A little back-story for those new to No Credit Needed -

Back in April of 2005, my wife and I decided to get serious and do something about our debt reduction.  As part of our plan, I created this website to track our progess.  After ten months of planning, working hard, sacrificing, dealing with setbacks, and learning from our mistakes, we were able to celebrate – we were debt free!  Less than a year later, we managed to fully-fund our emergency fund and for the past two years, we have managed to fund our retirement accounts and education savings accounts for our three kids.  Presently, we continue to fund our retirement accounts while saving for a future home purchase and building cash reserves.

I share the above so that you’ll understand where I am coming from when I make the statement – The more things change, the more they change.  I know, I know.  The actual quote is – The more things change, the more they stay the same.  The truth is, I just don’t believe that.  Nope.  I believe, like I said before – The more things change, the more they change.

Frustrated with being broke, even though I had a good job and a decent salary, I decided to make some changes.  Those changes, once they had born their fruit, led to other changes.  Subsequently, those changes, after bearing their fruit, led to even more changes.  And, so on.

My point?  We must not relegate ourselves to unmitigated stasis.  Instead, we must force ourselves to change – to break free from the foolish habits of the past and replace them with positive routines in the future. As our circumstances evolve, our attitudes evolve, our emotions evolve and our responses evolve.  This evolution – amazingly – begins to push itself forward.  The process, almost literally, takes on a life of its own.

Here’s an example.  After getting out of debt and building our emergency fund – our entire outlook on life was altered.  We were no longer bound by the day-to-day drudgery of paycheck-to-paycheck living.  Free, even a little-bit free, we began to think long-term.  Think about that.  I had worked for almost fifteen years, and I had never really considered that I might, someday, be a guy who “had money”.  I honestly thought that worrying about debt and feeling nervous about the future were simply parts of life.

Imagine how liberated we were when we realized – Hey, we’re actually saving money, living below our means, and planning for a pretty awesome future.  Things had changed!  And, they continue to change.  Each step in the process leads to another step, and then another, and then another.  With each step, we have more opportunities, more freedoms, and more choices.

The more things change, the more they change.  Instead of worrying about this month’s credit card payment, I’m thinking about investment opportunities.  Instead of fretting because I don’t own the latest and greatest, I’m satisfied with my current automobiles and saving up to pay cash for their replacements.  Instead of facing a future clouded with doubt and worry, I’m making plans and preparing for my life thirty years from now.

Before you finish this post, please keep the following in mind.  I am, quite literally, just a normal dude.  I like football, french fries, and hanging out with my friends.  I don’t have an advanced degree in finance and I haven’t figured out some way to line my pockets with gold.  Frankly, I’m just a a guy who got fed up with being broke and decided to do something about it.  When is the best time to start planning for your future and embracing some change?  How about today?

Follow me via Twitter

The More Things Change, The More They Change

Lets be honest:  This whole debt reduction / saving money / getting our finances together thing can be difficult / boring / exhausting.  Perhaps, there are some steps that we can take to stay (or get back on) track – even as we push through those difficult / boring / exhausting days.

1.  Start with a solid game plan and a defined goal.

• Your first goal will depend on your starting point.  You may need to get current with all of your creditors.  You may need to build a small emergency fund.  You may need to pay off you consumer debt.  Whatever you goal – put it on paper, date it, and determine your plan to achieve it.
• It never hurts to print out some copies of your goal and put them up in prominent places around your house.  I keep a copy of my goals inside the front flap of my Bible.  When I’m studying the Word or spending some time in prayer, I can take a look at my goals, and focus on the next steps I need to take.

2.  Block out the nonsense and the noise.

• Here’s the deal.  Just as soon as you set your mind to get out of debt, a buddy will call and ask you to play golf or friends will call and ask you to get together for lunch.  While we don’t want to avoid fun all-together (more on that in a bit) we do need to learn to change our behaviors.  Remember, those of us who struggle(d) with credit card debt do so for a reason.  We bought things we couldn’t afford with money we didn’t have.  When you feel the pull to go out and spend, remember you ultimate goal, block out the noise, and stay focused.
• The above is easier-said-than-done.  It never hurts to have an accountability partner or good friend with whom you can share you goal, someone who will not tempt you to spend but who will actually help you reach your destination.  Surround yourself with like-minded folks and you’ll be ahead of the game.
• After reading this post, I came back to add this paragraph.  When you first get started with personal finance management, you might feel overwhelmed.  You might also feel intimidated.  Don’t worry.  These feelings are normal.  Learn to breathe, take things step-by-step, and feel comfortable about the steps you are taking.

