Getting the Ball rolling

It feels good to know that we really are trying to stick to the year long budget we have planned out.  I'm not gonna lie --  this is going to be tough.  We wanted to get the tuition for daycare caught up and then start trying to get ahead by paying every week, one from my paycheck and the other from Johnny's paycheck.  However, I did the math wrong and wound up OVERpaying to catch up and now we are a week and a half ahead, and we are still going to give them more so we don't get behind.  We never know when something is going to come up and having some cushion is a good thing.  We also paid our 2010 property tax and some $13 bill from a bill collector.  I don't even know what it was for, but we paid it so it is now out of our hair.  Currently, we are a little ahead in our budget, but there were some things we calculated incorrectly so we'll keep an eye on it.  It feels good to get some of this stuff paid off.  Today the plan is to catch up on the TV/Internet bill.  I guess the lesson here is to never get behind because it is so hard to catch back up. 

Here is a tip.  We have started taking $20 out of Johnny's paycheck and $10 from mine and setting it aside.  We don't even count that money as part of our paycheck.  That money that we set aside is for emergencies.  We put enough cushion in our yearly budget that taking out that $60 every month and putting it aside will not effect us. 

2011 plan

I just did a zoom out on the year 2011 with our debts.  Basically, I made a HUGE game plan... and I really hope we can stick to it! Basically, if we are smart and play our cards right and do what I know will work (which involves a lot of smart decision making), 25% of our debts will be paid off by the end of the year.  It's not the 66% I was aiming for, but at least I know how to be realistic.  I mentioned in a previous blog that there was something to do to help pay off debts a little faster and will keep you motivated.  Here it is -- pay your smaller debts off first.  Here is our game plan: Pay off the smaller debts first (and ours should all be paid off by July), while simultaneously making payments on some of those big debts, whenever you can, to help bring those down a little.  I suggest doing this so that when all your small debts are paid off then your big ones won't be as intimidating. 

... but why should I pay off my small debts first? Wouldn't it be simpler to make big payments on the big debts and littler payments on the smaller debts?  It may seem that way.  However, you want to feel like you are accomplishing something... so get rid of those little debts so they aren't hanging on your back!

Setback #1

Being as this is a blog, there will be many glances into my own personal finances... remember, this is an adventure we are taking to see how we get out of debt.  It's only fair that I share the struggles that are encountered along the way!

No matter how much you double and triple check your budget plan, you can still make mistakes.  We aren't any different.  Our son's daycare called because his tuition was getting really far behind and they wanted money.  We met with the school's supervisor (so to call her) and made a payment plan with her so that way our son would not get kicked out of daycare and then they are still getting their money.  The first week we were supposed to pay some money arrived.  We quickly realized that the $350 we promised was not going to be able to get paid.  My husband miscalculated his paycheck amount (it was only a partial amount because he was on paternal leave) and instead of the $380+ we were expecting, he only got paid $125.  After speaking with the supervisor again and signing another payment plan, we are still on a good page, but it is something that I would have preferred to have not happened. 

We're currently in a situation where we are barely scraping by.  We contacted family services to see if they could help with daycare expenses.  We were declined because we "make too much".  We don't make enough for daycare and rent.  That's not even counting the other bills we have.  We plan on requesting a "fair hearing" to get state help.  We also got a letter from the state to refill out a form for our food stamps.  I'm almost certain they will claim we "make too much" and not give us anymore.  If this happens then we will appeal that too.  Right now we are finding a way to live off of $80 for two weeks.  It will be that way until I return to work from my maternal leave.  We know things will get better, but it's just a matter of not getting too worked up when you hit major setbacks.

Where to begin...

Make a list of debts that you have.  I made a list of three columns.  Column #1 has all the debts that can be paid off with payments.  This includes things such as cars, hospital bills, and that nice expensive vacuum.  I added all those items together and put a subtotal #1 beneath it.  Column #2 has all my monthly debts that are expected to be paid every month.  This includes things such as rent, daycare expenses, etc.  I added all those items together and put a subtotal #2 beneath it.  Column #3 is my IOU column.  For any person I owe money to other than a bill collector, I put his/her name and the amount owed.  As with the first two columns, I add up the amount and make a subtotal #3.  Finally, add the three subtotals together and you can see just how much money you owe and can begin making a plan on how to get that paid off.  My suggestion: Pay off the smaller debts first.  I'll explain that in more detail next.

Tip 1: Admit that the debt you are in is your fault.

… no really, it is.  It’s not that vacuum company’s fault that you decided to purchase their $2,500 vacuum.  You decided you wanted it and signed up for the payment plans.  Look at your debts.  Chances are, a majority of the items on that list of debts are of items you really didn’t need in the first place.  I call them “irresponsible wants”.  I will admit it, there are a lot of those on my debt list.  One of those is that high priced vacuum.  Wanna know how often I’ve used it in the year that I’ve owned it?  Maybe a handful or two.  I still owe a high amount of money on it because I let my debts get out of control. 

I’m not saying that every single debt is your fault.  Things come up that we have no control over.  I’m just saying that a vast majority of your debts were caused by not thinking clearly.  Pointing fingers and failing to take responsibility for your own actions will get you nowhere.  This is the first tip to the GOOD project.  Admit that the debt you are in is your fault.  As soon as you can admit that you caused it, then the sooner you can move on to doing something about it. 

Intro

I am by no means a financial advisor.  I am just your everyday, average person who has been unfortunate enough to be in a bunch of debt.  Welcome to the GOOD project: Get out of debt.  I hope to take you through this adventure with me as I pull myself from being filled with debt to getting out of it as soon as possible in a reasonable manner.  Feel free to comment on my experiences as well as any tips I come up with.  Thank you for taking the time to jump aboard this adventure! Who knows how long it will last and where we will end up.  One thing is for sure: it's not over until we are out of debt!