Thanks for all your support, suggestions, criticisms, and questions over the last couple of years. We continue to look forward to hearing your successes as well.

• 30′s Personal Finance: It’s Not Too Late
• True Frugality
• 9 On Assignment: Frugal Family
• Being Frugal: The Original Sustainability? – Chris Farrell
• How to Break the Paycheck to Paycheck Cycle
• Getting Your Finances in Order
• Eliminating Debt in 2009 Part 2 Extra Income
• 100 Ways in 100 Days-7: Bake Items in “Groups”
• 100 Ways to Save Money in 100 Days-6: Use a Prgrammable Thermostat
• 100 Ways to Save Money in 100 Days-5: Switch to CFL’s or LED’s

Has your financial documents and other important information ever looked like this?  Ours did not too long ago.  When we first started to get out of debt and try to take control of our finances we really had no idea where to begin.  Our bills were in the house somewhere(or so we thought).  We ended up just making guesses at what we owed to whom when we made our first budget and debt list.   Now, we can lay our hands on most any document we need in less than 2 minutes.  Here is how we got started:

1. We started a file system Originally this consisted of tan manila folders in a pile (a filing cabinet was a luxury at the time we were going to do without).  We had each bill we owed in its own little folder.  Then we placed the bills in groups: credit card debt, personal loans, car loans, and household expenses (mortgage, insurance, taxes, phone, electric, water, etc.) These eventually migrated to a box that had once held reams of copy paper, and from there into a filing cabinet.
2. We processed immediately As soon as the mail came through the door it had a place to go.  If it was a bill it was placed in the “to be paid” folder in whatever position it needed to be based on date. Once paid it was transferred to the correct account folder.  If it was a bank statement it was reconciled and filed.  The point is that most of our disarray was caused by just laying the mail down when we came in and forgetting about it.
3. We started a master list of bills This is a tip I read about over at No Credit Needed.  The list contained all of our bills, the estimated balance, the interest rate, and the date due.  At any moment we can look and see where we stand on our consumer debt.
4. We started an account and number list Another idea we gleaned from NCN.  The list has all our accounts (bills, checking, savings, etc.) with the name of the account, account number, account balance, address, and any relevant phone numbers.
5. We go over the finances once a month If you are in a relationship that you share financial responsibility in, it is imperative that you communicate and keep each other informed. It also helps that you are looking at the progress made together.  It makes it easier to say no to the $20 container of coffee and go with the $12.

That is what worked for us.  We started cutting expenese (who really needs to spend $130 a month on movie rentals?) and earning a little extra here and there.  It is paying off  in huge dividends right now.  We just paid off one of our personal loans last month, and we are on track to reduce our overall debt by 40% this year.

Thanks for reading, we hope you have a great and wonderful day.  Feel free to leave an orginization tip that has helped you in the past, or make a suggestion on a topic you would like to see on here.  Take care.

• 30′s Personal Finance: It’s Not Too Late
• 30′s Personal Finance: A Change of Pace
• What Debt Would You Pay Next?
• January Update: 1 Bill Paid Off!
• Eliminating Debt in 2009 Part 1 Saving Money
• Free Debt Reduction Ebook!
• It Pays to be Financially Organized

photo courtesy of www.accountingunleashed.com

Well, January was a great month for us.  We have paid off our smallest personal loan.  This is our first bill that we have completely paid off since we began our Total Money Makeover.  By sticking to our budget, earning some extra money, and a little sacrifice we paid off this loan a full 13 months early-saving ourselves $427.18 in interest.  Another thing I would like to point out is that this was all aceived on a very modest income.

Now the increase in our assest was nothing to get excited about (an increase of 0.4%), but anything other than a negative number is fine with us.  The percentage of debt reduction was great (though just a little under our goal) at a whoping 3.2%.  If we continue this percentage every month that will have us at a total of 38.4% of debt gone at the end of 2009.  That is just shy of our 40% goal. This summer we are going to do some freelanceing to make up for the other 1.6%.

