Becoming Financially Fit

It all started with the in-mail offer.
0% interest for 10 months.

I had the best of intentions paying it off in full every month, but c’mon. We all know how that story goes. During my last year of college, I took on more than a full load of units, and didn’t have much time to work. I resorted to using my credit card to pay for photography essentials (my major), and of course, a little splurging went on during the weekends when I wanted to forget about my classes.

Over time, I came to dread the credit card statements I received in the mail. I knew it was bad, and after a while, I didn’t even open them. Making the minimum payment was getting me nowhere. I then fell into a very bad habit — spending money when money depressed me. The voice in my head was saying, “You’re already $3,000in debt, what’s an extra $20?” I was spending wayyy too much on food, and even more on shopping. All those little things that I had bought myself in an effort to cheer-up had done more bad then good, and by then, I didn’t even know what those things were. I didn’t have *anything* to show for all that debt. Definitely not a good feeling, but what are ya gonna do?

After a few failed attempts at paying the cards off, New Year’s 2011 was rolling in (by this time graduated, and employed full-time), and I had yet to pick a resolution. It didn’t take much soul-searching to decide that I not only wanted to get rid of my credit cards for good, I also wanted to become financially smart (understand the different between IRA’s and Roth IRA’s, and exactly how COBRA, HSA/FSA & 401k’s worked…mission accomplished!).

Step 1: Make a budget
I finally sat down to create a budget while watching ‘Confessions of a Shopaholic’ (ha!), and used Mint.com to help me. I entered my bank account information so it could track exactly what I was spending, and where I was spending it. I’ll be host here — I was $8,700+ in debt, and it was saddening to see the amount I had racked up on my cards all added together. Your budget should be looked at monthly, to see if any changes should be made.

Step 2: Set an Out-of-Debt date
I used Mint’s Goal tool to see how quickly I could eliminate my debt if I paid $X per month. Going by my resolution, I wanted to be done with it within a year. A year seemed like an awfully long time (especially considering that seemingly-long timeline was my obstacle in previous attempts to pay it off. “A year? But I want it gone NOW!” Cue more depression), but that was my goal. For real this time.

Step 3: Read, read, read!
I bought a couple books that I found most inspiring — “Young, Fabulous, and Broke” by Suze Orman, and “The Simple Dollar” by Trent Hamm. I love Suze Orman’s bluntness.. more or less, she said, “Stop feeling sorry for yourself and get to work.” I really needed that. Trent Hamm was a great inspiration for learning how to save money on things like food, and I went to work on trimming my food budget. Instead of buying lunch at the food court every day (I work in a mall), I made lunches and brought snacks, saving hundreds of dollars. I also learned that I don’t want what I can’t see, so I stopped window shopping on my lunch breaks and days off. If I needed a new outfit, I went into my closet and accessorized until my heart was content. (Chances are, you have more than enough already.. so re-mix your wardrobe and try the 30/30/30 challenge)

Step 4: Pick Your Self Back Up
Here’s where I’m ashamed. I opened a THIRD credit card. This one was, like the second, opened with the intent of transferring my high-interest balances (up to 28%) over to 0%. Why did I fall back into the debt pit? It didn’t have enough of a limit to transfer balances, so I kept it for “emergencies.” I used it for more than that, which I shouldn’t have, BUT have paid off the balance before the 0% turned into 19%.

All in all, I’ve paid off near $10,000 in a little over 9.5 months. (The 3rd credit card’s balance grew as I paid off the other 2 cards, so the graph doesn’t show $10k at the beginning. The graph also shows I still owe $500, but the payment is pending. I was just way too excited to post this than to wait!) A lot of how quickly I’ve paid this off had to do with living with my parents (saving on rent), making commission at work (more than half of my debt was cleared by commission alone), and a fair amount of it had to do with learning, and re-learning that Wants are not greater than Needs.

