I have been writing about personal finance (as in, my own) for nearly a decade. In that time, I’ve had some financial success – paying off my consumer debt, purchasing a new home – and some blogging success – mentioned in the New York Times, interviewed on television and on radio – but the truth is: I still buy stuff I do not need.
I also use unnecessary dashes and commas when I write, but that’s a topic for another day.
Convenience Items – I am a sucker for anything that makes life easier. I tend to spend too much on convenience items – because, you know, they’re convenient.
Tools – I love new tools, used tools, old tools, broken tools, cheap tools, and expensive tools. My woodworking skills are minimal, at best, but I love hanging in the shop and building stuff. The problem is – I’ll buy tools, just to own them. While not a complete waste, I do have to pace myself.
Entertainment – Dude, we went to one of those 3D-surround-cinemas the other night – and we were out nearly $100 for the 5 of us! (The movie, by the way, was awesome.) My kids are still young, but growing up so fast, that it’s easy to justify the expense. (They’ll only be young once…) But, I need to do a better job of finding inexpensive, but still awesome, things to do.
Snacks – Again, we have three kids – and it’s super-simple to pull into the convenience store, pick up a few snacks, and head down the road. Obviously, this isn’t the healthiest thing in the world (although, I will say, my kids are all in very good shape, and eat less junk food than I did at their ages). We’re working on packing healthy snacks, prior to trips and vacations, as well as for school lunches.
Entertaining – This one is a little different. We often have folks over to our home – and I often am in charge of large group outings – and I tend to over-spend when preparing meals and get-togethers. (On some level, even though I’m a guy, I think I would make a pretty decent grandmother.) I like for folks to be comfortable when they come over, so I always buy more-than-enough. I’m not so sure this is a bad thing, so I’m not going to beat myself up over this one. Sharing a meal with friends or family is one of life’s great blessings.
I’m a relatively frugal person, but I do have areas where I struggle and I still buy stuff I do not need. How about you? Do you have any areas where you are not as frugal as you’d like to be? Leave a comment below or via Twitter @NCN.
Side note – For me, if I know I have an area where I might spend more than I should – I don’t ignore it. I put it in the budget. If I’m going to spend more than I “should” – I, at a minimum, want to plan for it. The last thing I want to do is over-spend, and use credit. Worst-case, I pay cash and it’s in the budget.
Let’s not wait until January 1st to focus on getting out of debt. It’s July – It’s time. Fight for your independence- and get out of debt, today!
No doubt, a little dramatic, but you get the point. Today is the day to start planning for tomorrow. Here’s how I paid off my consumer debt – including credit cards and an automobile loan – plus some tips and tricks I’ve learned along the way.
Stop Borrowing – This is the key, first step. Put the credit card in the wallet, and stop using it. You don’t have to cut it up, or freeze it in a bucket water. Make a decision to stop going deeper into debt – and then work hard every day to honor that decision.
Start Saving – I know, I know. It’s easy to want to skip ahead and start paying off debt – and I’m the last person who wants to dampen debt reduction-based enthusiasm. However, if you are going to make it through the entire process of getting out of debt, you will need an emergency fund. The amount to save before beginning debt reduction? I’ll leave that up to you – for me – I always tried to maintain a minimum of $2000 in emergency fund savings, even while paying off debt.
- List your debts – in the order determined by your strategy – and make minimum payments to all accounts.
- Make an extra payment to the first account on your list.
- Continue to make extra payments until the first account is paid off and eliminated.
- After paying off the first account, take the combined amount (minimum payment and extra payment) which had been going to the first account, and apply it to the second account.
- Repeat until all of your accounts have been paid off and your total debt has been eliminated.
Live On Budget – If you know where the money is coming from and where it is going, you can know how much “extra” there is for debt reduction. I’ll have more on creating a budget, later this week.
