“Reducing Debt” Archive

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Overcoming Financial Mistakes…

My husband and I both know there is some padding in our checking account. Paying overdraft fees is a pet peeve of mine so I try to make sure we have a little more than we think. This month, we both used the debit card a few times and before we knew it, the padding was gone and we were well over our budget. I had to do a pricey and frustrating balance transfer from our savings to avoid an overdraft.

I am very disappointed.

This event led to the following changes:

1. More involvement by both of us. Often in relationships, one person manages the finances. When things don’t go well and money is too tight, this person feels the stress, the pressure, and the responsibility for the mess. We have both decided to dedicate and hour each week to review each transaction. Now we have more checks and balances on each others spending – otherwise, we’ll have another bad month.

2. We are refocusing our goals and setting rewards. Our next payoff is still a ways away and we’re getting frustrated and bored. We decided to give ourselves something to look forward to after our next payoff. It’s nothing huge, maybe a dinner out or a trip to the theater, but rewards between payoffs has become something we need to stay motivated.

3. Reconsidering our numbers. We went back to make sure our numbers were working for our ever changing budget. We’ve been underspending on gas and overspending on miscellaneous necessities (car repairs, house repairs, etc.). We decided to adjust our numbers and perhaps pay a little less on our credit card so we can stop panicking when things aren’t balancing. Leaving the numbers the same would be great, but it’s obviously not working and it’s causing frustration.

4. We have decided to spread our focus. It’s easy to let finances consume our thoughts and lives. Rather than let this stress grow, we decided to let ourselves enjoy other things in life. Running, swimming, yoga, gardening groups, and organizing the garage help to keep our mind free of the finance clutter in our brains.

When there are long distances between payoffs, it’s important to work at what is frustrating you. You can’t solve everything, and it will be painful, but taking steps to at least reduce stress will help to prevent burnout. I’d rather take things a bit more slowly than give up entirely.

What have you done to motivate yourself and prevent burnout?

Posted by Beks on June 29, 2009 at 7:49 PM in Confessions, Credit Cards, General Debt, General Personal Finance, Keeping Motivated, Life Experiences, Living Frugal, Money & Relationships, Monthly Spending, Reducing Debt | 4 Comments »
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Normal by the Numbers?

I’ve been asked to reveal my actual monthly budget numbers. I was reluctant at first and then realized it may be a learning experience and I should see if I am normal in my expectations of my money.

No, I am not going to reveal my housing costs. Asking a San Diegan to reveal her mortgage payment is like asking a New York housewife to reveal her age. The only thing likely to happen is a giant string of lies.

I’m also not going to reveal our charitable giving amounts. What we decide to give is a very personal decision and it’s not an amount I’m willing to change just to pay more on bills.

Savings: $50
Electricity/Gas: $105
Cell Phones: $100
Cable/Internet/Phone: $100
Grocery: $300
Gas: $260
Laundry: $10
Toiletries: $11
Clothing/House Repairs/Animal Care/Spending Money: $200
Water: $70
Trash: $18

All remaining money is used to pay our mortgage, our credit card, our student loans, and my husband’s truck.

So. Am I normal by the numbers? What does your budget look like?

Posted by Beks on May 18, 2009 at 5:00 AM in About Me, Confessions, General Debt, Monthly Spending, Reducing Debt, Spending Money | 28 Comments »
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Catching up on my financial journey…

I started blogging about my debt journey in November. I was recently laid off from a job I loved, was swimming in debt, and felt completely overwhelmed. I had no doubt I would lose my home, my credit, and my good name.

But I guess that’s part of a journey. It can’t be all fun right?

I worked a tough job for a ‘big box store’ to pay the bills while applying for any decent job available. I finally landed a great job in December.

I’ve struggled with unexpected expenses – like a monthly $150 property tax hike and a 1% sales tax hike…

I’ve made lifestyle changes – the biggest one is my use of public transportation…

I’ve struggled with monotony…

And I paid off my car.

Here is where I am on my debt journey. Somehow, we’ve squeezed $10,000 toward our debt – $30,000 to go. Sure I’d like it to be more, but $10,000 isn’t a bad number.

I can’t wait to finish this journey and finally become…

DEBT FREE!!

Posted by Beks on May 4, 2009 at 5:00 AM in About Me, Debt Updates, General Debt, Home Ownership, Keeping Motivated, Life Experiences, Reducing Debt | 6 Comments »
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Three Lessons My Garage Has Taught Me

We’ve been ‘encouraged’ (ie. sternly scolded and forced) by the members of our debt reduction class to sell everything to pay off debt.

We dug around our garage for a few hours and it taught me three very important things:

1) I’m a pack rat.

In this day and age, no one… and I mean NO ONE… should still have a Tae Bo video or a Chia Pet.

2) If I don’t see it, I don’t care if it’s sold.

I can’t remember what is out there. If my husband sells it before I see it… it’s fair game.

3) The things I thought were so important to me… aren’t.

There are very few things I use on a daily basis. I don’t need the rest. It’s time to simplify.

What are you selling?

Posted by Beks on April 22, 2009 at 12:03 AM in Making Money, Reducing Debt | 14 Comments »
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Dearest Chase Bank

I’d like to thank you for offering me a loan when I needed it — *cough* — I mean, when I WANTED it.