No, I don’t need to spend more than $2 on lunch. I can make it at home, saving at least $4 each time (~$80/month).
No, I don’t need to buy bottled water with my lunches. I bring my own from home and save $35 a month.
No, I don’t need to spend $25 on a mani/pedi monthly. I bought the tools and do it myself (saving ~$25/month).
No, date night doesn’t require going out to dinner. My boyfriend and I make our own dinners and save at least $20 per meal (~$80/month), and rent movies from the Blockbuster kiosk, saving $18 instead of going to the theater.
No, I don’t need new reading material. I borrow from friends’ or a family member’s library and put the cash towards my cards (at least $10 right there).
(If you weren’t keeping track, those things alone just saved about $230 a month.)

The key: identifying your money pits, and re-thinking your Needs. You might find that Wants are masquerading as Needs, and can cut them back.

Step 5: Keep It Up

Sure, it’s tough knowing that ou have X amount of months until you’re out of debt. And sure, it’s easy to fall off the wagon. But remember that saying, “If it were easy, then everybody would be doing it.” This is where you get to shine, and put any extra cash towards credit cards. $4 here, $18 there.. it adds up, and before you know it, you’ve paid off an extra $100 on top of the minimum payments. Congrats. Now enjoy watching those large numbers fall, and KEEP. IT. UP.

.s

I spend too much money on food.

The 1st of every month I have the best intentions of saving money in the Food category, and by the 20th of every month, I get an alert from Mint.com telling me I’ve overspent in that category.

SO.
The past week I’ve decided to just buckle down and find something that works for me, and I’ve come up with a few great options on saving money of my guilty-pleasures, and I think you’ll enjoy them, too!

CHAI LATTES:
After spending years drinking chai lattes, I found the perfect chai at a local cafe — it wasn’t too spicy, it wasn’t too sweet.. it was just right. (Goldilocks, anyone?)
I asked what chai they used, and bless their hearts, they told me. AHA! The hunt for Nub Chai was ON.
After contacting customer service to see about picking up a case, they told me where I could buy it wholesale.
Wholesale = cheap. I like cheap.
A large chai latte used to cost me $4. I bought a case of the same chai for $38.. and with that case I can make 80 lattes.
Are you following, reader?
80 chais would have cost me $320 if I were to buy from the coffee shop. 
Instead, I make them myself (half chai, half milk), and it costs me only 62 cents.
Total cost: $3.38/chai latte — Savings: $67.60/month (84.5%)

BREAKFAST BURRITOS:
My all-time favorite breakfast is the breakfast burrito.
At the same cafe I found the perfect chai, they have the perfect breakfast burrito.
Potatos, beans, scrambled eggs, sausage, and cheese — it is exquisite.
But the price? Not so much.
One burrito costs $7.25.
So, my mom and I set out to make our own breakfast burritos, for a fraction of the price.
Using leftover potatoes from last night’s dinner, some pinto beans, Safeway brand ground sausage, scrambled eggs, and some shredded cheese,  we ended up making a BUNCH of them for less than $1 a piece.
30 breakfast burritos (1 per day) would have cost me $210.
Total cost: $1/burrito — Savings: $180/month (85.7%)

LUNCHES:
Lunches have to be the hardest part for me to save money on.
I work in the mall, near the food court, so usually some deliciously unhealthy scent travels down the wing and tempts my nose.
And when your nose is tempted, it’s kinda hard to think that your ham and cheese sandwich is going to hit the spot.
So what do I do? I make tastiness of my own, on a budget, to battle those food-court smells!
BATTLE OF THE SMELLS.
*ahem*
One of my favorites is not only tasty, but cheap and super easy to make.. Chili & cornbread.
You dump some chili in a pan, and cornbread mix on top of it, and throw it in the oven til the cornbread is done.
Even I can do that, and that’s saying a lot.
Add some veggies, like carrot sticks or celery for a snack, or nom on some broccoli, and it’s slightly healthier. Or at the very least, a little more well-rounded.
Another idea is making quesadillas.. those are wonderfully cheap and easy. You can put some ham inside the quesadilla, and/or salsa, and plop some sour cream on it.
When I eat at the food court, I usually spend $6-9 ($120-180/month), depending on what I’m hungry for. By brown-bagging it, I estimate that the savings per lunch is $4-6.
That’s a savings of $80-120 a month (66%).

