Thursday, January 27, 2011

financial freedom

...This is another dream of mine. For one, it's not healthy to stress over finances. More importantly, it limits what God has called us to be able to do, namely serve others, and is not how He intended us to live.

I've been working on this for several years, and each year have made a little progress. With school and car loans paid off, that leaves the other giant known as credit card debt. Who knew these would be just as hard or harder than the larger balance loans?? Still, I feel hopeful and determined that I can tackle it this year.

There are plenty of valuable articles and resources available online to help with the process. I like using mint.com for creating a monthly budget and sticking with it. Before setting a budget, I found it was helpful to take a retrospective review and comb through six months of expenditures, categorize all spending, and figure out where the money was actually going. At this time last year, I discovered that the majority was going to car repairs, vet bills, and food...not to mention the random trips to Target and Walmart that were uncategorizable (if this is such a word)! I had to better plan for those occassions so that they wouldn't end up a part of the never-shrinking credit card monster. To help with food cost, I decided to eat out less, set a monthy grocery and dining budget, utilize coupons every now and then (though I have not gone as far as studying the fine art of couponing), and online shop for pantry items. Alice.com offers free shipping on all orders, combines offers with coupon deals, and will even send reminders of when you might be low on an item.

When moving last year, I was able to sell quite a lot of unwanted furniture, electronics, and media on craigslist.org, at McKay's, and Ms. B's Used Books. This wasn't incredibly rewarding, but it meant less to move and freed up space in the new place. The downside was that I felt the need to replace, fought the urge as best I could, and did not win that battle!

Avoiding clothes and home goods shopping is doable for me. I simply don't have the space. I've had to ask myself many times, "Is this a necessity?" and more ofthen than not the answer is, "no." I struggle with my desire to want a morning latte and to eat out. Lattes are such a treat...and supposedly have less caffeine than coffee (just enough to start off my day). While I do enjoy cooking, it's hard to manage portion size and eat leftovers quickly enough. I'm still working on these last two.

Progress has been made in being able to balance my checkbook. In the past, I solely went off my online bank account and never balanced my checkbook. Then I heard someone tell me, "If you don't manage your money, your money will manage you." It has really helped to keep me in check. I tried carrying cash at one point, but that was difficult to stay organized and track where it was going.

The method for paying off credit cards has been to focus on the smallest balance first and then take that payment and add it to the next until they're all paid off. It just so happens that the smallest balance cards have the larger interest rate so it worked out better that way too. I heard initially to pay the minimum on all the other cards while focusing on the one. Recently I was told that your credit score reflects the payments you make, so if you pay anything above the minimum, it will show that you pay more than the minimum...even if it's only 5 dollars. I only have four cards with balances, and one on the verge of being paid off (Friday!) so I'm not talking 20 or anything. Still, it's a good way to make goals and feel like I'm making some progress at least. Another two will be paid off next month!

I'm excited to accomplish this goal!

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