One of the things that I use to keep myself focused in my journey to debt freedom is books! I use Audiobooks usually because I can “read” these while commuting, working, washing the dishes and folding the laundry. Audible is my favorite source for audio books.

Here are my favorites:

The Total Money Makeover, Audiobook, by Dave Ramsey (2003) I love it because it’s read by Dave Ramsey himself. He has a passion for what he does and a lot of energy in his voice. I’ve listened to it several times and it’s what I turn on if I don’t know what to listen to. I no longer learn something new every time I listen to it—instead, I use it as an energy boost to stay focused. For me, having a “voice” rather than reading the book by myself is like having someone else cheering me on. (Try it, it might work for you too!)

Outliers, Audiobook by Malcolm Gladwell (2008). Also, read by the author, I like all of Gladwell’s books. His unique perspective inspires me to look at all of my circumstances through another lens. The text itself isn’t precisely related to getting out of debt, but success measurement. To me, being out of debt is a measure of success in my own life, so it applies in a less direct way.

Guerrilla Marketing by Jay Conrad Levinson (2009). This one is about marketing in unorthodox or affordable ways. If you have a “side hustle” program going on (as many of us do) this might inspire you to find another way of finding clients or reaching out to sell your product or service.

No More Mondays by Dan Miller (2008). This is a great book about finding/pursuing your passion. I do hope that is one of your post-debt goals. It helps me focus on the “after.”

The Go-Giver by John Burke and John David Mann (2008). This is another great book about change in perspective and attitude. It’s a parable, so easy to listen to, not a bunch of numbers and a good refresher on attitude. (Or maybe I should say it is “attitude refreshing.”)

The Four-Hour Workweek by Timothy Ferriss (2007). I’m personally a big fan of old-fashioned, holistic and neighborhood-based business (I’m a hippie at heart), but what I love about four-hour-workweek is what the case study individuals did once they met their business/income goals. They took their kids sailing around the planet, they pursued athletic goals and other personal goals. I love the “life is more than work” perspective, and use the case-studies as inspiration for what I might want to do when I’m debt free.

Blogs, blogs blogs! I get many personal finance and debt-reduction blogs in my Google Reader, but seldom check it. My very favorite blogs are delivered to Facebook and my email where I’m more likely to read them. Whenever I have a moment of “hmm… I could use some inspiration” I can usually find some within moments on my mobile phone. Surf around for some of the best of the best. I especially enjoy those with a humorous perspective and a youthful voice (Debtkid, PunchDebt, Man vs. Debt, and Budgets are Sexy).

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.

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.

Photo Credit DjCodin from www.freedigitalphotos.net

A reader asked us last week “what’s a snowball?” Fair question. We’re talking money, not weather here at DebtKid.

Here’s the answer, the best that I can give it to you, but it is further explained in the “Total Money Makeover” by Dave Ramsey. (I highly recommend the audio-book personally).

Imagine a snowball rolling downhill. It gets bigger, right?

Some financial experts teach you to pay off your debts beginning with the highest interest rate. Dave Ramsey, on the other hand will teach you to pay them off smallest balance to largest balance. It doesn’t make much mathematical sense, but it does make sense in other ways.

First, it gives you a sense of accomplishment. When you’re feeling crushed by debt, a few quick wins feel really, really good. Good enough to work as hard as you need to in order to get out of debt. There’s a real psychological boost. Second, there’s a cash-flow advantage to it.

Two words of caution. The debt snowball will only work for you if you’re on a budget and planning a certain amount of income each month towards your debt at a minimum (extra is always good too). You also need to have a small emergency cash reserve in place just in case. This is so that you don’t need to resort to creating more debt, but be sure that it is not so much that you might be comfortable being in debt. (Debt-busting is not about comfort and relaxation!)

Here’s how you “roll” the snowball.
1.List your bills smallest to largest citing the total balance owed, and the minimum payment on each.
2.Pay off the bills as fast as you can with the smallest. Plan on a minimum payment for every bill and direct any extra towards the top of the list—the smallest bill. In our house, we knocked out the first three bills for a total of about $200 in the first month. This freed up an additional $200 the next month. There’s your cash flow advantage. Rather than just paying minimums, as soon as you get a small bill out of the way there’s a little extra money wiggle room to make even more progress on the next bill. This month I’m paying off a card that has a $209 minimum monthly payment, which is freeing me to make a whole lot more progress every month on my last remaining debt.
3.Any time you have extra, unexpected money (tax return, birthday card from grandma or yard sale money) immediately send it to your smallest bill. What looked like a bunch of $30 and $50 payments suddenly becomes real money once they’ve all vanished and you have that extra cash every month to throw at the big looming debts.

Many criticize this method because it has no regard for the interest. Certainly, I’d bypass this method if I had a few small medical bills at 0% interest and some payday loans at 800% in the middle, but otherwise, this method if followed with intensity can usually be worked in 18 months to two years, so the difference between one credit card at 8% and one at 12% in my family has made very little difference.

Hope that helps!

