Closing in

As of today, I have paid off 46.8% of my debt- sooo close to my goal of 50% by the end of the year!! This is exciting for a few reasons- it's a big landmark, for sure, and also the sign that easier times are ahead.

Debt payoff is like a roller coaster- you start off slow, building momentum and making small bits of progress. But, thanks to how interest works, the more you pay off, the faster the rate of your success accelerates- so even though it took 3 years to get to the 50% mark, I have good reason to believe that it should take 12-14 months to pay off the remaining 50%. Why? Well, think of it this way- when you start off, you have a lot of debt accumulating a lot of interest. So as you pay it off, less of your money goes toward the principal (the money you owe) and more goes toward the interest you're being charged. But as your principal gets smaller, so does the amount of interest you're being charged, so more of your money goes toward the principle. Because of this, the same dollar amount chips away at larger and larger portions of your debt.

I think this is why it's hard for many people to stay with a debt plan- the initial efforts don't yield much result, which is disheartening and people often give up. But, the longer you stay with it, the easier it gets!

Interestingly, this is the same way savings work for you. The more money you put in savings, the more you have to earn interest on. So when you put 100$ in savings, the first month you may get 6 dollars in interest, assuming a 6% interest rate (I wish!). BUT, the second month, you get interest on 106 dollars, so instead of making another 6 dollars in interest, you get 6% on your 106 dollars, or 6.36. Over time, that compound interest (that's what it's called) makes a big difference!

I love math.

laziness

I have great news. I recently discovered that being lazy can actually equal being frugal! Here's how it goes:

Don't feel like sending out Christmas cards this year?
Don't do it!
$100 (printing, postage) saved.

Don't feel like going out for dinner?
Don't do it!
$40 (dinner plus tip) saved.

Need to go shopping for some new clothes?
Don't bother!
$200 saved.

Etc...

Things I didn't buy

In my last post, I listed things that I spent money on outside of the planned budget. Today I thought I'd list the things I have cut out of the budget (successfully) in order to keep the debt payoff moving at the awesome rate it's been lately:

• haircuts
• clothes
• big ticket household items (like rugs, small electronics, organizational stuff, etc)
• seasonal items like plants for the front porch
• vacations

Although I could really use all of these things (except the mums), I'm doing my best to use everything I already have until they are basically trash, and putting off vacations and household stuff for the time being. I keep reminding myself that this time next year, I'll be so close to paid off that I can use CASH to pay for the things I need. This is all the motivation I need!

unfortunately

here's a list of things that got in the way of me following my budget last week:

• PTO book fair
• PTO tshirt sale (x2)
• union dinner
• donuts for work breakfast party
• kids' dental appointments
• one night where everyone was really tired and we just wanted mcdonalds

I know I should budget for these things, but seriously- other than the dental appointments, how regular are any of these things? Is it better to budget $100 a month or whatever for incidentals (which will then give you the feeling that you HAVE $100 to spend on incidentals) or to budget for nothing and then move $100 from debt payoff to spending money if need be?

Psychologically, I know I spend less with the latter scenario. There's something about "planning" to spend extra money that makes me spend it two or three times over!