3.  Learn from yesterday’s mistakes and move forward.

• It’s going to happen.  You will blow your budget, you will bounce a check, you will buy something you don’t really need.  Understand that you are human, that life can (and will) throw you a few curve balls, and that obstacles will find their ways into your path.  When I was getting out of debt, I missed my goal date by more than four months.  Instead of getting (overly) discouraged, I regrouped, re-focused, and moved forward.

4.  Reevaluate your goal and be realistic.

• This one is so important.  As you move forward, one of two things will become apparent.  You will either (a) need to be less aggressive with your goal setting or (b) become more aggressive.  If you are easily reaching your goal, well ahead of schedule, you may need to reevaluate and change your goal date, by moving it forward.  If you are really struggling, and feeling completely overwhelmed, it may be time to move a goal date back by a month or two.  The key is to keep up a steady, solid pace of progress.

5.  Take time to celebrate.

• I’m old school.  I still like to give the good old high-five, especially to my kids when they do something awesome.  Since I’m a push over, I consider almost everything they do to be awesome, so I’m used to giving lots of high-fives.  From time to time, give yourself a high-five.  Go out for a nice dinner.  Buy a book you have been wanting.  Splurge a bit and do something nice for the kids or your spouse.  The celebrations need not be elaborate.  Find simple ways to keep yourself motivated.

This week I will be writing a series of Back to the Basics articles.  I encourage you to subscribe to No Credit Needed via RSS or Email.  Also, if you liked this article, please consider promoting it via the social network buttons below.  Comments are always appreciated – and don’t forget to follow me over at Twitter.com/NCN.

Follow me via Twitter

How To Stay On Track

I’ve been thinking about motivation.

Where does it come from?  How can it be maintained?

My primary motivation to get out debt was born out of a desire to have more control over my life.  To be frank, I was tired of living with the constant burden of interest payments.  Deciding to do something about my debt, I began to make major changes in my spending and saving habits.

I’ve come to the conclusion that there were forces, external and internal, that combined to push me towards my decision to get out of debt.  First, a few months before I began to get out of debt, I began to listen to Dave Ramsey.  Day after day, I would listen to his radio program, and week after week, I was encouraged by the stories of those folks who were getting out of debt.  Regardless of whether you agree with Dave’s techniques, you have to admit that he is a dynamic motivator.  Second, I began to think about my situation, and a great anger began to build, deep in my spirit.  I was angry – with myself – for working so hard, for so long, and having so little to show for it.  Third, I looked around, and realized that I was a father, with two kids, and a wife, and I needed to do a better job of preparing our family for the future.  These forces combined to, quite literally, create the motivation that I needed to get out of debt.

But what kept me going?   I had tried to get out of debt before, only to fail.  Why was this time different?

Looking back, the biggest difference was, that in the past, my only goal was to “get out of debt”.  There’s nothing wrong with this goal, except for the fact that it’s too vague.  This time, when getting out of debt, I broke my goal down into specific, manageable micro-goals.  So, instead of saying “I want to get out of debt” my next micro-goal became “I want to send $200 to American Honda Finance, this month”.

By focusing on these smaller, realistic micro-goals, I was able to stop thinking about my total debt balance, and really focus on the next creditor on my debt reduction plan.  Shoot, not only could I focus on the next creditor, I could focus on the very next payment.  In other words, I kept my nose to the grindstone, and tried not to look up until I had completed each of my micro-goals, and ultimately, my final goal.

After getting out of debt, I didn’t stop setting micro-goals.  Instead, I picked an amount that I wanted to save, set a date for saving it, and then broke that amount down into monthly (and eventually weekly) micro-goals.  I created a system that gave me almost instant feedback, making either payments or deposits, not on a monthly or quarterly basis, but on a weekly, or even daily, basis.  I never lost my motivation, because I was constantly creating, then achieving, micro-goal after micro-goal.

If you are struggling to stay in-the-game and remained focused, consider breaking your goals down, into smaller and smaller micro-goals, until you are forced to remain engaged.  I’ve written about the success I had making multiple monthly payments.  This technique not only reduces your average daily balance, but it keeps you focused on your debt reduction game-plan.

After getting out of debt, and saving up an emergency fund, things get a little trickier.  Why?  Well, the main goals – and thus the micro-goals – aren’t so clear.  Do I want to save for retirement?  Yes.  Do I want to save for kids’ college?  You bet.  How about saving for a new house, is that important?  Oh, yeah.

