Next on the list

It's hard to believe that November is almost over!  I've now been on the debt-reduction mission for a little over a month and I've created a game plan, examined some of my bad habits, and paid paid down a little bit of debt.     I am hopeful that I can pick up steam through the end of 2011 and into the new year!

The next thing on my financial to-do list is to reduce my monthly expenses.  Over the next couple weeks I’m going to pick through every aspect of my monthly expenses for ways to reduce the amount I’m spending and therefore increase the amount I have left over for debt reduction.  I already looked into how much I am spending on non-essential small items like soda and eating out and can cut out at least $115 a month from non-essentials spending.  I’m hoping that I can cut at least that much from the amount I spend on essentials!

Here’s my checklist of the essential items that I'll hopefully be able to reduce:

Living expenses: food, toiletries, gas, parking

Pet supplies

Electric and Gas

Cell phone

Car insurance

Getting the cold is expensive

I’m the kind of person that refuses to admit I am sick and am notorious for blaming symptoms of illness on anything other than actual sickness.  Obviously since I can’t even admit I am sick in the first place, I don’t get treatment until I get to the point that I’m completely miserable and making everyone around me miserable as well (once I admit defeat I turn into a pathetic mess of whimpering, needy helplessness).  I got to that point last week. 

I spent at least a full week blaming my cough, headache, and fatigue on the weather, the time change, the volume of the tv, the brightness of the sun, and pretty much anything else I encountered with the exception of the bug that had taken down at least three of my coworkers.  But early last week, the congestion set in and I ran out of excuses.  So with my white flag raised and my head feeling like it was about to pop I hit the cold and flu aisle at the drugstore and got the medicine a coworker recommended.  The first meds didn’t work as well as I hoped and the congestion got worse so back to the store for something different. 

After another day of increasing pressure and another box of tissues I went back to the store for the heaviest thing they have: Mucinex D Extra Strength.  It was ridiculously expensive for an over the counter cold med but so worth it.  Not only did I start feeling better quickly but I apparently really enjoyed the buzz as well, telling S that I felt fuzzy like our cat and laughing hysterically at every joke in a movie we watched.  After taking it for two nights and spending all of Saturday in a Mucinex induced haze I woke on Sunday feeling better than I had in weeks. 

All in all, I think I took four trips to the drugstore and spent at least $50 on meds, tissues, cough drops, and orange juice.  I can’t imagine how much this simple cold would have cost me if I had gone to the doctor and gotten a prescription med as well!  

The little things add up

The last time I wrote, I set out a plan complete with goals and a to-do list for accomplishing my goals.  One of the items on the to-do list was to give up or reduce non-essential things I regularly spend money on.  Deep down I knew I was spending a small fortune dollar by dollar on things like my beloved Mountain Dew addiction, “forgetting” to make a breakfast or lunch and being “forced” to eat out, going out for a drink after work, etc.  It’s so easy to ignore how much these little things add up when I’m only spending a couple bucks at a time but since I am determined to kick these habits, I took a few minutes and calculated how much money the little, non-essential things are costing me.

Here’s what I came up with as an estimate of my spending each week:

$12 for Mountain Dew, as much as I resist the urge I still usually end up getting one 20 oz bottle a day

$5 for a forgotten breakfast

$10 for a forgotten lunch

$25 for drinks or dinner out

$1 for a snack at work

That equals $53 a week or $230 a month or $2,756 a year!  And that’s just for the stuff I regularly waste my money on, I don’t even want to know what the annual total would be if I add in all the bigger non-essential stuff I buy each year!  I’m sure I could do a more accurate estimate by looking through my debit card statement but considering I am giving the bulk of the non-essentials up, a ball park figure will do. 

It’s pretty unrealistic to think I’ll be able to give up ALL non-essentials but even if I reduce the spending by 50% that still equals an extra $115 each month I can use to pay off my debt.  Next time I get the urge to reach for the Dew or rush out the door for work without food in hand I’ll remind myself that an extra $2,756 would be better spent on something I truly want… to be debt free!

Setting a game plan

Although I haven’t been diligently writing about my efforts this week, I have been working hard on figuring out how to tackle my debt.  I would really love to be debt free in five years but that seems like a pretty high bar to set since it equates to paying off over $1000 a month in debt!  I figure if I shoot for that and don’t succeed I will still end up in a better than I am today.  I always find it easier to take on a big challenge if I set clear goals and objectives so that’s what I’ve been working on this past week:

Goal One: By the end of 2012 pay off all credit card debt (~$14,000) and maintain a $1000 emergency fund so I don’t have to reach for the cards every time something goes wrong.

Goal Two: Pay off the car (should be around $8500 left of the loan by then) and increase savings to $2000 by end of 2013.

Goal Three: By the end of 2016 pay off my student loan (should be around 35k left at beginning of 2014) and become debt free for the first time in my adult life!!

I’ve come up with a financial to-do list to increase the amount of money I can use to pay down debt each month:

1.       Thoroughly examine my monthly budget for any reductions which includes the grocery budget, pet care, utilities, cell phone, etc.

2.       Give up (or at least substantially reduce) some of the non-essential things that I regularly waste money on which will include my Mountain Dew addiction, eating out, beer *sob, and anything else I uncover along the way!  I have a feeling once I really calculate the cost per month that I spend on non-essential stuff it’ll be easier to say no to these things but I know myself well enough to know that this is going to be the hardest change to stick with!

3.       Spend less on the things that I do need like clothes, shoes, haircuts, car maintenance, etc.  I’m sure if I work at it I can be a lot thriftier than I am now.

4.       Sell any junk I have lying around… I don’t know if this will really make an impact on my debt but it will definitely reduce some of the clutter around the house!

5.       Make more money!  The most preferable would be to do a really great job at work, impress my new boss, and get a ridiculously huge raise but obviously I can’t count on that so I’ll be looking into part time work and side jobs that can add a little to the pot each month. 

It’s strange but for the first time in years I’m feeling kind of empowered when it comes to my finances.  Even though I’m way down in a debt hole, I feel better having finally acknowledged it and setting a game plan for getting back out of debt.  I know I’ve got a loooong way to go and some seriously bad habits to overcome but for now I’m going to let myself feel good about taking the first tiny step towards becoming debt free!