CHOCOLATE:
Oh man. Chocolate.
I have such a sweet tooth, it’s awful. I tend to crave anything sweet after lunch and dinner.. and it’s a sad day when I forget to bring some chocolate from home.
Why?
Because a candy bar from Macy’s or Kohl’s is $3, and my favorite little one from Starbucks is $1.95.
Let’s just say on average, if I were to satisfy my chocolate craving by buying one of those from the mall, I would spend $49.50 a month.
But we all know that I don’t really need that much chocolate every day.. so I’ve found the perfect alternative — bite-sized candy bars (like Snickers and Butterfinger) from Dollar Tree. You get 8 mini bars in a package for 1 buck.. that breaks down to about 13 CENTS a piece. Let’s say I eat 2 a day.. that’s a savings of  $2.22 a day.. or $44.40 per month (89%).

Those are a few ways I’ve been saving some moolah lately.. and I’m sure I’ll think of a few more to share with you.

But I wonder how you have been saving money — on food, or otherwise.
What would you like to save money on?
I’ll see if I can come up with a good answer for you.

Enjoy the day 🙂
.s

One of my biggest money pits was clothing.
I used to work at a nice clothing store for women, and constantly found myself racking up new clothes to be in trend. Of course, I justified it any way I could to feel less guilty.
But to be honest, I racked up guilt by racking up my credit card.
I knew the money could go to better use, but at the same time..wasn’t it better to spend at work to get my employee discount and SAVE money by doing that?
WRONG.

I forgot what was really important, and I’ll share my learned lessons with you, in case you’re in the same boat.

1. The good trends come back.
It’s true. Every spring there will be florals and there will be stripes. There will be bright colors welcoming the warm weather.. as will crops and sandals. My point? It’s okay to bring out those clothes from last year to rework into your wardrobe so you don’t have to spend (waste) money on the newest blouse from [insert your favorite brand here].
2. Classy is always in trend.
You know that phrase, ‘a little goes a long way’? Apply that to neutrals. Key pieces for your wardrobe should be neutral, and of nice quality to last you a long time. One important note about the word ‘quality’ — that is not an invitation to shop expensively. Check out thrift stores, as you can find good, classic pieces for a bargain. Or have a clothes-swap with friends. eBay, anybody? Seriously.. you don’t need to spend much to get classy.
3. Being debt free is more important than looking fabulous.
Don’t argue with me on that one.
4. Monkey see, monkey want.
(I’m sorry..poor choice of words, but I had to.)
It’s just too true. When I started working at a store where I didn’t want everything, that’s when I really kicked myself into get-out-of-debt mode. Out of sight, out of mind. I stopped going into stores where I was likely to whip out that credit card, I stopped looking at magazines where I was tempted to jump in the car to go to the mall, and I started remixing my wardrobe. Just how many outfits could I make with 30 items of clothing? (AKA, the 30/30/30 challenge. Google it!) Before I knew it, I had gone 2 months without buying any clothes. Miraculous.

Try applying some of these lessons to your life. Take that money you didn’t spend and add that to your monthly payment on your credit card, and see how good you feel. I promise, you’ll want to keep it up. (and this is coming from a girl who shops for every occasion)

So..what lessons have you learned? I’d love to see what rules you keep about shopping and whatnot, so please share!

.s

I guess you could say I related a little too well to the book, “Confessions of a Shopaholic” by Sophie Kinsella.
I didn’t go around buying anything designer, or really go on any big shopping sprees, but I did understand the whole “it’d-be-wrong-to-not-take-up-this-amazing-sale-opportunity” idea.

