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.

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?

Should you feel guilty if you buy lunch with cash that you could have spent on paying down debt?

If you broke your camera and needed a replacement, should you not buy the camera because you could use that money to reduce your debt even further?

Besides, can’t one consider a family camera a necessity these days? If you want photographs of your family, you’re not going to find them cheaper at a photographers studio than those you’ve taken on your own!

Last night I finally decided that there are limits to my dedication. I want to pay as much as possible on my debts, but only after deciding on a reasonable amount to reserve for family use.

These “rewards” for staying within budget and paying down debt at the predetermined rate I’ve set are deserved and necessary to my future momentum.

Deserved because I am dedicated, but I don’t know if I can sacrifice all the joys that come with living within a fixed budget and knowing you have some extra money to play with every so often.

Necessary because if I continue to adjust my debt payments every time I have a few extra dollars, I worry that I’ll burn myself out of never spending any of that extra money on things that can make life a little easier or more enjoyable now.

This month, I spent $99.99 on a camera, and reserved $75 for the family and extra entertainment this month. (I include dining out in that category also.) As for debts, I chose to pay my normal debt payments, which is the budgeted amount I previously set for paying down my debts.

So, ultimately, I decided to stick with my budget and use my extra money for other things, because if I had been outside my budget this month, I would not have had this extra money.

What about you? Do you think I made the right decision? Do rewards help or hurt your progress to get debt free and live a cash life?

Allie is a close friend of mine who has also embraced the idea that now is the perfect time to get out of debt, let go of old spending habits, and start fresh with a cash-based life. She recently took a vacation, and this is her story of budgeting and saving success in an area where it’s often hard to impossible to keep spending under control.

Allie’s story

My Vacation

So it took some doing, but I was finally able to brow beat my husband into a mini-vacation during Spring Break. The kids were free. The husband had some vacation to burn. But really, we didn’t want to push too much into the short time we had. That’s why we went to the old standby…Gatlinburg, TN.

When I was discussing with Kate that my goal was to pay cash for as much of the vacation as possible, and that I’d found such a great deal online, she asked me to guest blog about it. So here’s what we did.

First, we set a budget. We hoped not to spend more than $500 for the total trip (approximately four days and three nights). The total budget had to include the hotel, entertainment, food, fuel, and souvenirs.

The next thing we did was make a wish list of places to go and see while there. We knew the primary place we wanted to take the kids was to the Ripley’s Aquarium. We also wanted to take them to the Dixie Stampede dinner show, but really didn’t know if that was in the budget this time around. But since this was a “wish” list we put it on there. And basically those were our two primary entertainment costs. The other places were all about nature—and free.

With the money and wish list in mind, I searched online for any deals or coupons that would save money. Now I want to note here that there are a lot (and I mean A LOT) of places online that say they have good deals. But don’t be fooled. There are tons of vacation destination places that will take your money. I’ve heard horror stories of this happening. Or they’ll give you that special rate if only you’ll take a half or whole day of your vacation listening to some spiel about a condo.

Being very aware of this, I started with the city’s main site and worked my way around to the sites for the two places on the wish list (Ripley’s Aquarium and the Dixie Stampede). Now Ripley’s had some pretty nice deals if you were interested in doing more than one of their activities (Ripley’s Believe It Or Not or the Ripley’s Motion Theater). But with one child barely two, that wasn’t an option. [Special note here...don't forget to check restrictions on age, weight, height, etc. before buying tickets in advance!]

Not finding what I was looking for, I went on to the Dixie Stampede’s site. And there it was. I found a link on the combo deals page that led me to the Greystone Lodge at the Aquarium’s website. They had a super special going on through April 31st that gave you two nights stay and tickets to Ripley’s Aquarium for $101.00. It was definitely the best deal I’d found, so I called the hotel and had a wonderful lady help me work out our best deal.

