our 2008 goals should be reevaluated in light on the progress we have made thus far.

For 2007, I set 2 goals.

• Move my credit card debt to a 0% interest no balance transfer fee offer.
• Get credit card balance under $4000.

And I am happy to say - I did it! Both of those goals were met. I moved my credit card debt to a no interest offer in September and have been beating it down with renewed determination as every dollar goes directly to principal. And that has been one of the key factors that has allowed us to not only drop under $4000, but under $2000 in 2007, and I am scrimping and saving and planning and plotting to try and get it down closer to $1000 before the end of the year. I don’t know what I’ll be able to manage, but it is going in the right direction.

I didn’t set a goal for our overall debt number for 2007 but I am happy to say it has dropped under $30000 and I hope to never see it rise above that again.

For 2008, I set two goals as well.

• Pay off credit card by August 2008
• Have spouse student loan under $10000

I think both of those goals are more than attainable. We should have the credit card debt paid off before August 2008 and my spouse’s student loan should clock in at just over $9000 at the end of the year just by paying our budgeted minimums (our own little debt snowball) every month. I am working on figuring out some new goals for 2008, both a “conservative” set of goals that with staying the course, we should be able to reach, and a “stretch” set of goals that it will take some luck as well as hard work and focus to reach. I do however know that the sooner the credit card is paid off, the better, for our peace of mind and our budget. We also have to assess how we want to attack the student loan debt and what changes if any we want to make to our emergency fund.

I want to eliminate $15000 in debt next year. Stick around and see if we can do it. It’d be a huge huge stretch but anything is possible.

If you enjoyed this post, make sure you subscribe to my RSS feed!

Patrick at Cash Money Life is concurrently starting a new carnival (the Carnival of Financial Goals) and running a giveaway for a new iPod by asking What Is Your Financial Resolution for 2008? Funnily enough, that’s something I was already formulating a post about (and honestly, you’ll see quite a few “goal” oriented posts here in the not too distant future, since I am starting to feel like real progress is being made and can continue to be made with some planning and goal setting) so I thought I’d jump on the bandwagon and put my thoughts into words. iPods are pretty. And y’all know how much I love carnivals.

The #1 Financial Goal for our family in 2008 is NO MORE CREDIT CARD DEBT. Specifically, my goal is to eliminate the credit card debt by August 2008 so that I will not be charged any more interest on it whatsoever (the 0% interest offer it is under expires in September 2008). So I have 8 months in which to accomplish this goal. But how?

My credit card debt stands right now at $3144.20. August is 9 months away, so splitting that up, I need to pay at least $349.36 (we’ll round that up to $350 for simplicity) per month every month. $200 of that is budgeted in our monthly budget already as my “fixed” minimum payment, so it is the other $150 I need to concern myself with. My goal is to dedicate every bit of alternative income I earn, from selling things, taking surveys, and blog advertising, as well as any other source I can come up with, to reducing this credit card debt. Between those sources, I have in the past few months earned over the $150 threshold. The challenge will be to be able to dedicate all of that money in the next 9 months to debt reduction since I recently lost my contract position that was contributing to our overall budget. So to accomplish my goal, I will have to either increase the alternative income goal per month by another ~$200 at least, or find another contract-type position. I am actively pursuing another contracting option and hope to have positive news on that front soon. I would like to keep all other alternative income focused on debt reduction if possible.

I do think this goal is very acheiveable and realistic. In the past 6 months, since I started this blog, we have eliminated almost an equal amount of credit card debt to what we have left - about $3000. Since that time, advertising on the blog has started to bring in some more revenue which is counteracting the loss of the contracting position for now, and if we can keep up the pace we have set in the past, we stand to eliminate the credit card debt well before our self-imposed deadline. We have kept on track and stuck to our plan and there is no reason to believe we will not be able to continue to do so. We also have an emergency fund of $1000 in place to help if we suffer a minor setback.

So, I feel our goal is specific, measurable, achievable, realistic, and has a definite timeline. I’ll be posting updates on our goal as part of the general Tell All Tuesday posts as well as some serious mini-celebrating when we cross each $1000 threshold (which hopefully we will do very very soon!)

