I remember a long time ago an article I read. Basically it said that many people with debt had weight issues as well. I don’t think it was trying to say that if you aren’t good with money that you aren’t good with food. I think it was more along the lines of you are in debt and are turning to food in response. However, I find it funny that I see these things linked up quite often.
Take Total Money Makeover for example. Dave Ramsey spends an entire chapter comparing someone trying to get out of debt and someone trying to lose weight. It really is striking how similar the two processes are.
Denial. I think this is the chapter in which Ramsey first talks about the comparison. It really is true. Weight denial usually comes in the form of, “Well, it is only 3 pounds. I just won’t gain any more.” Debt denial is very similar. “Well, just one more outfit charged to my card won’t hurt.” You have to get passed the denial in both situations before you can do anything. That small amount of denial about your situation just builds on itself, until the pounds are up to 30 and the debt is thirty grand.
Obstacles. The next thing is getting to know your obstacles. For weight loss, if you keep buying cookies for “your kids”, you know you won’t be able to resist and you will blow your diet. (I use this example because…. Fine, I bought cookies this week!) Think of the obstacles with debt. If you keep your credit cards around when you are not 100% sure you can live without them you are going to use them. Identifying the things that will cause you to fail is key because what you don’t know WILL hurt you.
As a side note, this was my major problem to stopping debt spending. I really believed we could not make it a month without some help from my credit card. It took me cutting them up to realize that we could. Try it!
Planning. With Total Money Makeover you use baby steps and a debt snowball to fix your finances. For weight loss, you obviously must cut calories and then start exercising. I like to think about snacks now as how I am “spending” my calories for that day. If I go over budget, so does my waistline!! Exercising is kind of like saving. You are in essence banking calories that can be used later. No exercise, no room for extra spending. The exercise in your finances is working out those debts. Until they are gone you have no room for extra spending with real money either.
Goals. Financial goals and weight loss goals are easy to write down and track. However your goals have to have a deeper meaning. The end result should actually be a healthier lifestyle physically and financially. It takes commitment and putting what works in practice consistently. If you stop taking care of yourself or your finances you are bound to wind up right back where you started. That is the key.
I have started using some of the TMM ideas toward getting in shape… if you can’t already tell. It helps me feel like I am doing something while trying to get my finances in order. One thing that has finally become clear to me is the final step I talked about. This is a lifestyle change. It is not just a process you go through once and you are done. Weight loss for it to be permanent must work the same way.
Showing posts with label total money makeover. Show all posts
Showing posts with label total money makeover. Show all posts
Saturday, June 21, 2008
Monday, October 29, 2007
Look into your crystal ball!
I probably shouldn't even acknowledge it, but I am sorry I haven't been posting... at all! I am sure I have lost a ton of readers. Hopefully my female readers can sympathize somewhat. Starting a new job AND finding out you are having a baby is a BIG change. Anyhow. I am not promising anything but this is an article that has been simmering for a long time so here goes!
There are not many times that you can actually see into the future. However, sometimes with finances you can. So what can you do for motivation, after the month's bills are paid and you are cashless again trying to get your debt paid off? Pull out your old crystal ball. Or just some credit card statements and a calendar. I did this some months back and figured I could be nearly debt free in FIVE years. That sounds crappy but considering I haven't really been paying enough attention to my finances for the past ten years, it really isn't so bad.
I listed all of my debts, how much I owed, what I was paying monthly and for those debts that would end after a certain amount of time I wrote down that date. At first I tried to figure out the plan with a debt snowball, but I actually found that in paying off some of my smaller debts, my larger debts (ex. car) would be paid off around the same time anyway. That may not be the case now, because I won't be able to put as much money toward my debt with the added expense of daycare, but it gave me a light at the end of the tunnel.
Also, when I first did my snowball end date I had not figured my husband's debt into the equation. With his debt paid off and just some of mine we may actually be able to afford a new house!!! That would be awesome.
The point here though is that sometimes you need a little pick me up. If you have a lot of debt look at your smallest debt first. Paying as much as you can, find out how long it will be until it is paid off. Once you pay it off maybe you could even treat yourself to a special purchase with ONE month's worth of that money. After that, though, put it toward you next debt.
