I’ve confessed before to loving charts and graphs and anything color coded.  It’s probably the only fun part about getting out of debt, aside from the awesome feeling of making progress, of course.  At one point, my plans were quite elaborate and there were several documents to color code, but now that I’m down to one card, things are pretty simple.

This is my schedule for paying off the Capital One Visa.  I used this format with the other cards and it’s worked well for me.  This particular chart, because it’s the oldest, has been readjusted somewhere in the neighborhood of 20 times, I would guess.  Sounds tedious, but I enjoy it.

I’ve recently adjusted it to account for the raise, which means that it’s once again a stretch goal (meaning I have to do everything right to make it), but I usually come within $100 of my goal every month.  I’m currently still on track to be out of debt by the end of the year, but there is quite a bit of padding there, because my birthday and, of course, Christmas fall at the end of the year and my parents usually give me money for those occasions.  I’d rather get out on earned money alone and put that gift money toward my emergency fund, but anyway I can be out of debt by the end of year is legitimate in my eyes.

It’s sure to change several times before I get to the end.  (And, if you’re thinking I’m just really bad at subtraction, keep in mind that I roughly account for interest.) But, this should give you an idea of how I track my payment goals.

Related posts:

1. Update On The 2010 Resolution
2. After Christmas Wrap Up and The Most Awesome News Ever

I imagine this list is something I will have to continue adding to as I go, but at the halfway point of this journey, here is what I’ve learned about money.  You might notice an almost complete lack of numbers and facts.  That’s because most of what I’ve learned about money has to do with what I think about money and my relationship to it.  Most of these are obvious and I should say that I might have even been able to write a lot of this list before I got serious about my debt, but I have since learned them not just on a conceptual level but on a practical, felt level, if that makes sense.  They’re real and tangible to me now and not just good ideas for when I grow up.

• You have to take care of it for yourself. I’ve always been very independent and responsible in most regards, but when it came to my debt, I was for so long expecting that something or someone would come along and make it all okay.  I finally had to take responsibility for my debt and realize that I could get myself out.  No one was going to do that for me.  And no one is going to keep me motivated and accountable on this journey.  The responsibility is with me.

• Available credit is not the same as available cash. This journey has not convinced me that credit cards are the devil, but it has convinced me that they aren’t my best friend.  For a long long time, I treated my available credit as if it was money in my pocket to spend.  I also treated it as an adequate safety net–there for emergencies.  Why get by on less or hold off on buying that shiny thing when you can painlessly swipe a card and pay for it later?  If I’d ever calculated the interest on those purchases, maybe I would have felt differently.

• Money is an issue, so stop pretending it isn’t. I was so hesitant for so long to even bring money into regular conversation.  Like, “I’m sorry, I’d like to do that but I don’t have the money right now.”  Or, “hey, I’m struggling with money and I could use your support as I deal with it.”  Money is an issue for almost everyone, so it has a place in conversation and it isn’t tacky to be upfront about your financial limits.

• It’s not shallow to be concerned with money. I study the humanities, right?  No one is in this business for the money, because there isn’t any.  But, we all still have to eat and go to the doctor and, most importantly, buy books!  There’s this whole lifestyle that it can be easy to fall into.  It’s one that involves a great deal of time for studying.  In order to support myself, though, I have to work a lot.  So, sometimes that means I don’t study enough and miss lectures and can’t meet with groups at any time of the day.  I value my financial stability over my pure love of philosophy.  That’s okay. The only way I can keep up this lifestyle is by taking care of things now.

• You can value money without letting it become your primary motivation in life. It’s strange, really, because even though I used to spend a lot more money that I do now, I would say that I care about money more than I did then.  I see what money can do for me.  It can help me live the way I want to live.  I think a lot about how much money I’m making and how much I can save.  But, I don’t think money is corrupting my values or determining every choice I make.  It’s actually opening doors for me, because things that seemed impossible now seem within reach. I’m no longer counting on getting by on hope and good karma.  I’ve got the numbers worked out and I know how to get there.

