Getting too comfortable?

I think I am getting a little too comfortable with my finances again.

The more bills that we pay the more room we have to "breathe". I know I am overspending, but it isn't really causing a big problem right now because I have the money to do it. However, I am using money that could be snowflaked to my debt.

1. Snowball- using money from a paid off debt toward your next debt. You continue paying the minimums on all other debts and just work on one at a time this way.
2. Snowflaking- bits of money you save from other areas in your budget which are then added to the monthly snowball amount to pay debt off faster.

For instance... this month we charged an additional $40 on our gym account! We have to charge $25 a month that is built into the monthly fee, but we went WAY over. Yikes!!

Then I bought some additional supplements that I could have done without... we won't talk about how much those were. So, you KNOW it was too much!!!

If I honestly looked at this month's budget and last month's I could probably find and easy $100 or more that could have gone to my snowflake efforts.

One thing fueling this is that DH gets a lot of overtime some weeks. I LOVE when that happens naturally, but I give him extra pocket money and a lot of times some of the rest goes to cover our overspending. (I feel he deserves the extra money for working the extra hours, but I sure don't!!)

I am going to start really working on this for the rest of this month and next. I want to try to actually track it and see what happens. I will let you know soon!

Oh, and I haven't been TOO bad. I paid an extra $100 on my car this month, I have $200 to add to the snowball payment at the end of this month, and I hope to add to that on Friday. BUT, think about how much I could have added to that if not for the overspending!! I probably could have made an entire car payment with the money I have overspent with!

I am going to do better though!!

Getting too comfortable?

http://picturewealth.blogspot.com/2009/04/getting-too-comfortable.html

Two Years and Four Days

Two years ago, I bought 10,000 dollars worth of furniture. I really wanted to give our house a facelift, and I totally succeeded. I just put us in a lot of debt at the same time. Two years ago that decision or really lack of planning, caused me to start this blog. I have had LOTS of blogs before and since then, but this is the only one that still gets any posts.

I was reading back to some of my earliest posts and man was I lost!! I remember the first mistake I ever made. I had been reading Women and Money by Suze Orman and she said to pay off all debt at all costs (that is how I read it) then she talked about having an emergency fund. However, she never put any of the stuff in any order!! So, I took all the cash I had left from my tax refund and put it toward my debt. Of course soon enough we had an "emergency" which had to go on a credit card.

Anyway, it has been over two years now since I have put anything on "plastic". We did buy a used car last year, but I feel that we got a good deal and that vehicle is included in our debt that will be paid off in 3 years. When I say DEBT free, we will truly have no debt at all. I can't wait!!

I am getting ready to pay off my last credit card. Then it is on to vehicles and student loans. And, YES, it is the furniture that I will be paying off. The debt that started it all is about to be gone!

I am really proud of myself. I used the financial plan that I showed everyone how to create last summer to plan things out and I have stuck to it. I have faithfully snowballed the money. As soon as one debt was paid off the next debt got the money. I have made it a bill that I pay each month so there is no such thing as "extra" money. I follow a zero budget each month. Every penny is spent before I even get it. (In other words each dollar is spoken for so it can not be squandered.)

It has been much harder than I anticipated. I really thought when I started that I would have all my debt paid off in a couple of years. I thought with tax refunds and my teaching summer school we could do it faster. But, as you know life likes to throw curve balls. One of those just celebrated her first birthday a few days ago, by the way! We have also had some serious medical issues arise in the last year or so. So, we have had times when we had to put money into other things.

Also, early on my husband and I decided that we did not want to live a spartan lifestyle in order to pay off our debts. I am a firm believer in living your life while you can. But, that does not have to mean buying every single thing you want.

Anyway, I am sure that I will be picking up the pace of posting soon. I don't know, there is something about this time of year that gets it all started. And, then of course I have all summer "off".

Happy Birthday POW!!

Two Years and Four Days

http://picturewealth.blogspot.com/2009/03/two-years-and-four-days.html

Whoa! Moment

Hi, yes, it is me again, the woman who never posts. Well, I won't be doing much better any time soon, but I am sure this summer you will have more posts than you want. Ha ha. Anyway, we paid off a debt in full yesterday and as soon as we get some more bills from recent hospital visits we have endured we will probably pay off one more. If it is not paid off completely it will have a huge chunk taken out of it.

