Budget

Tired Of The Chokehold

To be totally honest, I am so sick and tired of paying off debt. It feels like a never-ending journey. It’s quite the phenomenon how quickly you can rack up debt, but how it takes forever to get rid of. No this isn’t a rant (well, it kind of is) about my debt paydown, but more how I conquer debt fatigue. Because folks, it’s very real.

I’ve been in debt for my entire adult life (wow, typing that just made me even more dedicated to getting out of deb). I’ve talked a bit about my dance with debt and how it wreaked havoc on my credit score. I started accruing debt my very first year in college. It started with student loans; innocent enough, right? Well, it quickly included consumer debt; credit cards. And honestly, it was basically a downwards spiral. I’m not naturally a saver, nor am I naturally frugal, so during my spendy years, I was not only totally ignoring my financial situation, but actively contributing to it’s demise…I know, a bit dramatic, but debt talk needs a bit of theatrics.

I did eventual get my head out of my ass out of the sand, but whoa, the damage had most certainly been done. By the time I figured I should start trying to do something about my debt and try to eventually live a life of minimal financial stress, I realized I had ways to go.

I researched different debt payoff methods; not going to get into debt avalanche vs debt snowball here, don’t worry. I opted for the debt avalanche method and am using ReadyforZero to help me. It’s great because I don’t have to put too much thought into it. I figured out how quickly I want out of debt, now (unrealistic); and how much I could put towards it every month; over $1000 which is unfortunately, not enough to get out of debt in less than three years. But, I have a plan in place and I’m sticking to the plan.

But….

I’m tired. Bone tired. Half of the time I wake up and think of all of things I can’t do (since I’m no longer accruing debt and all of my extra money is going towards debt) and I think, “This sucks. I just want to go and have dinner and drinks with my friends and not think about the cost, and I can’t.”

I have created mechanisms to fight this debt fatigue. Yes, I follow a budget (thanks YNAB) and every single penny is accounted for. I’ve budgeted for ” fun” money to combat said debt fatigue, but this fun money isn’t nearly as much as it was. True, my previous “fun” money was funded mostly by credit cards. I sometimes, okay often, feel deprived. When I was in my financial dark ages, I did whatever I wanted, when I wanted. Now, I act like a responsible adult and do activities that are in my budget.

I know a lot of hardcore PF bloggers have tackled their debt by cutting out “fun” money categories completely, but I just can’t. However, I’ve armed myself with several anti-spend weapons to keep my budget in check, continue with my debt payoff plan and still feel like I have a life. Like living in zombie-land, you must be prepared for all situations.

Anti-spend weapon #1: Embrace free activities. Mr. MyCountdown and I are all over every free activity we can find. Okay, so we don’t go to every free activity, but we live close enough to a major metropolitan area that there is always a plethora of things to do that are if not free, than really cheap. Spring through fall are the best. There’s free outdoor concerts everywhere, free festivals, street fairs and the list goes on. There’s literally something to do every weekend. During the colder winter months, if we can’t find a free activity, we make sure it’s pretty cheap or we stay home.

Anti-spend weapon #2: We never ever leave the house hungry. Never. We don’t want to get caught out of the house so hungry that we wind up eating bad fast food or salty, expensive restaurant food and then regret it as soon as we get home. If we plan to go to a festival, free park concert or such and only plan to be gone for about four hours, we eat plentifully at home (and quench our thirst) before leaving, making plans to come back home for the next meal of the day. If we’re gone longer, we bring snacks along for the car ride to hold us over until we get home. In fact, we have non-perishable snacks that live  permanently in the trunk of our car. I always bring my water bottle so I don’t have to purchase a drink while walking around. Okay, criminal activity exposed here: I even sneak my water bottle in my purse so I don’t have to purchase water if bringing outside beverages is a no no. And yes, I’ve been caught plenty of times and been asked to leave my water bottle at the gate, and no that hasn’t stopped me from doing it still (I just refuse to buy a $3-$5 bottle of water because I’m thirsty).

