get out of debt

Not too long ago I stated that I would no longer be living check to check come September. I guess it depends on how you define the month. Is it from the first pay check of the month? Is it from the first of the month?

I have decided that it should be from the first of the month. While, in my view, I have fallen short of this, I will make some preparations this week to make sure I can take full advantage of my pay check on Friday. I know some of this is going to be really hard, but if I don’t do it myself, it might just happen anyway.

1. I am not purchasing a monthly Metrocard until payday. I think I only need a $4-6 (2-3 rides) card to get through the week
2. I am limiting the amount of money I spend on meals at work to $50 per week, even if this means I have to skip a meal or two
3. I am going grocery shopping this weekend and I am going to try to get as much stuff as I can carry to work so that I am not spending $10-20 a night on food

I think I can make it. I am starting out the week with just over $100. After grocery shopping, I should have just enough for lunch at work this week. This is going to be interesting, I think… If I get in a bind, there is always my meager savings.

I am trying really hard not to dip into my savings. Right now, I am in the process of setting up a plan to pay myself back for not saving in June and July. I have to make adjustments to the amount I need to pay back to reflect 20% rounded up to the nearest $5 of my weekly pay.

In all, things are going pretty good. Making regular payments. I need to find out exactly how deep I am in though. I glanced at some of my older entries and I don’t think I am making the best financial choices I can be, otherwise, I wouldn’t be living check to check. I will make better choices in the future. I just need to come up with a better plan.

For some time anyway… About six or seven months. It didn’t happen all at once, but after I cut down my payments last year, I was doing good… I think! Then I lost my unemployment benefits too and then had to make calls to let them know there was no way I could make that month’s payment. This would be about December. I was immediately placed in collections.

I spent the next six months avoiding calls. Then things started to happen. I had a promising lead, so I started returning the calls to see where I was. One debt had approximately $3,500 added to it.

Long story, short… I set up payments for the next four to six months which I may need to adjust and reschedule for other expenses.

I am hoping to be out of debt by December 31 of 2009. I have to do some more figuring, budgeting and scheduling to get a more definite ballpark date. Still, I am on my way and I am happy to be back.

My repayment plans have stalled. I have been stuck for about a month. I spent the day calling my bill collectors. Due to my inability to pay, one more account slipped into collections. One account is in collections due to an error on Macy*s part. We are trying to resolve this now.

I am hoping I can make my long term goal of being debt free by December 31 of this year. Not the way I wanted to start of 2008, but all hope is not gone.

Well since I lost my job, I had to cut back on my savings and debt repayment. I am paying about half what I was paying when I was working. The job market is bad right now. There is a hiring freeze in my industry. I have, however, managed to pay off 63% of my debt since August of 2006.

It happened just about 2 weeks ago. With 2 debts and $11,900 to go. I can’t let this stop me. Sure I have other bills but I have come so far. I called the collection agency and bank to let them know I would be reducing my monthly payments until I found a new employment situation.

So Far This Month (cont’d)...

This month turned out better than expected. I paid off 3 bills. Feels great. I did make my “savings replenishment” goal for the month, sort of anyway. I am about $7 short of a grand. I have decided to reset my checking account every month. I will transfer all of the money to my savings for the day before the last check of the month. The purpose of this is to save for what I want faster, but it serves another purpose… The less cash I have on hand means the less cash I am spending. Since my savings is not directly linked to my checking it takes days to transfer and a few additional steps beyond just swiping my debit card.

I am also thinking about rounding my debt out. Flat multiples of 50 or 100 are easier to calculate.

Read first: So Far This Month.

OK, I realize now that, because of some unforeseen expenses, I may not make my savings replenishment goal. It’s cool, I will make it up over the next couple of months.

I am putting off all unnecessary expenses on hold, at least until next month. I am also clipping coupons, hey adds up to laundry money. LOL, I am so not the coupon / sale type. I will likely forget them when I am out shopping. Not finding many anyway, but $3 is a double loader. I don’t really intend to make a habit of this and I definitely will not be that person holding up the line while I look for my coupons or pinch my pennies, LOL.

I am actually looking to adopt some new, healthy habits.

I have made large payments towards my debt. I have used a good amount of my savings which is really my MacBook Pro fund. I would have paid off 3 bills entirely and more than half of one of the remaining 3. I wanted to bring it down to a point where I could tell exacly when I would have it paid off, which will be April of ‘07 or sooner. I wish I could do the same with the other two… well at my current pay rate I will have them paid off in 32 months.

As for my savings / MacBook Fund, I am thinking about a transformation there too. I need separate accounts for my goals. I am thinking about setting up an emergency fund, a travel fund, an X-mas savings account and an account for all the things I want. Any ideas?

More to come later…

This month I will pay off an extra bill (DFS). One more than the original 2 I espected and I am paying off more than half of one of my remaining bills. Which means that by tax time 2007 I should have just one outstanding debt remaining.

Since I have the opportunity to pay off DFS, I am dipping into my savings to do so. This hurts a little bit. I will, however, be able to replenish my savings pretty quickly, as the absense of DFS allows me to almost double my monthly savings.

I know my debt reduction strategy is not for everyone. I simply take a big axe and swing at the little trees first. They are in my way. When I am done with those I work on the larger ones. I can take smaller, better placed swings which will bring my trees down with less effort. Or I just paid off the smaller, easier ones first and redirect all or most of my funds towards the larger ones.

Not for nothing, I am that much closer to my goal. I am still trying to figure out if a “Debt Free Xmas 2007” if feasible. Might have to defer my debt freedom until Easter 2008.

Last month I made the decision I wasn’t going to rush and pay the bills off just because I had the money. I paid off all of my interest baring accounts immediately. Allowing interest to build would be counter productive. The other bills I let stand until the time of the month I usually pay them. It just didn’t make any sense to make additional trips to the payment centers or use additional stamps or plain just waste the time needed to do these things. So I put the money in my savings account where I could get a bit of interest while I waited to pay the bills. Now I have the funds set to cascade from my savings to my checking as my due dates come up.

And then there were 3!

(1) Estimated

Over the next month I will pay off a significant portion of my debt and kill 3 bills and reduce one by approximately half. I have put the results in an accountancy table for you to view.