The Plan, Part I: Turning Sense into Cents

I've mentioned I have A Plan, right?

Of course I have! And I'm sure you've all been sitting on the edge of your seats, waiting with baited breath for The Big Reveal hoping I have the magic key to financial freedom. Aren't you?

Well...here it is:

Spend less. Pay more.

That's it, in a nutshell.

Of course, there's a lot more detail behind it but the basic principle is just that: Spend less. Pay more. Oh yes, and save. If that sounds vaguely familiar - and it should if you've ever been on a diet - it's because it's the basic principle behind that pesky little weight problem the typical American Jerk (including me) has too.

No magic, just common sense.

The problem is I hate dieting. Hate hate HATE it. I don't like the idea of restricting anything - money or food - at least, not to the point of feeling deprived. Deprivation, to me, feels like I'm one of those shriveled up, tired raisins in the bottom of a box of store brand Raisin Bran. It leads to a binge/purge cycle...frantic, meaningless, reckless spending on things I will never use and, eventually, give away.

No bueno.

Besides, I've already been there, done that. I restricted my "financial diet" so much shedding that extra $5,000 in debt I had the first time, I'm not sure I really learned the lesson. In fact, I know I didn't or I wouldn't be where I am today. Instead of learning how to be reasonable in my spending, what I learned is that I could binge - sometimes for years - and then painfully restrict for a little while so that I could start the process all over again.

And that's just not particularly helpful. Hence, why I'm not at all interested in going that route again.

So the question is how can I shed the debt AND break the binge/purge cycle AND maintain some semblance of a quality life with as little hard work and pain as possible?

The very first step most experts will point out to a blossoming debt-reductionist such as myself - I mean, besides admitting I have a problem - is to know where my money goes. Luckily, that bit of work is something I've already done and know practically off the top of my head. Because, you see, I've been keeping a record of that very thing for literally years. I am, however, admittedly a tad bit OCD.

Now, when I say I've been keeping track for years, I don't mean I've kept every receipt and written down every penny I've spent and on what. But I have a running tally - a spreadsheet I created back at the beginning of 2007 when I first started trying to peck this thing to death - of what bills need paid and when, and how much "discretionary" income I'm left with after the obligations have been cleared. And then, at month end, and because I do nearly everything by debit (and, let's face it, credit) card, I run reports on what got spent and where outside of my fixed bills. Gas, cigarettes, grocery, dining out, wine, wine, and more wine. Then I plug those figures into the spreadsheet, overwriting the budgeted amounts, and I can see how I've done for the month.

Ahem.





As I've said then, I already know where I spend my money.

Now, if you're playing along and you don't know where you spend money or where you might be able to cut back and you've been using debit/credit cards for most purchases? You are within quick, easy reach of having a firm idea of where it all went just by logging onto your account and playing around with the reporting features offered by your bank and/or cardholders. I'd do at least a 3-4 month average and more, if you can, what with the holidays having just occurred. Holidays, as we all know, blow all finances to holy living hell.

If you spend only cash, then clearly you have no need of my advice *laughing*.

Seriously though. If you are one of a kind of people who just takes out hunks of cash as necessary and spends it until there's nothing but lint left, you may have to do a little pre-historic hunting and gathering to have a better understanding of just how many lattes you're really buying (or, in my case, cocktails).

Then, you make a list of all your bills and all your expenditures by category (you can be as vague or as specific as you like) and you assign each one a number...the average of the ACTUAL amounts you spent - not the ones you wished you'd spent - and add it all up.

If you're lucky, your total expense is already less than your net income. Why are you still only making your minimum payments again?

If you're like me, you are breaking even or maybe even a little upside down.

If you're way overspending, you'll see it immediately and really. Just. Stop. It...Now. Not only are you "bridging the gap" between your salary and expenses, you're hanging by your fingernails from the middle of the suspension bridge at Royal Gorge.