Think About Interest – I always hesitate to talk too much about interest rates, even though they are very, very important. I like the idea of living on a budget – and focusing on a sound strategy – and then looking for ways to reduce interest. When I was getting out of debt, I “surfed” a balance from a high-rate card to a low-rate card, and this saved us a little money. So, as you reduce your balances, you may want to take advantage of similar offers. From time-to-time, one of my affiliate advertisers offers a decent interest rate – and if they do – I’ll share that information with you.
Time Is Money – With most credit card companies charging interest based on average daily balance – the sooner your payment arrives, the sooner it is applied to your account, and the lower your average daily balance will be. Over time, this can save you a not-insignificant amount of money.
Get Pumped – Now, a bit about the psychology of getting out of debt and fighting for your independence. We were created, I believe, to be both free and connected. When we got out of debt, we were free from the “weight” of our debt – the worry and associated fear. We were then able to spend time connecting with the people and things that were truly important to us.
Do It - For years, I listened to radio programs about debt reduction, I read books about debt reduction – I even attended a special conference about debt reduction. Then, one day, I sat down, put my credit cards in my wallet, opened a savings account, drafted a debt reduction strategy, and I actually did it. That’s the key – Start today for a better tomorrow.
Getting out of debt can be a struggle – but man is it worth it. We don’t have to wait for a New Year’s resolution. No, right now, we can declare our independence, fight for it, and get out of debt!
Insert “USA! USA! USA!” chant, here!
Let’s be real. The idea of getting out of debt sounds awesome. The day-to-day grind of getting out of debt… not so much.
Here’s how to stay motivated while getting out of debt -
Celebrate Your Progress – Check those numbers and get excited about the amount of debt you have already paid off! For our family, we are working to pay off our mortgage (update this week!) – and while our progress has been a little slower than we had hoped – we are 1/4 of the way there! It’s super-motivating to see just how far we have come.
Connect With Others – This has been very important for our family. (So much so, that I started No Credit Needed just to share our story with others.) Whether it’s a family member, a friend or two, a group at church, or just a shout out on twitter (Shameless plug – Follow me @NCN and let me know how you are doing!) – find someone and share your journey with them.
Remember Why You Started – For me, my debt reduction journey began with the birth of my second child. I was broke – even though I had been working since I was 15 – and I was scared. My motivation was to provide a more secure financial future for my kids and our family. Whenever I get frustrated with my progress, this motivation… well… motivates me!
Set A Short-term Goal – If getting out of debt is going to take you several years, set a short-term goal. Focus on making a few extra dollars via eBay, or making an extra micro-payment or two. I’m always looking for ways to save a dollar or two – and I’ll often set short-term, month-long, goals. Meeting these goals keeps me moving forward.
Get Some Exercise – This sounds weird, but focusing exclusively on our finances can be exhausting. Unfortunately, entertainment can be exhausting – and sitting around the house watching television can lead to overeating – and overspending. So, spend a day at the park, or a day at the lake, or a few hours on the bike. Do something to change up your routine – and you just might change your attitude.
Do Some Giving – When getting out of debt, it was easy for me to become “me” focused. So, I made it a point – and still do – to find ways to give-back, to my church, or to a friend, or to the community. Helping others always motivates me to become a wiser and better financial steward, plus its a blessing to be a blessing.
Talk With Your Spouse – My wife is a constant source of encouragement. When I’m feeling down – about finances or anything else – she’s always there with words of encouragement, reminding me of how hard we have worked and how far we have come. Make a date with your spouse and dream-big about the future that you are working hard to secure.
Getting out of debt takes four things – money, a plan, determination…and time. Let’s all keep moving forward! You rock! Be blessed.
I created this video 7 years ago (wow!) to demonstrate my favorite cash management system – the envelope system.
I have been using the envelope system for nearly a decade and it really is a great system for managing cash and household expenses.
Watching this video always makes me smile. The quality is so cheesy-awesome – but the concept is so super-simple. My Dad says that the opening reminds him of Napoleon Dynamite!
Side note -
I’ll soon be making more videos – with improved graphics and audio! – so visit the NCNBlog channel and subscribe!
The channel will focus on money-saving ideas, tips, and strategies, as well as DIY projects, frugal living, and home maintenance. Be blessed.