From the depths of debt to a cash based existence

There’s really not a lot to talk about right now. We’re chugging along on our plans to pay off debt as quickly as possible, but we aren’t sacrificing everything to do it. It’s like a diet. You have to change the way you think and live, not just cut out everything that might keep you from losing weight. Our debt payoff plan is livable and ongoing, and it’s easier to stick to simply because we are still able to splurge and buy things we want.

For example, my husband has been working a lot of overtime lately. We could have taken all that extra money and paid it toward our debts to get out of debt a few months earlier. Instead, we chose to spend some of it. He bought me a gift (a Nook from Barnes & Noble) and signed us up for the state handgun safety class so we could apply for our carry permits this year.

I’m not sure I’m quite ready to carry a gun around with me :), but he wants us to have our permits so we at least have the option.

We’ve gone out to eat a few more times than usual lately, and we’ve bought a few more things for the house.

I’m only spending what we have, not banking on future overtime. I don’t plan to get in the habit of overspending.

The thing is, the overtime has given us something to enjoy without impacting our debt payoff plans at all.

It really can be hard to decide what to do with extra money you come into. Sometimes, you just need to stick to your existing plan and treat the extra money as your chance to relax.

We have been working hard over the last few months, and lately it seems easier than ever to live within our means. It really is a mindset. We’ve had to practice a lot over the last few months, but it’s paying off. We think hard before we buy something and I’ve finally made saving a priority.

Although I would love to put all my money at my debt, and I know my savings would grow faster if I didn’t have that debt, for the moment, we are putting money into savings every month. I am still managing to pay extra toward my Amex card, but the economy has made me realize just how important savings are to a comprehensive personal money management plan.

If we don’t have money to save, we are clearly not living within our means, so we have taken steps to correct that.

I try not to worry too much about my finances, because at the moment, I am doing all that I can reasonably do to improve them. I am working extra to earn enough to be able to both save and pay extra money monthly toward debts. I am spending less, which I achieved by cutting my satellite TV service in favor of the more economical Netflix subscription and an antenna. I am working to build up a side business to bring in even more money to help me pay off debts. Finally, I have not incurred any new debt since June of last year and my current plan doesn’t allow for any new debt ever.

Paying off debt is my most important financial goal, but I’m not going to do it to the detriment of my financial safety net. I do worry that if something unfortunate happens with our finances, we could see ourselves losing all the progress we’ve gained.

Money is tight right now and I want to have some money put back in case things take a turn for the worse. Hope for the best, be prepared for the worst is a saying that seems to be resonating with me right now. So that’s what I’m doing.

Drastic measures to cut debt might seem a little over the top, but with the economy in the shape it’s in, I worry—a lot. So, we’ve taken a few drastic measures to trim our expenses so we can add to the amount we’re paying on our debt obligations.

To start with, we cut off our satellite TV service. We installed an antenna we already owned and hooked it into our digital TV. I subscribed to Netflix and had them send me the free disk so I could stream it through my Wii. Since I won’t be letting my internet go unless I’m desperate, I figure I should make the most out of it.

We’re saving $40 a month and spending an additional $9.82 a month. That’s not a bad bargain, and the Netflix setup is amazing.

I cut my grocery budget from $110 a week to $90 a week. So we’re saving $80 a month.

Just these two cuts have given me an extra $110 a month to pay on debt. That kind of money adds up. It also means I can go from paying just over the minimum payment on the Amex to $250 a month. That’s $1,000 every 4 months!

I will certainly be on the lookout for more ways to cut. I want out from under some of these monthly bills, especially the debt payments.

Have you ever made drastic cuts to pay more toward your debt?

What the hell?

I think I just got pole-axed.

I’ve never been much into politics, although I’ve voted every major election and most minor elections since I turned 18. I’ve called myself an independent all this time, but in every presidential election I’ve voted for a democrat, and in most of the local elections, I’ve voted democrat.

Ouch. I hadn’t realized what I was doing, setting myself up for this.

