Besides losing weight, losing debt is one of the top New Year’s Resolutions. While we’re all feeling so warm and fuzzy about the new year, I’ll let you know what some of my goals are. They are beastly hills to climb but I’m feeling better about the coming year. In fact, I’m more optimistic about this year than I have been going into year’s past. Before it would have been more wishful thinking, but I’m heading into 2011 bullish and with a go-get-em attitude.
They say admitting a problem is the first step in dealing with it. The only thing is, I haven’t been denying it. I’ve known and been managing the mountain of debt over the past few years and slowly (and I do mean slowly) there are shards of light poking through. No, it may not be the “I’ll be debt free in X days” but instead the sense of “ah…my lungs aren’t collapsing.”
Where do I start?
Take inventory of your debt. Yes, it’s ugly. I do this in excel with each account name downt the left and the month/year running along the top. I input the the ending balance of each account at the end of the month. I do include property taxes, etc. and not just credit cards,
Make a Monthly and Weekly Budget. You don’t need a fancy system for this. You can use a notebook, the back of an envelope or stolen napkins from the washroom at the gas station – it really doesn’t matter. Write down how much you take in each month and how much you are obligated to payout.
Prioritize. Easier said than done. What items can you not go without each month (e.g. health insurance, prescriptions, utility bills); what items can you do without (e.g. weekly dinner out); and what items can you focus on trimming either by competitively shopping or seeking a reduction in the bill (see my lower your cable bill article).
Set Short-Term and Long-Term Goals. For the month of September, I’m looking to add no new debt. I realize that sounds crazy, but it’s the only realistic goal given what I know the income and expense outlook is for Sept. In October, I’m looking to pay our 2009 tax bill. Long-term I’d like to have no debt other than the mortgage…but that’s a long way off!
This is my starting point and it may be different for you. Yes, you can get into the “what do I pay off first?!?” conversation and we will. For now, let’s just call a spade a spade and in this case, the spade is buried pretty deep in debt.
I’ve been a Comcast customer for years and in looking for ways to get a handle on the household expenses I went looking for a way to lower the cable bill. Some say you can plot to negotiate a lower cable bill, I say just ask for a lower cable bill. There is no harm in asking and if you’ve done your research on the competition you can lower your rates or stay at “the best” rate by simply asking every 6-12 months.
Today I’m happy to say I reduced our monthly bill by $97 or 41% per month. Over the course of 12 months that’s $1164 that stays in my bank account and flows to the bottom line. Whoo!
Technically my husband has been a Comcast customer with the cable, internet and phone. I’ve had a separate bill for my home office phone lines. I work from home so phone and internet are vital and for our sanity, so is cable.
How did I lower my cable bill? Here are the steps I took:
I called AT&T to ask for the new customer package rate for 3 phone lines, cable and internet. I explained I was currently a Comcast customer. The AT&T new customer rates were far better than what we’re currently paying with Comcast.
Next I called the Comcast number 1-800-934-6489 and selected the options to “upgrade” my account. This gets you to the sales group.
I asked what the current upgrade specials are and “best prices” and upon finding that they couldn’t beat AT&T explained that I’d been a long-time customer and was tired of watching my rates go up and went through the AT&T quote I was given. I was then transferred to the Customer Retention group – BINGO!!
Once in the Customer Retention group I once again explained my situation, AT&T rates and asked for my calbeasked what the best rates were for the Comcast Triple Play (phone, internet, cable). The restul was $99 for the first 12 months; additional phone lines are $10 each and additional DVR’s per TV are $8 each. No contract like a cell phone for 12 months. The rep said the rate will go up in month 13 by $35. At that point I’ll go back to step one and start again.
I’ve already put a reminder in my calendar for August 2011 to call and ask for a lower cable bill to keep.
With every new year we set resolutions. Losing the weight of debt on your shoulders, trimming the fat from the budget and toning up assets should rank at the top of lists for 2009.
Let’s face it – 2008 was a real financial stinker. 401k’s lost value, home values fell, credit card debt skyrocketed, unemployment, salary cuts… drink a dixie cup of cheap champagne and say good riddance to 2008. 2009 is the year to get your personal financial house back in order.
Here are some resolutions for thought:
Cutback on Credit Card Usage
Tuck the plastic away and pay cash. Yes, cash. It’s that paper and coin stuff in your wallet or purse. Become friend again with George, Abe and Andrew. If you aren’t a cash-carrying fan, use your bank debit card. You’ll be less likely to spend the extra $5-$50 if you know it’s coming directly out of your bank account.