Anti-spend weapon #3: Family and friend activities. Our favorite activity is hosting friends and family and going to others homes as well. We always do it potluck style, that way food and drinks (I always supply an inexpensive bottle of wine to the festivities because, well, wine is always good) are incorporated into our general grocery budget, instead of our “fun” money category, which is extremely limited. We have game night, watch movies and even bust out the home karaoke machine (that’s when the party really gets going). We also enjoy these activities because it allows family and friends with children to join in the festivities.

Anti-spend weapon #4: Inexpensive or free hobbies. Both Mr. MyCountdown and I enjoy spending time outdoors and a great afternoon for us is typically going for a nice run, bike ride or long hike outside (with the Mr. taking pictures), or bringing a blanket with a few books to the park for a read and a nap. On cold, rainy or snowy days, the only thing I’m typically interested in doing is curling up on the couch with one of my cats and whatever novel I’m reading (you can also partake in less PG, but explicitly more fun adult activities with your significant other on these kinds of afternoons too 😉 ) and all the above are totally free.

Anti-spend weapon #5: Continually envision and focus on what my life will look like once I’m out of debt and all of my hard-earned money is mine to keep.

So yes, I have extreme debt fatigue at times. I’m pretty sure many folks in a similar situation do, but this is how I battle the ever-present fatigue.

What anti-spend weapons do you wield to defeat the “spendy” monsters and keep you on track with your financial goals? 

Latte, Schmatte?

By now, we’ve all been inundated with David Bach’s “Latte Factor.” Some are proponents of it, others think it’s hogwash. By some accounts, if your “latte factor” is actually, well, latte’s, depending on how often you swing by your local Starbucks or what not, you may end up giving them over $1,800 of your hard-earned money a year. That, invested over the course of thirty years would have made you a hefty sum well into the six figures (different expert’s calculations yield different results).

But is focusing on the proverbial “latte factor” the most effective way for you to cut expenses and grow your retirement fund? Even though I discussed the merits of tracking your latte factors here, especially if you are just learning the basics of money management, I’m not entirely sure that it is. That being said, I do think that it’s a good idea to keep an eye on your latte factors. I know that if I’m not careful, my “latte factors” can get expensive. Even though I do track all my expenses and use budgeting software, I can sometimes lose a bit of self-control, especially when I’m stressed, tired and it’s the end of a long work day.

Depending on what you’re spending, you can potentially save a nice chunk of change every year. About ten years ago, I was in a really bad spot financially. So, yes having a ton of small expenses was no good when I didn’t even have $500 in the bank for emergencies. But is that change enough to actually change your life? Don’t get me wrong, $1800 a year is nothing to sneeze at, but you may gain more traction cutting back larger expenses.

The irony is that larger expenses are often the toughest to cut back on quickly. Reducing housing and car expenses can yield big bucks, but it takes time to make the arrangements to do that. So what did I do?  Caveat: Though I’ve done some things right, I’ve also made some poor financial decisions in the past and apparently I’m still making them.

Thing that I did right: A few years ago, I found cheaper housing. I could have really cut back on housing expenses, but I absolutely love the town I live in. I’m currently in contract with my current lease, but plan to move to even cheaper digs when my lease ends.

Thing that I did wrong: I went and leased my car since I didn’t have enough saved to purchase one when my old car finally died. Bad, bad move. I discussed a bit of my foolishness here.

Other really bad thing that I did, I got into debt (half of it being consumer debt). This IS the biggest money drain out there. For those who are in debt, getting out of debt is the best way to begin super-charging your savings. Once I’m out of debt, I can use the money that was going towards my debt payments, along with the money saved by having cheaper housing and car costs, to really supercharge my countdown to freedom. I believe that once that money is available, a little indulgence in the “latte factors” won’t matter.

Do you think that “latte factors” are a significant inhibitor to saving money?

Where Does My Money Go?!! Part I

Most readers (and writers) of personal finance blogs understand basic money management skills. Though many of us are still struggling to manage our money or tackle debt, we understand the theoretical principles fairly well. Unfortunately, that’s not the case for the majority in our country and abroad.