• It’s possible. This was the biggest surprise to me.  I’d come to think of supporting myself and living a comfortable lifestyle as impossible.  But, it isn’t.  It does take hard and consistent work.  I can’t take off to study abroad at any opportunity or show up to work only when I feel like it (like some of my classmates), but I can do it without killing myself.

• There’s no such thing as sitting on your debt. For a year, I was in a place where I could make my minimum payments with no problem and still have spending money left over.  So, that’s what I did.  When I think now of the hundreds–hundreds–of dollars in interest I paid every month, I realize that my debt was growing all that time and I was throwing money away.

• Savings Can Allow You To Take Risks. When the bottom fell out of the economy and it seemed that even well-established people were on this sinking boat, I felt like no matter what you did, you would always be vulnerable to these kinds of situations.  That is true to a degree, but if you build up a solid foundation and have a safety net to catch you, you can not only weather these storms, but you can also afford to take risks and live more adventurously.    When my debt was growing, I was living recklessly.  I think adventurously is a better option.

After writing this whole post, I realized how similar it was to my post about the Strategies I Use.  Sorry for the repetition, but I think these things are really important!

No related posts.

I’m not one for giving tips, but I have developed a method for getting out of debt, most of it exceedingly obvious and borrowed from other people.  Some of it designed to combat the mind tricks I use to sabotage myself.  A lot of it unconscious.

1. The Snow Ball Method. This is taken right from Dave Ramsey, of course.  What can I say, but that it works.  I wrote out all of my debts, and started knocking them off, smallest to biggest.  Paying off the small stuff first leads to early victories (I had my first a little over a month into this journey) and encourages you to keep going. And then when you get to the big debts, you can put a lot of money toward them, because you’re not also making minimum payments on other debts.  It’s not the most strategic in terms of the bottom line, because you’re not concerned with what has the highest interest rate, but it is ultimately the smartest thing, because it’s not about getting the best start–it’s about getting to the finish line (incidentally, though, my snow ball did line up with interest rates, so I still paid off the highest first).

2.  Go All Out. This is also part of the Dave Ramsey method, but it works for me, because this is my general approach to goals.  As I’ve said, I’m not good at moderation.  I just end up getting nowhere.  Instead, I’ve made getting out of debt my way of life.  I don’t buy things and I work a million hours.  Not buying things gets a lot easier as time goes on and I’ve gotten a lot better at it.  The work, because I can’t afford the financial loss of giving up my full time job or the loss of opportunity giving up my part time job, is what I would be doing anyway, but having a goal in mind makes it so worthwhile.  Going all out means that I can see the end and it gets a lot closer every month.

3. Don’t Think of What You’re Missing, Because You’re Not Missing Anything. I’ve never been good at window shopping, so it’s best for me to just completely avoid temptation.  It’s really easy to fall into the mind trap of if I’m not spending, then I’m not living.  Spending money is fun, so it seems to follow that not spending money is no fun.  If you think too much about the pretty, shiny things passing you by and the money you’re not spending on that perfect hair cut and the fancy drinks you’re not having out with friends, then it does feel like you’re depriving yourself, but it’s surprising how many of those things you don’t miss and how much cheaper it is to drink at home (still with friends).  I’m going to enjoy nice things when I can afford them, but in the meantime, I don’t pine for nail polish colors I don’t know exist or makeup I haven’t seen in person.  It’s like a sugar addiction where the longer you’re away, the easy it is to stay away and the less you feel like you’re missing out.  If something is truly worth it, I’ll make an exception, but most of it is not worth it.

4. Keep Very Little Money in Checking. This is a personal trick I use to make myself feel poor and to make sticking to my budget a challenging game.  When I go to the grocery store with $200 in my checking account, I’m less concerned with sticking to the $50 budget.  When I go with $60 in my checking account, there are (kind of) real consequences to over spending.  I have overdraft protection, so I won’t be charged fees, but that would dip into my savings and I regard my savings as sacred.  I seem to get more out of my money this way and I feel like I have a better sense of where it’s going.

