Staying Motivated While Busting Debt

by Jessica W on March 11, 2010

For many of us, the battle to get out of debt is a long one, taking many months or years. I’m 15 months into my journey now, and I have about four more months to go.

Right now I’m having a harder time than I have before staying on task. The remaining debt is the biggest “snowball” and is a hefty $10k. It’s also been hanging around like a member of the family for so long it’s become nearly invisible (the balance has been roughly this size for about four or five years years). Waking up every morning and staring that thing down and saying “you’re next sucker” isn’t working because I can practically hear it shouting back to me “yeah right kiddo… just try…”

We’ve covered maintaining the motivation several times (links below) but today I want to focus on immediate and right now ways to get your eye back on the goal.

In our house, we’ve found ourselves beginning to stray now and then—eating out more frequently saying “well, we’ll be debt-free in four months, so let’s celebrate now” or slipping up and beginning to add lifestyle extras. Now that we’ve noticed this—here’s how we’re tackling it.

This isn’t the home stretch—it’s crunch time! We’ve enrolled our oldest daughter as the “traffic cop” to help us all stay accountable on this. Kids notice everything, may as well reward them for pointing out things like this. Besides, when your kid calls you on “bad behavior” you have no choice to but to shape up. There’s no rationalizing to children.

That last snowball is intimidating, so break it down. We used to budget $1,300 to $2,500 for our snowball payments. It got broken up into several places but now we’re down to writing one gigantic check to the last debt every month. I’ll admit it, I’m a wimp. It’s psychologically difficult for me to write one gigantic check—part of me wants to hang on to the money “just in case” something comes up. Instead, I’ve started writing weekly payments to break the big payment into smaller ones that don’t hurt so much to write and maintains some cash flow security. If you are doing this with a credit card account make sure they accept multiple payments in a month as some charge an extra fee for doing this.

Amp it up! Amp up the energy. Talk about your progress to goal every week, or every day. Make a chart or keep a list—whatever energizes you.

Surround yourself by those who’ve done it. One of my favorite things to do is to download the Friday Dave Ramsey podcasts. Every Friday, he invites listeners to call up and scream “I’m Debt Free!” Then he interviews them about the hardest parts, the best parts, and how much they paid off in how much time. I always find myself energized after listening to these, and sometimes listen to them more than once!

Re-focus on the why. I recently realized that I had completely lost track of this. I cannot remember why we were getting out of debt. It took me some thinking to remember what prompted our conversion to the debt-free lifestyle and I realized that one of the motivators wasn’t a factor any longer. (We were attempting to adopt two kids who I met on my travels to Ethiopia, but they’ve since found another family, which is truly OK by us, but I had to step back and re-evaluate my reasons for continuing on this debt-free journey. Additional freedom, reduced need for income, and security for the kids we already have at home proved to be sufficient motivators for me). A few minutes of fantasizing what would happen to us if my husband lost his job (and excellent health insurance) was enough to get me back on the wagon. Take a minute and remind yourself WHY you’re getting out of debt. Make a list of what being debt-free will allow you to do and put it on your checkbook, or your bathroom mirror, or your forehead.

Next up: Motivational reading and soundtrack ideas for maintaining the focus.

In case you’d like to look back at some of our other motivation posts, the links are below.

Motivating yourself when you want to spend

Feeling derailed

Some techniques to keep yourself on task

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Hasta La Vista, Visa!

by Jessica W on March 9, 2010

I just closed two paid-off Visa accounts. One has an annual fee of $75, so I can practically feel the money back in my pocket. We had kept this card around a long time because it was linked to a favorite airline and we got a $50 companion fare annually as a benefit of being a cardholder. This year they eliminated that benefit and incidentally, it came up in our snowball, so we just nixed the thing.

One card left—a MasterCard at 8.9%.

We thought the balance on our last card would be $7950 this month, but it’s actually, still at $10,000. While our high February income was expected, we had some major expenses that were not—a veterinary bill, major office equipment repairs for our small business, some home repairs, and an unplanned auto repair all totaling $3,000.

I must say, I’m pretty jazzed that we could cover all of that out of cash without touching our emergency fund and we still made large (albeit not gigantic) payments on our snowball.

Our March income looks like it’s going to be much better than our usual income, so we believe we can make up the difference this month and still be on track for a July payoff.

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Every Day I’m Hustling!

by Jessica W on March 6, 2010

Remember how I said we’re implementing a full-blown, whole-hog hustling program around my house? Well, it’s working.

I had projected almost no income for February for my small business, and only a few hundred dollars of writing income. It ended up being a record month. Additionally, we got the balance of our tax return (adoption tax credit). Overall our February income exceeded $11,000 for the month (both of us). We normally budget off of a minimum income of $4,400. March looks to exceed $7,500 (no tax refund this month either!).