I have had to learn how to focus on more than one goal at a time.  This is a little more difficult for me, because I like the immediate impact of putting all extra available income towards one goal!  (In other words, it’s more fun to see $600 deposited into my saving account than it is to see $200 deposited into my Roth, $100 into my daughter’s ESA, $100 into my son’s ESA, and $200 into my wife’s Roth.)  Slowly funding these accounts, quite frankly, isn’t nearly as fun as rapidly building an emergency fund, but it’s something I’ve learned to do.

I think, when you first begin to focus on your finances, it’s important to be like a laser, and focus on the very next micro-goal on your list.  As you mature, it gets easier to spread your focus, just a bit, and focus on several micro-goals at once.  If, however, you’ve been doing this a while, and you feel like you are losing that focus, take a breather, block out all of the other goals, and go back to one, specific, manageable micro-goal.  I think that you will soon find that familiar motivation that got you started in the first place.

Follow me via Twitter

Micro-Goals And Staying Motivated

I had a very interesting conversation with a good friend yesterday.  We were talking about our finances (he reads No Credit Needed and I asked his permission to share a bit of our conversation with you guys) and he said -

I think that the most important thing, no matter the system that you use for managing your money, is that you have to have a day where it just “clicks” – a day when you decide to take control of your finances.  After that, it’s all a matter of finding a system that works for you.

I think there is a lot of merit to what my friend said.  For me, it clicked more than four years ago, when I decided to put my credit cards in my wallet and get out of debt.  Since then, I’ve learned a lot about personal finance management, but nothing that I have learned has been as important as that initial decision to actually do something about my situation.

In a strange way, even though it took me nearly a year to get out of debt, I was already free that first day.  Just knowing that I had decided to make a change – and that my life would be different from that day forward – was powerful, in and of itself.  Now, of course, I had to actually go about the business of getting out of debt, but that was the easy part.

When I look back, I’m shocked that it took me so long to get my act together.  I’m sure that some of you feel the same way, about yourselves, as well.  Thank goodness for second (and third, and forth) chances!  At this point, I’m just happy that it finally did click!  The system may change, over time, buy my commitment, born that day four years ago, never will.

Follow me via Twitter

The Day It Clicked

It’s almost May, which means that one-third of the year 2009 is gone!  I don’t know about you, but time seems to have flown by, and it seems like only days ago, I was writing down my 2009 resolutions.  (Remember those?  Yeah, that’s that pesky list of things we promised we would do in 2009.  I wonder what percentage of folks will actually follow through and do something about their resolutions.  40%?  20%? 5%?)

If you are like me, you probably have motivational highs and lows.  One day, you are really in to saving money and getting out of debt, the next you are looking at a new set of golf clubs, trying to justify an unnecessary (but really cool!) purchase.  (Confession time – As I type this article, I have another browser-tab open to golfsmith, where I am looking at a sweet new set of Cleveland irons.  A man can dream.)

So, what can you do you do, if like me, you are prone to get off task and lose your motivation?  Well, since I’m pretty much an expert at the do-over, I’ll share.

1. Stop beating yourself up.
2. Remember your original goals / plans / motivations.
3. Balance your checkbook.
4. Recalculate the time it will take to get out of debt / meet savings goal / etc.
5. Find community.

1.  Stop beating yourself up.

It’s easy to feel like you are the “only one” who has ever failed.  The truth is, lots of people fail when it comes to money management  (Have you read the financial section of the newspaper in the last, oh, two years?  Oh, that’s right, in many places, you can no longer buy a newspaper.  See, lots of people fail when it comes to money management!)  Also, stop feeling sorry for yourself.  If you are reading this article, you probably have more financial resources than 75% of the people on this planet.  Instead, regroup and get ready to move forward.  (Interestingly, I was in a financial funk around this time last year.  Click here to read more about how I regained my focus and moved forward.)

2.  Remember your original goals / plans / motivations.

For me, it all comes back to family.  I’m doing “this” so that my family can be secure and so that my wife and I can (one day) enjoy a happy retirement.  When you get offtrack, it’s always important to re-visualize (is that a word?) your original plans and and goals.  Think about how wonderful it will feel to finally pay off that last credit card.  (High-five to Trishia from Blogging Away Debt.  You rock!)