5. Count Additional Debt Payments as Bills. Dave Ramsey says to budget every dollar.  What this means for me is that I plan out every month how much I will have left after bills and food, and then whatever is left I make into a new bill for my debt.  So, if know I’ll have $700 extra, then I make a bill in my mind for $700 due to my credit card company, even though the minimum payment is only $200.  Once I have this goal in mind, I’m really determined to stick to it.  If I didn’t plan this way, I’d think, $600 toward my debt sounds pretty good, but if I know it could be $700, then I will do what I need to to make goal.

6. Don’t Use Credit Cards. I know this couldn’t be more obvious, but when you’ve had a bad relationship with credit cards, it’s hard to break the habit right away.  And when you have really ambitious goals, it’s hard not to spend on one card just so you can make your goal paying off another.  I didn’t do well with this from the start.  Christmas presents and my books for this semester were all put on credit cards even though I had the cash to pay for them.  I did it because I wanted to put that cash toward paying off other cards.  I knew I was doing nothing to reduce my total debt, but somehow it still seemed like a good idea.  It was when I realized how different it felt to buy on credit than with cash or debit that I knew it wasn’t going to work.  Credit has never felt like real money to me, so I’ve always been a little stupider in spending it.  A lot of people go to using only cash when they’re getting out of debt.  I knew right away that that wasn’t going to work for me, but using my debit card exclusively does.  That way, it’s real money I’m spending and I can easily track what I’m spending it on by using something like mint.com.

7. Indulge Your Organizational Desires. I love plans and charts.  They’re fun to me, especially when color coded.  It’s really easy to spend so much time making plans that you never actually do anything toward your goal, but since I am making progress, I’ve given myself license to waste as much time as I want planning out my money and making pretty tables.  Sure, the overall plan hasn’t really changed from the beginning, but I have the entire debt journey tracked out.  What I’ll pay every pay day and how much it will reduce the balance.  Sometimes I don’t get as many hours in as I planned or an unexpected expense comes up, and since I’ve budgeted so tightly, it’s time to reassess.  That means new plans and charts!  It may be silly to some people, but going over all the calculations and designing pretty charts makes me happy and keeps me motivated.  It’s a free thrill and that’s exactly what you need when you can’t reward yourself with things that cost money.

8. Talk About It. I travel in circles where money only comes up in sarcastic comments about never having any, usually said while throwing down a credit card for drinks.  But, I’m learning that money really isn’t a taboo subject.  People are surprisingly open to talking about it if you just bring it up, in real life and in the blogosphere.  Throughout a year and a half of blogging, I never said anything substantial about money.  The very first day I did, I heard back from a huge number of people who have been reading me most of that time, and it turns out that we all think about money–we all have to think about money.  My debt is no longer my dark little secret, so I can talk about what I’m doing and I can get support from people who want me to succeed.

9. Do It The Hard Way. Getting out of debt is just like losing weight where it’s obvious how to do it, but people still look for tricks and magic pills.  Now, I’m not saying you should be stupid about this, but most anything that isn’t common sense is going to work as well in the long run as diet pills.  You can transfer balances and consolidate and borrow money from people, but so often those things just let you prolong your bad habits.  They remove the urgency and sometimes even your own responsibility.  It’s the same logic as the debt snow ball.  If you’re just looking at the numbers, then of course you’d pay high interest debts first, but if the real goal is to be debt free, then you have to think about the psychology too.   It was such a powerful experience to accept my debts as they stood, knowing that I got myself there and I was going to get myself out by working hard and living within my means.  I’m setting myself up to really be debt free and I’m building lifetime habits, because when you do the work with no tricks, you have all the more reason never to put yourself in that situation again.

10. Accept the Challenge. I don’t know quite how to explain this other than to say that getting out of debt can be surprsingly fun.  For so long, money was a dread-filled subject for me.  I would feel the dread in my stomach every time I thought about my debt, so I took to not thinking about it.  But, it should come as no surprise to anyone that succeeding at something is exciting and succeeding at getting out of debt, once you get serious about it, really isn’t that hard.  Your hard work is worth it the moment you see your credit card balances going down.

No related posts.

I spend a lot of time thinking about when I’m finally out of credit card debt.  It’s a thrilling idea to me and I just love thinking about what I’ll do and how I’ll feel.  I have a clear plan in mind even though I’m at least nine months away from putting it into action.