We were able to book two nights at $30.00 per night and add an additional night for $30.00 more. Plus, we were able to get four tickets to Ripley’s Aquarium and three tickets (as my daughter is too small to have her own seat) to the Dixie Stampede. All of this, plus tax, only came to $234.00! It was awesome!

That left us over $250.00 for fuel, eating out and souvenirs.

The room and entertainment taken care of I went in search of coupons for restaurants we like to eat at, and I went to the grocery store for snacks, drinks and sandwich fixings for the trip. The hotel had breakfast covered, so I knew I only had to deal with lunch and dinner. We were going to be there four days and three nights, so here’s what we did.

Day 1

We took our time on the trip up—starting out just after having a big breakfast at home—and stopped off in Knoxville at a little drive-in we’d seen on a Food Network show. We ordered one chicken strip dinner and one order of onion rings. We ate so bad, but it was so good. And those two items were enough to feed all four of us lunch. Did I mention we aren’t really big eaters?

Now I don’t know about your husband, but mine can’t let the opportunity to visit the Bass Pro Shops big store in Sevierville pass him by. He had to stop. Very fortunately, the sales weren’t all that good and we made it out with only a pair of sunglasses for him. :-)

Then on to the hotel. After settling in, we decided to eat a good dinner. My son wanted shrimp and ribs. That left us with a few options, so we settled on Ruby Tuesdays which gave us more options and was less costly than one of the more specialized restaurants.

Day 2

We ate breakfast at the hotel, and headed out. We’d decided to break up our outings and not overtire the kids, so today would be a trip to the Roaring Fork Motor Trail, a little hike through the streets of Gatlinburg, and then on to the Dixie Stampede that evening. So we took our cooler and headed out on the trail. We had a picnic lunch, and then ate the wonderfully pedestrian fare the Stampede had to offer that evening. The largest cost this day was fuel. We’d forgotten to fill up before heading back to the hotel the evening before, so we ended up paying a bit more than we’d have liked. The good news is that this fill up lasted us all the way home in my very economical Kia Sorento.

Day 3

Again we ate breakfast at the hotel, and then headed out to the Aquarium. This would be our most costly day and we knew it. We’d planned accordingly, saving the bulk of our food and souvenir monies for today. We spent our time in the Aquarium wisely. We looked over every nook and cranny. We also took in with us snacks and drinks for the kids. This is one of the few places that I’ve found doesn’t mind if you bring in food. By the end of our wondrous journey, however, everyone was starving. So after picking out a couple of “clearanced” t-shirts for the kids and a couple of stuffed sharks, we headed further into Gatlinburg. We decided to eat at the Bubba Gump Shrimp Co.. The price was a bit high, but they had chicken and fries for the kids as well as shrimp for us and we were able to order one kids meal (for the little one and me) and one shrimp sampler plus (for hubby and oldest kid) and a side salad (for me) to share. I admit I did try the shrimp and would have probably been tempted to eat more than my fair share, but I didn’t want to over do so late in the afternoon knowing we planned to go to Pigeon Forge shopping.

And we did. We did a little shopping at the outlets, being careful not to overspend. And then we ended up at O’Charley’s. We had a coupon for $5.00 off $20.00 and with some careful planning we were able to get out of the restaurant very satisfied with a bill of less than $20.00 for all four of us.

Day 4

Our last day was sad. We hated to leave the relaxing fun we’d had together, but on the other hand we were very glad to be headed home. We grabbed our breakfast at the hotel, and loaded up. We still had a few snacks, so we opted not to stop for lunch until we were near Knoxville. We also knew we needed to stop by a Wal-Mart to look for a bat, but that’s another story… We chose to eat lunch at the Turkey Creek Steak N’ Shake. The cost was less than $20.00 for all four of us.

