Tired of Drowning in Debt?

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Credit: Pixabay

When I jumped into the planner world online, I discovered lots of Etsy shop owners and YouTubers talking about the Dave Ramsey method of budgeting.  I haven’t read everything by Dave Ramsey, but since I’ve always struggled with budgeting, I decided to see what he had to say.

**NOTE: I am not a financial planner or advisor, I am simply sharing a method that has worked for me.**

Everyone dreams of being debt-free, right?  But how do you actually get there?  There are a million financial advisors who can tell you what to do to become debt-free.  It’s simple – pay off your debts and avoid buying things on credit.  But simple is rarely easy.

And when you have a mountain of debt, even when you’re throwing every extra penny at it, it can feel like you’re not even making a dent.  What I learned from Dave Ramsey was to approach my debts in a different way.

What makes the most financial sense is to start paying off whatever debt you have with the highest interest rate first – that way you save the most interest and reduce your debt faster.  However, when your highest interest rate debt is also your largest debt, even when you’re paying extra, it often doesn’t seem like you’re making any progress.  So people become discouraged and quit making the effort.

Enter psychology.

People need to feel like they’re making progress in order to motivate them to continue their behavior.  So instead of paying off the highest interest rate debt first, Ramsey’s advice is to concentrate on the smallest debt first.  Yes, it doesn’t make the most financial sense to do it this way, because your large debt will still be accruing interest while you pay off the small one.  But – you will see progress quickly, and that will motivate you to continue doing what you’re doing.

Once you have one debt paid off, put that same payment amount towards the next biggest balance until it’s paid off, then repeat.  So, for example, when you pay off your car loan and your payment was $200, then you take that $200, plus whatever minimum you were paying on the next biggest debt, add those together, and make that the new payment amount for that debt.

Following this idea, rather than concentrating on my large credit card balance, I focused on the small balance remaining on a car loan.  Within 6 months, the car loan was paid off.  And the feeling of walking into the bank and paying it off was amazing! To help me keep track of what I’m paying, I created this Debt Snowball Tracker for myself (there are a million versions of these out there, so feel free to grab this one or make one for yourself):

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I currently have four credit cards, a car loan, a bank loan, and a mortgage.  I’m ignoring our mortgage for this purpose, because we will likely move and sell the house before we pay it off anyway.  We did just refinance our mortgage and were able to get a better interest rate and lower our payment, so that will help.

Simply having a visual tracker like this helps so much when you are budgeting and paying bills.  You can see how much the amounts are reduced in a single glance, and when you see that you are getting close to paying off the balance, it helps give you that extra push to get it done.

Once I paid off the first car loan, I have been adding that payment into the bank loan (our smallest remaining debt balance), and in just a few short months, it will be paid off as well.  After that is paid off, I’ll be able to attack our credit card debt and work my way through them as well.  And while I know that this approach doesn’t make the most financial sense, it has allowed me to be successful in making progress, and that’s what matters to me.

Planner Overload

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Credit: Pixabay

When I started this blog, it was with the intent to open a planner sticker business on Etsy.  I’m still not there yet, but that’s a post for another day.

I am working on it, creating stickers that I could sell.  I’ve concentrated on things I would use first, because if I never sell anything, at least I’ve created something I will use myself.

I’ve been a planner girl since forever.  When I was in school, it was a way to keep track of my homework.  As I got older, it became a way to keep track of my life.  And I’m still using them.

Them.

As in, plural.  Something I never have done before.  I’ve always just had one planner, and it was one with a monthly spread, because I never use the weekly ones.  I want to be able to glance at my month and see what’s going on that month.  Drilling down into weekdays and hours is just too much for me.  I get information overload.

However, since I dove into the world of planner stickers, I realized I had no idea how many people seem to use planners these days – and multiple ones, at that.

In the planner community, there are two big planner companies.  Each of those companies sells multiple types of planners – different layouts, different themes, different sizes, etc.  But they also sell planners for multiple purposes.  You can buy a fitness/workout planner, a budget planner, a faith planner, a life planner, a household planner, a kids’ planner, and more.

I’ve watched plenty of YouTube videos of planner people who use these multiple planners and thought, sheesh, why would you need that many planners?

I’m now one of them.  :/

I have my original, cheap $5 2 year monthly planner.  I have my bill planner (it’s really just a small spiral notebook where I track my bills).  Now I also have a yearly planner from one of the two big companies – because I needed to know what it was like to use one before I could make/sell stickers for it, right?  And I bought a budget pack from that same company – again, because I need to know how people use it before I can make stuff for it, right?  And I’m currently trying to talk myself out of buying a planner from the other company for the same reasons.

Oh, I forgot, I have a Bullet Journal that I’ve been trying to use again.  The BuJo was appealing because it was functional and not focused on ‘pretty,’ but if you spend any time on YouTube, you’ll find tons of artists who show off their illustrated-to-the-nines BuJos.

So, that’s now 5 (5!) planners I’m using.  Which is ridiculous, I know.  Especially since some of these planners are $40 and up.  But I’m having a hard time paring them down.  I’m actually enjoying using the new yearly planner.  2 issues with it – one, it has lots of pages for weekdays that I will never use, so that’s a waste of trees and money, and 2, the monthly spread, while good, isn’t big enough.  Since I only use the monthly spread, that’s a whole month’s worth of stuff that has to get written down – bills, appointments, schedules, holidays – for 4 people, since I track everyone in my household.  I suppose I could size up to the bigger planner, but then that’s even more money (and pages I won’t use, because it also has pages for weekdays).

And even though I understand the whole ‘sunk cost fallacy,’ I find it hard to get rid of my original cheap $5 planner, because it’s good for another whole year!  And it’s bigger than my new planner, so I have more room to write stuff down.

I am planning to get rid of my little spiral bill planner, because I do like the new budget planner I’ve been using.  Recording things in both places is getting obnoxious, and the new one has much more space to write.  I guess it’s just resistance to change that’s keeping me using both.

I also could incorporate my new budget planner into my new yearly planner – the rings are designed so that you can add/remove/rework pages as necessary.  I just haven’t done it yet.  Doing those two things would at least get me down to 3 planners instead of 5, which is something.

I have also explored the idea of using digital planners for all these things, but honestly, I like using an analog planner.  I like writing with my pens, the feel of the paper, and the stickers.  Digital planning just wouldn’t be the same, plus I’d be worried about it all somehow getting hacked.  So for now, analog planning is the plan.

I’m still trying to figure out if the Bullet Journal is something I want to stick with.  I like that it’s functional, but I’m discovering I would also like it to be pretty.  Something that seems a lot easier with my yearly planner than the BuJo.  We shall see.