Thanks for reading, and have a great day!

How are you doing with your debt reduction progress?

• Getting Your Finances in Order
• What Debt Would You Pay Next?
• Eliminating Debt in 2009 Part 1 Saving Money
• Free Debt Reduction Ebook!

One of our main goals right now is to get out of debt as quick as possible. We lived rather recklessly and it got us into a mess. It is not an easy task to get out of debt (far easier to get into than out of), but it is an attainable goal. Right now if we paid the minimum payment or bills (student loans, personal loans, mortgage, etc.) we would be in debt for the next 24 years! That is no longer acceptable, so we have a plan in place to reduce this time drastically (we are hopeful to reduce total debt by 40% this year).   How?  Glad you asked.

First, we are going to continue to try to reduce our expenses. In the order of importance to us:

1. Meals

This is our biggest area that we struggle with. Many times money is spent on convenience meals (that only leave you hungry in an hour) that could be used for more groceries. We have literally wasted an entire months of grocery money in one week. It is our goal for 2009 to make our dining out experiences enjoyable family outings-not just a trip to the drive through window. Another way that we are going to try to improve the area of meals is through more and organized coupon use. Combing coupons with weekly sales allows us to get many items drastically reduced, free, or if we are really lucky-we get money back!

2. Reduce our fuel expense.

Our second area that has the most room for improvement is our gas expense in our vehicles. For ways that we have reduced our fuel cost, check out this article.

3. Reduce our utility bill

Lastly, we continue to try new and innovative ways to reduce our monthly utility expenses. The best ways to help reduce this expense are in our saving on expenses category.

As a note here, there are a couple blogs out there that are really worth reading while trying to reduce your expenses. First, Money Saving Mom is a great resource for sales and deals that we mentioned earlier about getting things reduce or free. Also, Lynnae at Being Frugal always has useful information on frugality and other personal finance information. GLBL Guy at Gather Little By Little is great about providing specific personal finance information and often has free software, spreadsheets, and other reviews. We have learned a lot from these three (and others), and have been inspired by both their stories of successes and failures.

We are currently on step two of the Dave Ramsey Plan. We have our $1,000 dollar emergency fund in place and we are currently working on our debt snowball. For those of you who are getting out of debt, this is one of the best plans on the market. It required a little personal tweaking in our situation (we still wanted to contribute to retirement accounts while getting out of debt), but it has worked well for us so far. The name of the book is The Total Money Makeover: A Proven Plan for Financial Fitness.  If you need a little motivation as well as a guideline debt reduction plan, this is a must read.

Tomorrow we are going to dicuss ways to increase income in 2009 to help eliminate debt. Thank you for reading, and have a great day!

Photo courtesy of www.freefoto.com.

• 100 Ways in 100 Days-7: Bake Items in “Groups”
• 100 Ways to Save Money in 100 Days-6: Use a Prgrammable Thermostat
• 100 Ways to Save Money in 100 Days-4: Wash Only Full Loads of Laundry
• 100 Ways to Save Money in 100 Days-2: Filters
• Getting Your Finances in Order
• What Debt Would You Pay Next?
• January Update: 1 Bill Paid Off!
• 100 Ways in 100 Days-12: Remove Items in Groups from Refrigerator
• 100 Ways to Save Money in 100 Days-5: Switch to CFL’s or LED’s
• 100 Ways to Save Money in 100 Days-3: Air Dry Clothes

Well-as hard as it is to believe-another year has gone by. What are your plans for 2009? In this economy I am sure some will be looking for new work, or thankful for the work that they have. We have talked before about depression caused by job loss as well as the importance of goal setting. Both of these articles were from experience and were written to try to help some avoid our mistakes.