Epilogue

When our trip was over, we felt good about it. We hadn’t overspent and we didn’t have to worry about paying off the trip later. It was paid for. And we’d enjoyed ourselves without the worry and stress that could have come afterward. I’d definitely recommend trying it sometime. —Allie

When she was telling me about her fun (and affordable) vacation, I convinced her to write me a blog post about it. She’s a great friend and she said yes without any hesitation at all. She’s one of those friends you can always count on to help you out and we discuss our financial situations regularly, because we trust each other.

As sensitive as it can be to talk about money and our own financial circumstances, it’s a huge relief to know I have someone I can share these details with on a regular basis who won’t turn around and share these details with someone else.

I’ve never been much of a believer in “support groups” and the like, but sometimes I wish I did. I think it’s a big help to talk things out. I’ve always told my family I think better when I’m talking… :)

If I have a support group, Allie is it. I hope you enjoy her post on Monday.

For now, I’m going to leave you with my own philosophy on vacations and money.

Tips for leaving money worries behind on your next vacation

• Don’t take it unless you can afford it. There’s nothing less relaxing than worrying about money.
• Set a budget and stick to it.
• Use your credit card when necessary–it’s generally safer than your debit card, but make sure you don’t overspend. If you think you might, then just stick to cash. Pay for your hotel room or other reservable costs ahead of time on your credit card, but then make sure you leave enough money at home to cover that cost. Don’t start off on your trip owing money.
• Use coupons and discounts anywhere you can use them. Even $5 to $10 off in a couple of places can add up to a lot of money. Would you throw away a $5 bill? If you have a coupon and don’t use it, you might as well have thrown the money away.
• Finally, enjoy your vacation. If you plan ahead financially, you can leave all your worries at home.

Come back on Monday to check out Allie’s guest post.

How I implemented a cash budget

1. I listed all my bills that I would be paying by check or that are auto drafts from my checking account.

I converted anything that wasn’t monthly into a monthly amount.

If you pay an amount:

Weekly multiply by 4.3333
Twice a month multiply by 2.1667
Every three months multiply by 0.3333
Every six months multiply by 0.1667
Twice a year multiply by 0.1667
Once a year multiply by 0.0833

My goal was to have a comprehensive list of money that would be coming out of my checking, for regular bills. What I didn’t include was my gas, grocery and entertainment money, because all these things can be paid by cash and honestly, although I don’t like the idea, if I’m short of money, these are the expenses that will have to be cut. I can’t very well not pay my debts or my utilities, or anything I’ve committed myself to paying, such as my cell phone and my satellite television.

I believe strongly that when I create an obligation to pay something, that I should actually pay it. I get mad at people who think they can sign a two year contract for a phone and then just not pay because they no longer have the money to pay it. These people have only themselves to blame for buying something they couldn’t afford.

I’ve done it myself.

I like my cell phone, and sometimes I even think I need it, but when I pay that bill every month, I get a little disappointed in myself for having taken on that obligation. But you know what? No one twisted my arm. I had a choice, and I made it in favor of a two year contract for a low cost cell phone.

2. The next thing I did was to list my monthly income.

3. I subtracted my monthly checking expenses from my monthly income. That’s the amount of money I could take out each month for cash expenses.

Since my husband is paid weekly and I’m paid bi-monthly, I converted that amount to a weekly amount that could be withdrawn from the bank and split between us based on our gas needs. After that it just depends who is going to be doing the grocery shopping for the week and who needs dining out and entertainment money. We do a lot of stuff together, so for us the division of the money isn’t that big a deal.

We’ve been doing this for several months now, and it’s been the easiest budget I’ve ever set for myself.

I do have to keep an eye on the variable expenses like electricity and telephone so that I’m comfortable there’s enough going into the checking.

By not funneling the majority of our spending through the checking account, I’ve cut out loads of data entry of receipts for purchases that don’t really matter. I’ve been able to keep my husband from dipping into the account based on the idea that if he takes money from the checking we won’t have enough money to pay our bills.

In short, I’ve been able to relax.