But, there is something that bothers me a bit.  Even though other people might not describe me this way, because I’m reasonable and level headed, what I know about myself is that I’m no good at moderation.  I tend to think in terms of all or nothing, especially as it relates to goals.  If I’m having cake, I’m not going to eat two bites.  If I’m trying to get fit, I’m not just  taking the stairs instead of the elevator.  If I like a band’s music, I’m listening to nothing else for weeks and months.

It’s obvious even in my approach to debt reduction.  Thanks to this blog, I know a lot of people getting themselves out of debt.  They’re taking an extra shift here or there, cutting out pedicures, eating at home more often, and putting an extra hundred dollars or so toward their debt every month.  Meanwhile, I’m in overdrive.  I tried the reasonable approach more than once and each time I slid quickly into apathy.  I can’t do it.

The question in my mind is how will I transition from the crazy pace I’m at now to a moderate approach to money?  I will have known both extremes and it will be time to find the middle way.  I think I’ll be lost at first (I often feel that way, because I put so much energy into each goal that I don’t know what to do with myself when it’s done), but I’ll find my feet.

What I’m really trying to avoid is setting myself up to resort back to old habits.  I don’t worry about myself going back into debt, but I do worry about falling into those old traps of mindless spending that never brought the satisfaction I expected. I have a lot more thinking to do about what my future relationship to stuff will be.  I’m becoming accustomed to going without it and though I will certainly loosen the purse strings, I hope to keep that general attitude, looking for fun and excitement in other things–the kind that actually deliver.

No related posts.

I mentioned a couple weeks ago that my bank was offering a deal to temporarily reduce my APR.  After reading all the fine print three times through, I made a plan to save up as much money as possible before March 5th when the offer expired.  I had to wait until the last moment to make the call and accept the offer, because I got paid again today.

I called this afternoon–actually, they called me today–to accept the offer and made a payment of $1000, which in addition to the payments of $500 and $300 I made earlier this month, reduced my balance to $5325.  The deal was that you could get your APR reduced depending on how much of your total balance you could pay off with a one time payment (the earlier payments ended up counting too).  My payment was large enough to get me a reduced APR of just 6% for the next 6 months (at which time it will return to what it was before: 19.24%).

This will save me $50-$100 a month in interest.  That’s huge and it gives me even more motivation to keep paying down the card. I should be able to pay off the entire balance within the 6 month period.

The progress meter in the side bar of this blog is finally showing some, you know, progress. This Visa is my longest standing credit card; it was my first ever.  Much of the balance on it is old, so seeing it get so low is really cool.

Related posts:

1. A Bank Deal

When I was younger, I don’t remember ever thinking much about how people spend their money.  In the years when my mom was single, money was obviously an issue for us, but she worked hard and did everything she had to do to make sure we had what we needed.  As they got older and more financially stable, I remember noticing that my parents lived like poor people even though they made more than all of my friends’ parents.

Later, I grew judgmental of people spending irresponsibly.  I remember when I was working at Bed, Bath, and Beyond as a freshman in college and a coworker told me she had $7 in her banking account.  That was inconceivable to me.  I had thousands of dollars in my banking account and I was still nervous about money.  As a student, I was sometimes resentful that I had to work so much more than the other students I knew, but working was an important part of my identity and I wouldn’t have quit if given the option.

When I got to grad school and quickly started accumulating debt, I became much more aware of how the people around me spend money.  Mostly, I was just very confused about how my fellow grad students supported themselves.  It’s still a mystery to me.  I mean, some of them don’t work at all.¹

As a person in debt, I for a long time believed I was all alone.  Then, I began to suspect everyone was secretly in debt.  Now that I’m a person getting myself out of debt, I sometimes watch people who seem to be good with their money, realizing they all have the same conservative habits, but more often I am focused on my own efforts.  I spent too long worrying about what other people were doing with their money, assuming that if they were doing okay, if they weren’t worrying about money, then I should do the same.  This journey has been about personal responsibility for me and it’s changed my focus on money inward.