We will still be carrying over a huge tax credit into 2010, so we changed my husband’s withholding to be far less than he was even withholding before, because that will get us the balance of the credit week-by-week rather than next year in one lump sum. This will keep our snowball rolling.

So—what caused the massive income boost? A few things at once.
1.Tax refund.
2.Some new clients who’ve doubled my small business’ volume.
3.Old written-off client invoices suddenly paid.
4.Extra overtime for my husband.

At the same time, some planned expenses decreased.
1. Health insurance co-pays were recently reduced. One Rx went from $108 a month to $40.
2. Adding gleaning cut our monthly food expenses by $250.
3. Bartering with friends. Trading piano lessons for babysitting allows me to take on more small-business work while my husband is at work. Normally, I only schedule my work appointments while my husband is home—this new arrangement is for “drop-in” babysitting, so I can take a job while my husband is working, and my friend will watch the kids. This costs me 90 minutes a week in piano lessons for her three kids, and allows me to increase my income by $300-$500 per week.

I’m encouraged. We had more expenses than we expected (Murphy-type stuff) in February, so we didn’t make all of the progress that we had hoped to make, but we did not expect the higher-monthly-income to last beyond February.

Just today I learned that one of my husband’s employees will be out for another month, so my husband will be working six days a week (or more) for another month. I added new clients in February and already in March. Another client informed me that they’d be giving me a raise, and they account for about 50% of my volume.

We still think we’ll be debt free in July, and if my small business volume remains this high, we’ll be debt free by June.

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Gleaning Update

by Jessica W on March 4, 2010

A small portion of one week's glean. A few weeks ago I posted about my first experiences with the gleaning co-op that I have joined which resulted in many interesting questions. I thought I’d drop in and update you about how it’s going, how it’s affecting our “bottom line” and if it’s worth it.

First off: It’s a huge time commitment. I spend five to seven hours a week processing food. Picking it up in a nearby town, and then cleaning, composting, chopping, canning, freezing, etc.

Second: It’s totally unpredictable. Most weeks I pick up two banana-boxes of food. Last week I picked up six. (Roughly 250 lbs of food to deal with).

Third: It’s not flexible. If six boxes of food get picked up, six boxes of food must be dealt with. If it’s not done ASAP, fruit flies, mold and spoilage will ruin your next several days. You cannot ever be too busy to “deal” with whatever presents itself in the boxes. Even if it includes 35 lbs of cactus leaves, 150 bags of hamburger buns and two boxes of aged radishes.

That said, out of each pickup, we feed our family for a week and freeze extra. We also provide fruits, bread, vegetables and dairy products for as many as eight additional families.

My husband jokes about “food bank day at the Wards” but truly, it’s been benefiting many people.

Overall it’s reducing our monthly food budget by about $250 a month. It would be a greater reduction if I wasn’t doing the Atkins diet which is kind of expensive, so yes it’s worth it, especially when we add in the number of people we’ve been able to help with it. The other day I was able to make a fantastic eggplant Parmesan for six for a grand total of $0.33. (All I had to buy was the eggs—everything else came in the box). My $0.33 Eggplant Parm. It was a hit with the family.

Honestly, I’m enjoying the adventure and the opportunity to involve my oldest in this lesson in planning, thriftiness and resourcefulness and caring for those in need. She always looks forward to the boxes and wonders eagerly what treasures might be in there and she’s learned a great deal about the needs of others. We’ll be keeping this project up for a while I think.

Many have asked why this food is going to volunteers and not food banks. Generally, the non-perishables all go directly to food banks. Most food banks aren’t set up to process gleaned produce and breads and the ones that are, tend to have far more than they can handle. Most food banks prefer to buy fresher produce and dairy in bulk because the quantity and quality is reliable. We work with families in need from our own neighborhood and from our church to distribute as many items as we can on an individual basis. Otherwise, we’re just diverting items that would otherwise be sent to the landfill because the next inventory shipment has arrived or the item has a cosmetic flaw that results in it being unsalable.

If you’re interested in starting a co-op of your own, you can take a look at the by-laws and organization structure of the one that I’ve joined.

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Home Loans For The Self Employed? Good Luck

by debt kid on March 2, 2010

Back in 2006, getting a mortgage to buy a home was about as easy as buying a tub of butter. Except, well, you actually had to PAY for the tub of butter upfront, whereas you could get a loan for the house. Even for the self-employed, there were NINA (no-income no asset) no-doc loans, or SISA (stated income, stated asset) loans that with the right credit score, you could qualify for. Heck, even with a bad credit score, you could still get a loan (granted your interest rate was higher).

Now that times have changed, what can a self-employed person do to even have a chance at getting a home loan?

