Sunday, February 1, 2009

Money Money Money Money

It's time to declare financial independence!  Well, to be more accurate, it's time to plan for how to become more financially independent - but the first way sounded much better.  I challenge you to do the same!

A new month brings me to a new decision.  I am adding "Taking care of finances" to my 'to do' list below.  I have spent a good part of this morning looking over personal finance blogs and various websites designed to help the layperson configure their finances.  I read a really inspiring blog about a woman working her way out of bankruptcy on her own.  No, we 're not considering anything drastic like that at all, but it is really hopeful to read how others are dealing with this economy after making mistakes.  I have that great feeling when I want to try something new, inspired by someone else's experience and successes.  You know how you wake up in the middle of the night and ask yourself, "Why am I so excited (happy, in love, anxious, or something else)?" - well, this happens to me.  

I have decided to treat financial freedom like a game.  If I think of it like work, it won't happen.  We have a few personal debts that need to be dealt with, on top of a monster mortgage and student loans, and though I won't go to the extreme of listing their amounts as we pay them off, I will periodically post our successes.  I have recently learned the difference between the snowball and DOLP methods of paying down debt and though they pertain mostly to credit card debt, of which we have none, we do have these enormous loans that need to be annihilated.  
The first step is to prioritize our debt.  After listing our balances and deciding who gets paid first, we will budget how much money goes out altogether.  Then, the first, largest payment goes to the top loan, while the others get the minimum payment.  You know how this goes...then the first loan gets paid off and the next in line gets the larger payment and gets paid off faster, etc.  

In  order for this to work for us, I have to set the following things in action:

  • Set up our payment plan on the computer so it runs on it's own - it's much more fun if the game doesn't need constant attention
  • Take a percentage of any 'extra income' and put it toward the top payment - nowreferred to as the apatosaurus or APS, for it's size and age
  •  Clean out the basement and have a yard sale in the Spring.  All proceeds go to APS
  • Start charging our sons rent (just kidding - but we may start charging for peanut butter)
  • Do not take on any additional debt (duh)
  • Lower the thermostat to 62 during the times we are home
  • Look into moving to a rental to decrease our 'overhead' (a bit extreme, but possibly worth it)
How about you?  What are you doing to increase your financial independence?

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