As far as we go, we are looking forward to 2009. Personally, we feel that this will be a rewarding year. As always, we wish to increase our knowledge and enjoyment of our spiritual journey. We try to learn new things daily. One rather extreme goal we have is to reduce our total debt by at least 40%. This will by no means be an easy task, but we have learned from our mistakes and we are using a budget, paying down debt quickly, saving for emergencies-just trying to keep our financial house in order.

We hope, beginning in January, to give out monthly progress reports on our liabilities and assets.  This is not only to show what we are doing, but to help hold ourselves accountable to our plan.

Also, we are going to try many new things in 2009 and we look forward to reporting all those things that worked wonderfully and on the things that flop miserably.

We welcome you to share some of your dreams and goals for 2009. As always, thank you for reading and have a great day!

• How to Set and Achieve Goals

If you are serious about getting out of debt, and changing your life, this is the most crucial step. Since this is such an important step, it is a good idea to take your time and complete this step over several different sittings. Remember, you have to know where you are before you can map out the route to where you want to be.

I will tell you that this is the most difficult step so far that we have experienced. Not difficult to create, but frustrating to keep in check and balanced. If you have not done so, please read our previous posts in this series here and here, they are the first steps to creating a budget. Without further delay, here are the steps we used to create our budget:

1. Gather those receipts The ones that you are going to have saved for a month (we have read recommendations of anywhere from two to six months, but it was not feasible for us as we needed to get started immediately). Sit down in one location, we prefer the kitchen table, grab a legal pad or notebook, and get ready for step two..
2. Categorize Everything that you find a receipt for, assign a category. In the beginning do not worry about specifics (those will be worked out as you go!!), just get a general idea of which category your purchases need to be in. We have such categories as: bills (a free table for you to use is here), home, food, personal care, pet supplies, automobile expenses, insurance, taxes, etc. Notice that these are very broad categories. We kept it simple as long as possible, until we had a firm grasp on just where our money was going.
3. Enter your totals Again, just place items under the main categories for now. That is how we started, and it did not take long to find the biggest leaks in our budget (Dining out, tech toys).
4. Find your soft spot(s) If you are in good shape and have no improvements to make, we commend you ol’ masterful steward of resources. If you find some changes need to be made, welcome to our club.
5. Choose your method Once you have the previous step completed, it is decision time. There is actually a poll on our page about this very question, so if you have a moment, please click your answer and vote. Are you going to continue by hand? We wanted to start this way because it made it more personal for us when we had to hand write each figure and total. Will you use a spreadsheet? Money management software(Quicken, MS Money, etc)? A web-based application (YNAB,Mint,Pearbudget,etc.)? What ever your choice, it is imperative that you like the interface and “usability” of your chosen system, or you will not stick with it.

Once you have a handle on where most of your disposable income is going (assuming you have disposable income), start your sub-categories in that area. As stated, our biggest problem was dining out. Under food, we created the sub-categories groceries and dining out. We further investigated (but did not create sub-categories for these) our dining out expenses and narrowed them down by restaurant and day of the week. Surprisingly, our biggest expense was through the week, and not our weekend “date” meals. Once we had that category under control, we divided the next biggest, and so on.

The secret to gaining ground is to find those areas that can be trimmed, and then appying that surplus to your financial plan. We have just finished Dave Ramsey’s The Total Money Makeover: A Proven Plan for Financial Fitness and are going to follow that advice with a few personal tweaks. A post for the near future is one that discusses creating your own financial plan, using the suggestions of authors and combining several ideas, as well as speaking with a personal financial advisor. The latter concerns me somewhat, since no one (other than ourselves) would have my best interest entirely in mind, and most of personal finance advisors earn either a percentage of your total wealth, commission on products sold, or both. It pays to take the time and do the research yourself, make a decision, then put your personal plan to work.