If you enjoyed this post, make sure you subscribe to my RSS feed!

This morning I talked about where the journey to debt elimination started, and how we came to the biggest turning point - budgeting. This evening I’ll explore how our adoption of a more consciously frugal lifestyle *before* our economic downturn occurred has helped put us in a position to deal with it without worrying about how our bills will get paid or our basic necessities met. And also where we want to go from here and what we’re doing to get there. And it all hinges on not just living within our means, but knowing exactly what our means are.

Part of what was keeping us from making the most of our money before I started the blog was our spending changing based on how we felt about our situation at any given time. When things felt tight, we scrimped and spent as little as possible. But when things felt okay, we’d loosen up a bit and go out to dinner or buy things we’d been waiting to buy until “things got better”. We never bounced any checks or overspent our money, but we also didn’t really save any of it either. When I started this blog I also started working on a budget.

The start was easy. I listed all our recurring monthly bills and I listed our income. I was surprised to see how much theoretically was left over after our bills were paid. And then when I started adding in miscellaneous expenses, groceries, annual expenses, gasoline… I was surprised to see how *little* was left over. Since we wanted as much as possible dedicated to debt reduction every month, we eliminated anything we thought we could. Our budget has, for example:

• $0 for eating out
• $0 for entertainment
• $35/month for miscellaneous expenses
• $10/month for clothing (generally from yard sales or thrift stores for the kids, who grow continually)

We make all our meals at home (and my spouse brings lunch to work every day) and we do things largely for free for entertainment. We can theoretically take money from the miscellaneous budget for those expenses but it seems other things usually come up for that. It seems extreme to some, and a bit spartan, and it is in some ways, but we’re okay with it. We did take advantage of a vacation opportunity that ultimately paid us, where we did get to eat out a bit and do some fun not-so-free activities. We switched our cell phones to prepaid plans which we spend less than $10/month each for (the most inexpensive I could find after a lot of price comparison). We did think about getting rid of the cell phones altogether, but my spouse needs one for work to be able to reach him 24/7 and I travel with my two small children and don’t want to be stranded on a roadside with them. But all in all, our lifestyle became much more consciously frugal than it was before budgeting, and left us living about 10% or more below our means every month (which has been funneled directly into debt reduction after establishing a $1000 emergency fund).

The other big change we made was not treating “found” or “extra” money as “spendable”. I do surveys online to make some extra money, and every penny of that goes to debt reduction (I used to treat myself to small things with it). I also have some ads on the blog, and that goes to debt reduction as well. If I am given a cash gift, it goes to debt reduction. At the end of the month, every penny that we didn’t spend in our budget that is not being carried over for irregular expenses (like car maintenance) is paid to debt. In about 4 months we’ve eliminated over $4000 to the principal of our debt, about half that to the credit card debt. That may not seem like a lot to some, but in our world (we’re in the 15% tax bracket if that gives you an idea of our income) it is a lot. We have a little over $4000 in credit card debt left, and we hope to eliminate it before August of 2008.

Do we save every single penny we possibly could? No, of course not. We have cable TV. Which, at the moment, is free (my spouse is required to have cable internet to have access to his work whenever he is needed, he is a computer programmer, and we have a package deal right now that makes the cable TV free until April of next year). When it isn’t free any longer, we’ll have to reassess that. We spend more than we could on groceries. I shop at discount stores like Aldi and buy generic whenever appropriate, but there are a few indulgences like the weekly frozen pizza and the aforementioned diet dew for my spouse at work. And a semi-weekly batch of cupcakes or muffins for my 3 year old son to help bake. Sometimes with sprinkles.