During my last year of college, I decided to cut back hours at work and increase studio time to get classes out of the way, and not take any summer classes. Just wanted to be free of school.
Result?
Not much money.
And to keep up with my friends’ lifestyle of entertainment (a movie here and there, going out on the weekends, etc), I used my ‘Emergency-Only’ credit card.

Big mistake.

I had a nice, high credit limit, and lots of fun times. Then I’d get the statement in the mail, get depressed about it, make the minimum payment, and buy a little something pretty to get over it (“What’s $15 more on my statement?”). Meanwhile, I was only getting closer to the end of 0% interest, and closer to that dreaded, evil 19% interest.
Nine-teen percent.
Good grief.
Every time one of those booming “ARE YOU IN CREDIT CARD DEBT OF $10,000 OR MORE?” commercials came on the radio, I turned it off. I hid.
I felt like I was in a downhill spiral. And to push it out of my mind, I pretended like I didn’t have that debt on my shoulders. Big mistake, well-deserved. I know I got myself into that mess, and I’m not blaming anyone but myself, (Ok, maybe I have a little resentment toward credit card companies for getting away with interest-rape).

It took several attempts to finally buckle down and get myself out of this Mess.

The first attempt, I hid my credit cards from myself. Only problem with that is, is you can’t actually hide something from yourself. I knew right where they were, and somehow that pretty silver card found it’s way back into my wallet.

The second attempt, I created a too-tight budget. Well that’s just not going to work for anyone. I cut entertainment out completely, spent minimal amounts on food, and desperately tried to cut back on gas. Thing is, you have to live. I learned this in Attempt 3..

The third attempt, I sat down with a credit counselor about negotiating a lower interest rate with both credit card companies I was borrowing from, and she helped me create a budget. She taught me that, as I said earlier, you have to live. The reason my too-tight budget wasn’t working for me was because I completely cut out having fun with friends — no movies, no drinks, no comedy night — and that only made it worse… aaaand I’d end up spending money anyways, all the while saying, “Screw it. It’s only $10 more.”

I didn’t end up going with the credit counseling agency to negotiate lower rates, because I wanted to do it on my own. I guess I just needed a little encouragement from someone professional. She said that it was all very workable, that I wasn’t really in as big a Mess as I felt, and I could knock it out in a year if I was diligent.
A year!
Ahhh… big weight off my shoulders.

So I logged into my Mint.com account, took a good look at my numbers, and decided that 2011 was The Year to kill The Mess.

A couple months prior, I decided to set aside $50 from every paycheck to put into savings. Having a little something in that account started to make me really happy. Usually I only had $0.50.. so having anything more than that meant that I was being diligent.
And you know what?
The things I normally would consider buying just weren’t worth not having that money in savings. There was no way I was taking money out of that account when it had taken so long to build up. In fact — my goal was to buy a laptop from Apple, but now that I’m close to having that dream computer, I don’t want to see the balance go to $0.00. I can do with not having a computer for a little while longer, while I earn interest on my savings, and decide what I really want to do with that money.

Anyhoo.

Lucky for me, I recently started a new job where I earn hourly + commission, and if I work reeeally hard, that year of knocking down The Mess will get a little shorter. Logging into my bank accounts and Mint is actually something I look forward to, now that I get to watch those numbers go down significantly.

I have to say — being diligent about being responsible with my money is worth more than anything I’ve seen in a store. Not buying that super-cute outfit means that I’m that much closer to having a burden lifted off my shoulders. There will always be time to save up for something I truly want after I become debt-free.. but for now, I have to keep my eyes on the goal of getting there.

If you’re still reading, you’re pretty awesome. I know it’s been wordy, but I know I’m not the only one out there feeling this way. If you’re in a similar boat, stick around. Let’s get through The Mess together. I don’t claim to be a financial expert, just all too familiar with getting frustrated with money (or the lack thereof, as the case may be).

So.. that’s my story. As I learn more about being financially responsible I’ll share it all with you, so check back here. 🙂

.shannon