We’ve already seen one benefit to this way of doing things.

I got a raise shortly after we started, and because we were used to withdrawing only a certain amount of money from the checking each week, that additional income is building up in the checking account as our cushion. My husband has worked some overtime this month and that money too is sitting there.

Future benefits

As I pay off debt, I’ll easily be able to “snowball” the money simply because it’s going to sit in checking undisturbed otherwise.

My biggest challenge with this will be my husband’s desire to replace one payment with another, but I’ll cross that bridge when I come to it.

What I had to get used to

• Paying cash at the pump meant prepaying for gas (I learned that most stations will let you fill up and pay after the fact if you just ask)
• Paying cash in the grocery meant adding my bill in my head as I added items to my cart (I really started to pay attention to how much food I was buying and wasting)
• Buying online meant I had to add cash to my checking account as soon as I bought something (I shop online a lot)

Of course, this method may not be for everyone. My philosopy is that if you don’t try it, you’ll never know for sure if it would have worked for you.

The real world would have us believe that every holiday is a reason for gift giving, that every part of our lives should be insured, that credit cards are a necessity, that consuming is the only way to save our economy… The list goes on.

I want to take exception to the latter item I mentioned. Doesn’t the real world realize that consuming is what got us to this point?

I consumed my way through a car, a camper, a house, a vacation, a lot of gifts, and plenty of insurance, and I did a lot of that consuming with credit cards. Not so much lately, but a few years ago, I wasn’t working while my kids were still too young to be in school and sometimes I even paid the bills with credit. I mean, why not? I had always planned to go back to work and pay for it all then.

Bad, bad, bad idea.

My husband became self-employed somewhere in there and we had to pay for our own health insurance. I set it to an automatic payment, and ended up using a credit card for that too.

In those days, credit cards were a necessity in my household.

I went back to work, but only part time. So we sold our house and built a new one. The new one cost 2.25 times more than we planned, so the equity we cashed out of the old house went to pay off credit card debt and pay down only a small portion of the new house. We ended up with a mortgage 1.8 times larger than we’d had, which I admit is still better than the 2.25 times it would have been without that equity.

Lucky for us that I had gone back to work.

We have health insurance, dental insurance, prescription drug insurance, auto insurance, disability insurance, homeowner’s insurance, camper insurance, and life insurance. The amount of money we’ve spent on insurance this year to date is over 11.2% of our income to date. Insurance takes some of the risk out of life and has its purpose, but that 11.2% hurts.

I’m done consuming. My husband thinks he isn’t, but these days I hold the purse strings and I’ve put us on a cash diet. When he runs out of money, he’s done consuming. He’s really doesn’t cause me that much trouble these days when it comes to money. He just wants to know where he stands—but our day will come, because he and I have a few very different opinions on the feasibility of living a cash-based existence. I believe it’s very possible, and he thinks I’m crazy.

He thinks:

• if you can afford the payment, you can afford the item
• he’ll be too old to enjoy the things he wants if he waits until he can afford them with cash

I think:

• if we don’t have the cash to pay for it, we can’t afford it
• if we haven’t met every other financial goal we have that could possibly be considered a need, we can’t afford it
• a person doesn’t deserve to enjoy something he hasn’t earned

Our cash-based budget that we’ve been following for the past few months has made a world of difference to our relationship issues related to money. I love my husband. But our money fights became our bone spur.

Next week, let me tell you about our cash budget and how it’s helped us live within our means without adding stress to our lives, and how easy it has turned out to be. It’s even saved me hours, quite literally, in front of the computer doing my checkbook and bills.

You know, I said I was done consuming, but I should rephrase that. I’m done consuming what I can’t afford.

I’ve got my own ideas of how the real world should work, and I’m not going to let anyone else’s ideas of when I should give gifts, what parts of my life should be insured, whether or not I should have credit cards, or if I should do my part to save the economy by consuming even more stuff get in my way.