So this is what a Rock and a Hard Place feels like

I realized a while ago that our system for budgeting and spending was imperfect a while ago.  I loved our debt diet, how it was helping us pay off our debt, but we were having trouble with our normal monthly expenses and staying afloat.  From our tax return we put aside a little cushion for ourselves.  But by August, that cushion was gone.  We needed a different way to organize our spending and also to catalyze our debt reduction.  As of this month, it's been a year since I start this blog and our debt diet and we've paid off about $3,000.  Which feels GREAT until I look at what's left ($17,000) and then I start to feel a little sick inside and try to picture another 5 years of this.  I want it done faster.

This month we had an unfortunate emergency trip to Las Vegas.  Tony's uncle passed away and we needed to be there asap.  Thankfully our wonderful cousin was able to get us buddy passes, so that our plane tickets were cut in half, and Tony got an advance, so we could pay for regular bills and said plane ticket.  However, this left us in a predicament for October.  Our precarious situation was made even worse by having Tony's check reduced even more.

This last week Tony thought that maybe we should consult a lawyer about filing bankruptcy.  As least then we'd have our revolving debt (which is all of our debt basically) wiped out and we would have that money freed up every month so that we weren't so stressed at the end of each month.  First got our free annual credit reports here.  We were surprised about how well our reports were, for some reason we had terrible doomsday visions of what would be on there, but they were even somewhat good. I also learned that there's a difference between a credit report and a credit score.  A report is fact.  This is your history of payments, accounts, cards, collections, etc.  A score is an arbitrary number derived from those facts.  That's why each one can be so different (if you've seen those commercials).  This gave us some doubts about filing, since that would mess up our nice reports for 10 years.  So we talked with our good friends that had been through a bankruptcy and were doing really well.  We shared our situation and they shared their circumstances.  Then they let us borrow a book, not just any book, but the Total Money Makeover by Dave Ramsey.  

This book helped us confirm what we and our friends were thinking, "we're not in an insurmountable amount of debt, just terrible at handling our money." So we canceled the meeting with the lawyer and started reading instead.  When I started reading it only took me one night to get through 150 pages. What I really like about the book is how easy it is to read. He is very straight-forward and may come off as harsh, but honestly I think that's what needs to be done in most cases.  Dave talks about a lot of money issues that make so much sense when laid out like that. He suggests basically the same thing for paying off debt (he calls it a debt snowball, Oprah calls it a debt diet), so we're good there, but he addresses the other side of things - what to do with the rest of our money.  He shows examples of a Zero balance budget, basically every penny goes somewhere, which is what we are doing starting tomorrow.   Along with that, he talks about a cash-only system (besides bills that come directly out of our account).  So that's what we're going to try.  This month is going to be super tight because unless we take another advance, we will be squeezing by on a lower income.  I'm very excited though to see how we do with cash only (that includes groceries, gas, and dining out/entertainment - which is super low this month anyway) and hopefully see some changes in the next few weeks and months.

I'll keep you posted.

July Recap

July was a fun month for us, we had family come up from Florida and we spent a long weekend at the beach in cute little condos and rode mopeds and ate ice cream and had some general frolicksome fun. And we go to go camping and spend more time getting sunburned at the beach.

I also found a flaw in our budgeting system. I need to look ahead at our months better and find these extra fun things we're doing and plan and save for them. We survived this month on a little bit of savings and a mid-month draw.

I hate that feeling of being at the end of your account. That "if this goes through in the next 3 days we're gonna overdraft" feeling. It's a total buzz-kill.

In other news, I also got a 0% card that I transferred half of my balance to. This will save us some finance charges that can go towards more debt. Yay for capital one and their relentless offers.

Happy New Year... or first 4 months!

So, life got away from me and I haven't posted in a while, but we are still on track. Actually the reason I wanted to post was we got our tax refund and are paying off one of our credit cards - HURRAY!! We're making the payment tomorrow, so it hasn't hit me yet, but I'm anticipating a ton of bricks lifted off my shoulders! Once that is paid off, it frees up the $60 min payment to go towards another credit card, to speed up that cards pay off date. This will cut off 1.2 years of our debt life. I'm pretty stoked! After tomorrow, ETA of being Debt-Free is 3.4 years! That may seem like sooooooooooooooo far away (because it is, my son will be turning 5!) but when we first started our Debt Diet in September, the pay off date was 5.5 years away. Plus I haven't taken into account next year's and the year after that's tax refund. We may have this done in 2 years. Or not. Life is funny that way and has a lot of unexpected twists and turns.