1. Lots of Cash to Put Down

20% is the new 0%

2. Perfect Credit

The days of getting a loan without good credit with a conventional mortgage are over. Your only, and best bet if your credit blows is an FHA mortgage.

3. Documents, Documents, Documents

Lenders are going to want to see not only your last two years tax returns, but they may even ask for bank statements for the last 12-24 months of your business. You need to be able to show without a shadow of a doubt that your income stream is going to continue to be profitable into the future. If your business is less than 2 year old, you’re probably out of luck.

I actually talked with a bank loan officer last summer, just to look at the possibility of ever buying a home again. I just gave up after the meeting. In another year or so, I may go back and look at the possibility again, but for now at least, even getting a mortgage would be impossible for me.

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Talking about debt

by debt kid on February 26, 2010

Here from CNN Money? Make sure to subscribe!. Also, if you have a few hours and want to start from the beginning of my story in January of 2007, here’s my very first post. Grab some coffee.

Very few people like talking about debt. Those who do are either 1. personal finance bloggers or 2. weirdos who don’t care what anyone thinks.

I fall into both camps, and lately I’ve been feeling more and more ok talking about the mistakes I made in the past. Probably because I’ve come so far since I made them.

Why don’t we talk about money

My fiancee and I talk about money quite a bit. Probably more than we even need too. But, given my unique debt situation, it’s often warranted.

But I can count on one hand the number of money conversations I’ve had with friends in the past 3-4 years. For such an important part of our lives, the topic just doesn’t come up that much. And I don’t mean conversations like, “How much do you make?” those don’t need to come up. But conversations like, “How do you guys save? Where do you save? Do you save money? Do you invest? How? Why?” etc. Those types of conversations could be fantastically interesting to have…

So, how do you start those conversations or are they better left to just your spouse and you?

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I ate better when I was broke

by debt kid on February 23, 2010

I stepped on the scale this weekend, and the results were not pretty. 199.8 lbs.

Yikes. Now, I don’t consider myself “fat” but I’ve gained 15 lbs since last summer, and I’m not happy about it.

I was thinking about my food spending habits lately, and I know there is some correlation between my weight gain and my income gain. When I was dirt poor, I thought about every single grocery purchase. I never splurged on anything extra.

Now with a little more cushion in my budget, I’ve noticed that I throw in extra food into my cart that I wouldn’t have even considered when I was broke.

So, I need to go back to shopping like I’ve got $70 in the bank instead of $700.

The good news is that since my “fat awakening” I’ve already started eating better. I’ve even been counting calories, which is shockingly familiar to counting dollars. I’ve found it kind of a fun game to play watching how many calories I eat. I even splurged on a food scanning app for my iPhone to scan food items and track the calories, it makes it super easy and fun.

My goal is to be 180 lbs by my wedding in July. I weighed in at 196.4 this morning, so I’ve got a ways to go, but definitely some time to get it done. Maybe I’ll post some before and after shots here for motivation.

The last two months have been bad health and spending wise. With my fiancee’s mother passing, and then we both got sick for 2 weeks, we just ate terrible. And all that happened right after the holidays. Not exactly the best way to start 2010. Here’s looking at a better March!


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Stop Acting Rich

by debt kid on February 17, 2010

I’m about 3/4 the way through “Stop Acting Rich” by the same author of “The Millionaire Next Door“, Thomas Stanley.

The good news is that for the most part, my consumption and spending habits match exactly with the frugal millionaires (or Toyota Millionaires) that Stanley lusts over.

I don’t even drink Vodka, but if I did, I’m sure it would be the $10 bottle brand, not the $60 grey goose brand.

I drive a Toyota, which is good according to the book (well built, not flashy, good value). And I don’t lease. My car isn’t totally paid off yet, but I hope to have it paid off at the end of this month. Then I’ll go buy a new Mercedes….

Just kidding. My fiancee and I will probably keep my Scion Xb (a Toyota brand) for years to come. It’s a great little car.

Now, the one part of the book that worries me a little bit is that Stanley statistics show that the area you live in determines your spending habits. Not a shocker, but I think this will be a struggle for me when I move. We are planning to live in a nicer neighborhood in Portland, though will be renting. I don’t think our spending habits will change, but according the “Stop Acting Rich” they most certainly will.

I know for a fact our food budget is going to go down. It’s always been my Achilles heel. I’m just not much of a cook, and I’m willing to part with dollars to get food. I love food. So, our food budget has been way too high for a long time. Living together however, and without the stressful job my fiancee has now, I think we will cook a ton more. In fact, I know we will. As cliche as it is, she is looking forward to cooking more, and I’m looking forward to eating! (and doing the dishes of course!)

Why do so many people, especially my age group (young professionals), “Act Rich”.

