Beating Broke

Personal Finance from the Broke Perspective

Are You Tracking Your Debt?

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I think we can all agree that most debt is bad.  Some of us might even agree that all debt is bad.  Nearly all of us will also agree that nearly all of us have debt.  It’s not a comfortable thing to have usually, and, since you’re reading this, I can only assume that you’re dedicated to paying it off like I am.

Like the debt conquistadors before us, we’ve learned that knowing your debt is key to besting your debt.  You can’t win a race without knowing where it starts and where it ends.  But, somehow, you’ve also got to be able to track yourself along the way.  You’ve got to track your debt, and track your progress in paying it off.

Many of my indebted blogging friends have gone so far as to track their debt on their blog.  Many of them have even gone so far as to create a nice progress bar that we can easily see how far they’ve made it.  I don’t do that.  Not because I’m embarrassed by the debt, or the progress we’ve made, but because I decided years ago that I wanted to keep it private.  You don’t need to know how much debt I have any more than I need to know how much you have.  We aren’t in a race against each other, and I surely don’t want anyone feeling badly about how much debt I have and trying to catch up. 😉

debt line graphNo matter how you go about it, keeping track of your progress as you pay off your debt is important.  If you’ve been reading Beating Broke for long, you’ve probably gathered that I’m a fan of budgets. I think they’re a useful tool to help people like me keep track of what they spend and where they spend it.  Budgets have helped me get control of my finances and move them in the right direction.  So, it’s only natural that I use my budgeting software (YNAB) to keep track of how much I owe and where.

There are tools all over the place to help you track your debt.  One of the sponsors of the Debt Movement, Ready for Zero, is a great tool to not only help you keep track of what you owe, but to also help you plan how you’ll pay it off.  Tools like Mint also do a really good job of giving you an online tool to track your debt (and other accounts).  I don’t use any of them.  Mostly because I haven’t come across one that actually connects to all of my accounts.  My local accounts at a credit union that is small enough to not be fully integrated (I guess) with the services that those sites and apps use to update accounts.

If you want to go really frugal, a simple spreadsheet can do the trick.  Just list out all of your accounts, how much you owe on them and then update it as you make payments.  Want to make it fancier?  Track them monthly, then make a colorful line graph of your progress.

It doesn’t matter what tool you use.  The point is that you track your debt.  Know where you started with your debt, and then track your progress as you make your payments and pay it down.  Even if you aren’t paying off accounts every month, it helps with motivation to keep going.

How do you track your debt?

img credit:blamevaraia on Flickr

Need Money Quick? Have a Flash Savings Challenge

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The last few months have not been kind to my family.  As Dave Ramsey says, “Murphy came to visit.”  Within the last few months, I have had several medical tests run, my computer broke so I had to buy a new one, my husband’s pay was docked $750 for two months in a row because his employer didn’t take out enough taxes, and my husband had to pay $1,700 out of pocket for a conference for work and we are waiting for reimbursement.

IOU Piggy BankBecause we were trying to pay off as much as possible as quickly as possible on our debt, we had very little in emergency savings (only about $1,000).  All of our unexpected expenses cost much more than that, so we not only used most of our emergency fund, we also added to our credit card debt.

Because we had paid down our credit card debt for 10 straight months, having to add to it for the last two months was difficult.  Even though we didn’t come close to erasing all of our progress from the last year of gazelle intensity, we definitely knew we were moving in the wrong direction.

Righting Our Situation:  A Flash Savings Challenge

My natural urge, now that everything has settled down, was to once again try to throw as much on debt as possible.  While it might have made me feel better in the short term, I realize that the next time Murphy comes to visit (and I know he’ll be back some time), we would end up in the same situation.

Instead, my husband and I decided to focus on growing our emergency fund, and quickly, before hitting the debt hard again.

Paying the minimum on our debt for the next few months so we can grow our emergency fund is almost as difficult as watching our credit card balance increase the last two months, but we both know a healthy emergency fund is necessary.  Since I am self-employed and bring in 1/3 to 1/2 of our income and work can sometimes be sporadic, we decided not to follow Dave Ramsey’s advice of a $1,000 emergency fund (because clearly that was not enough last time); instead we are aiming for $5,000.

