In April of 2005, I had an ‘ah ha’ moment.  As I sat staring at the paltry amount of money in my checking account, it occurred to me that I had been working for more than half of my life, and yet, I was broke, in debt, and I had no plan for my financial future.  I had less than $1000 to my name.  I had worked, hard, for more than fifteen years, and yet I had no savings, no emergency fund, and no idea for how I could ever retire or pay for my kids’ college.

Scared, and more than a little frustrated, I made up my mind, then and there, to do SOMETHING about my situation.  I took out a piece of paper - actually, the back of an envelope - and I began to list my creditors.  I then went online and found out just how much money I owed.  The total?  I owed a little more than $11,500.  Now, since that time, I’ve met a number of people who owe much more and and a number who owe much less than $11,500, but, three years ago,$11,500 was a LOT of money.  Remember, I had never lived on a budget, I had always depended on credit cards to get by, and I was used to living paycheck-to-paycheck.

Now, in 2008, my life is completely different.  I am debt free.  I have a fully-funded emergency fund, and I’m working hard, along with my wife, to ensure that we adequately fund our retirement and education savings accounts.

I didn’t type the above paragraphs so that I could “toot my own horn.”  After writing about debt reduction for more than three years, I’ve met people who’s stories make mine pale in comparison.  No, I shared my story for one reason:

You.  Can.

You can get out of debt.  You can save for your future.  You can live on a budget.  You can retire with security.  You can live a more peaceful life.  You can be and do and see and know more than you ever thought possible.

Three years ago, I had the back of an envelope, a desire to get out of debt, a borrowed copy of one of Dave Ramsey’s books, and a silly little blog - but, I also had two more things - the two most important things.  I had determination and I had a plan.

I lined my debts up on another piece of paper - a proper sheet of college ruled, if memory serves - and I began to plan.  I narrowed my focus, I stopped worrying about what other people thought, and I began to work as hard as I could to rid myself of debt.  Even when my son got sick, and was hospitalized for a week, and we used up our entire emergency fund, I would not give up.  Even when my original goal date zoomed by and I was still in debt, I would not give up.  For some reason, whatever fire that was lit in April of 2005 refused to go out, no matter what the situation and no matter what the setback.

I don’t know anything about you.  When you read this article, you might find it inspiring, or corny, or even off putting.  I can’t do anything about your reaction.  All I know is, I’m looking around at a world filled with people who look like they’ve lost hope.  My goal, and it has become the singular goal of my site, is to let people know:  If a dude like me can, anyone can. I’m serious.  There’s nothing special about me.  I’m the most average guy on the planet.  I want my kids to grow up and be happy and healthy.  I want to spend a long, blessed life with my wife.  And, I want to be able to leave a little behind when I pass on.

What is special, however, is what happens when you couple your plan with your determination.  So, if you are where I was, and you’re feeling discouraged or down or depressed, maybe this post will serve as a “pick-me-up”.

Now, go to your kitchen table and sort though that stack of bills.  Take out an old envelope, flip it over, and get to work.  Tomorrow, you change your life.

You. Can.

• 24 Comments

I want to once again thank those of you who arrived here via this Money Magazine article about families who are living without credit cards.

If this is your first visit to my site, welcome.  I hope you will take a few minutes to read a bit more about me and about how and why I live without credit cards.  Now, today’s post:

Creating My List Of Financial Priorities:

It is vitaly important, to me, that I:

Live On A Budget - No matter how much money I have (or don’t have), I will always use a written budget to manage my finances.  Over the course of the last 3 years, I’ve used very complex and very simple budgeting techniques, but my goal has always been to crate a clear picture of how money flows into and out of my life.  My budget - which is my financial road-map - keeps me on track.  (I’ve written several articles on budgeting, including this popular one about budgeting when you have irregular income.)

Purchase Adequate Insurance - I have health, life, dental, disability, and property (renter’s) insurance.  Once a year (or more often, if the need arises), I reassess my financial situation and purchase insurance accordingly.  (For those new to my site, when you read the word “I”, feel free to insert the word “we”.  Whatever I do for myself, I do for my wife and our three kids.)

Maintain Adequate Cash Reserves (Emergency Fund) To Cover Six Months Worth Of Expenses - I keep enough money, in my savings account, to cover the cost of food, shelter, clothing, and utilities, for six months.  In the past, I was more willing than I am now to dip into my emergency fund.  But now, especially with the state of the economy, maintaining a fully-funded emergency fund has become a very high priority.  (If you haven’t done so, consider adding your input to this poll I’m conducting about emergency funds.  In a few days, I plan to summarize the feedback and write and article about the poll results.  It should be interesting.)