What’s changed though in a very positive direction is we’re aware of exactly how much money comes in, and how much goes out, and what we do with that. Budgeting really does work. And budgeting is what has shown us that even without my irregular income, we will be able to pay all our bills. When the company I contracted for ceased operations without warning at the end of October, we immediately looked at our budget and figured out exactly how much of that money had been going towards our bills and basic necessities. And the bulk of it had been going towards debt reduction. Somewhere between $100-$200 a month from July-September had been going towards our budgeted items. Since my son was switched from his mainstream preschool (which was a $75/month year round budget item) to an early childhood special education preschool (free thanks to the wonders of public education) in October, that gave us a little more room in our budget as well. We changed my spouse’s tax withholding to largely cover the gap, and the blog income for the time being will not exclusively go to debt reduction, and that will cover the gap until I find a new source of income.

Yes, I would love to still have that income and dedicate the bulk of it to debt reduction. But knowing we have an emergency fund and that we do have what we need to pay our bills is a good feeling, and one I wouldn’t have had before we started budgeting. I am actively looking for ways to increase my income, and feel confident that by January I will have succeeded in replacing the income I have lost. Having the breathing room to be able to set January as a goal and not “yesterday” is also thanks to the wonders of budgeting.

So I share all this not to pat myself or my family on the back, for there are lots more little things we could possibly be doing. I share it to show that it can be done - living below your means is possible, and being prepared for a setback is also possible. Sometimes it is hard, and sometimes it seems sort of easy. But it is our adoption of a more consciously frugal lifestyle in the first place that has allowed us to feel like we will get through this setback with our lives largely intact. Thanks for being a part of our journey and traveling it with us.

If you enjoyed this post, make sure you subscribe to my RSS feed!

When Brip Blap tagged me in his meme, I Commit Publicly To…, I never thought this is the declaration I would be making. I’ve been publicly declaring debt reduction goals and dedicating alternative income to them for months now. So my public declaration

I commit publicly to eliminating our credit card debt

by August 2008

might seem odd. And kind of a cop out. But circumstances have changed for us in those few days - I lost my source of income, which was not large in and of itself, but was a big part of our accelerated snowballing. Most of my income was going towards our debt reduction, and without that, this just became just that much harder.

So, I am publicly declaring that we will not be thwarted. We will not let this setback throw us into despair. We will still tackle that credit card debt, and we will still get rid of it as soon as possible. It is going to require some adjustments for us, and I am already starting to try and find a replacement source of income, but I need this motivation right now. I need this public declaration to keep myself on track and focused.

So thanks, Brip Blap. This came at just the right time.

I can’t think of a huge list to tag and there’s no number requirement so I am just going to tag my M-Network buddy Lynnae at Being Frugal. I know she’ll have a great idea.

If you enjoyed this post, make sure you subscribe to my RSS feed!

Arguing at the top of your lungs about money. Just don’t be those people.

When I was leaving WalMart yesterday with some cold medicine for my poor sick kids, I was followed out by a young couple, who proceeded to stand in the middle of the parking lot shouting at each other at the top of their lungs. The woman was yelling “Why do you keep spending money, we don’t have any money!” and the man was yelling back “I didn’t spend any money I just bought…”

The content of the argument as far as details and who is really at fault is immaterial (I didn’t stick around to listen, I kept going to my car quickly and unobtrusively), the point is - don’t be the couple arguing about money in a parking lot. Communication, at home quiet rational communication, is key.

Talk to your partner about money. Make sure you are both on the same page. Figure out what is really important to each of you and work out your compromises with each other so you both feel heard and you are working together as a team. If you are sharing your finances with another person, then you both should be involved in your overall budget and financial decisions.

That doesn’t mean that you both have to be actively involved in every single step all the time. My spouse does not want to have to deal with paying bills and tracking expenses and other things like that, so since I enjoy it, I do those tasks. Besides, he does the laundry instead - I definitely have the better deal there! We may not do every task jointly, but we talk about our overall financial goals (and he could take over the minutiae if he needed to for some reason) and we both have a say in what our goals are and what we are trying to accomplish, and also in how our money is budgeted. Unless one of us starts being completely deceptive, I can guarantee we won’t be the couple screeching at each other in a parking lot about the other spending money.

So if you share your finances with another person - make sure you communicate and you are both working together towards common goals. Don’t wait until you are a public spectacle.

If you enjoyed this post, make sure you subscribe to my RSS feed!