Pound Foolish cover

Money Quote for Tuesday: Pound Foolish Author Takes a Stand

I’m currently reading “Pound Foolish,” a book by journalist Helaine Olen, which discusses the dark side of the personal finance industry (that’s basically the subtitle). I am still finishing it up and I plan to review the book, however, I have run across one quote by the author which has stuck with me, and I think it’s important to share:  Continue reading “Money Quote for Tuesday: Pound Foolish Author Takes a Stand”

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The Tightwad’s Notebook: Lesson #16–Pay Off (Not Down) Your Smallest Debt First Regardless of the Interest Rate

The Tightwad’s Notebook: Lesson #16–Pay Off (Not Down) Your Smallest Debt First Regardless of the Interest Rate

Wipe our Debt
I can’t tell you how great it feels to get rid of a large debt. It’s a freeing feeling like no other–thank you Dave Ramsey! The way to do it? Pay off (don’t pay down, pay OFF) the smallest debt first regardless of the interest rate. Attack and conquer one small debt, then go on to the next when that one is dead and buried. You’ll get to the bill with the large interest rate soon enough. (Photo credit: Images_of_Money)

This is really a page from Dave Ramsey’s book, but it’s so worth mentioning again…and again…and again. Pay off–not down–your SMALLEST debt FIRST. Continue reading “The Tightwad’s Notebook: Lesson #16–Pay Off (Not Down) Your Smallest Debt First Regardless of the Interest Rate”

Dave Ramsey Would Be Proud: Over $50,000 of Credit Card Debt Gone

I just wanted to share a happy story about getting out of big-time debt. This afternoon, one of my dearest friends called and yelled into the phone, “WE’RE OUT OF DEBT!!” She had just sent off the last check for the balance of the last credit card. I told her she should call Dave Ramsey and give him the good news, too, because his books inspired her.

It took 17 years for this family to get into and out of over $50,000 of debt one one credit card, but they did it, and without going into bankruptcy, which I remember was once a near-possibility. (There was some debt on a second credit card that was eliminated, too.) My friend’s story is pretty typical, but they don’t live in a fancy house or drive fancy cars. Quite the opposite, and they don’t even know what they have to show for all that credit card debt. No fancy kitchen, no addition to the house. No Lexus. So, how did they get into that mess? LITTLE THINGS ADD UP and they add up fast to $50,000, so just keep that in mind when pulling out that plastic. The lesson here: LITTLE THINGS ADD UP.

debt
Little things add up to lots of debt but one family erased $50,000 of credit card debt. It wasn't easy, but they did it. (Photo credit: Alan Cleaver)

Quite simply, this family got out of debt slowly, but surely, by putting every extra penny towards their debt. That included tax refunds and any extra money that came their way. They also stopped charging by, oh, I’d say 90%. There were those days where my friend would call and tell me she had to charge something, but the guilt was palpable. I believe it was the guilt that motivated this family to get debt-free.

Now, the challenge, as she says, is to stay debt-free. I asked her what she was going to do with the credit card…cut it up? Freeze it? Lock it up? She wasn’t sure. Now comes the hardest part…maintenance!

Congrats, dear friend!

~Marilyn, TFF

Cash-Only Challenge Diary: March 2012

So…where is all this extra cash coming from?

Seriously.

This isn’t all about using cash, however. It’s about budgeting, too.

But I’ll disclose this: um, errrr, I sorta used my debit card this week. Gulp. The good thing: I was extremely conscious of how much I was buying/pumping gas, etc. so I was able to stay in the budget I set. That means: $25 for my gas, $60 for my husband’s gas, $75 for food (happily including lots of fruits–including organic strawberries from Shoprite–and vegetables and yes, thank goodness for coupons from our local coupon exchange club), $20 for “blow cash,” allowance, etc. It all worked out, and I was able to eliminate yet another annoying little debt with what was “extra.”

No doubt, I will come up against one of those days/weeks/months where this carefully planned budget will fall apart–at least I’m anticipating it! What I’m loosely planning is that I’ll have to rearrange the budget, take a little from here, nip and tuck there, and crossing fingers it’ll all balance. Gail Vaz-Oxlade would be proud. (she likes those balanced budgets!).

I will get back to putting cash into my wallet. Starting Monday! Why is this so difficult? My head knows how bad it is to continue on this path of debit card use. But, it’s clearly a habit to NOT use cash, which is why it’ll take time to get into the habit of only using cash. Anyhow, Monday morning first thing, off to the bank I go for cash.

I will post again in two weeks!