Photo courtesy of Fremont County

Now remember, I want to make this process - for me - as painless and work free as possible. But there is some work involved (we've done most of the hard work already) and there is a little pain. Because now that we know where we've spent our nickels and dimes? We have to decide where to cut back. And that can be rough.

There are eleventy-billion lists of practically painless ways to cut personal spending available on the internet. I know. I checked. And I've read them all.

Here are a couple of examples:

Being Frugal 101 Ways to Save Money

MSN Money Central 50 Ways to Trim Your Budget

At this point, it's really important to know yourself and your habits. Just because someone recommends doing your own oil change does not mean you should do your own oil change! Especially if you are, say, me. And frankly? If you ever find me elbow deep in Borax and baking soda attempting to make my own laundry soap? Please, by all means, put me out of my misery.

But there are some really decent tips out there.

Most of them, I'm already doing. For instance, I got rid of cable television...10 years ago about the time I got rid of the boyfriend. I don't belong to a gym and I seriously do work out at home or by taking walks. I had a bus pass through my work until just this month. But what I discovered is that I was still spending a lot of money on gas in addition to the $30 I was paying for the bus pass. So I've given the pass up for this year. That could have been a budgetary mistake given that gas - in January - has risen to nearly $3 a gallon in my city. Too late now. I'll work around it.

My problem then isn't that I have all of these "extra" luxuries like cable or Netflix or gym memberships or mani/pedis and massages I can cut out. The problem is that I:

A) Give my money away and
B) Love to socialize, drink wine, and travel.

So here are the list of things - the carbs - I'm trimming from my financial diet:

1) No more lunches out. I work less than 5 minutes away from my favorite Mediterranean restaurant in the metro area. But at $15 a pop? I can make my own hummus - fantastic hummus - and bring it with me to work.

2) No more charitable donations. This one absolutely kills me because I do love to support my favorite people and causes. I have a tremendous amount of guilt surrounding my decision to withdraw my financial support. But, by the same token, if my debt does not decrease, I will likely require those same charitable donations.

3) No more spontaneous Church o' Brunches. While I love bacon and eggs and bloody marys and congregating with friends, these are expensive endeavors - ones I should not afford.

4) Shop the heck out of grocery sales and clip coupons where applicable. Frankly? Our grocery budget is disgustingly inflated. And we don't even shop at the Whole Paycheck Foods. It's just that we buy what we want, when we want and have given no thought to how much it really costs. I am embarrassed to tell you then that, in the month of December, we spent no less than ONE THOUSAND DOLLARS at the grocery store.

Ahem.

5) Stick to my REASONABLE budget. I have a reasonable budget and I'll talk about it soon. The problem is that I've not, until now, been sticking to it. Rather, I've said to myself, "Self? You can get by with just sending in that minimum payment just this once in order to do [fill in the blank]." Unfortunately, that happens nearly every month.

6) Give up fancy schmancy salon shampoo and conditioner. While I will continue to have my fancy schmancy salon haircuts because A) my hair stylist is the BEST I'VE EVER HAD and B) because the $40 a cut every 8 weeks keeps me on a professional-looking level (necessary for my middle management job), the extra inflated dollars for salon quality product, right now, is unnecessary. I'm keeping my M.A.C. makeup though. For now. My skin thanks me. And again, we want as pain-free as possible...right?

*EDITED TO ADD:*

7) Enforce a moratorium on all travel. If it requires a hotel stay I'm responsible for, it's not in the budget.
So that's where I'm cutting back. If I do these things - and I am (or have at least for the last month) and will continue to do so  - I free up an extra $250 a month to go toward paying down debt.

I can, am, and will do this.

Watch me.

So. Now. Tell me. Where do you think you can cut back your own expenses relatively painlessly in order to make a dent in your own debt? You don't have to comment here to tell me. You can send me a private message telling me. Or you don't have to tell me at all. But I would love for you to think about it...really think about it...along with me. Please. I don't want to be alone.