Very nice blog about living within your means and saving money.

[eliza61]

One of the reasons I think budgeting and dieting always fail is because we (general use, as in society) always pitch it as "depriving" ourselves. Let's face it, we're human we like that rich piece of chocolate cake or those brand new toys. I've always loved photography and since the event of DSLR cameras I've been totally tempted to go into serious debt to get my hands on one of those shiny new cameras. so it can be very easy to talk ourselves into why we "need" that piece of Lindas fudge cake from the cheesecake factory or that new pair of 100 dollars sneakers to go on vacation at the world.

Anyway, I saw this blog from a young lady who seemed to have a very sensible approach. For many of us, especially those of us born before the 70's it probably sounds like common sense.

First Person: Daily Habits That Keep Me Out of Debt

My goal was to be out of debt by age 30. I succeeded by asking myself five key questions every day about my spending habits and finances. Some people talk about "good debt, bad debt," but I'm of the school of thought that all debt is bad debt. I don't like Dave Ramsey's idea of living on just beans and rice (literally) or buying a beat-up car. But I do believe that living debt-free is psychologically liberating.

Here are the five questions I asked myself to get out of debt for good:

Could I do this myself?
Before paying someone else to do something for me, I'd consider whether I could do it myself. Everyone has down time. If you have a Type A personality, consider washing your car as your meditation break. Mow the lawn for exercise.

Am I putting aside money for a car and a house?
Almost everyone wants their own car and house. If you already have a mortgage, think about adding extra payments to your monthly budget. If you don't own a home, put aside a 20 percent down payment on a house. If it's your first house, you may be able to use money from a Roth IRA. Even when you are out of debt, you will always need to save for a car and possibly a new home.

Could I do something else to make money?
Sometimes your debt is stagnant because you just aren't making enough money. Every day, explore the possibilities for increasing your income. Look at passive income streams as well, such as receiving dividends (company profit that's given to shareholders) and residuals from work. I doubled my income within months by writing daily goals to accomplish more work as a freelance writer.

Do I already have this item?

Before buying something new, consider whether you already own it or something similar. Many times I've gone shopping for a tablecloth or window covering, when what I really wanted was in a drawer or closet at home. Shop at your own house before you go to the mall.

Can I pay cash?

If you can't pay cash and need to use credit, that's a red flag. Researchers say people spend less money when they use cash instead of plastic. One of the worst signs of financial trouble: using credit to buy groceries. To become wealthy and stay out of debt, you have to keep more than you make. Work with cash only until you can stick to a budget.

When I started my plan to get out of debt by 30, I was in my 20s and had a lot of debts. The worst were car and college loans. It felt wonderful to write the last check to the loan repayment center. Today, I'm working on paying off my mortgage early with my financial partner (husband).

http://finance.yahoo.com/news/First-Person-Daily-Habits-ac-3030578433.html?x=0

I know #4 was a big one for me. I had/still do have a horrible habit of always running out to buy some thing without even checking my closet especially shoes. I'm trying to get into the habit of "shopping" my closet first.

 

[luckymom4]

Thanks for this post! I think a lot of debt comes not from what we spend money on, but also what we don't save money on. Doing things yourself (like packing a lunch instead of eating out every day) really adds up. If you put the money you would have spent in a savings account instead of just spending it on something else, you can quickly see how much you were wasting.

I love saving money almost as much as I love the DIS boards.

 

[SaraJayne]

She isn't out of debt. A mortgage is a debt.

Otherwise, most of the points are good ones...and should be common sense.

 

[Tiger926]

Thanks for the link. I did like many of the points in the blog. We are shopping more in our home as well. Granted, we give everything away to charity or other family/friends, but we have cut out a lot of shopping for clothes/shoes, as we used to buy way more than we needed.

I agree with OP - she isn't out of debt, as she has a mortgage. I see this on this board constantly, and even started a thread about it. Out of debt means no debt, period. We owe nothing except our mortgage, but we don't say we are debt free until our mortgage is gone. Have knocked off a ton extra the past year, so that should be in approx. 8 years or less.

I also disagree with using cash. We don't use cash for anything, as we are paid to use credit cards. If we don't have the cash in the bank, we don't purchase. Cards are paid each month, and at the end of year, we get various monetary cheques or points to cash in for gift cards. I get the whole only use cash thing, as many people can't use credit cards properly, but we don't subscribe to this theory at all. We haven't paid for our Costco executive membership in years, thanks to putting our groceries on our AMEX card. We've also received replacement items for warranty items that have been broken, and cash on insurance policies that we have had to utilize, thanks to our credit cards.

We save money by using our credit cards, but I do realize not everyone is like that. I just don't like black and white generalizations like hers that no one should use cards.

Tiger

 

[DawnM]

I actually am more along the lines of mortgage is ok as long as it is 25% of your take home pay or less on a 15 year loan. I consider myself out of debt but I do have a mortgage. And HOPEFULLY a house will appreciate at some point. I would love to be mortgage debt free but it can't happen right now.

Although listening to Suze Ormond lately has been interesting. Her take is that in today's market, you need to buy a home to live in, not as an investment.

But I digress.....

Good article.

Dawn

 

[punkin]

Of course a mortgage is debt, but it is not generally considered consumer debt, which is "evil incarnate" on this board.

Interesting article. My DD just came home from college and is complaining she has no clothes and we need to go shopping. I go upstairs to her room and an entire suitcase is still not unpacked and I have a new mountain of laundry downstairs that still hasn't been done. Now granted, much of that is winter stuff, but she is not getting an new stitch of clothing until everything is put away and she can tell me exactly what she still needs for summer.