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It's been about three weeks since I began March's budget that is managed by Mint.com and their free website. As I reviewed my spending plan on the site, I have noticed a spending pattern on several categories. Now this is where I can see where the money is ebbing and flowing, and where I have overspent! Yikes! It's amazing how quickly things add up! I wasted alot of money this month!
But, that is why tracking your spending allows you the ability to see where you overspend, underspend, or stay within your spending plan. I personally have overspent in the following categories:
Restaurants, groceries, gasoline, and pets. I know some of these are vital, but eating out and spending too much at the grocery store can be cut. Even the pet budget was over because we had the dog groomed instead of taking the time and shampooing her ourselves!
I can see why we justify spending too much. I earned extra money on overtime this month, and more is on the way. However, this will now go towards my debt snowball instead of eating out or spending outside of the spending plan. I now only have debt on back taxes, car loan, and a parent plus loan. After that we're debt free except for the house.
The Mint.com website and my spending plan will help us shape up for a better future for me and my family on our way to being debt free by the end of this year!
Baby Step #2- The debt snowball from Dave Ramsey's book "The Total Money Makeover" has been my method of reducing the $55,000+ in unsecured debt that has overwhelmed me.
This method, for me, works! I put the lowest balanced debt first and then in increasing order, have been paying them off, one by one.
While paying minimums on all, I put every extra penny into paying off the lowest balance first. Then after the first debt is paid off, I add that payment, to the next lowest balance payment....voila!...the debt snowball.
As I currently stand, I started the debt snowball process in February of 2008. The original balances were as follows:
VISA #1: $325
Nordstrom: $325
Home Depot: $1200
American Express: $2500
VISA #2: $2600
Personal Loan: $4500
Auto Loan: $13,000
Student Loan: 13,450
IRS: $17,350
I am proud to say, that as off this Monday, All of my credit card debt is paid off! Woo Hoo! Zero, Zilch, Nada! No More Credit Card Debt for me!
The debt snowball method works if you are committed to it, focus on your spending habits, and sell everything. With your spending plan, you can "find" money to apply to your debt. You also, can E-bay, Craigslist, and sell stuff to get more money to apply to debt.
I mentioned snowflakes before. Well, what is a snowball made of? Snowflakes, of course. Any small amount of money can be a snowflake that you can apply towards debt. I save change, recycle, work overtime and earn extra income when I can to put towards debt. I even pickup change in the street!
Recently, I debated about an old pick-up truck I had on my ranch. But after watching Dave Ramsey on television, I decided that it had to go too!
However, I still have more debt to pay off. During the last year, I have been able to pay a significant amount towards the larger debts. With regular payments, and putting my tax refund towards IRS debt, I have been able to do the following to the remaining debts:
Current Balances:
IRS: $3900
Personal Loan: $4500
Auto Loan: $6405
Student Loan: $12,900
As you can see, I still have quite a ways to go. But with a significant amount of income free from paying on five credit cards, I am now applying all of those payments along with the current payments to the smallest debt. With this plan, I should be debt free by February 2010!
February 2010 and debt free except the house! I am excited.
So to summarize: $55,250 initial debt.
: $27,705 current balance.
: $27,545 paid.
Half-way there and still Baby Steppin'! Thanks to inspiring blogs like Get Rich Slowly, My Money Memoirs, Money saving Mom, and of course Dave Ramsey!
When I started my financial turnaround in February of 2008, I personally was over $55,000 in debt, not counting the Mortgage. Some of the debt I had was left over from my divorce of 8 years ago.
But somehow, over time, I rationalized using credit cards, getting a car loan, borrowing money, and paying for college tuition with a student loan.
Before I knew it, I owed the following:
5 Different Credit Cards: $6,950.
Auto Loan: $13,000
IRS: $17,350
Parent Plus Loan: $13,450
Personal Loan: $4500
For a total of $55,250! A huge number that I compiled with stupid spending, dumb borrowing, lack of planning and lack of savings!
By totaling the amount of unsecured debt i carried, I began my journey to financial freedom.
As with Dave Ramsey's plan, I actually started a budget, or as I prefer, a spending plan! I started looking at my spending habits, traced all of my expenses, and gave every dollar a place to ebb and flow!
The next step was to do the most emotional thing I could think of at the time....CUT UP MY CREDIT CARDS! I was so attached to my Nordstrom credit card because I opened that account over twenty years ago! How crazy is that! Being attached to a credit card that cost me 20 something percent in interest to buy expensive clothes! DUH!
So, I brought out the shredder, put all five credit cards on the table and told my new wife that we were on the road to financial freedom. With that, all five credit cards became many plastic shreds!
Next step was my emergency fund, Baby Step #1 from Dave Ramsey. I immediately opened an ING Orange Savings account. ING offered a $25 gift when you opened an online account with them. I had budgeted $200 also to put into savings that first month. After a month of working some overtime and selling some stuff, I was able to get my $1000 EF funded.
Next post, I start Baby Step # 2-The Debt Snowball and the many Snow Flakes!
We started this financial journey in February of 2008. My wife and I were sick and tired of living paycheck to paycheck! All of our income was going out to bills.
We make a good income, but were not making ends meet! It became obvious that our handling of money was out of control. I didn't even know how much money was going where and what we could afford. We thought were living the "American Dream"...but we were in debt up to our ears!
Not to say that all Americans are in serious debt, however, some of the friends, co-workers and family that we share life with, are mostly living beyond their means.
So, we decided to stop the madness, and get a handle on our finances.
First, we searched the internet for financial information. Through Google, I came upon "Get Rich Slowly", a blog about a man and his wife's journey to become financially responsible and debt free. After reading about J.D. and his situation, I could completely relate to what he went through. I too was deep in debt and without any idea of how to get out of this financial mess.
GRS has a story of how he became free of over $35,000 in debt. By using a "Debt Snowball", starting a budget and changing their lifestyle, J.D. completed what we wanted to do...become debt free!
So, we followed this plan, and found more information through his website. In particular, we found Dave Ramsey. I checked out his book "The Total Money Makeover" at the library(my first library card in years!). I read the whole book in one day and I was "All In"!
From that point on, we had a road map on becoming debt free!
In the next post, I will outline how we started back in February of 2008 on our "Baby Steps". Our goal: Pay off over $55,000 in debt!
We're not there yet, but we are heading in the right direction for sure!
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