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Creating a Budget and a Spending Diet

So, the down and dirty plan. I've read a lot of financial blogs and success stories regarding debt repayment. Like most things, there aren't very many secrets and quick fixes. It's about setting a plan, and sticking to it. This journal will hopefully force me into sticking to it.

Dave Ramsey is mentioned quite frequently in debt repayment circles. I'll be utilizing his suggestion of having a $1000 emergency fund to start, and I'll be utilizing the debt snowball method for the quick successes and the motivation that comes with that.

Like everyone, I have basic expenses:
  • Mortgage
  • Utilities (water/sewer, heating oil, WiFi)
  • Mine and L's cell phone (more on this later)
  • Gas
  • Family groceries
  • Car Insurance and registrations (once a year)
If you read my last entry, you'll know I have established a three phase plan in order to break my goals down into digestible pieces.

Phase one expenses will be credit cards. I'll filter all extra funds into these starting today, and if I can stay aggressive, I hope to have them gone by the end of 2018.  

Phase two bills will get minimum payments until the credit cards are gone, and then will be paid off by the end of 2019 (again, aggressive). These are student loans, car loan (yes I have a note on that high performance machine...), and a personal loan.

That would get rid of the "ugly debt".

Phase three is the mortgage (cherry on the sundae). 

I have created an excel spreadsheet that will track expenses, all account balances good and bad, and my "net worth" (shockingly in the positive, not overbuying on the house helped).

I will be investing a small amount along the way, mainly to take advantage of my employers match to these accounts (I hope everyone is trying to do this as well). A 401k and a health savings account (if you've seen me smile, you know the large expense of braces are in my near future for S and H). 

To execute the plan ASAP, I'll be on a spending diet. It's not a complete spending "fast", I do want some wiggle room for recreation/family activities and have a line item for this. Each Friday I'll share progress towards each phase's goals (% achieved) and have a confessional for all spending outside of budget.

I've done a lot of work to whittle the monthly expenses down as much as I can and that the family will graciously allow (admittedly though, I do enjoy having WiFi and streaming reruns of Seinfeld and Rules of Engagement after a long day). 

About that cell phone plan...just this week I made some adjustments to my Verizon account to make sure that it was as low as it could be. I cut our data plan in half, and I attacked what has been one of my spending problems over the years. A small love affair with technology (I now consider us separated, a real heart breaker on Valentine's Day). In November of last year, I financed a Galaxy Note8 through Verizon's payment plan. This week, I purchased a used Galaxy S6 and sold the Note8 through eBay, which allowed me to pay off my Note8 balance to Verizon. Cutting data and getting rid of my phone payment lowered my monthly bill by $50. I'll soon pay off the S6, which was wonderfully cheap. This move saved me $500 in the long run, as well as freeing up monthly money to throw at debt.

Leave a comment - do you track your spending? Have you tried an online service like Mint? 

Comments

  1. AnonymousFebruary 15, 2018 at 5:11 AM

    Great job on the phone exchange!

    I would say I loosely track our spending using the tools on the Bangor Savings Bank web page, that doesn't mean I do anything about changing our habits though. I look at it and realize what we spend at DD and the Bucks monthly/yearly but that doesn't mean I've acted on that information...

    ReplyDelete
    Replies
    1. Derek HFebruary 15, 2018 at 5:20 AM

      That's a great start. I've been tracking for about 8 months prior to this, and I have the exact same spending vice - coffee (caffeine in general, actually).

      Changing habits is tough. The subject of today's and tomorrow's post. Thanks for following and commenting.

      Delete

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