While brooding over my psychological battle with debt, 20/20 hindsight has taught me that staying focused on my personal budget is the real challenge. In 2006 and 2007, I was able to pay down my credit card debt by $16,000 in 12 months. However, for the last four months I’ve only been paying the minimum payments. I have a toy sized $7,000 remaining between Discover Card and Citibank. So why have I stopped making budgets and pinching pennies when the end is so near? Because I lost my focus.
How do you eat an elephant?
You’ve probably heard before that you eat an elephant one bite at a time. It takes determination and focus. Conquering debt is exactly the same way. It’s impossible for us to pay all of our debt off in one magical all encompassing payment (well most of us anyway). So you pay little by little, month after month. Over the course of those months, weeks, and days, the more you lose focus – the longer the ordeal will drag on.
This is why staying focused is so very important. Kristin Armstrong describes the challenges of bicycle racing as follows: “I knew that 24 minutes would be tough to beat. I had to stay focused and most of all suffer! The winds were swirling and the roads were winding making it a bit tough to stay focused. My mind would drift and I would have to refocus time after time.”
Achieving debt free status is really tough because it takes time to beat it down. Along the path it’s easy to become ‘mind numb’ to the whole process and take a mental vacation – I guess that’s what I’ve been doing. My income dropped due to a new contract we had taken on at work, they capped the number of hours we could work at 40. Because of this I was no longer able to pay the $1,400 per month I had become accustomed to. Shortly I was back to making minimum payments on those pesky credit card debts.
Where did I go wrong?
When my income dropped I used my $1,000 emergency fund to pay that $1,4000 one last time on my credit cards. That was the first mistake, I should have kept the emergency fund and reevaluated my spending. Secondly, realizing that times had become tight again, I should have committed myself to creating a new budget with set goals. Each month, by carefully controlling my spending, I should still have been able to make above minimum payments on my credit card debt. This would have kept me focused. But instead I chose the vacation – and four months have passed now without lowering my principal balances.
How to stay focused daily
Try and create a living atmosphere that promotes frugal living and insures that you stay focused on lowering your debt.
1) Go to google and type in “credit card debt” or “U.S. consumer debt” or whichever statement accurately describes your financial problems – maybe it’s “subprime housing market.” Click on the search button and a list of websites about that subject will arrive. Now, at the top of the google page click on “News”. This will bring up the latest news articles on the particular subject that you typed into the search engine. In the address bar of your web browser, copy the url (address), and paste it into the home page of your web browser. Now everyday when you log onto the internet the first thing you see are news articles describing debt.
2) Make an effort to surround yourself with people who have better habits than you. It has been said that people who are poor have poor friends and people who are rich have rich friends. Now I’m not suggesting that you drop your best friend because he or she can’t manage money – but make a genuine effort to establish relationships with people whom already have the lifestyle that you want to aspire to. This is simply one more subtle hint that will regularly influence your mind to help you stay focused on our goals.
3) Print out little notes that have certain daily or monthly goals. Stick these notes in places where you will be forced to look at them everyday. For example, I might print out “NO MORE THAN $5 ON LUNCH” and tape the note just above my rearview mirror where my eyes will naturally glance across it. Another great place to put notes is on the mirror in the bathroom – in the morning while brushing your teeth you’re staring at “ONLY $7,000 MORE TO GO!!!”
4) Use microsoft money or another software program that forces you to input receipts in order to balance and reconcile your checking account. Every couple of days I sit down and open Microsoft Money. I check my banking online to see if I have had any deposits – if so I put them in. Every time I buy something using my debit card I keep the receipt and put the amount into Microsoft Money. This forces me to take a peak at my finances every couple of days. This software produces a report of how much I’ve spent in each category so far within the month – it’s a useful tool.
Be creative. Think about your own life and what strategies you can take to keep savings on the forefront of your thoughts.
Create a monthly budget
Get back to the basics and create a monthly budget with weekly and daily goals. Be realistic about your income. Every weekend sit down and reevaluate your budget. Did you make more or less income than you expected? Did you spend more or less in each category than you expected? By reevaluating the budget each weekend, you may find additional monies that can be put towards debt or savings.
If you are married have a planned time each week to sit down and look at the budget. After all you should be working towards the same goals. This time also forces the two of you to communicate about money, helping each other stay focused on your goals as a family.
Envelopes or no envelopes
My biggest problem seems to be my daily spending habits. Sometimes when I’m on the road I might ‘treat myself’ to a more expensive meal than I should be having. But since I’m not focused on my budget I mentally sweep it under the rug knowing that these actions are prolonging my suffering. Perhaps its time for the envelopes again – in my case probably so. Using envelopes to budget your daily spending is sort of like being on the nicotine patch. “Hey are you still on the patch?” sounds a lot like “Hey are you still using those stupid envelopes to control your spending?” But the process works.
For two months I put certain amounts of cash into envelopes labeled according to their spending category. For example, I had an envelope labeled “Lunch” and inside was just enough cash to cover my lunch expense for the week. This method works surprisingly well and gave me a daily feeling of satisfaction knowing that I was doing all I could to stay within budget. This is what I call extreme focus. You can’t get much more focused on spending that rationing it out in paper envelopes.
So I’m off to embrace a monthly budget, print off some little notes, and break out the envelopes. I hope this article provided you with some helpful tips for saving money. Good luck and stay focused!
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