Remember that personal finance is just that-personal. Do what works for you. When you blow your budget to the hot place and back (and you will), recoup, count your losses, adjust accordingly, and move on. Also, the budget is not set in stone at our house. We never make changes without total agreement. If you are not married or in a relationship that requires consent, obviously you are the CEO and can adjust as you see fit. If you are in a relationship, it is not negotiable-you and your spouse must be on the same page. If you are not in harmony with each other, you may as well draw flowers and butterflies on that legal pad. It will not work. If you are not a subscriber, please consider this free service. We are going to do a article on talking about finances with your spouse soon, and you will get it immediately if you are subscribed.

Recently, I have been toying with the free downloadable version of Pearbudget (they just released a web-based subscription service). I like what I have seen so far, and will give a full review in a later post. As always, have a great day!

• How to Set a Budget : Personal Finance Tips
• How to Organize Personal Finances : How to Make a Personal Budget
• One Step at a Time: A Journey Toward Financial Independence
• Origin of the word budget
• How to Budget Personal Finances : The Envelope System for Managing a Budget
• Obama Budget Cuts Visualization
• How to Budget Personal Finances : The Envelope System for Managing a Budget
• how to use debt reduction calculator – morecalculators.com
• How to Budget Personal Finances : Why Budgets Fail
• What Debt Would You Pay Next?

What is it that defines your life? What makes you get out of bed each morning to face another day? Most of us have asked, or been asked, these questions. After our financial fallout, my wife and I sat down to have this very discussion (which is material for another post entirely).

We thought, and we pondered everything under the sun. We questioned each other and had extensive conversation. After several hours of thought and debate, we finally came up with an answer. Are you ready for what we found? We found that we were defined by…nothing.

Not a singe answer we came up with could answer that question (which was part of the reason we got into our financial mess). We will have another post soon about all the items that were eliminated as possibilities, and the reasoning behind each choice, but for now lets focus on creating the change.

The first thing to do is actually decide on what you want your life to be about. Take you time with this, for if you stick with your choice, it will affect most every major decision made from this point forward. Once you have your answer, we found that we went through four phases during our change. These same truths will probably hold for most any change, not just a lifestyle change.

The Four Phases of Lifestyle Change

1. Phase 1: Withdrawal This was definitely the hardest phase. Nothing about our lives was the same anymore. The weekly $40 (a weeks worth of groceries for the two of us I might add) trip to our local Mexican restaurant-gone. The trips with friends a couple times a month with the intention of having fun finding ways to spend money-no more. (Friends who are true will stick around, those who are not will fade and be replaced by new ones that are more in line with your new found values). Spending hours on end lounging in front of the television watching cable or movies-at an end. You get the point. Every aspect of our lives had been flipped, shaken, stirred, and set back up. It was total misery for over two months. Then came…
2. Phase 2: The Honeymoon Once the shock wore off, we entered the “honeymoon” phase; life is good, look at what good choices we are making, I am so glad we are doing this together, we should have done this sooner, etc. If phase one was the hardest, this was by by far the easiest. Everything was in such perfect harmony, and we were beginning to actually see the results of our choices coming to fruition. Then it all went haywire…
3. Phase 3: Disenchantment Ah, yes. These are the tumultuous times. Not nearly as severe externally (like phase 1), but here is where internal problems, the mud-slinging, began. One would specify an amount for an expense and we both would agree upon it, then the other would go above and beyond the amount. Discussion only lead to one party accusing, the other justifying. One would request a task be completed, the other would balk “How can you expect that at a time such as this!” Thankfully, for us, this phase only lasted a little over month, but it was near impossible to be on the same page at anytime during that month I assure you.
4. Phase 4: Normality After we got back in the same ballpark, life became an increasingly smooth experience. By no stretch of the imagination are things perfect (we still have issues once in a while, as is the case with all relationships), but we are in tune with our goals and purposes now. New friends have entered the picture, and we are slowly cultivating those relationships. Most of the issues we had that stem from this change are now handled in a routine, almost reflexive way.