3.  Balance your checkbook.

I know it sounds a little silly, but when you have been struggling, it feels good to get back to basics.  And nothing is more basic than balancing the checkbook.  As soon as you do that, you’ll then be able to move on, and take a new look at your budget, check your savings account balance, and begin to focus on your retirement investments.  Start simple, get everything “in balance” and then move to the next, more complicated tasks.

4.  Recalculate the time it will take to get out of debt / meet savings goal / etc.

I love to use the financial calculators over at dinkytown.  Spend some time with their 350+ calculators, and you’ll be re-energized.  I know, I know.  It can be depressing to know that your original goal / timetable was too aggressive.  And it can be frustrating, dealing with an emergency or financial setback.  Do not compound your difficulties by wallowing in your frustrations.  Do some calculations, get the problem “out of your head” and “on to paper”.

5.  Find community.

We all need accountability and encouragement.  I find both from folks in my church, and from the world of friends that I have online.  In fact, that’s why I started this site.  (Can you believe I’ve been doing this for FOUR years?  Wowsers.)  You need to find someone, or some group of people, who can and will encourage you.  Also, it never hurts to tell a trusted friend or two that you are “on a budget” or that you are “saving money”.  (Alert – There are some people who will think you are crazy for giving up your credit cards or skipping vacation.  Ignore and avoid these people.)  Also, it’s super awesome if you can get your entire family – every person who lives in your house and is able – to pitch in an do their part.  Remember, even the Lone Ranger had Tonto!  Find someone with whom you can share your story, and enjoy their support.  When you get down, give them a call.  (Oh, yeah.  Here’s a list of sites that can connect you with a world of folks who write about personal finance.  You are sure to connect with a few like-minded new friends.)

Tomorrow, we’ll put some “meat on these bones” and see if we can’t flesh-out some more practical steps to take when we are starting over.  In the meantime, take a look back and see if you are meeting your 2009 resolutions.  Leave a comment, and let us know.  Were you overly-optimistic?  Are you doing better than you thought you might do?  Any tips?  Struggles?  We’d love to hear from you.  Rock on.

Follow me via Twitter

A Fresh Start

Ups and downs.  We all go through them.  Judging from the current state of our economy, I’m pretty sure it’s safe to say that more folks are going through downs than are going through ups.  The last thing any of us need to do, right now, is to slack off and stop actively managing our finances.  I know, I know.  The temptation is there, especially when things are going rough, to just throw your hands up and give up.  Do not!

It’s easy to save when interest rates are high.  It’s not so easy when they plummet to near zero.

It’s easy to find motivation to invest when the market is bullish and strong.  It’s not so easy when the market is bearish and weak.

It’s easy to live on a budget when you have surplus income and costs are low.  It’s not so easy when money is tight and prices are high.

It’s easy to give, tithe, and be generous when there is an abundance.  It’s not so easy when life is hard and times are tough.

It’s easy to plan and pontificate when all looks well.  It’s not so easy when times appear troubling and the world is restless.

Let us remember the words of Thomas Paine -

THESE are the times that try men’s souls. The summer soldier and the sunshine patriot will, in this crisis, shrink from the service of their country; but he that stands by it now, deserves the love and thanks of man and woman. Tyranny, like hell, is not easily conquered; yet we have this consolation with us, that the harder the conflict, the more glorious the triumph. What we obtain too cheap, we esteem too lightly: it is dearness only that gives every thing its value.

These may be trying, difficult, unfamiliar times, but our country, and its people, have faced far worse.  We have stood against the evil of fascism, the lie of communism, and the brutality of terrorism.  Will we now, in the face of difficult financial times, give up, give over, and give in?  Never!

The men to whom Paine’s words were delivered would never know the comforts of our modern world – indoor pluming, rapid transportation, instantaneous communication.  They lived, for the most part, hard lives, and many of them would deal with harsh deaths.  Their sacrifices and commitment paved the way for the liberties and the freedoms that we now cherish.  Far be it from us, and our generation, to lose hope and to lose faith.

Each of us, in our own homes, businesses, families, churches, communities, and states, should begin to take personal responsibility for the daily management of our finances.  We honor those who came before us by ensuring the passage of our blessings to those who come after us.  Today, instead of giving up, we must choose to work harder, smarter, and better than we ever have before.  We cannot allow the temporary stresses of the day to destroy the bright future of our tomorrow.  We must hold our elected officials to the highest of high standards – and ourselves as well.  The destiny of our great nation depends on the personal responsibility of each of its citizens.

