Well it is one month into the new year. My goals for paying down my debt and losing weight are still in tact. I'm not sure which is harder though, losing weight or saving money. It seems like my grocery bill has exploded into the atmosphere with milk costing almost $5 a gallon etc etc.

I keep a monthly budget in excel. My budget is forecast for about 6 months out and I try to keep track of the $ I spend and the expenses I incur. I think I need to build in a fudge factor of about $50 for odds and ends that I end up buying like cold medicine for the kids and other unexpected costs.

I managed to tow the line on the credit card charges with the exception of a few bucks. I think the key to financial success is planning, planning, revising and measurement progress.

In addition to my financial goal and weight loss goal in 2008, I decided to automatically tithe to my church. Since I love technology, my church tithing is automatically deducted from my bank account once a month. I think I am more likely to consistenly tithe if it is automatic rather than the seemingly more optional approach of using the church issued budget envelopes.

January 10, 2007

Today, another for sale sign went up in my neighborhood. That makes 4 homes in the neighborhood priced at above $400,000.00 in less than 6 mos. I don't want to assume people are moving because of the economy, but I know of at least one family who is moving because their finances didn't work out. For their sake, I hope things work out and I try to reason that "everything happens for a reason". My dad used to say "It is always darkest when the storm clouds are overhead". Isn't that the truth! I admire the family who sent out a neighborhood email telling us why they are moving - because they can't afford their home. It takes real courage to tell the truth sometimes.

I am in not in danger of losing my home. I have a good job so with a lot of diligence I can pay off my debts. However, if I didn't come to terms with my debt we could have, eventually, dealt with the prospect of "down-sizing" and taking our children out of catholic school. I still get mad at myself that we were so careless that we could have jeapordized our lives.

That being said, I have to say that I think I appreciate my circumstances more now and the promise of being debt free will be all the more sweeter because I know how hard it is to be and stay debt free.

Thanks to all of you who left comments. I really enjoy your feedback and hope you will return often. We're in this journey together and I hope I can give you as much courage and hope as you give me!

Talk to you tomorrow.

I actually began my quest to be debt free in June 2007 when I realized (too late) that we had $40,000 in credit card debt and $34,000 in a home equity line of credit and about $500 in savings

We got to this foul financial state with very good intentions. Somehow, I had head my head in the sand and figured that there would always be a tomorrow to pay the debt off.

Today, we have reduced our debt to about $62,000.00, paid cash for most things and increased our savings (emergency fund) to $1500.00. I am using Dave Ramsey's snowball approach and paying off the smallest balances first. The good news is that I have not touched my 401(k).

I think there are a couple of phases that I have experienced to date. Let me describe them:

1. Whom am I kidding? Fooling myself that the debt wasn't that bad. There will always be a tomorrow to pay if off.

2. Acknowledgement & Shock: When I finally got my head out of the sand and figured out that I was only paying minimum balances and not reducing my overall debt, I was shocked. I swear, I didn't sleep well for weeks.

3. Regret: I regret my financial decisions. How could I accept myself for letting our finances go so far astray? I was very embarrased about my financial state. What would others think? I look like I have everything put together and in proper order! I wonder how many of us out there feel this way?

4. Hope: Besides having some really pragmatic advice about debt, Dave Ramsey's books offer lots of hope. If you lose hope, you got nothing! Have faith, get to know God more.

5. Acceptance: Okay so I made mistakes. Some days it is still hard to believe we are knee deep in debt.

6. 2 steps forward, 1 step back: My typical way of dealing with a problem is to manage it head on and resolve it QUICKLY. Well, this quest of mine will require lots of patience and persistance. Some days, I feel like I've made progress in paying down some debts just to find that my husband charged something. Ugh

Stay tuned . . .