Sunday, March 09, 2008

The Start of Frugal

It's been two weeks since I literally froze my credit card in ice (really, it's in the freezer now) and decided to start reducing my debt. A few days previous to making this decision I read an article in Good Housekeeping about a message board on MSN Money called WIRR or Women In Red Racers which is a subgroup of the larger Women in Red board. Women and men post whatever debt they chose to "race" and then post updates on their progress. Each person is racing against their own debt, not against other members. After reading the article, I went to the board and started reading. At first it was a little intimidating. It seemed like a close knit group and initially there seemed to be a lot of rules regarding how to post. However after I kept reading, I noticed that the group seemed very welcoming of all of the newbies and were very helpful regarding how to post properly to keep the update process as easy as possible. After my first update, meaning after my payment to my credit cards go through, I will be included in the $25K - $35K group and my race will begin. I'm really looking forward to being included on the list. Isn't that odd? I want to be included on a list of people who have at least $25K in debt. I think it's because it will symbolize the start of my debt reduction even though I've really already started.

One of the first steps I took was to attempt to create a budget. I had read Dave Ramsey's "Financial Peace" so I decided to start with his budget example and go from there. Without going into too much boring detail, after playing around with a budget I realized I needed to do a few things to make my life easier and to increase my chances of success;
  • Change utility bills to budget billing.
  • Change another bill to an automatic payment to avoid late fees.
  • Cancel my landline.
  • Cancel an email account I've been meaning to get rid of for at least a year.

I also gave myself the goal of not using my credit card for one billing period. If I can make it until about March 22, it will be the first time in as long as I can remember that I haven't used my credit card. I looked back through my statements which go back until 2006 (I've had this card since the 90's) and the minimum amount I've charged in a month was $200.

The first thing I did was to freeze my credit card in ice. Next, I moved a couple of regular monthly charges from my credit card to my checking account and added them to my budget.

I've also been trying to reduce my spending. The past two weeks I've taken my lunch to work. This might be a first for me. I've also used the bus to get to my personal training session twice a week. I've joined another Women In Red board that has each member set a goal for a number of days they will try to go without spending or "$0 spending" days. Each member decides for themselves what they consider $0 spending. Some literally won't spend any money at all for a day, others, such as myself only include money spent outside of their budget. I'm really focusing on reducing the number of mindless, useless purchases I normally make such as M&M's at work or Starbuck's iced tea. I also really need to reduce my magazine purchases. I'm a complete addict. It's the glossy pages that are so colorful and enticing, I can't resist. Last year I tried to reduce the money spent on magazines by subscribing to them, since subscription prices are cheaper than newsstand prices, but it's still out of control. Anyway I found the $0 spend board on March 4, since then I have had 4 $0 spend days. My goal is 15 $0 spend days for March.

As far as sticking to my budget, I'm doing pretty well. I'm trying to use cash for stuff such as groceries and gas. I'm actually trying to come in under budget because I have some bills coming up in April that I'm worried about covering. One is to renew my domain name and the other is to renew my subscription to a genealogy website. Previously I would have whipped out the credit card and not given it a second thought. Instead, I think I will probably cancel the genealogy subscription and hopefully I can figure out something for the domain name.

All in all over the past two weeks, I've decided that living within my means sucks and I don't recommend it to anyone. With that said, I plan on sticking to it. $26K in credit card debt is outrageous and I need to make it go away. 100 lbs took 2 years, I know this will take a lot longer, but in the end it will be worth it (I really, really hope!)

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