I must say that we are enjoying the results, and would not change the journey one iota. As always, hindsight is 20/20. Looking back, even though I do not think we would of had the level of success that we have experienced, I can not help but wonder if we did not change too much too quick; maybe we should have tackled one area at a time, which is something you may wish to consider. I would also like to say that you can not go into a cycle like this half-heartedly.

Unless you are at the point that you are totally disgusted with the way things are; a time when to continue on you current course is going to be so painful and depressing you have no choice but to take drastic action; whether you experience this ordeal alone, or with a significant other, if you are not 100% committed, you will fail. Just the hard facts. The siren call of your former life will sound sweeter and sweeter each day, until finally you give in. We had tried before, and failed miserably; it was not until we had a lifestyle change in our heart first that we succeeded. The countless hours of support and prayer from loved ones and others who understood also helped tremendously. Without faith and prayers we could have never made it; if you do not believe in God or a supreme being, at least find like minded individuals or a support group to help you through this. It is overwhelming when you decide to change everything at once, but the pain and aggravation will go away eventually, and your effort will be greatly rewarded. Are we enjoying a perfect life now? No, but we are a little closer.

Good luck, and have a great day!

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We would like to let everyone know that a free ebook has been released by NCN, one of a few that inspired and is encouragement for this blog, about debt reduction. Laid down in easy to understand terms are the methods and steps used by NCN to become debt free. We have been implementing, as well as writing about some of the techniques outlined in this ebook. We have been using parts of this system for almost four months, but we saw improvement within the first month. So, please go get this FREE resource.

We need to add as well, this is a 100% free resource; it is not loaded down with affiliate links and ads like so many other “free” ebooks. Also, there is no email required, thus you do not have to worry about getting ten sales letters a day for “last chance” offers. Check this free ebook out, apply it, and see the difference. Have a great day!

No Credit Needed Debt Reduction Guide eBook

• Getting Your Finances in Order
• What Debt Would You Pay Next?
• January Update: 1 Bill Paid Off!
• Eliminating Debt in 2009 Part 1 Saving Money

Before I receive all the hate mail, I would like to say that I know that a recession is not a great economic cycle to go through. The point is that a recession is just that: an economic cycle. Things cannot grow continually, no matter how bad we desire it. The media loves to hype these things way out of proportion because they know it will get your attention, and you will listen to what their advertisers have to say. It is all about the bottom dollar. Now, I have just gradually stepped down off my soap box, so lets get on with the post.

The rise in the cost of living and fall of the dollar’s value make a recession extremely difficult on the poor and financially stretched. Even though it can make things harder for some just to maintain day to day living, lets look at some ways a recession could actually be a good thing.

• Forced frugality

While going through a recession, many people are forced to become more frugal in all areas of their lives. Not just with money, but with all aspects of their time, energy, and resources as well. We are to be good stewards of what has been given us, and this just gives us the chance to become better at it. A great resource to try to get a copy of is The Complete Tightwad Gazette. Not all of the advice is for everyone, but you could easily save a considerable amount of money by practicing only a few of the ideas.  Sometimes a copy can be found for free at paperbackswap.com.  Check out the link on our homepage.

• Learning experience

When we survive this economic downturn (I am still not necessarily convinced that it is a full blown recession) we will be better suited to not only help ourselves, but share our knowledge with others as well. Make no mistake, whether it be a tech crunch, terrorist attack, sub-prime mortgage mess, war…whatever, it will come again; when it does, we will be better prepared.

• Position to learn a new trade

If you happen to lose your job, or just need extra income from part-time work, this is an opportunity to learn a new trade or skill set that can be used in the future. Even if you get back full swing in your primary profession, the new knowledge can allow an extra income stream if you choose to continue your endeavor. Some have found their true calling in dark times such as we are discussing.