It is very important, to me, that I:

Fully-Fund Our Retirement Accounts - Currently, I am fully-funding my 403(b) and my Roth IRA.  My wife is fully-funding her Roth IRA and her pension plan.  We plan to fully-fund these accounts, year after year, until we retire.  By fully-funding my 403(b)  - (similar to a 401(k), but for non-profit organizations) - I reduce my annual tax bill and save for the future.  Roth IRAs provide an opportunity for tax-free growth.

Fully-Fund Three Education Savings Accounts - I have three small children, ages 8, 4 and 2 months.  I plan to fully-fund ESAs for each of them.  My goal is to assist them when it comes time for them to go to college.  I will expect for them to work, while in college, but I do plan to pay their tuition (and living) costs.

It is important, to me, that I:

Continue To Live Without Borrowing Money - So far, I have managed to live more than three years without borrowing money.  During that time, I’ve purchase a newer automobile and several furniture pieces for our house.  But, if I plan to continue to live without going into debt, I must be sure that I -

Save For Future, Major Purchases -  Currently, I live in a house provided by my employer (as part of my compensation).  In the future (near or distant), I plan to purchase a house.  I would love to be able to do so without borrowing any money.  This may, or may not, be possible, but I am going to try.  Even if I am unable to purchase a house without borrowing money, I do plan to save up for a substantial down-payment.

It is cool, to me, that I:

Live Without Using Credit Cards - While it might come as a shock for some to read, living without a credit card is pretty easy, once you get used to it.  When I want to purchase something online, I simply use a debit card (which is associated with a separate checking account, dedicated for debit card purchases).  I also use a debit card for groceries or gasoline.  For most other purchases, I carry cash.  But, No Credit Needed isn’t, primarily, an anti-credit cards site! While I do like to write about my life without credit cards, I realize that most people will use them.  I want my readers to know, my primary goals isn’t to convince you of the ‘evils’ of credit cards.  No.  My primary goal (for the site) - is to promote the idea that credit does not have to be the default option.  You can save up enough money to purchase an automobile.  You can pay cash for a new television set.  You can go to college without accumulating massive loads of debt.  You can live debt free.

I realize that most people will borrow money when they purchase an automobile or buy a house.  And, I realize that many people use their credit cards ‘responsibly’ - and pay them off at the end of the month.  But, there are millions and millions of people who are over-their-heads, who continue to borrow money, always putting of tomorrow what needs to be dealt with today.

Credit, like anything else, is just a tool, to be wielded by its owner’s hand.  For me, I choose not to use credit cards, because I just don’t like dealing with credit card companies.  But, credit isn’t’ the real issue -  personal responsibility is!  Each one of us must look inside ourselves and determine those things that really matter.  So, today, I’ve listed what matters (in the financial realm) to me.

As you read my blog, please don’t get hung up on the ‘He doesn’t use credit cards” bit.  That’s such a small part of what I’m trying to do.  I’m trying to shape my financial destiny, and the destiny of my children and their grandchildren.  My ultimate, long term goal (for my life), is to be a blessing to other people - financially, emotionally, and spiritually.  Not using credit cards is just one ’small tree’ in the very ‘big forest’ that is my financial life.

Thanks again for stopping by, and if you have not already done so, please consider subscribing to No Credit Needed via RSS or via Daily Email.

Edit:  If you like this post, please consider stumbling it.  If you haven’t checked out Stumble Upon, click here to view my profile and consider creating one of your own.  It’s a great resource for sharing links and finding interesting content.

• 17 Comments

I want to thank those of you who have clicked over from Money Magazine. Author Donna Rosato interviewed me a few weeks ago and yesterday, her article, Life Without Plastic, was published on the Money Magazine website. My family and I are profiled on page 6 of the article. The print version of the article will be in the July issue of Money Magazine - on newsstands this week.

(If you missed it, please click here to read my original welcome message, written yesterday when the article was first posted on the Money Magazine site. You’ll find tons of general information about me and my websites.)

Since so many of you are new to my site, I thought you might like a little background information.

Thee years ago, in April of 2005, I sat down at my computer. I was depressed and worried. I had two kids and a great wife, but our finances were a mess. We had less than $500 in our savings account, I was barely funding my retirement, and we were almost $12,000 in debt. Feeling frustrated, I decided that I was tired of being broke - and I determined to do something about our situation.

