This post was inspired by a final sentence over at You Need a Budget.  Jesse said,

“A guy gets bright-eyed with the prospect of spending $500 on a “modest” gas grill (the one that really caught my eye yesterday was over $900 though - yeah right!). Does the same guy get excited about throwing $500 toward unsecured debt? Or stashing $300 in his emergency fund?”

I think this point deserves some more development - it certainly caught my attention and made me sit up a bit.  Why is it that we’re so mesmerized by purchasing new items, but when it comes to paying for our old debts, we don’t get so excited?  Is the value more when we buy new items?  No.  $500 on a new grill or $500 toward old credit card debt is the same amount of money, and our market economy has decided that they are worth the same amount.

So why are we so excited about buying the latest new item at Best Buy or those perfect pants at the mall, but we’re not as intense about pay off of debt?  Why, psychologically does it feel better to purchase these new items than it does to pay off the same amount of debt?

I think the key to this point is that you don’t have the “just new” feeling when you pay off debt.  You don’t get to open up a package.  How do you stay intense about paying off debt when it seems to take forever to pay it off?  How do you reward yourself about your accomplishments in debt payoff when you’re not able to spend money on rewards?  You don’t receive anything from the debt payoff except for the satisfaction of knowing you’re going to come out ahead.

So how do you stay “intense” about paying off your debts without purchasing new, shiny items?

Photo credit: Tracy O

Good morning!  I have stated in my blog that we follow “groundhog day goals,” which means that I revisit my goals each month on the month-date matching (2/2, 3/3, 7/7, etc).  Here’s how I’m doing on the goals I’ve laid out for myself this year so far: 

1.  Pay off 42,000 of my mortgage.  I don’t have any other debt (beyond monthly utilities and food costs), so this is my only debt payoff.  A+.  I’ve paid off $33,268.40 already for this calendar year.  Only $8731.60 left for the year to reach this goal - and 5 payments to do it in!

2.  Contribute $4,000 to DH’s IRA.  A-.  Done back in June.  This goal is removed starting August.

3.  Pay for DH to return to school.  A+.  Grant is good to go.  This goal is removed starting August.

4.  Cut sugar out of my diet.  B.  I’ve been super-cognizant of health in my foods this month.  Results?  Expensive groceries, but I feel much better about my choices.

5.  Schedule more of my weekends.  C.  This is happening more, but not the 5-5 that I wanted.  I will work up to those 12 hours.

6.  Input new layout for my blog by July 15.  A.  New layout is done, working out glitches.

7.  Be on track to payoff the house by March 2009 instead of May.  C.  I’m not still sure I’ll make March right now, but that’s why we set goals!

8.  Find a decent living room set and get it to my house by the end of the year - under $500.  D.  I need to be more aggressive starting this month with Craigslist.

I want to take this opportunity to say that this goal-setting method has really worked for me.  I automatically do many of these things that would just rest in the back of my mind if I didn’t have this blog nagging me to complete my goals.

I challenge you to state your goals here in my comments section.  Next month (August 8th), I will challenge everyone that comments here to see how they’re doing with their goals.

Another new thing:  a new goal every month.  Right now, I’ve already completed a few of these items, so I can scrap them for some new goals.  Here’s my new goal for July:

9.  It’s more expensive, but purchase groceries that are more healthy and interesting.  Our bodies are more important than our money.  This month, I would have gotten a B on this, since I purchased 2 weeks’ worth of groceries in this manner.

Post your progress for the month below!

Photo Credit: scottwills

My goals have changed as the year has worn on, but here’s how they’re looking:

1.  Pay off 42,000 of my mortgage.  I don’t have any other debt (beyond monthly utilities and food costs), so this is my only debt payoff.  A+.  I actually only have a few more months to kill this $42k.

2.  Contribute $4,000 to DH’s IRA.  A-.  I did this by taking money out of the emergency fund, but I replaced it 1 June.  The emergency fund was depleted for one week.  Luckily, nothing happened.

3.  Pay for DH to return to school.  A+.  His grant is fully paying for his tuition and books.  Hallelujah!

4.  Cut sugar out of my diet.  D.  I should just scrap this goal.  Or maybe not….

5.  Schedule more of my weekends.  C.  This is happening more, but not the 5-5 that I wanted.  I will work up to those 12 hours.

6.  Input new layout for my blog by July 15.  C.  No new layout, but I’ve worked some new fixes to some problems that were bothering me.  I will do this soon… 

7.  Be on track to payoff the house by March 2009 instead of May.  B+.  I’m good to go for March right now, but I’d better not have another bad month like this one was.

8.  Find a decent living room set and get it to my house by the end of the year - under $500.  C+.  I found a couch that I only marginally liked.  I’ve got to keep my ear to the ground!