For those individuals who just need some financial tidbits to get them started down the path to money management, I’ll be doing a series of posts about the basics of managing your money and sharing my own journey along the way.

For many of us, money is constantly on the brain. Most of us know that we should save as much money as possible in a retirement saving account and investments that are essentially growth vehicles for our future selves, but we also need to save for the immediate future. If you have a flat tire, leaky roof or need to replace your refrigerator, your retirement account is not the place to retrieve these funds.

The best avenue for “rainy day” savings is either a simple savings account or a easily accessible money market account (if you’re looking for more growth potential). That’s all well and good, but how do you find money to save with all of life’s other necessities?

First, start by tracking your savings and seeing where your money goes. You really only need to do this for two to three months so that you can get a rough idea. Keep in mind that this type of tracking won’t take into account those expenses that come up once or twice a year e.g. property taxes, insurance premiums, holiday gift buying and birthday presents, etc. Once you have tracked all of your expenses (yes, that $0.79 candy bar counts), start by determining what your “Latte Factor” is. What’s a latte factor? It was a phrase that was coined by David Bach to describe the little things we all buy that can add up to a nice sum of change over the course of a year.

For some, their “latte factor” is actually latte’s! Do you find yourself at Starbucks a few times per week? If yes, then you are probably spending about $4 per visit. If you go to Starbucks four times per week, that can add to more than $800 per year!

Do you go to the salon once a month? At $50 per visit, that’s about $600 per year. We can go on with more examples, but you get the picture. Now figure out what your “latte factor(s)” is and calculate a rough estimate of what this costs you every year.

Now, it’s time to cut back. Notice I said “cut back,” not “cut out.” The thing with “latte factors” is, is that they’re the small things that bring us some joy on a daily basis. If you vow to cut them out completely, there’s a high probability that you won’t succeed (though check out this debt destroyer if you want to try going cold turkey, she did it!). You may end up feeling deprived and miserable. So instead of cutting them out completely, decide the minimum you can live with to start. If you typically visit Starbucks three times per week, decide that you will only visit on Monday or hum-back Wednesday to get you through your week.

If you go to the salon monthly, cut it down to every other month. Make small cuts to all of your latte factors. The next step is probably the most important step. Put the money that you would have spent immediately into a savings account. If you vow to cut back your salon visits, but don’t actually save that $50, it’s a guarantee that the $50 will be spent elsewhere. One of the best ways to make sure these “savings” are actually saved is to start automatic deductions every two weeks on payday to your savings account for the amount of all of your “latte factors,” whether that’s $10, $15 or $20.

Even though these amounts may seem very small, once you’ve built up $1000 in your savings account, you’ll be on your way to protecting yourself when that “rainy day” comes.

So, you may be asking, where does your money go, Ms. MyCountDown? Good question. In all honesty, even though I know these basic money management principles, I still ask myself this questions pretty regularly! I track every single expense in YNAB (yes, including that $0.79 candy bar),  and man oh man, it’s an eye opener. Honestly, I love grocery shopping as I mentioned here (that’s a bit weird, yes I know) and I can drop a pretty penny at the grocery store if I’m not careful.

Mr. MyCountdown and I (well, especially me) love wine, and I’ll walk out of the grocery store with four or six bottles of wine at a time. Yikes! Though that should last about two months, I make sure that our wine is kept well stocked. I think this would definitely fall into the “latter factor” category.

So what have I done to reign in my “latte factor?” I honestly can’t vow to not buy anymore wine, but I have started limiting my purchases. I typically shop at the local Kroger and they have a great deal where you get 10% off if you buy four bottles at a time. So, for the past year, I’ve been limiting my wine buying to every 3 months, 4 bottles a pop. That way, I can still have a nice glass of wine with dinner if I feel like it, my overall wine consumption decreased and I save money.

I do practice what I preach as far as actually saving the money saved from reduced “latte factor” spending. Along with saving for my retirement, I transfer money every pay day into my online bank account to to be there when I have a “rainy day.”

What are your “latte factors?” Have you tried to reduce your latte factor spending?