• Better planning

This one is directly related to the first item mentioned, frugality. It will become second nature to find creative ways to use all available materials for day to day living. My Grandmother survived the depression of the late 1920′s-30′s. Until the day she died that woman epitomized frugality and creative ways to use everything, and waste almost nothing. When she passed away and we were getting the house in order, each family member took loads of preserved food. She could have easily lived at least six months without setting foot in a grocery store. Who can do that now?

• Investment opportunities

If a person has managed their finances correctly, a recession is a great time to seriously study a few avenues of investment. You may research thoroughly a couple stocks to invest in. My favorite-real estate. In some areas home prices are down thirty percent. Think of that, a house that would have cost you $200,000 eighteen months ago is now on sale for $140,000. This is another scenario, unless a landfill comes into play, or the government decides to place a highway through your kitchen, house prices will climb again. I am convinced that now is the time for people with expendable capital to invest. Completely research your market, then attack no holds barred!

There we go. Some may consider these ideas optimistic, but I say that all the nay-sayers and doomsday advocates are only being pesimistic? Half full, or half empty, how do you see the glass?

As noted above, a great place to start for reducing expenses is with The Complete Tightwad Gazette. A wonderful book to give you some initial ideas. We easily saved $200 our first month by just implementing a few ideas in the first couple of chapters!

• Being Frugal: The Original Sustainability? – Chris Farrell
• Extreme Frugality: Meet the Carters – Gourmet Magazine
• 100 Ways in 100 Days-13: Fill Your Freezer
• 100 Ways in 100 Days-12: Remove Items in Groups from Refrigerator
• 100 Ways in 100 Days-9: Clean Refridgerator Coils
• Get Ready for 100 Days of Saving Money

Scatterbrained…forgetful…absent minded…I, and most people that I am close to, have used these labels to describe my mental state at one point or another. I get upstairs only to forget why I am there. I remember a task that I needed to complete two weeks after I should have done it. Just a couple of the dilemmas I used to find myself in frequently.

There are several ways to remedy the type of situations described above, but the one that works best for me is to focus continually. Here are several ways that I have found to keep on track and maintain good focus.

• Quiet time- One of the things that helps me focus is setting aside a small block of time (usually around fifteen minutes or so) and just quieting my mind. I try not to think about anything, and if I find that impossible I will pick a phrase, word, or scripture to meditate on repeatedly.
• Use a good note system- This has by far helped me the most. I first started this system after reading David Allen’s Getting Things Done: The Art of Stress-Free Productivity. Mr. Allen’s theory is that everything we need to do that is not properly noted or planned for creates and “open loop” in your mind. This causes the chaos that can sometimes make it hard to focus. I plan on doing a complete review of this book soon, for it greatly helped me increase productivity and decrease confusion.
• Turn off your email client- It can be somewhat hard to do, especially in todays fast moving environment, yet I found that this constant interruption was a great hindrance to my ability to focus. An excellent train of thought would be flowing like water, and then lost because someone sends an email that says “What are you doing for lunch?” Now lunch was still three hours away, and my brilliant idea would not return. I have found checking email once an hour or every two hours to be more than sufficient.
• Set aside time- For every task that must be completed, set a specified amount of time for that task. Even if you do not finish, having that focus time where all your attention is on the situation at hand, will allow you to accomplish more than you realize. I know from personal experience that I can get more completed in twenty minutes without email, phone, or visitors, than I can do in an hour with those same interruptions.

The ability to focus has developed slowly over time. It is kind of like going to the gym-the first time; almost kills you, but every time gets a little easier from there on. As noted a couple of times above, my productivity goes through the roof when I stay focused. It is also a good safety precaution. How many accidents could be avoided if only people were focused (like on there driving instead of the cell phone) on what was going on around them instead of something else? Lastly, being focused brings clarity to my life that was all together impossible before. At any given time you can be sure that you are giving your current task 100% of your best. Have a great (and Focused!) day!

How do you remain focused? Or do you feel more can be accomplished by multi-tasking?

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