Category Archives: credit cards

Our five FREE steps to financial Freedom

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I’ve been trying to make the best of the permanent layoff that came my way in early December. I started a business, I’m also writing and blogging. Without commute time I find myself with a lot of free time. I’m definitely enjoying the flexible lifestyle.

One of the things I’ve decided to tackle is households’ financial situation. This was especially critical now in the face of my less-than-reliable income and a new business startup. As an “under-30” family of four, we have some debt. A couple of college educations, a mortgage, two adoptions that zapped our finances but filled our hearts. We were not in financial peril, but we sure could have been uncomfortable if we had not been paying attention when the layoff hit.

The surprise in this project was how we were able to cut our household expenditures by one-third without really trying (or even noticing, for that matter).

Armed with this new information (and cash as a result!), we rushed forth and started getting out of debt. Using only free resources from the Web and strict budgeting, we’ve paid off two of three credit cards, one adoption loan and all of the college loan. Woot! Not bad for three months, huh?

Recognizing that not everyone was so lucky as I to be laid off, I thought I’d share some time-saving and free tips to financial freedom. No scams, no catches, no hidden spam-engine. And you don’t have to download my free e-book. I don’t even have one.

Have fun, save money, spend less, retire early, and get out of debt. It’s working for us. Unless you email me, you’ll never even hear from me again. (Unless we’re friends or family of course). For the sake of easy reading, I’m breaking this into several posts. Follow the hyperlinks for a free and easy journey to financial freedom.

But please do me one favor. If you like this list, please pass it on.

Now, my family’s first five free steps to financial freedom.
1. Expense tracking
2. Budgeting/Cost cutting
3. Saving
4. Alternative Investements
5. Paying down debt (fast!)

Step 1 of 5: Expense Tracking

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Ok, I know, nobody likes to do it, and you really can’t do anything about your expenses until you know what they are. How did I finally conquer this dragon? I signed up for Mint.com. It’s a free, online banking aggregator (i.e. dashboard) for your money. It downloaded 90 days worth of transactions on all of my bank accounts and put them in one place. Egads! $115.85 spent in 90 days on my cat? Are you kidding me? You can see my earlier post about Mint here and how it works, but I’m telling you, this may have saved this family’s bacon! While we consider ourselves to be fairly frugal people, what we learned is that we simply aren’t extravagant… but we’re definitely aren’t frugal. At least we weren’t. Mint doesn’t keep your personal info, it is just shown to you through their site, so don’t fret, they won’t Twitter your Visa balance.

Bottom line: The thing I love about Mint.com is that I didn’t have to track my expenses for a month and loose four weeks of time. It took a retrospective look at what we’ve spent in the past few months and categorized it, saving time and allowing me to start slashing our expenses while I had the gumption. Result? A viable household budget on our new income in hours, not weeks.

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Part 5 of 5: Paying Down Debt.

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I put the cards through the shredder. Every one of them. I’m hanging onto the chips for an art project. Mobile, mosaic, jewelry, I’m not sure yet, but the inspiration will come. Just do it. If you have to have one for emergencies, put it in a Ziploc bag full of water in the freezer. You won’t be able to thaw it quickly or the card will be damaged. Get out all of your statements and use a debt calculator to figure out how to get out. We were paying highest interest accounts first for a long time, but not seeing a big difference. Recently we switched to the snowball effect and WOW is that satisfying. We outright paid off some smaller loans in full (with cash, not credit) and that feels good. Now we have that extra $100 or $200 a month to payoff some bigger balances. We’re also getting aggressive about using any idle money we can, right down to change buckets, and checking the sofa cushions. Found $33 this way last month! Is your mortgage interest rate high? You might want to shop around—rates are way down. Take a look at Smarthippo.com. I’m thinking about doing this but haven’t taken the plunge yet as we think we may sell our condo for something bigger.

The bottom line: to creditors any paying is good paying right now. Try to get them to drop your interest rates, and pay as much as you can every single month. I sit down to write the check every month and challenge myself to pay 10% more than I had planned. Every rebate check or babysitting dollar you get, throw it at those debts. I’ll bet the credit card companies hate me. Every time I deposit anything “extra” to my bank account, I write a check back to the credit card company for the same amount. They get a half dozen checks in the mail every month.

You’ll be surprised at how fast it goes down, especially if you have your net worth on Mint. If you check your Mint.com page every day, your fingers are on the pulse of your finances and you feel compelled to tackle those debts. I sure have and it’s working great for us. We’ve turned around our finances so much that we’ve moved our expected debt free date up by more than 18 months.

Good luck—and please, let me know how it works for you!

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Snowflake!

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I truly hate the “a little here, a little there” approach to paying off debt. Sure, I know it works, but I hate doing it, it’s a pain. I’ll do it anyway now becuase I know it’s the right thing to do.

Also, this week is midwinter break for our oldest daughter, and I thought this would be a good opportunity to instill some financial virtues in her. This morning we put on some loud music and sorted out the “penny bucket” which had about four pounds of coins of various nations. We sorted all the US money into coin rolls and such, and then dropped it off at the bank, $33. Not too shabby.

I’ll “snowflake” this to the last credit card. I’m ambitious now. I’ve seriously caught myself looking around the house to decide what I could sell to unload that one LAST debt and be free of my plastic chains.

Last week our oldest daughter came home and sat down on the sofa by where I was writing and said “Mom–today I learned about interest. Did you know there are good kinds of interest and bad kinds of interest?”

Wow. Those kinds of teaching opportunities don’t come along every day do they? It was the same time that the tax refund came and I was just about to pay off two credit cards entirely.

I sat her down and opened our Mint.com dashboard. I showed her our “good” interest, such as my Lending Club investments, which are earning about 11%). I also showed her our “bad” interest, and how we were going to pay off two of our three credit cards and put them through the shredder.

I encouraged her to save for her future. Tomorrow we’re opening “Smarty Pig” savings accounts together. Come back soon to see how that went.

Two months later, almost plastic free

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A few months ago I posted about how I got my credit card interest rates lowered.
A combination of cutting back household expenses, attacking our interest rates and using balance transfers judiciously has put us ahead in a big way.

Flash back to December, I was laid off from my job on December 6th, and started my business on December 7th. I didn’t get my first assignment until January 2, and have been paid for only most of my assignments so far because the invoices haven’t hit the due date yet.

Fast forward–Today, I shreded all the credit cards in my wallet except my debit card and the emergency credit card that we have (for tow-trucks, etc.)

I bought a lazer printer for my new business (CASH!) and an industrial-strength paper shredder (also cash!).

I initiated the shredder with a pile of credit cards (more came in today’s mail just for this occasion!). I’m saving the scraps wtih plans to make a celebratory art project or mobile or something. I’m not usually the artsy-fartsy type, but being debt free is going to be inspiring, I can tell.

We’ve slashed our debt since December (even with starting a new business and short one reliable income) by $16,000!!!

Still on schedule to be debt free by the end of March. Ya Hoo!!