~Marilyn, TFF

The First Three Weeks on Cash-Only Budget

budget
Time for a cash budget. (Photo credit: 401K)

It’s been a long time coming to use cash for food, gas, clothing, and entertainment. I’ve been religiously watching Gail Vaz-Oxlade’s show, “Till Debt Do Us Part,” and eyeing those money jars. It just makes sense. But, I never did anything about it.

But one day, I realized my grocery budget was creeping upward, even with couponing. What the heck was I doing wrong? Using a debit card and not using a solid budget–that’s what I was doing wrong.

I drew up a serious budget (much harder than it sounds, it takes t-i-m-e, but it’s essential). In my budget–$75 cash for groceries, $25 a week cash for gas in my car (my husband uses more, but I work from home), $20 miscellaneous or “blow money,” per Dave Ramsey. That’s only the cash part of the budget.

I didn’t use jars, but I did use basic envelopes, which proved too cumbersome as I went through my week.  I ended up labeling two pockets of my wallet. One pocket says “Gas” and the other says “Groceries” and that’s where I keep the money.

Some highlights:

1. Week One: I was filmed for Channel 12 News (not aired as of yet) on a shopping trip at Stop & Shop in Fairfield–it was an extra shopping trip that week and I shelled out an extra $54.00. To balance the budget, I decided to reduce my grocery budget for two weeks.

2. Week Two: Did relatively well, was able to buy about four pounds of expensive organic ground beef because I used some Catalina coupons from ShopRite thanks to some great deals I put together. By week’s end, I spent an extra $10 at Whole Foods when I found a couple of extra deals. It’s only $10, you say, but you know how the psychology on this works … “it’s ONLY $10….” turns into “it’s ONLY $20 and so on…” But, it’s like a diet, you make peace with yourself and get back on the program.

3. Week Three: So, it’s now Saturday, one day into my third week of cash only, and I have spent my reduced cash budget. But, we have plenty of food and will only need some fruit and veggies–but it’s extra money.

But so far, it’s great, I love it, and I see where my money goes and it gives me great hope. I spent $200 so far in three weeks–not too terrible in an affluent town like Fairfield.

Stay tuned.

~Marilyn from TFF

My Cash-Only Challenge Diary

Rubber Band Wallet
Cash only grocery shopping is possible. Image via Wikipedia

How do couponers (extreme and not-extreme) —with families–keep their grocery budgets SO low? We’ve heard couponers on TLC’s EC show say they spend $50 a month for groceries for extended family members and themselves. We’ve read that couponers spend $30 a week on groceries for a family of six! On and on. HOW DO THEY DO THAT? Yes, we know the stockpiling and couponing drill. We do that. But in my personal case, with a family of four, $30 a week in Fairfield would not go far for balanced and healthy meals, paper, or personal goods, even with the use of serious couponing.

Until now.

Until my cash-only diet.

Thanks to two of my cash-only heroes, Gail Vaz-Oxlade (every Saturday night on CNBC) and Dave Ramsey, and their many followers and fans who have blogged and commented on how they accomplish low weekly grocery receipts, the key to success is not just in couponing; it is the use of cash only when grocery shopping. Those magic jars and the envelope systems. Think they’re corny? Think again.

Yes, I’ve known for a long time now that cash only is the way to go. I believe we all know that. Yet we continue to pay for groceries via debit or credit card, or even by check (because we know there’s overdraft protection). Many people like the point rewards via credit card, many people are able to pay their card in full each month to get those rewards. I’m not disciplined enough to do that, and I thought I was “paying by cash” by always buying groceries by debit card. Uh-uh. No way. When you pay by plastic, no matter what form it is, you tend to nudge up that grocery total. You buy more. You buy an extra can there, an extra bottle here, and how about taking advantage of that great sale–why not, you have your plastic in your wallet.

But when you pay for groceries (gas, clothes, etc.) by cash–it’s a whole other ball game. A completely different mindset. As Dave Ramsey says, it’s painful to pay by cash. The pain makes you extraordinarily careful and judicious about what and how much you purchase.

And it works.

So, in my research, I tried to find an online resource that tracks how to buy by cash. There are many resources, but not one diary, of sorts. I’m starting that diary. If anyone knows of another diary, please, please let us know! My dairy won’t be perfect or daily, but I’m hoping it helps others who want to go the cash-only route. In going cash only, you absolutely do reduce how much you spend, you can keep to a budget, you can pay down debts, you can feel more in control of where the heck your money goes.

Let’s learn together! I’ll post later today on some of my experiences and challenges.

~Marilyn from TFF