Click here to read all of the 33 Days And 33 Ways To Save Money And Reduce Debt posts.

Day 30: Know Your Weaknesses (Spending Triggers)
If you have struggled to get out of debt, take a few minutes and write down a list of your, personal ’spending triggers’.

When you find yourself in certain circumstances - or around certain people - do you find it difficult to maintain good spending habits?

At Christmas time, do you spend more than you should on gifts, food, cards, and parties?

When you go to the convenience store, do you buy snacks that you don’t need?

If you are at a restaurant, do you feel social pressure to order what others are ordering?

Are you overly influenced by “sale papers” or “internet specials”?

As simple as it seems, if you want to get out of debt, you need MONEY! So, you can either earn MORE money, or spend LESS money. (Brilliant. I know…)

If you are aware of your ’spending triggers’ you can

A) avoid situations where you might be tempted to overspend.

B) discuss your financial goals with your friends and family, so that they will be “on your side” (helping and not hurting).

C) be absolutely committed to living on a budget.

I’d love to read your comments. Have you figured out what your “spending triggers” are? Do you have a system in place that helps you avoid overspending?

Click here to read all of the 33 Days And 33 Ways To Save Money And Reduce Debt posts.

Observant readers will note that this series has taken much longer than 33 days. I can assure you, I am blogging as often as life permits.

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My wife is an educator and she normally gets her paycheck on the last day of each month. But, in November and December, she gets her paycheck a couple of weeks early, due to the fact that school will be out for Thanksgiving and Christmas holidays. In the past, we would look forward to this “early money”, because we were living “paycheck-to-paycheck”. But, inevitably, when January rolled around, we would be struggling to make it to January 31st! November’s and December’s paychecks would have long-been-spent, and we’d be using our credit cards to help fill the “paycheck gap”.

Sound familiar?

If you get your paycheck a few weeks early, be careful!  Do not treat this money as a “bonus” and go crazy.  I know folks who will spend every dollar of their December paycheck before January 1st - and then they have to go through all of January, using credit cards to ‘make ends meet’.  This ’strategy’ (or lack thereof) will put them behind for an entire year!

Now, because we have an emergency fund and a budget, it really doesn’t matter to us “when” we get paid. Our budget is based on our annual salaries, and bills are broken down into monthly categories. So, even though we might receive a paycheck on the 21st, money from that paycheck will not be allocated for expenses until the 31st.

Using a budget helps to keep things in perspective!

If you are looking for an easy-to-use budget solution, consider the YNAB Personal Budget system.  YNAB is a spreadsheet-based system that I’ve been using (with great success) for more than 2 years.  (YNAB has been a sponsor of No Credit Needed for more than 2 years - and I proudly promote it!)

If you want to read more about creating a budget, check out a few of these articles I’ve written:

How To Live On A Budget If You Have Irregular Income

How To Create A Simple, Easy To Use Budget

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Here are a few of this week’s best articles from the Money Blog Network:

AllFinancialMatters asks “Should we give $500 to every newborn?“.

Blueprint computes whether using a 401K to save for a house is better than using  a regular brokerage account.

Consumerism Commentary has 10 easy ways to save money.

Nickel writes about Zecco - a company that let’s you trade stocks - for free!  (How do they make money?)

FMF suggests that index funds still rock.

JD has a post after my own heart - I too hate those “life takes Visa” ads.

MBH writes about the positives and negatives associated with car pooling.

Here are a few of this week’s best articles from My Personal Finance Blogroll:

MoneySmartLife gets a little “in your face” - and I love it!

GenX says that it’s time for “Gen-X” to grow up.

SVB has 15 painless ways to pay-yourself-first.

3M is interviewing for a new job.

Sun gives us the 411 - what happens to your money if Etrade goes under?

Lazy has a guest post - he’s on vacation - written by Plonkee - about being lazy!

Here are a few of this week’s best articles from My Personal Bookmarks (Non-Personal Finance):

Big Honkin’ has released Episode 6 of Geek Out Loud!

I’ve spent a few minutes reading through some of the content at Chore Buster.

Frank is continuing to produce The Overnightscape - a must-listen for me.

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I will be the first to admit - I know very, very little about taxes. So, in an effort to learn a little bit more about ‘tax rates’, I did a search of the IRS website and I found this page - 2007 Federal Tax Rate Schedules. (Please visit the IRS site for detailed information about your tax rate. I’ve provided a summary of the information provided for those who are Married - Filing Jointly. This summary is provided solely for the purpose of discussion, and you should consult with a qualified tax professional before making any tax-related decisions.)