When I first graduated from college I was 20 years old, I moved to downtown Seattle, into a 300 square foot studio apartment. If I ran the toaster, it had to be with all the lights off, or I would flip the only breaker I had. Ditto on the hair dryer. The only windows looked directly at high wood fences. The front door opened directly into a parking garage. This was 2001. I had a monthly income of $1,500. A rent of $525, student loan payment of $262, credit card payment of $150 and a monthly bus pass expense of $40. I still remember those numbers as clear as day.

I lived 6 blocks from the nearest bus stop. In the morning, I’d walk down to the main road, stop at Tully’s and get a cup of coffee before I got on my 90 minute bus commute. (My apartment wouldn’t run a coffee maker either). There was always someone who wanted to talk to me. Early morning bus commuters and the homeless are a friendly lot in that neighborhood.

Once someone asked to borrow $5 for a morning coffee. Why would I loan money to someone from the bus stop? The chances are slim to none that I’d get my money back and coffee is hardly a necessity. Especially when it’s only $0.99 at the 7-11 across Market Street.

I don’t remember if I gave the person $5 or not, but I got on the bus and thought about that strange interaction. Then I realized, that I myself, had swiped a credit card for my latte.

I borrowed money for coffee from a stranger. It’s a sad statement on my character that I had to judge someone else before observing my own wrongdoing, but I’d been a customer of credit for three years before I’d even noticed myself using it.

That week I started on a number of misguided attempts to learn about financial responsibility. I enrolled in some online classes about investing (yes, when I was broke) I’d been taught that it is wise to invest young. I took a class about budgeting, in which I really learned nothing—I already knew my monthly expenses. I read the information about my college loans that had just come into payment status and discovered I could move them from a five year repayment to a ten year repayment, which would improve my cash-flow by lowering my payment to $110. (But I didn’t invest with the extra money, I just had a little more wiggle room for non-coffee food).

I tried watching what other “responsible” people did in my social circle. But the problem with learning in social circles is that usually we were out spending money being social.

I paid attention to the lessons that my parents taught me, but they had educated themselves on loans, and built their businesses with credit—it was just a way of life. I didn’t notice the differences—like the fact that I had no reason to need a credit card. I wasn’t carrying inventory of waiting on receivables. My income didn’t fluctuate from month to month either. Likewise, I wasn’t trying to educate myself while raising children. It was just me. I could have worked three jobs and nobody would have minded.

It took me eight years to resolve to live without credit or debt. There was more financial floundering around—mostly due to lack of a plan. I mistakenly taught my husband that “credit is a tool” and he reluctantly believed me.

But looking back, the first time I was aware of my misuse of credit was the one stranger who wanted to borrow money for coffee. Ultimately, what led me from questioning my use of credit to wholesale change in ways, was having a critically ill child and a job loss at the same time. We realized we had to ensure we’d never be in that position again, and somehow we came to the conclusion that living without debt would be the key. (Likely adding all of our debt payments in the budget).

I’m curious: did you have two turning points in your journey like I did? One where you began questioning, and one where you ultimately changed? What was the time difference? (For me, it was eight years—which encompassed my marriage and our adoption of our two daughters)

I looked back at my November post, and have noticed a typo—card 1 was supposed to be $2,337.87.

Here’s where we’re at for December

Card 1 $2,020.05
Card 2 $12,067.00
Mortgage: $159,910

This doesn’t represent huge progress, but we do feel good about it because of all that we were able to cash-flow this month including; Christmas, new jeans for both kids who simultaneously grew out of their clothes all at once (Oh $h!#!) and some delayed maintenance on my car. (I was thinking it had been a while since my last service… it had been 18 months! (Oh $h!#²!)

All this AND we made some progress on the debt (all this with only one “real job” in the family… I wish I know 12 months ago when I lost my “real job” how well this would have worked out).

My billings in December were almost 2x what I projected, so when my clients pay me in January, we may be able to pay off Card 1 entirely. We’re hoping that tax return that should come in Feb or March will wipe out ½ of card 2. We may be closer than we’d expected to debt freedom.

Still leaving room for Murphy, so planning 6-8 months until everything but the mortgage is paid off.

As I mentioned earlier, my debt has dropped quite a bit. I’m not sure if it’s because of that or because of something I read on this blog that made me reconsider my approach to paying down debt. I might have talked about this earlier but it’s a topic I keep coming back to. Ever since I started reading pf blogs, I have contributed a huge percentage of my income to paying down my debt. I did not want to pay a single penny more of interest than I had to. Debt was “bad” and something I had to get rid of as quickly as possible so any money that was not going to essentials was sent straight to Visa or Mastercard.

The Moment of Change

I think my aha moment was when I realized that debtkid still has way more debt than I do but he has substantial savings. I think this is mentioned in the post about his mom. He has $177,266 in debt but on the other hand he has $59,130 in savings. If that were me last week, I’d have put at least $50k towards my debt. Think of all the interest that payment would save me! However, reading that made me realize that I had put myself in a precarious situation. Yes my debt is dropping quickly, but if I lost my source of income, not only would I not be able to pay my day to day expenses (like rent!) but I also would not be able to meet my credit card payment for the next month! Just because I pay much higher than my minimum balance and have been for so long does not give me extra time to pay. On the other hand, if DK’s income for some bizarre reason disappeared, I think he’d be able to live for another 2-5 months and meet his debt obligations.

