Money Management, Motivation

Fixing My Finances: How I Got Started (Part 1)

If you are broke, scared, frustrated, confused, angry, or worried, this post just might be for you! First off, there are tons of great resources which will give you information about personal finance. I am NOT a personal finance professional, and I do NOT provide the following as professional advice. But, if you’ve ever wondered HOW I got started, here’s the answer.

Two years ago I was (broke, frustrated, confused, etc…) I was “sick and tired of being sick and tired”. So, I decided to learn a little bit about personal finance. I had listened to the Dave Ramsey radio program. I enjoyed Dave’s conversational style. I purchased a copy of Dave’s book, Financial Peace Revisited. (I’d strongly recommend that you buy Dave’s book and/or listen to his radio program. If you purchase his book through Amazon, I’ll get a referral fee. I have found that you can learn about 85% of Dave’s advice by just listening to his radio program. Also, I’ve also read Dave’s other awesome book, The Total Money Makeover: A Proven Plan for Financial Fitness. Either book is awesome. If you do not want to purchase a copy, take a trip to your local library. Most will have a copy of one or both.) After reading the book, I determined that I wanted to do THREE things.

I wanted to get out of debt.

I wanted to live without borrowing money.

I wanted to find a place where I could “share” my journey.

I had just recently discovered “blogging” so I figured that I might as well give “blogging” a shot. I signed up for a free site and I started posting. (One day, I’ll do a post about “blogging” itself. This, alas, will not be that post.)

After reading the book, I “took stock” of my current financial situation. I wrote down my monthly expenses, my monthly income, my account balances, my account numbers, my account contact information, etc. Basically, I did a personal finance “inventory”. I wrote down (on a simple piece of notebook paper) how much money I had, how much I owed, and to whom I owed it. I listed my savings account, my credit accounts, and my retirement account. This piece of paper served as my “reality check”. (It was during this process that I realized that I had worked for 14 years and had “nothing” to show for it but a bunch of stuff and a stack of bills.)

I then created my initial “plan”. I worked on creating a budget. My first budget was a very, very simple document, consisting of my monthly income estimates and my monthly payment estimates. Trust me, the first six months of “budgeting” will be a hodgepodge of over- and under-estimates. I usually overestimated the cost of electricity and gas, but underestimated food and health care. A few months after starting, I was contacted by the creator of the YNAB Personal Budget. I’ve been using (and promoting) it ever since.

So, that’s how I got started. But, as Paul Harvey might say, here’s the rest of the story…

You see, the above is simply the “nerd-half” of the equation. Anyone (with a little effort) can set up a budget, read a book, and punch a few numbers. But, what REALLY began my progress towards financial security had VERY, VERY little to do with the “mechanics” of the operation, and almost EVERYTHING to do with a change in attitude. Not only did I create three “goals” but I decided on three “courses of action”.

First, not only did I create a budget, but I began to talk about my (our) future with my wife. Whenever you see the word “I” on this blog, 99% of the time you could replace it with “we”. If you are married, you MUST communicate with your spouse about your finances. I find that the NUMBER ONE reason that we have been successful in turning our financial ship around is that we learned to “row” together. A POORLY designed budget that is faithfully executed will always be more beneficial than an EXPERTLY designed budget to which no one is faithful.

Second, I found some “accountability”. For me, my accountability came in the form of one “real life” friend and this blog. For you, you may choose to blog, talk with a friend, or join a support group. I have never been much of a “joiner” and I am not talking about some over-emotional group of people who whine and cry about every little setback. But, I needed a place to celebrate my progress and discuss my struggles. No Credit Needed became that place. (BTW, you are MORE tan welcome to join us over at the No Credit Needed Network, a great place to celebrate progress!

Third, I determined to be “different”. I created a goal (to NEVER borrow money again) that was so “radical”, so “out there” that the GOAL ITSELF drove me. Think about it this way: What if I DO have to borrow money some day? Does that mean I’ve failed? Of course not! I’ve paid off over 11K in debt and saved over 25K in the bank in less than TWO years. Having an (outlandish?) unique goal creates an undercurrent of passionate resolve. I dare to be the “oddball” who pays with cash.

There you have it. I started “fixing my finances” by reading a book, creating a budget, talking with my wife, and sticking with my plan. Along the way I received encouragement, gained wisdom, shared my struggles, and celebrated my success. Trust me! If I can do it, ANYONE can do it, including you. We rock!

Part 2 of Fixing My Finances: 10 Lessons I’ve Learned can be found here.

4 thoughts on “Fixing My Finances: How I Got Started (Part 1)

  1. My husband and I are going through this same journey. We were inspired by reading Get Rich Slowly and The Simple Dollar, but what really got us motivated to make a change was the upcoming birth of our son. We had taken a rather haphazard approach to personal finance in the past, and the result was a mountain of bad debt.

    We resolved in January to make a full accounting of our finances. We discovered we owed more than we thought, but we had also saved more than we thought, thanks to employer-sponsored automated savings and matching programs. We also had more equity in our home than we had realized. Almost immediately, and with surprisingly little effort, we began to cut back on the fluffiest expenses – we now bring our lunches almost every day at work, and have cut back on vices like Starbucks and booze. We use an online spreadsheet program to track all our finances now, and as we do it tallies up the totals for us so we know exactly where our money goes (and when). We have been aggressively paying down debt, and it has been surprisingly satisfying.

    In the end, we were shocked to find that it’s actually fun to care for your finances. We take more enjoyment in the things we do spend money on, and now that the initial trepidation at shining a light on our finances is done, we feel more secure and have less fear of the unexpected – we don’t *think* all the bills are paid, we *know* they are.

    By the time our baby is born, we plan to have cut our consumer debt by 1/3. Yay us!

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