Now, my goals are a little harder!  What are your mid-year goals or resolutions?  Have you been keeping up with your 2008 goals?

It’s halfway through May now, so I’d better start planning on what my goals are for the rest of the year.  I’ve been doing pretty well on my New Year’s Resolutions, so I know I need to come up with more or better goals.

1.  The only current goal I am not meeting is my cutting sugar out of my diet goal, so I will keep this goal.  Mother’s Day is over, so no more treats!  Or I will find fruits and other “treats” that don’t involve processed sugar.

2.  Schedule more of my weekends.  I would like to have my weekends a little more solid, instead of whatever pops up.  This way, I won’t waste them away on my computer surfing the Internet.  I will have the time from 5:30 am to 5 pm scheduled and the evenings will be waste-able!

3.  Input new layout for my blog by July 15.  My current setup is not professional and it could use a lot more “white space”.  This would only require a few hours’ work to transfer everything over.

4.  Be on track to payoff the house by March instead of May.  I might currently already be set up to do this, but I’m not really sure right now.  This was a stretch goal, but it’s becoming a reality.  Now, to just stretch it even farther!

5.  Find a decent living room set and get it to my house by the end of the year - under $500.  I would like to have some decent living room furniture, but I don’t want to pay an arm and a leg for it.  I also want to surprise DH, so I will have to borrow a truck and some help!

That should be enough.  Here are my original goals, that I am pretty much killing:

1.  Pay off 42,000 of my mortgage.  I don’t have any other debt (beyond monthly utilities and food costs), so this is my only debt payoff.  

2.  Contribute $4,000 to DH’s IRA.  

3.  Pay for DH to return to school.

4.  Cut sugar out of my diet.  

What are your mid-year goals for 1 June?  How are your old New Year’s Resolutions coming along?  Can you refresh them if you’ve given up?

Well, yesterday was 5/5 or Groundhog Day Goal-Readjustment day.  The carnival took precedence, so here are what my resolutions were for the year and my personal grades for them:

1.  Pay off 42,000 of my mortgage.  I don’t have any other debt (beyond monthly utilities and food costs), so this is my only debt payoff.  A+.  All told, I’ve already paid 21175.50, and the year is not half over yet.  I’m getting my bonus on the first, too, and I bet you know where that’s going!

2.  Contribute $4,000 to DH’s IRA.  A+.  This is simple and automatic.

3.  Pay for DH to return to school.  A+.  The grant is processed and DH starts his first grant-funded semester in 3 weeks.  Now, to pay for the babysitter is another headache!

4.  Cut sugar out of my diet.  I’m sure you PF readers don’t really care about this one, but I put it down anyway! B-.  I’m getting better at this one.  I’m planning on meeting up with some old high school friends next month, so I’m getting a little more motivated!

I’d say I’m doing pretty well for the year!  Now it’s time to start thinking about some June 1st goals, since I’m killing these and the year is not even halfway over yet.

How are you doing on your New Year’s Resolutions?  Do you even remember what they were?

I totally spaced my goals for the month.  Here are the annual goals and my grades:

1.Pay off 42,000 of my mortgage.  I don’t have any other debt (beyond monthly utilities and food costs), so this is my only debt payoff.  A+.  I’ve paid 13348.50 so far for the year and don’t expect to slow down anytime soon.

2.  Contribute $4,000 to DH’s IRA.  A+.  This is automatic, so I can’t fail.

3.  Pay for DH to return to school.  A+.  We just got approved for a two-year, $3k annual grant, which will help immensely.  He has to take more classes than he does now, but that will help him finish more quickly, too, so we can start making money.

4.  Cut sugar out of my diet.  I’m sure you PF readers don’t really care about this one, but I put it down anyway!  C.  This month was better than the last two, but I still need to throw things out of my pantry.  Agh - wasting food.  But for my own good!

How are your New Year’s Resolutions doing?  Have you kept up with them?

I have been ill this week, so I didn’t get groceries yesterday.  My awesome boss at work told me to go home at noon yesterday because I was coughing and hacking so badly.  Usually, I consolidate all my grocery shopping to Friday nights, but I wasn’t about to go shopping at noon when I was released from work to get better.  I came straight home (forgetting to even pick up my prescription for more Robitussin) and went to sleep.  I feel a little better this morning.

So I wasted at least $5 in gas by not consolidating my trips this week.  I have to drive into town to go to work usually, so I just don’t do that when I get groceries (I go straight from work on Friday night, since I’m already in town).

I challenge you to find someplace that you wasted money this week and resolve to do it better next week.

