Thursday, December 27, 2007

Getting Started

The new year is a good of a time as any to get started being in control of your money, if you aren’t already. To help you get started, here’s how we did it. It’s not exactly Dave’s way, but it’s what got us going.

Last summer, we started tracking our expenses. We operated out of one bank account, and I kept a spreadsheet. Every night I would transfer the expenses that hit the bank account that day to my spreadsheet, keeping a running balance of where we were at.

After those two months, we evaluated where our money was going. We were SHOCKED to see how much of our money was spent on eating out. The first month it was almost $300. We also spent $700 on random stuff like golfing and hotel rooms. We also found we were spending $530 per month on groceries. And those are only examples – we were spending money faster than it was coming in. I sat there in disbelief, and thought to myself, “Holy Crap.”

(If you want a sample of the spreadsheet I use every month, email me.)

I gathered up all of our debts and wrote them down, largest to smallest. We had several little annoying bills. Best Buy had a $400 balance, Nebraska Furniture Mart had $1000, and so on. Over the next 2 months, we got rid of all of those and cancelled all of the accounts.

We then proceeded to cancel our credit cards. The companies didn’t like to hear that we didn’t plan to get taken advantage of anymore. “You’ll need these for emergencies.” No thanks, we’ll use our own money for emergencies, thanks.

We started selling a lot of extra stuff: a mower, saxophone, bunk beds, etc. We netted several thousand on those things. All that money went straight to debt!

So that brings us to today. We are down to three debts: my car, home equity line of credit, and our mortgage. I can’t explain the feeling that I have that I am in control of my money. I really want you to feel the same way!

We are acting our wage.

We are living within our means.

If we can’t pay for it in cash, we don’t buy it.

We don’t by crap we don’t need.

We WILL be debt free.