Make a Budget
Strange as it may seems, many people don’t know where their money goes each month. If this happens to be you… it’s as easy as a notebook and a pen. Write down what you spend every day for a month. Track every penny from the electric bill to tipping the parking attendant. Once you know where you spend, you can start making adjustments. Be realistic and be ready to cut things – even if it’s for a month – to see if you really miss it.
Make a Commitment to Know and Improve Your Credit Score
If you don’t know what your credit score is, you need to. It’s like knowing your weight. If you don’t know what the number is and set a goal, how will you know when you get there? Find your credit score using sites such as MyFico which is free an provides you with a full credit report. Improving your credit score by paying bills on time and lowering debt will save you money in the long-run by being rewarded with lower interest rates. Tip: Mark your calendar to order a credit report every six months to track your progress.
Pay More Than the Minimum
Yep. If you are only making the minimum payment on accounts, not only are you paying more in interest but you aren’t taking the opportunity to improve your credit score. Try and pay and extra $10-$15 on credit cards and if you are extremely disciplined, try and pay an extra 5-10% on your mortgage payment (if not each month, every few months). Over time these extra few dollars can save you hundreds if not thousands in interest.
Create a Snowball Debt Payment Plan
If you don’t know what a snowball debt payment plan is, read past entries to get started. It’s quite simple to do and will provide motivation and a great deal of satisfaction in addition to saving you – - – - money! More for you, less for the credit card company.
Create “Found Money” Situations
Maybe it’s participating in a few focus groups over the year or cleaning out the garage and selling items on Craigslist or eBay. Maybe it’s finding a job on the weekend or a freelance opportunity. Make 2009 the time to earn some extra income to apply to your snowball debt plan.
Contribute the Maximum to Retirement Plans
The stock market is in the tank but we know it will come back so why not be buying when stocks are on sale? Invest in yourself and put the maximum you can towards retirement. If your company has a 401(k) contribution match – take advantage of the free money. Don’t forget to contribute to your IRA too!
Start an Automatic Savings Plan Even if it’s $25 a paycheck, put it aside in an ING savings account. Having it set aside for emergencies will provide a great deal of comfort.
Get Smart About Your Personal Finances
Don’t assume you know everything or stick your head in the sand trying to hide from it. Face your fear in the comfort of your own chair or in the library. Read a few self-help personal finance books. You will learn a few tips along the way and stay disciplined. I’ve listed a few books below to help get you started.
Bonus Round Resolutions
I haven’t made it this far but someday I will!!! The two most wonderful resolutions one could possible do is to save 10% of each and every paycheck and to make an extra mortgage payment each year. This is a long-term goal of mine and not one that I’ll be able to achieve in 2009… but there’s always 2010.
Layaway plans are back in fashion. With credit cards either maxed out, cancelled or simply tucked away, consumers are looking at layaway as a means to having at least a little something under the Christmas tree.
Out of the big stores only Kmart’s layaway service is there for consumers. Target and Wal-mart want consumers to use their store credit cards meaning a “ho-ho-ho” now will turn into the Grinch stealing 2009 trying to pay it off.
In fact, Kmart has even gone so far as to hire Kate from the TLC cable show Jon & Kate Plus Eight to be their spokesperson for the service.
How layaway service work?
It’s pretty easy actually. Since Kmart layaway is the topic today we’ll outline their program. Select your items as you normally would but instead of regular check-out, go to the layaway counter. You pay a $5 layaway fee and a deposit – normally 10% of the total and/or a $10 cancellation fee – and you must return every two weeks to pay on the balance. You have eight weeks to pay the balance in-full at which time you can take your items home. If you don’t make the payments every 2 weeks or miss paying the balance in-full by the end of 8 weeks, you will get a refund minus the $15 (layaway fee + cancellation fee).
To give a little encouragement, Kmart is offering a $5 coupon you can print here (requires Adobe reader to display and print the PDF) valid in-store October 24 – November 30, 2008.
Chances are if you’ve come across this article you are either a) looking for ways to lower your expenses or b) looking for MORE ways to lower your expenses.
In good times and bad, the rationale of “if some is good, more must be better” rings true. In times of big spending, consumers spent B-I-G. In lean times, when we make cuts, we cut D-E-E-P.
The San Francisco Chronicle’s site, Home & Garden Editor Lynette Evans put a call out to residents asking “How to save money” in these rough economic times. You can find the compiled list along with reader comments (including mine – give it a vote up!)
I wanted to toss out the same question to readers here and on Twitter – How are you saving money and cutting costs? Post your best ideas from home & garden, credit/debt, groceries, utilities and more – we’ll take ‘em!
Here are 10 tips on how to save money on your grocery bill.