What this all means

I am dramatically slowing down my debt payments and I’m going to focus on building up my savings. I don’t feel comfortable with only $1k in savings. I’m also going to put more money towards doing things i enjoy now such as travel. Yes, I will pay more in interest but I will consider that extra amount the price of having fun and gaining security. First things first, I’m going to sign up for that photography class I’ve been putting off for almost 5months.

What are you thoughts?

I just don’t get it!

I would have to say that I have a hard time understanding some financial terms and concepts. I do though try to find ways to help myself to learn about what I do not understand. One site that I have found to be extremely helpful for me is feedthepig.org.

Weekly tips…

There is a weekly newsletter that you can sign up for that is free. It is set up so there is one topic per week and they give you different tips that pertain to that topic. I am someone who loves getting advice and helpful tips so I think the newsletter is the greatest.

Check it out!

While exploring the site you can look up a plethora of articles on many different financial topics. I have read a few of the articles and even though some don’t necessarily pertain to my life at this moment they will at some point and it has helped me to put things for the future into perspective. They also have different calculator and worksheets as well.

One site fits all!

I think this site is a good resource for everyone no matter what your financial understanding is. I am sure someone that is very financially savvy would be able to find a few interesting things. For someone like me that wants to educate themselves on different areas of finance this is a wonderful tool.

Best regards,

Maeghen

I’m not talking about thousands of dollars but I thought it would be helpful to share some of the ways I have found to make some extra money. I’m not one to turn my back on money – no matter how insignificant the amount might be. A bunch of $3 checks might let me double a payment on my credit card one month.  Nothing on my list is too time intensive so without further ado here are my top 5 ways to make some money with only a little bit of effort.

1. Sell Unwanted Electronics

I don’t know how many people know this but I just found out – you can sell your unwanted electronics to best buy. You just put in the model number and condition of the item and they give you an estimate of what they can pay you. They pay you with a best buy gift card which is not quite the same as cash but still useful. They buy everything from old phones to laptops and GPS systems to cameras and car audio. It is definitely worth looking into. I know most people have an old phone or dvd player they don’t use anymore.

2. Sell Some Books

To those that live in New York, there is a bookstore called the Strand bookstore. They buy back all books (except textbooks) from you. I have found this to be more lucrative than selling on half.com as there are no commissions to pay anyone.  They pay more for hardbacks than paperback and like the books to be in pretty good condition. I can’t speak for other cities but I’m sure you can find similar places in any major city. On a side note, this is also a pretty good place to get brand new looking books for cheap.

3. Sell (Old, unwanted, too big, too small) Clothes

Moving away from books, you can also make some quick money by selling your clothes. It’s time too get rid of that collection of clothes that you are “waiting” to fit into (some of you ladies know what I mean) or clothes you haven’t worn in the last 5 years. On the east coast we have places like Platos Closet and Beacon’s Closet that buy back clothes. Obviously, the better condition your clothes are in the more money you receive.  I know Plato’s closet is located it numerous states but if it’s not available near you,  you should definitely look for something similar in your area. It’s a great way to clear out your closet and make some money.

4. EBAY

No list would be complete without talking about ebay. The only thing I have against ebay is the listing fees which is basically what you pay to post your items on their site. They are not high but I see how they can deter someone who is not sure if their item would sell. I think the best way to look at it would be to think of it as paying to list something in a newspapers classified section. You wouldn’t expect to do that for free would you? Ebay has so many users that I think it’s worth it. Someone will be interested in you mickey mouse shot glass that you got in 1979.

5. Take Online Surveys

I am putting online surveys last because they take a little more time to do. I belong to a bunch of survey sites; pineconeresearch, suveyspot and toluna to name a few. Even though the surveys take about 20-30 mins to fill out, I think they are worth it.  I have made about $150 in the last 3 months or so. It’s not an earth shattering amount but for me it’s valuable because I can put that much more against my debt.

(editor’s note: try Cash Crate)

So those are my picks folks. If you have any other ideas you’d like to share, feel free to do it in the comments section. Also, if you’ve had any experience with anything on my list, I’d like to hear about it – especially if you know of places like the Strand and Plato’s closet in your area.

Whoever decided to pick on the Latte when it came to cutting expenses…

Starbucks probably wants to kill them.

But “giving up coffee” to get out out of debt is about as cliche as you can get. And if it were as easy as just giving up the Latte, wouldn’t everyone be out of debt?

The reality is that it takes more than just a single small sacrifice.

I’ve written about this before, but it really takes a complete mindset change to really “get it”.

I believe to be successful in getting out of debt it has to be something that you feel in every part of your body. You have to want it so badly to actually make the necessary changes to achieve it.

You might have too:

• Not see your friends as often (because their always going out)
• Get a second job.
• Sell everything you can
• live in your office.
• Give up coffee, eating out, netflix, movie rentals, your car, and more.

Yeah, you get the idea.

The idea of “getting out of debt” sounds very simple. You spend less. You try and earn more. And you pay off what you owe.

The reality is much more difficult.