For months, I had been listening to Dave Ramsey talk about debt reduction. I decided to follow his ‘Baby Steps’. But, I didn’t really know anyone else who seemed interested in talking about debt reduction and I really wanted a way to connect with like-minded people. So, I found a site where I could start a ‘blog’ for free - and No Credit Needed was born.

Since that day at my computer, my life has changed, dramatically. I managed to pay off all of my debts, build up a decent emergency fund, fully-fund several retirement accounts, purchase a newer automobile with cash, and live without using my credit cards. Now, instead of living life worried about bills and paperwork, I look forward to planning for my future and managing my finances.

No Credit Needed is more than a blog. It’s an experiment. Can a modern family of (now) 5 live without borrowing money? And, my honest answer is, I don’t know. But, for more than three years, I’ve managed to not only live without debt, I’ve managed to thrive without it. So, until further notice, I’m still rocking on, No Credit Needed!

I’ve written several articles about credit cards and why I don’t use them, including -

I Do Not Use Credit Cards

Preparing For Life Without Credit Cards

Philosophical Reasons For Not Borrowing Money

How I Live Without Credit Cards

For those of you considering this way of life, let me assure you of two things - it can be done and it does take a lot of work. I strongly recommend that you live on a written budget. My preferred budgeting software is published by the good folks over at You Need A Budget.

I’ll remind you that I am not a financial professional. Instead, I’m very much just a regular guy. I have an awesome wife, three great kids, a job, bills to pay, and a future to plan for. No Credit Needed is my attempt to share my own story. And, hopefully, from time to time, it will inspire or encourage someone else.

Thanks again for stopping by, and if you have not already done so, please consider subscribing to No Credit Needed via RSS or via Daily Email.

For those of you who arrived here via StumbleUpon, thanks for visiting!  Before you leave, please consider stumbling this post.  Thanks!  For those who have never heard of StumbleUpon, click here to view my profile and consider signing up.

• 14 Comments

Many popular personal finance ‘gurus’ suggest maintaining an emergency fund with enough money to cover 6 months worth of expenses. I thought it might be interesting to see what my readers thought about this advice. If you are reading this post in a feed-reader, you will need to click through in order to leave a comment and vote in the poll.

Now that you’ve voted, a few questions -

Question 1: Where do you keep you emergency fund? In a savings account, money market, checking account, or under the mattress?

Question 2: What about six months worth of expenses? Is this too much… or too little?

Question 3: Would you sacrifice a fully-funded emergency fund in order to fully-fund a Roth IRA (or other retirement / education savings account)?

Question 4: What is the smallest emergency fund with which you wold be comfortable?

Thank you for your participation. Your answers will help me write a future post. If you are a blogger and you write a post about this subject, click the contact button at the top of this page and let me know about it. I’ll be more than happy to link to your post.

Related Posts -
Building An Emergency Fund - Where Do I Keep It?
Reader Poll - Short Term Savings
Updating My Non-Retirement Savings Chart

• 54 Comments

It’s hard to believe. I have been completely debt-free for two years!

In April of 2005 I created No Credit Needed.

My purpose? To track my debt reduction and share my story with the world.

In less than 10 months, I paid off more than $11,500, and on February 6, 2006, I was able celebrate my ‘freedom’ from debt.

Click here to read the post I wrote, 2 years ago, about becoming debt-free.

I cannot express how important this site has become to me. I am thankful for the (ever increasing) number of readers, visitors, and subscribers. You motivate me. You challenge me. You push me to research, defend, and consider my positions and my ideas.

Along the way, numerous other bloggers have helped me, linked to me, informed me, encouraged me, and inspired me. Many of them are listed in my blogroll - and I dare not attempt to single any of them out by name, for fear that I’ll fail to include all of those who have been so good to me and the site.

I would like to thank all of my fellow bloggers, who have taken the time to link to my site. By referencing my site, you have helped grow my traffic, you have connected me with new readers, and you have helped to build my online reputation. I will be forever grateful.

If you are new to my site - I want thank you for stopping by - and I encourage you to stick around.

Here are five of my favorite posts from the past 5 years -

(Almost) Everything I Know About Debt Reduction

What I Like About Being Debt-Free

How I Plan To Stay Out Of Debt

Welcome Clark Howard Fans And WSB TV Viewers

$10 A Day Equals 3/4 Of A Million Dollars

• 14 Comments