My quest to manage the weekly grocery budget continues and for the second week in a row I came in under $100. Today’s bill was $80.18 after deducting $36.90 in store specials and coupons. Not bad for a family of six. My grocery bill month-to-date is $178.41.
Here are some small but helpful tips that I’ve discovered along the way, both on my own and from others:
Only go to the store once each week. Small trips are expensive as you tend to be in for only one or two items but leave with five…three of which you probably wouldn’t have purchased in your weekly trip. Plus you save on gas
Make a listand divide into three categories exactly what is needed, what you are running low on and what you would like to get for future use if on sale. I find the last one particularly helpful regarding spices, mixes and frozen items.
Grab the store circular. I’ve found bonus coupons in here and have saved as much as $10 on itmes that fit the above criteria
Stick to your list. I’ve become prudent to the point of unless it’s milk, bread or eggs, if it isn’t on sale I wait until it is.
Tally your grocery bill as you shop. This keeps you on track and familiar with prices over time. You become a better shopper, specifically if your shopping involved more than one store. It also helps you catch errors at the checkout. Note – don’t be afraid to tell the cashier when the computer has the wrong price. In many states, the law is the price posted on the shelf must be honored at checkout.
Try store brands. Many store brand items come from the same factories as name-brand items, they’re just packaged with a different label. There are some items you may not want to switch for personal tastes, but give the store brands a whirl every so often and you may be pleasantly surprised. Store brands can save you up to 50%
Shop by the ounce. Get your math skills out and shop by the ounce. Often buying the larger size isn’t necessarily the best choice nor is the smaller bottle/size and cheaper price. Look at the price and size (remember 1 lb = 16 oz.) and do the math. Shopping by the ounce can provide significant savings at the checkout.
Stock up! There are certain items I know we consistently consume – chicken nuggets, peanut butter, frozen turkey burgers, etc. As they go on sale – stock up! Having a good stock of supplies in the freezer and pantry have allowed me to be under the $100 mark for the last two weeks.
Rainchecks! Don’t be shy about asking for a raincheck on sale items that are out of stock even if you didn’t need the item today. Be sure and write down the name of the item, size (e.g. 28 oz. bag), price and sale price. Ask the cashier or service desk for raincheck for future use. I routinely do this on my “stock up” items. Just because I didn’t need them today doesn’t mean I don’t want to save money the next time I have to buy. Store rainchecks are typically good for 90 days. It’s a free and easy coupon. Today I scored a raincheck on a frozen food item worth $8.49.
Coupons Who can forget coupons? I’m not a coupon-clipper by nature but if you have a little time each week to scan and clip, it can take real dollars off of your weekly grocery bill.
My grocery challenge for August is to keep the weekly bill under $100 … or at least the average per week under $100. It’s my monthly progression of personal budget improvement.
In May I stopped putting groceries on my credit card and instead used the debit card
In June I shopped with a more critical and value-oriented eye when in the grocery store
In July I began tracking how much we spend on groceries each month
For those regular readers, you know that I’ve started shopping once per week rather than heading to the store for a handful of items numerous times each week. That in and of itself has really helped with the grocery expenses. My weekly spend has to support a household of six.
The grocery spend this morning after coupons and store savings ($50) came to $98.23. I was able to stock-up on a few items for the pantry which was great.
Once you have made the commitment to stop increasing your debt-load, the next step is to setup a plan to payoff your debt. Specifically, non-mortgage debt.
The method was made popular by Dave Ramsey’s 7 steps for getting out of debt and getting your financial life in order. The plan is quite simple, takes very little time to setup and most important – you can see results on a regular basis to keep you motivated and on the wagon.
Here’s how the Debt Snowball Plan works:
List all of your non-mortgage debts in order of smallest balance to greatest with the minimum payment on each. I also list the interest rate on each. If I have two similar balances, I list the highest interest rate account first as shown in the example below. Note: Ramsey’s plan states you should focus on balances only as debt snowballing is about behavior modification… with 0% cards I have to disagree with him so this is my modification to the plan.
Determine how much you can pay towards your debts each month. Make the minimums on all of the accounts except for the first account (smallest balance) on the list. Put any and all extra money towards this account. Maybe it’s an extra $50 a month.
Once the first debt account is paid off, take the money (minimum payment + extra) being paid on account #1 and apply it to what you were paying on account #2.
Repeat until all accounts are paid off.
By paying on the smallest balance first, you see progress which helps you stay motivated. As the amount of money you can apply towards debt increases, balances decrease and suddenly the last account balance doesn’t seem so daunting.
For me, it’s focusing on that first account. Trying to juggle all of the balances in my head is overwhelming. By having the goal of paying off the first account, I target any and all found money (snowflakes) onto this account.