Married - Filing Jointly

When most people talk about their taxes, they talk about their “tax bracket”. I have been thinking about my “tax bracket” - and since my wife and I earn between $63,000 and $128,500 - I assumed that I was in the 25% “tax bracket”. I was, as is often the case when it comes to stuff like this, wrong. Or, at least, I was “kinda” wrong.

See, my “tax bracket” is the percentage of tax that I pay on my “last dollar” I earn. In my case, that would put me in the 25% “tax bracket”.

So, if I want to figure my federal income taxes for the year, I just multiply my taxable income by .25 and, bingo, I know how much I’ll owe, right? In the words of Lee Corso, “Not so fast, my friend!”

The .25 is multiplied by the amount of taxable income that I earn ABOVE $63,700. Different rates are applied to the amount I earn BELOW $63,700.

Let’s assume, just for this example, that my wife and I had a taxable income of $70,000. (This, by the way, is not the time or place to discuss what “taxable income” is. See the bottom of this post.)

We would pay a 10% tax on the first $15,650 of our income. ($1,565)

We would pay a 15% tax on the next $48,050 of our income. ($7207.50)

We would pay a 25$ tax on the next $6,300 of our income. ($1575)

If our taxable income was $70,000, our total federal income taxes would be $10,347.50.

Our EFFECTIVE tax rate would be 14.78%.

Again, I will remind you that I know very, very little about taxes, but I think I have this right. Please, if you have corrections or observations, I’d love to read them. Leave a comment!

A few quick notes:

1. Taxable Income is (generally speaking) gross income minus deductions.

2. $70,000 is just a random number that I chose for my example.

3. One of my goals for 2008 will be to reduce my taxable income.

4. My wife and I have been thinking about opening a 403b for her, through her work. By doing so, we could reduce taxable income for 2008 - but NOT by as much as I thought. One of the selling points - mentioned several times by one particular financial salesman - has been the ‘fact’ that our taxes would be reduced ‘by 25%’. Clearly, that isn’t the absolute truth. Our taxes will be reduced, but the EFFECTIVE rate of reduction will be much less than 25%.

5. Our tax system is very, very, very difficult to understand. I would prefer a flat-tax or a national sales tax - if only for the sake of simplicity.

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Are you ready to get out of debt?  Run through these suggestions and you’ll be better prepared to start your journey.

Admit your past mistakes - and work to correct them.

Let’s face facts - we’ve all made poor financial decisions.  It really doesn’t matter what you did yesterday.  What really matters is what you do today (and what you plan to do tomorrow).  Make a list of your current debts - ALL of them - and create a plan to pay them off.

Balance your checkbook - and find out how much money you actually have.

How much money do you have in your checking account?  How about your savings account?  I cannot overstate the importance of organized, accessible, reliable financial records.  You need to know how much money you have - right now - so that you can begin to get out of debt and change your future.

Commit to change - and send in an extra payment, right now.

If you are serious about getting out of debt, I challenge you to send an extra payment to one of your creditors, right now.  Seriously, log-in to your checking account or grab your checkbook, and make an extra payment.  If you can only make a payment of $1, that’s $1 of debt that will be gone, forever.

Decide to be different - and refuse to back up.

If you stop using your credit cards (and forgo those wonderful rewards points), if you stop buying new cars (and miss out on that awesome zero percent financing) and if you keep your old television (and miss out on 90 days, same-as-cash) - your friends and family will begin to think that you are nuts.  Guess what?  GOOD!  Being ‘normal’ is being ‘broke’ - and being ‘broke’ is being ‘normal’.  I don’t care how ‘good’ the deal is.  If you don’t have the money, don’t make the deal.  Challenge yourself to stick to your convictions and refuse to be moved by the comments of friends and family.  (Also, don’t be surprised when, in two or three years, they start coming to YOU for advice!)

Enjoy the process - and learn from your missteps.

Getting out of debt takes time, money, and discipline.  Learn to enjoy the simplicity of living without credit cards.  Focus on small victories and celebrate every dollar that you payoff.  Continually remind yourself of the long-term benefits of being debt free.  If you make a mistake, take a mental-note, and move on.  Remember, once you get out of debt, you will join a select group of human beings who are free from the burden of payments.

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