Change #2 debriefing

[vaneramos]

It's the end of April and time to review the second of my 6 changes for 2010, which I originally slated as: "Establish and maintain a budget." It seemed fairly simple. What actually happened turned out to be what fivecats calls "a serious, life-altering deal." I hope (and believe) he is right. Here's a brief outline:

• March 11. Worked out a draft budget and began to realize it would be impossible to get out of credit card debt without drastic changes.
• March 15. Saw a debt counselor, who recommended taking out a mortgage to refinance the debt and set up an emergency fund.
• March 21. Told Dad about the debt and my wish to refinance it.
• March 25. Opened a savings account, revised the budget and began setting up a system allotting funds for recurring expenses.
• April 4. After further discussions with Dad, decided against taking out a mortgage and instead agreed to take a loan from him to pay off my credit cards and set up an emergency account.
• April 6. Wrote a list of fun stuff to do instead of spending money when I am tempted.
• April 10. Reviewed the budget a third time with hangnaildhole (who has been a great help throughout the process) and devised a system partitioning expenses into weekly (generally to be withdrawn as cash once a week), monthly (to be left in my chequing account and paid from there), and occasional (to be set aside in a savings account and transferred back to chequing as needed). I determined maximum and minimum levels for both bank accounts. If excess funds accumulate, they will be transferred to a Tax Free Savings Account (third account, which I have yet to set up) for emergencies or longterm savings. Once I have about four month's living expenses saved in the TFSA, excess funds may be used as additional payments on the loan.
• April 11. Did my 2009 income tax return.
• April 19. Began reviewing old credit card statements to identify behaviour patterns.
• April 20. Received the loan from Dad.
• April 22. Went to the bank in an effort to get a hold removed from the funds.
• April 27. Finished paying off credit cards. From my pay cheque, completed the first monthly transfer (for occasional expenses) to savings.
• April 28. Wrote a cheque to pay income tax, and transferred money back from savings to cover it (which is what I am supposed to do).
• April 29. Mailed income tax return.

It still hasn't sunk in that I've done this.

The past couple weeks I've found it's relatively easy to resist temptation to spend money. Actually I've had some practice. For more than a year my Visa card has been maxed out. When faced with a choice of having money to pay bills on time—or not—I have always been good about doing what must be done. So I've become more frugal.

What I did not do, for much too long, was establish a plan so I wouldn't have to scramble from month to month. At last I have made one, and knowing what I can really afford, I scarcely feel inclined to spend more. In fact I still have a $20 bill and change left in my wallet from my allowance last Friday, which suggests my budget is tenable. I saved the $20 deliberately with a view to more expensive weeks ahead, and derive satisfaction from having done so. I realize the plan will not always seem this easy, but for now I'll just continue because practice will reinforce it for the harder times.

Comments

[changeling72.livejournal.com]

It sounds that you've worked really hard to get back on track. I'm actually going to put some money IN the bank tomorrow. Let's hope it stays there...

[vaneramos.livejournal.com]

Yes, I like having money in the bank to cover upcoming expenses, rather than just scrambling from week to week and month to month. Being able to plan ahead is new.

[queenmomcat.livejournal.com]

(loud sympathetic applause from south of the border) You have done a great deal...but you knew that. Congratulations.

[vaneramos.livejournal.com]

Thank you for the moral support. I couldn't have done it alone.

[teddyb.livejournal.com]

Congratulations, Van, on making those major changes in your life and starting to enjoy the benefits.

I can certainly relate, and I have definitely "been there, done that".

I don't know if you are currently using a computer-based personal accounting system, but if not, you might give it some thought.

There is something really, really satisfying about doing the entries when you make bill payments, and especially when you can run charts and graphs that show, in dramatic fashion, how your debt is getting smaller and your net worth is getting larger.

In any case, kudos top you for recognizing you needed to make some changes in your life and then for making it happen.

Good for you, bud!

[vaneramos.livejournal.com]

I'm not keeping detailed accounts at this point. One advantage of the system hangdnaildhole helped me set up is that it's based on maintaining levels in each of my bank accounts so I know there will be enough to keep the bills paid without actually watching my budget all the time. It takes less time and effort, but I can see how the charts and graphs would be fun. I might consider setting things up that way in the future.

[apel.livejournal.com]

Wow, this is impressive! It sounds like you're on the right track.

[vaneramos.livejournal.com]

Thanks for the moral support. It has made a difference!