In math, we have an order of operations (inside parens first, multiplication comes before addition, etc.).  There is also an order of operations in personal finance.  Each person has to decide what to do first for him- or herself, but there is definitely a preferred order:

1.  Get minimum payments made.  Scrimp and save until you can cover all your obligations.  When you have extra:

2.  Get your $1000 emergency fund.  You should still be covering all your obligations.  Use this emergency fund only in the case of emergencies.  Once you are covering your obligations and have a $1000 emergency fund in place, you should:

3.  Pay down the smallest or highest-interest credit card.  Pay them off one by one.  Different people like to pay off credit cards in different orders, but the point is to do it.  Once you have all your obligations covered, you have a $1000 emergency fund, and you’ve paid off all your credit cards, you should:

4.  Get a good-sized emergency fund.  This should cover 3-6 months of living expenses, depending upon how income-diverse and/or risk-taking you are.  Once you have all your credit cards paid off and a good-sized emergency fund, you should:

5.  Pay off all other consumer debt.  This includes car loans, student loans, etc.  Student loans should come last because of the benefits they have (low interest rate, etc).  Once you’ve done all this, the only bill you have left every month are your utilities and your food/consumer goods you need each month.  Once you’ve paid off all your consumer debt and have a good emergency fund and still have extra money left over each month, you should:

6.  Invest in your 401(k) up until the employer match.  Employer matches are free money.  Do it.  Once you’ve done this and you still have extra left over, you should:

7.  Invest in an IRA.   Choose Roth or Traditional according to your income expectations for retirement (if you expect a huge income in retirement, you don’t want to be taxed in retirement by taking out a traditional IRA, or vice-versa - if you expect no income in retirement, a traditional being taxed is not going to be a huge chunk.  If you will have extra income in retirement, you should get a Roth.  If you will not have any additional income in retirement, you should get a traditional).  If, after all this, you still have money left over, you should do one of many things:

a.  Save for your children’s college

b.  Save up cash to purchase your next vehicle

c.  Invest more money in mutual funds

d.  Pay off your house

That is the traditional order to do things in (a., b., c., and d. are in good order as well).  Did I miss anything?

My particular order of operations is off.  We’re paying off our house before topping off retirement funds.  It’s a bad deal, but it’s what DH wants.  The house will be paid off in 12 or 13 payments, so hopefully I can catch up (by paying the full limits on both IRAs and 401(k)s after house payoff).

What order of operations are you following?  Does it mirror this one?  Which step are you on?

The tax refund ($3,658) is supposed to be direct deposited tomorrow.  There will be a huge sigh of relief over here when that happens.  March is not a month I want to relive anytime soon.

But was it really that bad?  One man’s horrible is another man’s normal, maybe.  April’s house payment will be around $5k, so it isn’t that bad.  I just feel really disgusted because we actually had fun and spent money last month.  I wonder if I have a problem…  I just keep thinking that this month’s house payment could have been around $6k.  Yep, I probably have a problem with expectations….if I don’t make them, I pretty much hammer myself.

What do you do when you don’t meet your financial goals?  Do you just let it be or do you tell yourself it will be all the more better next time?

You and I both know I can’t reward myself by buying myself something.  I think I need to take another break, but by myself.  I have a ton of vacation time…now, just finding the time to take it.

I have a secret:  I didn’t graduate college!  I won’t graduate for another year!  I make good money without a college degree and I’ve made the most of my assets after paying off my debt. 

My true stoppage to spending/debt increase was about a year after I quit college and started my current job (I’ve been in my current job about 8 years).  I stopped spending and started saving.  Now I probably have a lot more net worth than most college-grads (about $250k - I’ll put up my NetWorthIQ one of these days).

Here’s how I did it:

1.  Get a secure job.  I can’t really think of many jobs with the same sacrifice/benefit ratio that I have, but there are many other stable jobs out there that pay well without having a college degree:  construction, factory work, etc.

2.  Learn from your mistakes.  I learned that I didn’t want to waste that money on partying or “running up and down the road” as my dad called it (I had a boyfriend back at home).  It took about three years for me to pay off my college loans for one year of partying and being stupid.  I got some classes out of it, too.

3.  You don’t have to go to college - or a 4-year college, for that matter.  My best experiences were after I quit college.  I got an awesome job and started attending my local community college.  I’ve been plugging away at it ever since, but I make decent money now without a college degree.  The degree is just for my next career - after “retirement”.  My parents had it stuck in their heads that state college was the only choice.

4.  Stay in your job as long as possible.  The real money is in your sticking power.  It seems like no one stays in one job for their whole life anymore.

5.  Become the “What Else?” Guy.  One of my boyfriends worked for my dad during my senior year of high school.  He would complete tasks quickly, then come to my dad and say, “Now, what else?” instead of waiting for my dad to tell him.  That stuck with me and has always helped me.   Try being proactive instead of reactive.

Try these tasks and you might be surprised.  If you’re already a college grad, you might even go further!