I do not like the new healthcare law—not at all. Sure, there are parts I think are good ideas overall for regulating an insurance industry that’s held all the power against the individual over the last so-many years, but overall, those kinds of fixes shouldn’t have been part of an overreaching bill that is going to fundamentally change the way I think of federal government.

And it’s totally amazing to me that EVERY SINGLE PERSON I’ve asked has been unhappy that the bill passed into law. I must live in the wrong part of the country, because obviously we’re in the minority here or Congress would never have passed this bill.

And, yes, I know talking politics isn’t always the smartest way to start a conversation with family, friends, and strangers, but I had to do it. "So, are you happy about the new healthcare bill?"

Uh, "no" being the answer EVERY time.

My daughter’s 5th grade teacher was obviously not able to hold herself back when she told my daughter’s class, "We’re all doomed."

Of course, I’m not going to tattle on this poor teacher, not when I feel pretty much the same.

So, I’m in the middle of a political crisis, as I try to regroup and discover exactly what I’ve been supporting all these years and who and how I go about finding the right people to support in the future.

‘Cause you see, I believe in personal responsibility, and I believe my debt is my problem, as is my healthcare insurance, and that to have integrity, I have to own up to this and do what I can to get myself out of this mess.

But wait, maybe the federal government will make the credit card issuers forgive some of my debt, because you know, I didn’t really know what I was doing when I racked up thousands of dollars in debt to pay for personal junk.

Hmm, who should I lobby? Oh, wait, I’ll just get a list of democrats who can be bought with sob stories and get them on my side…

Check out: Repeal the Healthcare Reform Bill

Ouch. The good news is I still have my part-time job, but the bad news is that I don’t know for how much longer.

The impact to my budget and debt-payoff goals would be severe.

The company I work for is going through some financial difficulties related to financing. If I lose my job, I’ll probably have to take on something much less lucrative, at least for a while that could mean a doubling of my work hours for about the same pay.

Since that can’t happen, I’ve been working madly to try to trim our expenses in case I end up out of work. I don’t work enough hours to qualify for unemployment, as far as I know, and staying home with the kids is my number 1 priority. I take them to school and I pick them up, and I won’t give up the time I have with them, because in about 8 years it will all be gone as they reach college age.

The thing is, I don’t want to sell anything, but if that’s what it takes, I’ll do it. However, my husband seems to be taking the future possible joblessness seriously, and he’s started to mention ways he can bring in some extra cash.

I’m spending my days when I’m home and the kids are at school working on some side income jobs.  Mostly working on a few websites I’ve got going to try to bring them up to snuff and pull in a few dollars.

I would love to use this money to get out of debt, because right now, my websites are bringing me about $100 a month. If I can increase this by 10, I will be able to quit worrying about my job income. If I can increase this by 20, I would be able to re-implement my serious get-out-of-debt plan where I was on the road to being completely debt free.

I would also be able to stay home permanently. I really don’t like driving to the office, even though I only do it once or twice a week these days.

I am trying to decide if I want to track this other income activity here on this site, or if I’m going to stick to strictly talking about my debt payoff journey here. I’m not sure, but the site is A Financial Journey and I think it would fit in with the theme. Still, it’s a decision I haven’t made.

I said the following at one point here on the site, and it turned out to be so true. Although my rates haven’t changed, more than one of my friend’s credit cards had favorable rates that were supposedly "locked in" and which subsequently jumped nearly 20%. Therefore, despite the lower interest rate, American Express remains the focus of my debt payoff plan. Once it is gone, I will start work on another debt. (Which will either be my RV or my home.)

The thing is, I would like to pay off the camper before the American Express bill because the interest rate is so much more favorable. However, with the current state of the economy and the ever-changing nature of credit card agreements, I worry that my American Express credit card terms will change drastically and unexpectedly and I’ll lose that lovely 3.99% interest rate until the balance is paid off….

I have friends who are dealing with unscrupulous credit card companies right now and I have little faith in them myself these days. My biggest fear is that before the new credit card agreement rules go into effect later in the year, many credit card companies might try to take advantage of as many loopholes in the credit card agreements as possible to keep from having customers locked in with very favorable terms long-term.