While our relationship has been great and I have appreciated your monthly letters of good tidings, I’m afraid I have to end things. You see, I recently met with my tax man and he told me we’re getting back a small chunk of cash which means… all the money I’ve been saving can finally be used to rid myself of you.

I know you have lots of friends like me and you probably won’t miss me but I’m sure you’ll miss the nearly two years of interest I would still owe you if we continued to be friends.

Please don’t take this personally, your service has been exceptional. We’ve actually got along quite well the past few years but it’s not you… it’s me.

I wish you the best in your future endeavors… none of which will involve me.

All my love, but none of my cash,

Rebekah

Posted by Beks on April 21, 2009 at 12:03 AM in Debt Updates, General Debt, Loans, Reducing Debt | 13 Comments »
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Three B.A.D. Ways to Reduce Debt

This guest post is from Ryan at Debt Reduction Forumla. He’s currently is reducing his debt from $75,000 to zero and letting you look over his shoulder. If you like what you see here, stop by his blog or you can subscribe to his feed here.

This is the first guest post Iâ€™ve written for Tricia. So I spent a few days thinking about a title that would get your attention.

Thatâ€™s when I came up with â€œB.A.D. Ways to Reduce Debt.â€

Of course, B.A.D. stands for Blogging Away Debt.

To write this post, I went back through a number of Triciaâ€™s blog posts to see what strategies she has personally used to reduce her debt during the last two years. Here are the three debt reduction strategies I came up with, along with how Iâ€™m using those same strategies.

Strategy #1: Create accountability.

When Tricia began her debt reduction journey, she started this blog to create accountability. I took a similar approach when I started writing Debt Reduction Formula. I did it, in part, for accountability.

But a blog is a lot of work, especially if you want to attract regular readers. Whatâ€™s a busy person to do?

At first, I simply created a spreadsheet that listed all of my debts, their interest rates, and minimum payments. This created personal accountability because I had to acknowledge my debt problem and see whether it was getting better or worse each month.

I continue to update that spreadsheet every month to see how much progress Iâ€™m making.

Even personal accountability like this goes a long way toward keeping yourself motivated. (And, trust me, you WILL need something to keep you motivated as you pay down your debt.)

Strategy #2: Minimize finance charges.

Another debt reduction strategy Tricia has used is minimizing her finance charges by looking for the lowest interest rates possible.

In one post, Tricia shares that she called around to credit card companies to get rate reductions, paid off as much debt as she could to improve her credit score, acted on balance transfer offers when she received them, and even took advantage of a Prosper loan at one point.

Weâ€™ve all heard about minimum payments. But, if youâ€™re like me, you may not have thought in terms of minimum finance charges. (I think I finally stumbled upon this concept a couple months ago.)

Letâ€™s say you have monthly minimum payments of $800. If you look at how much interest youâ€™re paying, you may discover that $600 of the total monthly minimum is going to interest!

By reducing finance charges, you free up more money to pay down principal, which accelerates your debt reduction.

Like Tricia, Iâ€™ve gotten reduced interest rates on a few credit cards. And I, too, recently got a Prosper loan to consolidate two loan balances. By doing this, I literally slashed my interest rate in half. (Iâ€™m now paying 11% instead of 22%.)

Strategy #3: Throw extra money at debt.

Perhaps this seems like a no-brainer.

But think about the â€œeconomic stimulus checkâ€ most folks will get this May/June. No doubt, some people will use it to pay off debt. But many people will spend it on a new widget or doodad.

A close friend and I were talking, and we speculated the number one purchase this economic stimulus money will be used for isâ€¦ a new flat-screen TV.

Not debt reduction.

Tricia writes that 100% of their 2005 tax return was used to reduce debt in 2006. And while itâ€™s easy to admire that kind of commitment, itâ€™s hard to put it into practice.

Currently, Iâ€™m also using extra money to pay down debt. Where does it come from?

Since Iâ€™m self-employed, I have periods of time when Iâ€™m cash-rich and other when Iâ€™m cash-poor. So whenever I get paid a project fee, I take whatever portion I can to pay down debt.

Iâ€™m actively pursuing different ways to grow my business so Iâ€™ll have more cash to throw at my debt. Not to mention, I recently received an unexpected inheritance, which Iâ€™m using to reduce debt as well.

So tell me: what B.A.D. ways to reduce debt have you personally used? Leave a comment below.

Thanks Ryan for the guest post!

Posted by Tricia on April 5, 2008 at 8:20 AM in Reducing Debt | 6 Comments »
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Free Tax Cut Online, Get Paid to Interview & A Debt-Free Blogger

I’m a little late on this week’s links. My husband got sick on Thursday and I followed on Friday night. Saturday, the both of us were quite miserable and I even took a five hour nap. I’ve been feeling a little better today, but still not back to normal quite yet.

We are also experiencing some bitter cold weather. The blizzard conditions outside even lead to the closure of a part of the main highway. That doesn’t happen very often. So, we ended up getting sick on a good weekend to stay put in the house.

Anways, here are some links that I found interesting this week:

Jim at Blueprint for Financial Prosperity has a couple copies of TaxCut Online to give away.

MyMoneyBlog gives some info on how you can get paid to interview for jobs. Pretty interesting!

Lastly, NCN shares how he has been a debt-free blogger for two years. One day, I hope to join the ranks of being a debt-free blogger