I think it is important to look forward to and celebrate these little accomplishments. Personally, I fall into a slump after months of paying on a bill only to see the amount go down slightly. By looking ahead you have something to look forward to. (Even if it is five years, or more, down the line!)
There are not many times that you can actually see into the future. However, sometimes with finances you can. So what can you do for motivation, after the month's bills are paid and you are cashless again trying to get your debt paid off? Pull out your old crystal ball. Or just some credit card statements and a calendar. I did this some months back and figured I could be nearly debt free in FIVE years. That sounds crappy but considering I haven't really been paying enough attention to my finances for the past ten years, it really isn't so bad.
I listed all of my debts, how much I owed, what I was paying monthly and for those debts that would end after a certain amount of time I wrote down that date. At first I tried to figure out the plan with a debt snowball, but I actually found that in paying off some of my smaller debts, my larger debts (ex. car) would be paid off around the same time anyway. That may not be the case now, because I won't be able to put as much money toward my debt with the added expense of daycare, but it gave me a light at the end of the tunnel.
Also, when I first did my snowball end date I had not figured my husband's debt into the equation. With his debt paid off and just some of mine we may actually be able to afford a new house!!! That would be awesome.
The point here though is that sometimes you need a little pick me up. If you have a lot of debt look at your smallest debt first. Paying as much as you can, find out how long it will be until it is paid off. Once you pay it off maybe you could even treat yourself to a special purchase with ONE month's worth of that money. After that, though, put it toward you next debt.
I think it is important to look forward to and celebrate these little accomplishments. Personally, I fall into a slump after months of paying on a bill only to see the amount go down slightly. By looking ahead you have something to look forward to. (Even if it is five years, or more, down the line!)
Sunday, August 26, 2007
What is a Crisis Plan?
A “crisis plan” is a misleading name. It is not something you would use if your car broke down. That is what your emergency fund is for. I guess it should be called a “crisis aversion plan”. If you know that an event is likely to happen in the near future you would want to put one of these plans into action.
What kind of “events”? Really anything you are not already prepared for. This might include a possible lay off at work, the imminent death of a loved one, or hmmm I don’t know, a surprise pregnancy.
Who needs one? If you already have 3-8 months of your salary saved up then you are in pretty good shape. However, many people are just beginning to repay debt and may have as little as $500-$1000. This is great for an emergency fund but when big things are about to happen it isn’t going to cut it.
How do you implement a plan? This depends on what you are going through. If there is a close estimate of how much money you will need then it is pretty simple. Take the amount of money you need and divide it by the approximate number of months you have to save it. This will give you a rough estimate of how much money you are going to need to save each month. If you can’t possibly save that much it is time to start selling things you don’t use, getting a second job, or cutting back on extra services you may subscribe to. If you have no clue how much money you will need start saving as much as possible. Sounds a little simplistic but you will need it in the long run.
What should be stopped? No more chunks of cash to those credit cards!! It may seem like the best idea is to pay off the cards as quickly as you can instead of saving. This is a bad idea because when the layoff/death/birth happens you will not have any money and will need to use credit to pay for it all. Another no no- any unnecessary spending. Any money that you can put toward savings should go to savings- nothing else. If you are about to have a serious financial situation on your hands… sorry, but you don’t need a manicure. One way I am helping myself do this is by thinking of every dollar spent on something else as something that could have gone to the baby. For example, I got a survey in my email today, I was really tired and didn’t want to do it, but it was paying $2 and I thought, “hey that could buy a couple bottles or a pacifier” and I took the survey. It can be tough but it helps.
What if it turns out that you don’t need the money? Simple! Use it to pay down your debt!!
I hope none of you ever needs one of these plans. I sure never thought I would, but if you do here ya go! If you have any other tips or hints to add please share with us!!
**Curious about why I have a crisis plan? Read the Big News here.
What kind of “events”? Really anything you are not already prepared for. This might include a possible lay off at work, the imminent death of a loved one, or hmmm I don’t know, a surprise pregnancy.
