Debt Free - Like Really

I have been really serious about becoming debt free....  For like the last 20 years.  

Made you laugh.  Right?

But seriously.   Now that I have a daughter I so have to get my act together.   I lose sleep thinking that  she may have to go without as she grows up.    I remember how my Mom "struggled" make ends meet.  I would like Missy Miu to see me "budget" to make ends meet.

In order to become debt free I have to have a plan. So I have decided on the following  route.

1. SNOWBALLING - From most to least expensive interest rate I am listing my consumer debt with the amount of months left.  Here's an example...  err...  Not mine:

1.  Furniture Store       32   %       6000     84
2.  Dept.  Store Card   28.8%       600        22
3.  Dept.  Store Card   28.8%     1100        48
4.  Car Loan                   9   %    25000     600
5.  Family                        0  %      2800         0

This list allows one to list their most expensive debt (using the interest rate).  Pay the minimum payment required on bills 2, 3 etc.  On the first bill you throw more than the minimum amount.  Every time you move down the list you snowball.   The payment used to pay off the most expensive debt will be applied to the next most expensive debt on the list.

2.  Start Now  Procrastination is not helping to pay down my debt.   How is it working for you?

3.  Make a Budget and get it to balance.

4.  Trim Down Where can you cut spending.   Does it mean bringing your lunch 3 days of the week instead of buying for 5 days?  Maybe that's an extra $65  month.   Take the $65 and apply it to the first loan on the top of the list.

5.  Make A Payment No need to wait for the due date.   If money is owing...  It's always owing.   Each time you apply a payment, you reduce the interest added on.

6.  Empty The Pockets
Got change in your pocket? Under the couch  cushions? I collect loose coin in a jar and stash it way in the back of my closet.   Every couple of months I count up the money and apply it to debt.  You'll be surprised to see how much money this can add up to.

Next week we will discuss making a budget.   In the meantime I ask that with me you create your snowball list and make a payment.

Until next week Financial Mamas!

Introducing The Financial Mama Series

Before going on maternity leave we made some attempts to save for the income we would soon be missing. We definitely could have done a better job. We had to live very tight during my time from work... Sometimes uncomfortably so.

I am back to work now and have many "what could have been done differently" thoughts. I want to be financially secure, provide for our daughter, go on a vacation once a year.... And oh yeah.... Retirement is not to far away.

On Mondays we will be posting the "Financial Mama Series". I will share with you what I'm doing to get my financial house in order. I would love for you to follow... Maybe we can all do this together. I would love to hear about what you are doing in terms of money in your household. Any tips or suggestions? Please share.

So before I enter 2014, let me introduce you to my first challenge:

Can you track how you normally spend your money?  In some aspects this may be a piece of cake for me.   I have a spreadsheet that states unequivocally where my money goes in terms of my fixed expenses.

Fixed Expenses: The bills that are paid out at the same time and are a fixed amount.   ie: rent,  car payment, daycare

I also have listed my variable expenses.

Variable Expenses: Money that is spent on  any particular day and at any total.  ie:  groceries, vehicle gas,  hair appointments

I do an OK job at tracking my variable expenses. I have a cute pink notebook (and it is cute) in my bag.  Flip through and you will see a section of vehicle gas.  My budget is $240 per month.   Whenever I fill up I subtract what I spent and am aware of how much money I have left.  Same for my $75 clothing budget and $400 grocery budget.

I get in trouble with the variable category I call "Miscellaneous".  Why am I calling this miscellaneous anyway?  This is the money that goes to STUFF.  Could be coffee...  a movie...  a blouse....  Wait! !

I HAVE A CLOTHING BUDGET!!

See what I mean? You will probably find that you have a hard time finding out what happened within your variable category.

Like me, you may think this first task is a difficult one.  (why am I envisioning Jack Nicholson yelling that I can't handle the truth?)  This task is just to give you a visual heads up about where your money is going.  Easy peasy.

It is usually advised that you look over 6 months of expenses.  I am using two as I have been collecting a full paycheque during this time.