Budget, Money Management

From Overwhelmed To In Control

When it comes to managing our personal finances, it’s very easy to feel overwhelmed.  Here are some steps we’ve taken, over the past four years, so that we feel in control.  We have –

Established An Emergency Fund

I cannot overstate the value of our emergency fund.  On several occasions, we have had to deal with unplanned-for expenses.  Instead of borrowing money to cover said expenses, we have been able to dip into our emergency fund, and cover the cost of those expenses.  While getting out of debt, our emergency fund balance fluctuated between $1000 and $2000.  Now days, the fund sits right at nine months’ worth of expenses.  We keep our emergency fund in our ING DIRECT Savings Account. Dedicating ourselves to maintaining an adequately funded emergency fund may have been the smartest financial decision we have ever made.

Eliminated Certain Unnecessary Expenses

Please note the use of the word certain.  We still spend money on things that we don’t need, but we have eliminated much of the truly wasteful spending from our lives.  Finding a healthy balance between wants and needs can be difficult, but finding a healthy balance between acceptable and wasteful is not.  I’ll be brutally honest.  We used to waste a lot of money, buying things that we absolutely did not need, and in many cases, really didn’t even want, just because we thought we had to.  Now, we think about our purchases, and we try to apply some common sense to our decision making.

Eradicated Our Debts

The blog heading says it all – Debt Reduction Rocks – We Are Living Debt Free.  Four years ago, we decided to get out of debt, and we worked very hard, through several ups and downs, until we accomplished our goal.  I remember, as a kid, having to walk home from school.  I also remember the relief, even the joy, that I would feel, each day, when I finally reached our backdoor and was able to drop my backpack, filled with books, from my shoulders and onto the kitchen floor.  That’s what being debt free feels like.  My burden, which felt so heavy at the time, is gone.

Established A Budgeting Routine

If you want to feel less overwhelmed, and more in control, start living on a budget.  A good friend told me that, several years ago, and I wish that I would have listened to him then, instead of waiting so many years to get my act together.  We use a zero-based budget, every penny is accounted for, and our finances are so much easier to manage than they were in the years B.B.  (Before Budget)  We also created a filing system for our important documents, and committed ourselves to maintaining balanced checkbooks.

Eliminated Credit Card Use

We stopped using credit cards, and we really haven’t missed them.  Sure, we forgo some of the cash-back offers that certain credit card companies provide, but we more than make up for those missed rebates with the peace-of-mind we have, knowing that we will never again have to worry about interest charges, late fees, or lost payments.  I’m not trying to convince anyone to give up their credit cards, but I will say, if you are tired of your credit cards, or you feel that your credit card usage is out of control, it is possible to live without the silly things.  Personally, I think that everyone, during their debt reduction phase, should give up their credit cards, if only temporarily, so as to break the cycle of charging-paying-charging-paying-charging.

Eradicated Negative Voices

Okay, so maybe we didn’t completely eradicate them, but we did choose not to listen to them.  Instead, we surrounded ourselves with like-minded, positive, forward-thinking people.  I started this site, and connected with debt reducers from around the world.  As a couple, we found friends who were willing to give this debt reduction thing a shot, and we shared our journey with them.  Celebration and accountability have been so important to our success.

Eliminated Some Of The Stress

Let’s face it, personal finance management will never be completely stress-free, but we can work hard to eliminate some of the stress from the process.  Over the years, I have created a financial inventory for my wife, so she’ll know where everything related to our finances is located, should something happen to me.  I have also updated our term life insurance coverage and we now have up-to-date wills, stored in a safe location.  Taking care of these things, just knowing that they are done, really removes so much of the stress associated with managing our finances.

What about you?  What steps have you taken / are you taking, to gain more control?  Do you still feel overwhelmed?  What are you struggling with?  Where are you finding success?  Leave a comment and let us know.

12 thoughts on “From Overwhelmed To In Control

  1. Great points in this post! Thanks to your site and many others, I have established an emergency fund of $2000 and I am starting to get my debt under control. While the economy is making it tougher to stay the course, getting out of debt is motivating me to stay on course.

  2. Wow – that is an impressive rundown. We’re on our way as well, but still just beginning in most areas, so we’ve got a ways to go. I’m curious – I see all the benefits of not using credit cards, but has that affected your credit score at all? We use ours only for set expenses, but I’m sure it would help our personal finances even more to get rid of them completely eventually.

  3. I feel a little overwhelmed when I read about people paying off their debt in 4 or 5 years. I think my debt reduction will take much longer — hopefully, that’s just pessimism rearing its ugly head. I can’t wait for that “dropping your backpack” feeling.

  4. @Jeff My credit score is higher now than it was three years ago. I guess, if I ever saw it falling very sharply, I might get alarmed, but so far, so good.

  5. @Jeff: Me and my wife have one credit card (USAA), and we only use it to purchase things that excede our debit card limit, and then pay it off in full. I can only remember a single purchase with it in the last 5-6 years. We have financed a few auto loans, but we’re past that stage. We recently refinanced our home and recieved a courtesy copy of our FICO which was well over 800. My credit report shows a Sears credit card still active from better than 20 years ago also. I don’t believe credit cards play near as much to your scores as they want you to believe, its really more toward how much credit could you get.

  6. Good post you are so right, when you pay off the debt your stress level is way down. I paid off Cap One last week made my next to last payment on overdraft checking this AM final payment will be made next week and for the first time in a long time I actually have balance after bills in my checking account. Woo Hoo ! But my question is should you have the $1000 or $2000 dollar emergency fund before you start with the snowball on you debt ?

  7. If you had to do it over again, would you first full fund your emergency savings or pay off the debt first while maintaining a smaller emergency savings or work on both simultaneously.

    I currently have an emergency fund of a little over $1000 and CC debt with a CU of $9000 at 8.9% fixed. Trying to decide if it’s better to up the emergency fund or plow everything at the debt first.

    It’s just me and a two year old child and we have great health coverage, thankfully!

    Haven’t used a CC in 2 years, so I’m not adding any new debt.

  8. Thanks for the info on the emergency fund mine is under $1000 but
    I am going to work on adding to it and do the snowball especially since my car is 20 years old.

  9. I wish more would think ahead and create a financial inventory for the spouse that is not taking part in the day to day financial management. Many leave everything to their partner to manage. It may make sense in that one might have better management skills, but I’ve seen far to many cases where something did happen. The surviving partner has enough to deal with without being hopelessly lost in regards to what their financial status is. At the very least they should have knowledge of where to find the information.

  10. Really great tips. I believe the key is taking one task at a time. Many times we get overwhelmed because we try to fix everything all at once. Handling your finances is an ongoing task that you must visit regularly if not you will get overwhelmed.

  11. Hello from Romania 🙂

    I never thought there is such a great community of “debt reducers”. I’ve seen plonkee’s blog, then ipaidittwice’s one… And here’s yours – a fantastic one!

    Although Eastern European incomes cannot compare to the American ones, I still have this sort of problems. With a consumer debt of about 70% of my annual net income, I’m about to panic.

    …That’s why I find your articles and advices very (very!) useful. Thanks a lot for them and best luck to you and the community!

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