1. I’m talking about the grad students in my program where few get tuition completely covered and no one gets a stipend.

Related posts:

1. Self-Delusion #1: I Work Hard, So I Deserve to Spend Money
2. How Do You Decide What to Spend Money On?
3. Found Money

There’s this book out by the author of The Millionaire Next Door called Stop Acting Rich.  I have not read either book, though my understanding of author Thomas Stanley’s philosophy is that millionaires live frugally and that’s how they grow and maintain their wealth.  This reminds me of the only millionaire I’ve ever known–an old boss of mine.  He drove a Honda only a few years newer than mine, wore a watch he must have purchased at a drug store, and worked all the time.  He matched the profile of most self-made millionaires.

My goal in life is not to become a millionaire, but deciding to get out of debt changed the way I look at my financial future, and living well below my means even when I don’t have to certainly appeals to me as a lifestyle if it means a secure financial future.

But, really, I need to take a step back.  Even just the title Stop Acting Rich is something I needed to hear a couple years ago.  Compared to others, maybe I never did live like I was rich.  I’ve never purchased a new car or even a pair of jeans that cost more than $100.  In hiding my debt, though, especially from myself, I made several bad money decisions, pretending that money was not a problem for me.  Just little things even.  Buying makeup and nail polish, because oh the pretty colors and I have to have it.  Replacing an iPod way before it should have given up on me, because taking it in to be fixed seemed like too much trouble and that shiny new Classic was just irresistible.  Agreeing to additional medical tests, though I didn’t think they were necessary.  Buying a new laptop, because I’d wanted it for so long and, hey, I work hard and maybe it will help me write that novel (really stupid; but, I did finish my first novel on it).  Buying an iPhone, because I just landed a new job and maybe I haven’t started working yet, but I will soon be bringing in my biggest pay checks ever  (Apple gets me in a lot of trouble apparently).  Agreeing to plans I wasn’t that interested in and knew would be too expensive, because I didn’t want to be the one to say something.

I have been so hesitant to make money an issue ever, which is silly because being frugal is nothing to be ashamed of, money is an issue for most of the people I interact with regularly, and I cannot afford not to think about money.

It’s weird being a grad student, because you have no money and usually you’re regularly collecting debt.  But, you’re not poor, because poor people don’t have enough money to pay rent and buy food and go to the doctor, and I’ve never gone hungry.  There’s more to the equation than cash in hand; there’s also available resources–like financially stable parents, available credit, and money earning potential.

It’s deceptive, though, because it made it possible for me to live for a long time in the mindset of someone with money.  At the time I decided to get out of debt, I had nearly exhausted all of my resources.  I had almost no available credit while already working full time.  Few options left but to go to my parents, which was a thought so terrifying to me that I would exhaust every other option first.

I worried that going public with my debt on the internet and with a few close friends would make me feel uncomfortable–like I was being watched and judged for my money-spending habits.  Instead it has been such a relief to bring money into the conversation–to stop pretending like it’s not a concern for me.  It doesn’t mean I never spend anything, never go out for drinks, or judge other people for their spending habits.  It just means I’ve stopped living like I’m rich.

No related posts.

For the last week, I’ve been having this debate in my head about whether or not to create a want list.  A want list would be a list of things I want to buy when I get out of debt.  It seemed like a good idea at first.  That way, instead of obsessing over something and debating whether or not to make a budget exception and buy it, I can say no for now and put it on a list for later so that it’s out of my mind.

The down side is that I worry this perpetuates the same thinking about material objects that contributed to my debt in the first place.  Maybe the better thing to do would be to stop focusing so much on the things.  Rather than think about the things I want, I can focus on the things I want to do.  The other problem is that what started out as a very selective list suddenly ends up a mile long and includes things even like a new car.  Do I really want to get out of debt only to buy a bunch of stuff I don’t need?  Is that the point of all this work?

There are other upsides, of course.  I can’t so easily put the things in my want list all into the Useless Junk category.  Some of the things I want will help me do the things I want to do.  Some will help me see the things I want to see.  Some are fun.  And others are necessities that I need to live well.  And maybe adding things to a list of stuff I won’t purchase for more than a year is just something I can do to make myself feel better right now, but when the time actually comes when I can afford those things, I’ll no longer want them.