Well, we think that to be “Rich” you have to drive a Mercedes, and buy a fancy condo. We don’t drive around town with our savings account balances as our hood ornaments, but maybe we should.

So, as I prepare to live in a nicer part of town after I’m married, both me and my wife will vow to not “act rich”. One, because we aren’t. And two, because being rich isn’t about status symbols. It’s about freedom, and the ability to sleep at night without worrying that the Repo man is taking away your leased Mercedes.

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Moving to Portland, OR

by debt kid on February 11, 2010

Being engaged is a strange place in life. You’re no longer just “dating” and yet, you’re not yet married.

It’s a heck of a lot of waiting.

Waiting to move (more on this).

Waiting to live together (til after we are hitched).

Waiting for checks to come so I can pay off more debt (I want to pay off my car this month!)

Wait. Wait. Wait.

I swear, I’ve read more news and blog posts in the last two weeks than I have in the last few months.

I’m trying not to spend much money on my business right now, keep costs low, and profits up, and so I’m bored at work half the time. But I head to the office….because what else am I going to do all day?

Moving To Portland

I am excited about moving to Portland.

My fiancee and I will be looking for a place in the next few months before our wedding. She will live in our new place for a few months while I move in with my Mom for a few months until we are married. Free rent!

So, lots of change coming. Just. Not. Yet.

10 Things Millionaires Won’t Tell You

I read a really interesting article on smartmoney today about millionaires. Number 7 was that the median college GPA is 2.9.

My cumulative college GPA?

2.9

Ha, that made me laugh. Next time my fiancee mentions my not so stellar college grades, I’ll bring that little statistic out!

Portland Finance Bloggers

JD Roth of Get Rich Slowly fame is a Portland area blogger, but I don’t know of any other personal finance bloggers in Portland. If you know any, or are one, leave a comment and we can meet at some hole in the wall coffee place sometime and talk about the “weird” that is Portland.

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Experiment 2010: Gleaning

by Jessica W on February 9, 2010

pretzel rollsFor 2010, I’m trying to be even more frugal. As I mentioned before, there’s just $7,000 left of debt to bust and I’m looking for a way to get there even sooner. Groceries consume about $500 in our budget each month for our family of four, so that’s certainly a candidate for “tweaking.” Sure, we could give up the few organics that we buy, or we could eliminate meat and eggs, but my low-carb diet would make that really hard. So I’ve decided to start gleaning.

What is Gleaning, exactly?

Perhaps you are wondering what gleaning is. Gleaning is a the process of salvaging food that stores can no longer sell, or crops that are left behind after a harvest. It’s such an old practice that it is even discussed in the Bible.

This week, I joined a co op gleaning group. It’s a non-profit and I pay an annual membership of $30 to support the groups’ activities. There are about 30 members and they take turns with their responsibilities. This way I’ll only be going to stores to pick up items two to three times per month, however, other members get the other days. This way, each store is gleaned each day and doesn’t have to hold spoiling merchandise. We’ll all be getting it fresh enough to freeze or preserve. Once a week, I’ll pick up my “share” of the gleans from a central location. All told,  it’s a time commitment, of 3-5 hours per week.

We’re encouraged to share our surplus with others in the community—I have several elderly fixed-income neighbors and will share with others in my church if there is anyone in need.

Where do you glean?

My group will glean a major warehouse store, a natural foods market, two supermarkets and two bakeries. Additionally, I’ve signed up for crop gleans and salmon gleans (when the Department of Fish and Wildlife has collected the roe that they need from salmon for hatcheries they need somewhere to send the dead fish and our gleaning group is a recipient).

Since I can, juice and freeze, the erratic nature of the gleans will work for me—if one day yields 7 lbs of aged grapes, I can figure out what to do with that pretty quickly. This summer I bulk-purchased tomatoes and peaches and canned those. Gleaned tomatoes may be too blemished to can, but could be turned in to spaghetti sauce and canned. While many would consider a crate of zuchinni a blight, I can think of what to do with it in no time. (One thing about gleaning is that you can’t pick-and-choose—you have to take the entire glean).

Tonight after my orientation, I followed my new friend to the house that hosted the day’s bread glean. She didn’t want all of her share of bread, so invited me to pick up whatever I’d like. It was a great surprise to come home with several loaves of artisan bread from a bakery and a big bag of bagels. (I’m so regretting my low-carb diet right now).

I go to train in stores Monday and Tuesday and should be able to post on gleaning progress before long.

Find a gleaning club

If you have volunteer time and a car (the bigger the better) and would like to join a gleaning club, they can be hard to find. Good places to start looking are local community message boards, food co-ops, churches, cooperative extensions through local universities (usually Agriculture universities) and food banks. Some food banks allow gleaners who volunteer on behalf of the food bank to share in the glean as well in exchange for their time.

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