This year I want to clamp down on our spending. We spend WAY too much! especially on eating out. I could cure this by planning better. I made a weekly menu yesterday, with very basic ingredients, so that I can be better prepared to make lunches and dinners ahead of time so we don't have this "I'm really hungry and can't think of anything to eat at home and we need to get something NOW to eat!" thought process that ends us up at the nearest Jack-in-the-box or at safeway buying chinese, or whatever.

This is a very rambling post, but I just needed to share my little victory over debt tonight!

December and Year-End Recap

What a month!

I think this month is normally a big expense month for most families because of Christmas. For us, it was made even bigger because we took a trip to Utah to visit my family. However, because of our generous boss and one other Heaven-sent blessing, we were in the black by the end of the month. But that doesn't mean we were very wise this month. We were a little zealous in our gift giving. Overall a good month.

In 2010, we made a huge step in paying off our debt by starting this method of tracking our spending. We still have a very long way to go. For 2011, I want our total debt to be below $15,000 by the end of the year. In order to do that, we only need to pay our CC the way we have been, and to not put anything else on them. It's definitely achievable as long as nothing crazy and out of the ordinary happens (knock on wood).

Happy New Year!

Black Friday...

What a month! This isn't the recap, more my thoughts on this silly shopping tradition we have. I've participated in Black Friday shopping craziness in the past, but the last 2 years I've realized that most of these door-busters and deals aren't really that great - or at least the ones they want you to spend the big bucks on aren't that great of a deal. This year, Tony got up and got a great deal on batteries and poinsettias and one or two great gifts. He spent less than $100, didn't wait in any lines (Home Depot and Fred Meyers) and came home feeling good about what he got. This month was a very tight month for us anyway, but at the end of that day we were on our last $20.

Honestly I don't see what all the hype is. People get trampled, you're low on sleep, tempers are running high and often lost, and its FREEZING! Is it worth it? I totally understand getting a deal on a few select gifts for family or friends, but for decor or things for yourself - there are WAY better deals on the days after Christmas sales.

It was a great Friday for me, I spent the day getting all of my fall/thanksgiving decor down and setting up for Christmas! I enjoyed eating leftovers and plenty of pumpkin pie. But mostly I enjoyed sleeping in and saving money (by not spending it).

Again I just want to say how THANKFUL I am for budgets and tracking spending! I can only imagine the damage we could have done if we weren't being consciously aware of our finances.

Sobering

So for fun tonight, since my son is deciding not to sleep anyway, I searched on Google trying to see if I could find our blog. Sadly no. A huge waste of time. I did find a lot of other bloggers, doing exactly what we are doing. I looked for fun to see what other people were doing and how much debt they had. At first I was a little impressed with us, the next lowest number I saw was over $10,000 more than we had. Then I looked at their breakdowns, about $15,000 of it was in car loans. Unfortunately for us, all of our debt is in plastic. We don't have hardly anything to show for it (like a vehicle). It was a very sobering night. Glad we're doing something about it though and not just wishing and hoping.

October Recap

This month was a curve ball (as noted in our last post). We only worked about once a week. Thankfully, because of our budget we were able to stay within our means and didn't overdraw or default on any bills. And spectacularly we are back in business! The last few days of last month, our boss informed us that we have enough projects to last through the year. Plus, Tony got another job at a jewelry store in the mall - doing sales, which he loves and is so great at (I wish I had half of his skills).

Because of the skimpy month ahead (based on our hours worked last month), we didn't pay anything other than the minimum due on our credit cards. We actually even closed another credit card so that the minimum payments and interest would be lower. This also helps to prevent us from putting more on that.

When we started this 2 1/2 months ago, I had a dream to finish paying off our debt within 2 years. That was a very lofty goal considering almost all of our income would be going to bills and debt, and thus far I'm seeing that at our current status, this goal cannot be reached that soon. More like 3 years. Still a great accomplishment if we can achieve it.

It's been a great month though, still spent a little more on eating out than we should and "unnecessary expenses", etc. The great feeling of staying within our means in irreplaceable!