Getting Out of Debt Update

Last year I had a few posts on personal finance and thought that it was about time for an update on how I'm doing with my goals of getting my spending under control and slowly getting out of debt.

Controlling my spending -
I have done really well at this. The best thing that I did to get a hold of it was to create and maintain a budget spreadsheet in Excel. It took me a little bit of time to decide what was most effective for me - I tried a handwritten notebook, an online tool, my online banking - but what I found works best for me is an Excel spreadsheet. It took several months to really get it down to being both reflective of my actual spending and also at regularly updating it. But now it's become a habit and I have actually been living within in my means (buying only what I have cash to pay for) for the past 6 months.

I now have categories for my spending and anything extraneous (not a bill or fixed monthly expense) is really tightly monitored. I also set up an automatic savings deposit through my payroll deposit so that for the first time since childhood, I have a growing savings account.

I will say that this aspect has probably been the hardest part, but also the most gratifying. One of the hardest lessons I've had to learn is the art of saying "No". I've struggled with feeling really guilty about saying no to plans with friends, buying gifts, participating in office get togethers, etc. But the effect has been worthwhile and I'm feeling more empowered each time I make a decision that I know is right for my long term financial health. Also, I've often been surprised at the reactions of others who seem relieved to find that they also get say "No". (Resulting in the "No in '09" resolution which deserves it's own post.)

Getting out of debt
I've done well here too - and mostly as a result of my budgeting. It's amazing how when you make it a priority suddenly cash appears to start paying it down. My car is fully paid off. I've paid off one smaller credit card in full and will pay off the second smaller one in two months. That will leave one card with a large balance, but once these smaller payments are eliminated then I just throw all the cash towards the one card and hopefully it will be paid off in a couple of years.

Get Rich Slowly has a great post today about how others view our spending. It got me to thinking about how one really needs to come to a decision to live within their means on their own terms. It took me a long time to feel ready to tackle my finances. Whether they know it or not, there were a couple of people who I really looked to as great examples. Andrea and Ian - Thank you for sharing your own successes in a way that was unjudgmental but incredibly motivating!