To get started, we challenged ourselves to have $3,000 in our emergency fund by December 9th.  We started with $611 in the emergency fund, so that meant we had to come up with $2,389 in 4 weeks.

How We Are Earning $2,389 Extra in 4 Weeks

We are only one week into the challenge, but here is what we have earned so far:

  • Sold my 8 year old breast pump: $60 (Yes, it has been sitting in the basement for 7 years.  Why didn’t I sell sooner?!)
  • Sold 2 window guards to protect kids from falling:  $40
  • Listed my kids outgrown clothes on eBay:  $124 so far, but the auctions won’t end for 2 more days, so I imagine it will be more
  • 3 unexpected jobs I got as a freelancer:  $64.67
  • Turned in our change in a jar:  $62.67
  • Returned unopened vitamins I didn’t need:  $32
  • Redeemed 10,000 Swagbucks for PayPal cash:  $100

Our total so far, one week in is $483.34

Over the next few weeks, we intend to do more things to raise the additional money:

  • Put my husband’s reimbursement check in savings
  • Cash out reward points from our credit card and use them as a credit card payment.  Put the same amount in our savings since we won’t have to pay that money on the credit card
  • Put more stuff on Craigslist and eBay (We have kids’ clothes, toys, and equipment to list as well as some of my husband’s tools he hasn’t used for years.)

Why  a Flash Savings Challenge Is Working for Us

I have known that I have a lot of stuff to sell around the house, but I just never got to it.  Now, because we have set a short goal of just 4 weeks and also an ambitious goal of over $2,300 to raise, I am motivated.  Yes, listing all of this stuff is time consuming, but it is nice to get some money in the emergency fund to make us feel more secure, and I also like getting rid of our “stuff”.

If you have extra stuff around the house, especially toys and holiday clothes, now is the perfect time to sell it and make some cash.

Have you had a flash savings challenge like this?  What were your results?

img credit:Images_of_Money, on Flickr

Is Free Money the Best Money?

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How many of you would turn down free money?  If someone just walked up to you in the middle of the street and offered you some money?  How about if the Publishers Clearinghouse van pulled up in front of your house, and they presented you with a big ol’ check with your name on it for $5000 a week for life!?  Would you turn it down and walk away?

Not many would.  Heck, I don’t know if anyone would actually say no.  I know I probably wouldn’t.  And, if I had to guess, I’d say you wouldn’t either.  The fact of the matter is that we all like stuff for free.  Free money is great (although rare), but we hunt down free products, free trips, and anything else that someone might be giving away for free.  Some of us spend entirely too much time hunting down free.  But, is free money (or items) really the best money?

What we obtain too cheap, we esteem to lightly; it is dearness only that gives everything it’s value.

-Thomas Paine

Paine was on to something, I think.  After all, how many stories have you heard about lottery winners spending all their millions only to end up on the docket at the local bankruptcy court?  The truth, should we really think about it, is that we do assess a portion (at least) of a things value based on how much effort it took to get it.  For you and I, a nice sandwich at the corner deli might not be something of great value simply because it can be easily attained.  An hour or so of work, and a short walk down the road and there you have it.  Those starving kids in Ethiopia that our mothers were always telling us about, on the other hand, would likely value that sandwich a little higher.  It’s not every day that they have the opportunity to eat bread or meat.  They may have to work for days in order to actually afford something like that.  If they can find work.

Don’t get so carried away in your search for free money that you forget the true value of the thing.  A dollar bill still has the same value no matter the method of getting.  Or, maybe spend some time assessing the value that you have for things, and making adjustments.  Maybe it’s not the thing you want, so much as the feeling it gives.  Freedom doesn’t have a price.  Freedom is free, but you have to be unchained from your debts and you desk in order to attain it.  It’s the long battle to unchain ourselves that gives freedom it’s value, even if it’s price is free.