Follow me via Twitter

Inspired By The Words – These Are The Times That Try Men’s Souls

It’s time to celebrate some debt reduction.  Let’s go!

No Credit Needed Network member My Money Memoirs recently eliminated all credit card debt.  Congratulations!

Another NCN Network member, Time4planB, reached a personal milestone and is at lowest debt level this decade.  Great job!

My Money Minute recently paid off all consumer debt.  My Money Minute shared this good news with me via Twitter.  If you have a Twitter account, follow me and we can hang out!

It’s always inspiring to find folks who are reducing debt and changing their lives.  To all of those mentioned above, and the thousands who are fighting the good fight, You Rock!

If you have had some recent debt reduction success, feel free to share it with us.  Leave a comment and let us know about your progress.

Follow me via Twitter

Some Debt Reduction Celebrations

What does it take to build a solid financial future?  Money, a good plan, and rock solid determination.

Consider a recent article written by Jen from Beyond Mom.  I love the article’s title: The Budget Might Kill Me This Month.  Isn’t that awesome?  Trust me, I’ve felt that exact same sentiment several times.  I encourage you to read Jen’s article, and I think you’ll be impressed, just as I was, by Jen’s closing words -

It’s not super-fun, and it’s certainly not glamorous, but you know what…it will be worth it.

I think that’s how most of us feel about living on a budget.  It is so cool to see someone make a choice – the right choice – and focus on the future.  By the way, Beyond Mom is a member of the No Credit Needed Network and you can click here to view her most recent NCN Network Chart – beyondmom.

For our family of five, it’s extremely important that we live on a budget.  In fact, just the thought of living without one makes me nervous.  I need the structure that a good budget – a good plan – provides.  Personally, we use software developed by You Need A Budget to manage our household finances, and we really like it.  I’ve been using YNAB for several years, and I’m proud to have them as a site sponsor.

As you develop your budget, remember one thing.  Your budget will be useless if you are not determined to use it.  I can remember, years ago, before I got serious about getting out of debt, creating an elaborate budget.  I broke down categories into sub-categories, and sub-categories into sub-sub-categories.  I created short-term, mid-term, and long-term goals.  I averaged my payments, created scenarios for paying of my debts, printed out my budget, and placed in a brand new three-ring binder.  And there is sat.  The budget – my plan for changing my future – just sat there.  I spent hours creating it, and then I did nothing with it.  It was years later, when I finally decided to actually do something about my future, that my budget started to matter.  I had to find the drive, the purpose, the determination to put the numbers on the page into real life action.  Then, and only then, did I begin to turn my financial life around.

Follow me via Twitter

A Plan And Rock Solid Determination

I recently received the following inspiring email from Valerie.  Valerie reads No Credit Needed, and she is also a member of the No Credit Needed Network.

Subject: Thank You

I just wanted to let you know that I finally paid off my debt this morning… after clicking online to submit the final payment of $200, I feel like a weight has been lifted off my shoulders.  Your website has truly helped me pace myself, consider purchases for the short and long-term, and think about funding my emergency, house down payment, and retirement funds. I can’t thank you enough for your… personal take on financial management, your thoughtfulness and support. I am incredibly grateful.

I sent Valerie a follow up email, congratulating her on her outstanding progress.  You can click here to view Valerie’s now-completed No Credit Needed Network chart.  In my reply, I reminded Valerie that her progress was a direct result of her hard work and that she should be proud of herself.  I want to thank Valerie for her email, and I want to thank her for allowing me to republish a portion of it here.  Valerie, You Rock!

If you are ready to get out of debt, may I suggest that you read – Debt Reduction 101.

Follow me via Twitter

An Inspiring Debt Reduction Email

This could be the day that you…

decide to get out of debt

start to live on a budget

stop arguing with your spouse

start talking to you spouse

teach your kids about money

send five extra dollars to the credit card company

get rid of bad spending habits

embrace bold, significant change

choose to believe that you are worth it

choose to believe that your kids are worth it

choose to believe that your family is worth it

choose to believe that your future is worth it

stop wasting time

start redeeming the time

believe in a better life

dream a bigger dream

plan for a better tomorrow

start to rock

This could be the day – your day – the day you look back and mark as the day you finally decided to do something about your finances.  For me, that day came April 5, 2005, the day that I decided that I had finally had enough – and that I was going to do something about my financial situation.  This could be your day – if you make it so!  Let the fear and anger and hope and promise associated with your current financial situation rise up, from deep within, and then harness that power – and rock!

Follow me via Twitter

This Could Be The Day