The rest of our debt will be paid off in 36 months or less. Oh, my goodness! Next month Picture of Wealth will turn 2. If I have been doing this for 2 years I can definitely stick it out for 3 more!! However that 36 months is what led to my Whoa! moment.

I was playing with my snowball calculator and just playing with some numbers. I took out the debt we just paid and just for fun, I took out the one that should soon be paid off. I ran the calculator with NO added payments even though we will be snowballing the money. The debt calculator said it would take 64 months to pay off the money!!! That is over 5 years. Subtracting 1 extra debt and adding no snowball money it would take over 5 years for us to be debt free.

So I added back the third debt since it is not actually paid off and ran the calculations again just to play and again I ran it with no snowball money added in. This time it took 60 months. My first thought was ???????? I just added a $5000 debt. How can it take less time to pay off? Then I realized... the $160 we are paying each month was now rolled into the calculations. That meant that as soon as that debt was paid off in the calculator it had "snowballed" the money to the next debt. Just doing that saved us 4 months worth of debt. Of course, those numbers don't mean anything because I did not add the debt we just paid off to the snowball. When I do that, AND as soon as we pay off debt number 2, we will be 36 months away from financial freedom!!!

We have a few more good things that will be happening in the next year or so though. I will probably teach summer school again $$$$$ We will get one out of daycare $$$$$$$$$$$$ and we will have 2 more tax returns in that time $$$$$$$$$$ I also put all overtime toward out debt. I would love to see us do it in 2 years!!!

We'll see!

Whoa! Moment

http://picturewealth.blogspot.com/2009/02/whoa-moment.html

Don't Count Your Chickens!!

A little over a week ago I was deciding exactly how I was going to spend my tax refund. I hoped to pay off my smallest debt, put an extra $1000 in our emergency fund, and if there was any left at that point, I was going to pay it toward my next debt.

Approximately two days later I was in the hospital which lasted almost an entire week. Oops. While I do have insurance, I still will have to pay quite a bit for this I am sure. So, now my plan is to save all of that money so that when the final bills come in I will be able to pay the balance. This was not the plan for that money at all!!

The point here is that, while it is great to plan ahead, you have to remain flexible. This also is a great example of why an emergency fund is essential. Say, it was not close to the beginning of the year, perhaps in the middle of the summer, or as my luck would have it, they day after I spent the rest of my tax return! If this had happened at any other time of the year, I would need to use my emergency fund to pay for it. Even though I am bummed that the money I wanted to use to pay debt is going to have to pay more bills, I feel lucky that I will not have to deplete my emergency fund.

So, I guess you can count your chickens, but don't be upset if a few never hatch!

Don't Count Your Chickens!!

http://picturewealth.blogspot.com/2009/01/dont-count-your-chickens.html

Recommitted.

Since my last post over two months ago our economy has gotten even worse than it was. Because of my work on our finances, my family was able to make it through crazy gas prices with no problem and we are actually doing just fine now too. However, I feel like I haven't been doing as well as I could be. I think I can do even more.

I just ran my debt snowball calculator to find out where I am at. My next debt is due to be paid off in March, but the next not until April of 2010!! That is TOO long. I don't want it to take that long. In fact, I am setting a goal to have that debt paid off by the end of this year. To do that, I will have to work very hard and save everywhere that I can. Maybe even have a yard sale or two.

I think the point I am really getting at here though is that I am recommitting myself to fixing my finances. I haven't really stopped, but as the gas prices have gone down, we have not saved that money (I still budget it as gas money each month so I will have it when prices rise again.) I have used that money on eating out, buying things I don't need etc. I am still doing my debt snowball, but I am snowballing the bare minimum. Using only money from my other two paid off debts. Had I been using that extra gas money I would have probably paid over $500 extra toward my debt since prices went back down.

I also overspent on Christmas. We didn't go into any debt for the second year in a row. But, we did spend more than I would have liked. And, next year we will have another child to buy for (we didn't buy her much at all this year since she is so young).

Anyway, I hope that some of you might recommit with me. Are you slacking off a bit? How can you fix it? Or, are you still doing really well? How do you stay motivated? I would love to hear all about it.

Recommitted.

http://picturewealth.blogspot.com/2009/01/recommitted.html