It’s still a debate for me.  I think I can make a list without becoming further obsessed with things and doing so will allow me to stop thinking, obsessing about things.   Because when you write stuff down, you no longer have to think about it, worrying you won’t remember.  It’s just that I like so much to cross things off of lists, so this could be a problem for me.

Related posts:

1. Revisiting the Want List

To me, there is a stigma to the words “I’m busy” or at least to saying them out loud to other people.  I wrote about it on my personal blog once.  Even now that I know I am really busy, I can’t quite get over the stigma.  But, I’ll ignore that feeling for now, because I am busy.  Crazy busy.  No time for anything busy (except blogging, of course, because I can do that from work).

There’s no reason to complain about being busy when it comes to debt reduction, though.  It’s all upside.  First, I am mostly busy working.  Working jobs that pay me. And they pay pretty decently–I mean, not career well, but better-than-most-of-the-grad-students-I-know-get-paid well.

What I learned in the first two weeks of January, when I was only working one job, was that I am less expensive when I’m busy.  I don’t eat as much and I don’t care as much about what I eat.  I also don’t go anywhere, except for school and work, which are all within a half-mile of each other.

I definitely don’t shop, because there’s no time and it’s the last thing I want to do with my little time off.   I don’t usually shop even when I’m not crazy busy, because I’ve sworn it off while I try to get out of debt.  But, being busy removes all the temptation and opportunity, so that I don’t even think about it.

Okay, so maybe there are some risks to being so busy.  Aside from burnout, there’s the danger of being too tired to care or be strict with myself.  There’s also the occasional problem of not having time to buy proper groceries, which leaves me eating out.  A combination of the two is what sometimes gets me.  It’s not that there’s no food in my apartment; it’s just that it’s not anything I want to eat and after working so hard, I feel like I deserve better.  Fortunately for me, I consider better to be fast food and I’ve been making a more focused effort to keep myself better fed this semester, so it doesn’t come to that.

To name the last and probably biggest upside, a goal like getting out of debt gives me a great deal of motivation that keeps my attitude up when I’m busier than is comfortable and tired and dying to go home.

No related posts.

I was driving home from the grocery store several days ago, going through the numbers in my head to figure out if I could still make my January goal.  I do this all the time and I get very stressed about whether I can make my goal or not.  The goals are not easy; they don’t leave any room for error.

This one time, though, I guess because the answer was that I couldn’t make my goal, it occurred to me how silly it is to stress myself out about a goal I made for myself and that no one else even knows about (the specific number, I mean) and that is a serious stretch (so I am likely to fail and even if I do, I still will have put a lot of money toward my debt).

I’m not usually good at following rules I’ve set for myself, but I just really want to be out of debt and the thought of getting complacent in this makes me very anxious.

The thing about spending money is that you can’t go cold turkey.  I still have to eat and I need a roof over my head!  Sometimes it’s hard for me to draw the line between being reasonable and giving myself too much slack.  There are many ways to approach getting out of debt and I took a page out of Dave Ramsey’s book and am doing it with gazelle-like intensity.

This is the way I want to do it, but I can’t say that the stress isn’t really stress.  It is stress, but the adrenaline-fueled kind and not the dread-filled kind.  One way I stress myself out is by keeping very little in my checking account at a time (it’s over draft protected with my savings account, which has $300 in it).  Often I’m trying to get through a week on $50, which I can do since I don’t have to get gas regularly and aside from bills, groceries are my only big expense.  It’s a game to see if I can do it.

I think the whole thing occurred to be suddenly as silly because I was in this mindset that I am poor and this is all the money I have in the world right now. That’s ridiculous in a sense, because I’m actually bringing in quite a bit of money–enough to put hundreds of dollars toward my debt every month.  But, it’s completely true in another sense, because, of course, I am in debt!  I have available credit, but not money that isn’t owed to someone else.

I can see myself starting to think of money differently.  Most importantly, I’m breaking the habit of looking at available credit as available funds.  And the challenge is fun.

No related posts.