If I’m going to change my relationship with money, I need to change my habits with it. In my last post, Taking the Shame out of the Debt Game, I announced to the world that I’m all in with a plan to pay off all of me debt in two years. All $40,321.33 of it.
I am not going into this as a two year journey of beating myself up for ever taking out loans or using credit. Making myself feel like shit for the next two years about my life long money habits would make it miserable. Instead I want to share the experience. What I’m doing, what I’m learning, what hurdles I’m running into.
In the few days since my last post I have been bowled over by the comments, the messages, and the honesty in which people have been opening up about their debt – it’s been really beautiful! One friend that I already talk to very regularly about finances even told me her debt number. (Debt number = the dollar amount to the penny that you owe.) She had never told anyone in her life her debt number before, and it felt liberating to her!
Knowing that debt number makes it REAL. It gives your debt a face. And in my situation, it’s a $40,321.33 face.
With this journey comes new habits.
As I mentioned, my first new habit it so share my experiences with this publicly. I’m taking the shame out of this process and hopefully will inspire other people to do the same.
Secondly, I got on a budget. I knew I needed to use a budgeting tool that was as easy as possible to use, and ideally pretty to look at. In the end, I chose Every Dollar to use. With this tool the idea is that every single dollar has a home. You create all the different buckets for bills, savings, pet care, … and every dollar is accounted for. I have it synced to my bank accounts to easily log transactions, and I have it set up to send me notifications twice a week to remind me to log them.
At first the idea of a budget honestly scared me. I thought I would feel like my money and my ambitious goal would have me in a choke hold… but it’s been quite the opposite. It’s liberating to know exactly where each dollar belongs, and to know that I have enough to live my life and make progress towards my goal!
Third, I’m building an emergency find of $1,000 before I aggressively pay down debt. I now know that this missing piece has really screwed up my finances multiple times in the past. Outside of saving for vacation I’ve never been one to save a bunch of money for a rainy day – I always thought it was better to put any extra money towards debt. But now I see that running my cash flow thin to make an extra payment or two seemed to always happen before something went wrong. I pay down an extra $400 to Citi Bank to find out two days later that my dog has cancer and needs a bunch of tests. I pay down $300 extra to Chase and then my car window gets smashed out. You get the idea.
Building this emergency fund of $1,000 will allow me to throw all my extra dollars towards debt, and will give me a safety net for those unexpected emergencies.
Fourth, I am tracking my credit use on the calendar. I have three colors – red for if I use credit that day, green for if I didn’t, and yellow for when I go an entire calendar week not using credit. The green squiggly lines around the border of a day show that I paid something to zero. Even though I have other people helping hold me accountable to this, I need a daily thing I can actually see to help me keep momentum.
I was so excited to add the yellow lines to my previous week on the calendar!
All these new habits are a conscious choice right now – none of them are automatic. Therefore, a lot of my mental bandwidth is going towards this goal of mine. This goal is an investment in myself, and in what I want my future to look like. Before this I couldn’t wrap my head around what a life without debt payments would look like, and now I daydream about it every day. That makes it seem real for me. And I need it to seem real if I’m going to get this done.
Thanks to all of you that have reached out to me with your own stories of your struggles and victories with personal finance! Keep ’em coming, and let’s make it less taboo to talk about this. It will make us all better with our finances in the process!