Who needs one? If you already have 3-8 months of your salary saved up then you are in pretty good shape. However, many people are just beginning to repay debt and may have as little as $500-$1000. This is great for an emergency fund but when big things are about to happen it isn’t going to cut it.
How do you implement a plan? This depends on what you are going through. If there is a close estimate of how much money you will need then it is pretty simple. Take the amount of money you need and divide it by the approximate number of months you have to save it. This will give you a rough estimate of how much money you are going to need to save each month. If you can’t possibly save that much it is time to start selling things you don’t use, getting a second job, or cutting back on extra services you may subscribe to. If you have no clue how much money you will need start saving as much as possible. Sounds a little simplistic but you will need it in the long run.
What should be stopped? No more chunks of cash to those credit cards!! It may seem like the best idea is to pay off the cards as quickly as you can instead of saving. This is a bad idea because when the layoff/death/birth happens you will not have any money and will need to use credit to pay for it all. Another no no- any unnecessary spending. Any money that you can put toward savings should go to savings- nothing else. If you are about to have a serious financial situation on your hands… sorry, but you don’t need a manicure. One way I am helping myself do this is by thinking of every dollar spent on something else as something that could have gone to the baby. For example, I got a survey in my email today, I was really tired and didn’t want to do it, but it was paying $2 and I thought, “hey that could buy a couple bottles or a pacifier” and I took the survey. It can be tough but it helps.
What if it turns out that you don’t need the money? Simple! Use it to pay down your debt!!
I hope none of you ever needs one of these plans. I sure never thought I would, but if you do here ya go! If you have any other tips or hints to add please share with us!!
**Curious about why I have a crisis plan? Read the Big News here.
Sunday, July 29, 2007
DUH JEN!!!
Wow, do you ever have those moments where you just go, DUH?? I had one yesterday. I was looking through the back of Dave Ramsey's TMM book and there were several budget categories with astricks beside them. I figured out that it meant for you to use the envelope system for those. If you are not familiar it is very simple. Get an envelope- write a category on the outside- each month you put money in. If you don't spend that money you leave it in and put in the same amount next month. For example, you don't get your oil changed every month, but if you put away $10 a month in an envelope you will have money for when you do get it changed.
The DUH moment came when I realized that one reason I go over budget is because I don't budget for these "seemingly" small costs, but they add up. DUH, I know. But, I really never put two and two together. I always thought all of that money should be going to my debt. No wonder I have to tap into my emer fund so often. DUH DUH DUH
But, as GI Joe would say, "Now you know, and knowing is half the battle!" Then he always said YO JOE... probably not as appropriate in this post.
The DUH moment came when I realized that one reason I go over budget is because I don't budget for these "seemingly" small costs, but they add up. DUH, I know. But, I really never put two and two together. I always thought all of that money should be going to my debt. No wonder I have to tap into my emer fund so often. DUH DUH DUH
But, as GI Joe would say, "Now you know, and knowing is half the battle!" Then he always said YO JOE... probably not as appropriate in this post.
Sunday, July 22, 2007
I Finally Did IT!
I cut up my last "emergency" credit card. After reading page 121 in Dave Ramsey's Total Money Makeover book, I stopped, grabbed my "emergency" card that I almost used yesterday, that has $4000 of debt on it, and I chopped it to bits. I had been reading the book, but something about that section finally spoke to me. I'm done. I have decided to "Live like no one else now so later I can live like no one else" Much thanks to JD at Get Rich Slowly for pointing out what an excellent book this is. Instead of running out and buying it I PATIENTLY waited for the library to get it back in so I could check it out! You know what is funny? I kept that stupid card around thinking it was giving me a sense of security but now I actually feel more secure. Now I can really say NO when my husband wants to buy something we don't NEED, or when a friend asks me to go out and I think... well I'll just put it on my card. I do have ONE thing to say if you are considering doing this... I do have a small emergency fund saved up right now so I have a true "emergency" fund I can use instead of having to charge it.
Wow, I'm really done. Finally done with those stupid cards.
Wow, I'm really done. Finally done with those stupid cards.
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