Wednesday, January 12, 2011

New Year's Resolution: Debt

As I mentioned yesterday, one of our resolution's this year is to get out of debt. There are a few things I discovered this year that are fantastic resources and will keep us motivated.

The first is blogs - specifically, The Simple Dollar and Get Rich Slowly. The authors of both of these blogs worked tirelessly to get out of debt, which is what we are trying to do. They are both in a place now where they can "play" with their budget more, which is interesting to read in a "this is what our future could hold" way for me. They have great ideas for staying frugal and helping keep your eye on the prize (unfortunately paying of debt is more of the slow and steady race and requires a lot of patience, something I lack). I highly recommend everyone with any interest in your finances check out these blogs as they are very relatable and will give you some great tips and ideas for budgeting and investing.

The second thing I want to mention is Dave Ramsey. His book, The Total Money Makeover: A Proven Plan for Financial Fitness, kick-started our plan. My husband received the book for Christmas in 2009, but did not start reading the book until mid-year. The book lays out a plan everyone can use to get out of debt and then set themselves up for financial success. Not everyone agrees with Dave Ramsey's plan (in fact the financial blogs I read both like some, but not all of his principles), but for us they are working. We like the debt snowball of paying off the lowest debts because it keeps us motivated and moves us through the cards faster. My husband and I started with five credit cards that all had balances (varying amounts). As I write this today, we have only one card left. Sure it is our hugest debt, but we have the minimum payments of four other cards to apply to this one, which is fantastic! We have our emergency fund and are working on our debt snowball. We plan to have a HUGE snowball by the end of the year, which we can use to plow through the last couple big ones early next year. I read the posts on Dave's blog and listen to his radio show on XM Radio. I cannot wait for the day we can call in and yell "WE ARE DEBT FREE!"

The last - and, in my opinion, the best - thing we discovered is I cannot say enough how much I love this website/program. The way this works is you add all of your accounts - credit cards, banking info, home info/mortgage info, car info, investments, etc - and will keep track of all your accounts. The overview tab shows the status of your budget, the balances on all your accounts, and your net worth. The transactions tab pulls in transactions from all your accounts and auto-categorizes these (you can edit the categories to meet your needs). The budgets tab allows you to set a budget, including a budget for your "goals". Mint offers plenty of options for goals like paying off debt, saving for vacation, etc, and also lets you add custom goals. We set up our budget and let it roll over month to month, understanding some things change monthly (the power bill, water bill) so we will have to adjust as we go. This is not a stagnant process in any way. I log in daily to categorize transactions and check the status of our budget. Multiple times a week my husband or I will call each other to check the status of the grocery or shopping budget before heading to the store. I think my favorite thing about this program is the trends tab. This allows you to graph all sorts of things - your net worth over time, your spending by category, etc. Although that should decrease now that we both have iPhones with the mint app loaded!

I am so glad I stumbled onto these resources as they have done a lot to get us started and to keep us motivated! In the last 7 months (since we started with Mint), we have paid off a large chunk of debt and increased our net worth by 16%. If that is not motivating, I do not know what is!

Thanks for listening!

No comments:

Post a Comment