Okay, so there’s actually a lot to report about this month, because I’ve made quite a few changes in my life that have had financial impact.

My debt repayment has been drastically slowed because I’ve cut my work hours. I went from working 3 days each week to 2 days each week, and I’m working towards quitting my job entirely and staying home to improve my family’s home life.

I have NOT accumulated any additional debt. My cash based living experiment continues to work well, but as yet, I won’t be able to actually quit my job for quite some time. I’m down to about 16 – 20 hours a week. I want to go to about 11 hours a week, but the budget just won’t allow for that yet so I’m still picking up some extra work hours from home through the week. (I work from home about 50% of the time for my job as it stands right now.) The 11 hours would allow for 2 days of work while the kids are at school.

So that’s where I’m at.

There is some bad news in all this. Last year my husband was receiving a miscellaneous payment from his employer that related to a health insurance rebate of some kind. That payment stopped on the first January 2010 paycheck. I knew it was only for the one year, but when I had reduced my hours from 3 days to 2 days, this money helped cover that gap. Now I don’t have that nearly $200 per month of income and it’s seriously hurting my budget.

Steps I’ve taken to ease the crunch

Got rid of caller ID and call waiting = $6 per month savings

Turned off the data package for my smartphone (I don’t have cell service at home anyway so the only place I could use this was when I was taking the kids to and from school so this wasn’t a big hardship for me) = $31.00 per month savings

Downgraded my satellite TV package = $22.00 per month savings

That’s $59.00 per month and I’m still looking for other cuts I can make.

I’m going to reduce my grocery budget but it won’t be by much, because I’ve always been pretty efficient with that anyway.

I’m about to read “America’s Cheapest Family” and see what tips they have but I don’t hold out much hope that I can reduce things any further than I already have.

Unfortunately, to pay off my debt faster, the only choice for me is more income, and that’s not on my agenda just yet. I need to take care of family and home first. However, I am still paying as much as possible and still have payoff of debt as my overriding financial goal.

Come bonus time for my husband (and he’s been assured that bonuses are coming) I plan to use that to pay off as much as possible of the only credit card debt I still have.

Note: I started this post a long time ago and I’m just now getting around to finishing it. :)

http://thehill.com/blogs/congress-blog/economy-a-budget/25427-pay-off-your-mortgage-early-for-a-fee-rep-marcia-fudge (I even left a comment back when it was freshly posted.)

I know I ranted already once on the blog, but I read this the other day and it hit me wrong. I already worry that there’s too much government interference in my life, but to know that they’re trying to take away all my responsibilities doesn’t sit well with me. I have the right to be stupid sometimes. In their effort to save people from lenders who might be trying to take advantage of others’ refusal to take responsibility for their own mistakes (such as not reading or understanding the fine print on a loan), they’re taking away my rights, little by little.

I do believe it’s unethical to offer loans to people and then encourage them to skim over the documents so they can be signed faster. However, I also believe this is where we have to be assertive and stand up for our rights to fully read and understand every contract we sign. … "Is legislation really the right answer when you don’t want to read your contract?" continues >

There are ways of working around a spouse who isn’t as enthused about paying off debt and living debt free in the future and I think I stumbled into one of them the other day.

After having my husband’s car die a horrible death a couple of weeks ago and having to buy another one (because my husband is/was positive this car could not be fixed for less than it would cost to buy another car) it occurred to me that I might just be going about my debt snowball all wrong. … "An alternative debt snowball method" continues >

I am rewarding myself today, for sticking to my budget and paying the budgeted extra on my debt this month. I bought a camera because my old one broke when I unintentionally knocked it to the floor. I’m also going out to eat with a friend today before we go walking in the local park (with the kids in tow).

Today, I feel good about the decision, but last night, I really struggled.

My problem is in defining at what point I should stop throwing every extra cent I have at my debt so that I can live a reasonably balanced life, buying what I need and occasionally, what I want.

Yes, you could take your lunch to work every day and save a ton of money. But do you have to, just because you’ve decided to live a cash based life and get completely out of debt?

… "Are rewards for successfully paying down debt a good idea?" continues >