The Debt Reduction Process: Successes and Mistakes So Far
I’ve been gung-ho about debt reduction for one year now, and I’ve been really gung-ho about it only in the past month. I’ve already learned a lot and now is the time to analyze what I’ve done well and what I’m still working on on my way to being totally debt free. You guys know I’m not perfect right?
Things I’ve Done Well
–Tracking my balances each month: This is pretty simple, and I like seeing what progress I make each month. I have a spreadsheet that lists my debt balances and my progress on each account for every month, which I updated at the end of the month after having paid all my bills. I started in June 2010, and since then I have paid two accounts in full (which were a $300 dentist bill and $1700 towards the cost of my Lasik surgery), and I have five accounts remaining to pay off, which are two credit cards, a CareCredit account for the rest of my Lasik surgery, my car and a student loan.
–Canceling my cable television as of October 2010: I have had cable television for most of my life, and always since I started living on my own about 6 years ago. But the cost of my cable and internet bill had jumped to $100 a month and I didn’t even have a DVR or HBO! I cancelled my cable and kept my internet service for $30 a month, which has worked out great. I still watch a ton of television on my computer, so I don’t feel like I am missing out on anything. Actually, I really need to stop watching so much TV, but that’s another blog.
-Reducing my expenses: This has been a gradual process, but I have really reduced my spending in a lot of categories: shopping, eating out and I even put off a vacation that we had planned for the summer but decided to pay off debt first.
With shopping, it hasn’t been easy because shopping used to be a true pastime, and I would wonder around stores for hours, looking at items and placing them in my home in my mind, imagining myself wearing some piece and looking amazing in it, and other incredibly consumerist fantasies. But I must be getting older and wiser because it’s been getting easier, and now when I go shopping, I don’t feel this burning desire to buy something, ANYTHING. From my teenage years on, my mind has been screaming, “I just need to buy something new that feels soft/is shiny/has some crazy patterns and bright colors that no one else would wear but I can definitely pull off! Yeah! BUY IT! BUY IT!” I’ve calmed down considerably since then.
I still eat out with friends and family, but I will try to find other activities to do besides going out to eat, and when I go out, I bring cash and don’t go crazy on the drinks and appetizers (but they’re the best part of the meal!).
Mistakes/Missteps along the Way
I can’t do it all, man. I get lazy. I get tempted. And I’m not very good at controlling my impulses. Here are a few pieces I am still working on.
-Still carrying and using my credit cards: I didn’t ever fully put away my credit cards until 2 weeks ago. I was still using them for $100 or less each month (usually right before a paycheck, so I was close to budgeting correctly, but still going over). I had my boyfriend hide them from me and I have been using cash/debit since.
-Creating a monthly budget: I didn’t start the monthly budgeting form until 2 months ago. I had printed them out in June of last year, but just looked at them and thought, “I could make a budget, but I’m just gonna put all my extra money towards the credit card payments, so why do I really need it?” But writing it all down and deciding how much to budget for food and other categories (and then putting that amount of cash in an envelope), and trying to stick with it is MUCH different than just telling myself, “Hey don’t spend so much today.” I am spending less with the budget.
I used the simple 1-page budget on Dave Ramsey’s site, and it has enough detail for me.
-Not fully committed to the debt snowball: I did pay off my two smallest balances first, but then I was splitting my extra money between my two credit cards, when I should have been focusing on just the lower balance card to get it paid first. I am focused on that account now, and am even making little $20 payments towards the card when I have some extra cash or I get an expense check from work.
-Increasing my income: I am lucky in that I am allowed to work paid overtime at work, and I can be spending all of my free time at home researching new articles for this website, improving its look, and getting the name of this website out in cyberspace. Looking at the big picture, I really need a position that is a greater challenge. When I come to work, I like to be busy and have a lot of projects going at once, which has not been the case lately. Although I really like my job, I need to research what other opportunities are available, and start planning for the future. I will be documenting that process on this blog as well, because I think we limit ourselves if we refuse to even think about other possibilities for our job or business.
Would love to hear what you think…and some lessons you’ve learned!