More Money Monday: Step 2

Step 2: Launch Your Debt Rocket

NOTE: This is the fun part. This is the part where you get to dream about what you want your life to look like. So if you've gotten rolling on Step 1, this is a sweet reward for your continuing efforts.

Everybody's done cheesy goal-setting exercises before, so it might seem somewhat lame to yet another one just because we said so. But this isn't going to be cheesy because this isn't a goal for your eighth-grade basketball team and this isn't a goal for drinking eleventeen glasses of water a day because Dr. Oz said so. This is a goal for you, for determining what you want your life to look like, and how you can set yourself up financially to make that possible.

Here's a free printable for this exercise, take some time either on your own or with your spouse or fellow budgeteer to sit down and answer the questions. When you're done hang it somewhere visible to you daily as a motivator and reminder.

Keep your answers as direct and concrete as possible. This makes them more measurable and understandable. And a big hat-tip to Dave Ramsey, whose Debt Snowball is a big inspiration for this piece.

First question: "Understanding the richness of my life isn't determined by my bank account or my toys, is there one luxury that I dream of having?"

This is your dream, your aspirational goal. For Carl and Ellie Fredricksen, it was moving to Paradise Falls. For Cassondra, this would be going on regular vacations. For Philip, this would be owning a hot tub or building a media room. Maybe for you, it's having built your own home, paid off your mortgage, sent your kids to college, and/or having built a dozen freshwater wells in Africa. (Sorry, was that a Jesus Juke?)

Second Question: "What are all the obstacles standing in my way of acquiring that one luxury?"

This is your Debt Universe into which you’re launching your Debt Rocket (we’ll kill this metaphor yet!). Here you get to list all your debts (from smallest to largest) and how much you’d need to save to reach your version of Paradise Falls.

A quick word on owing money: Debt is a the single biggest threat to your financial future. And while home ownership might necessitate a mortgage, there's other debt like student loans, car loans, and credit card debt (especially credit card debt) that can kill your dream before it even gets off the ground.

On top of that, debt is expensive. Add up all your debts that are not your mortgage and multiply them by the annual interest rate. For example, if you've got $2,000 worth of car loans at 6% interest, that's $120; if you've got $900 of credit card debt at 28% interest, that's $252/year that you're paying that you won't have to anymore!

So list all your debts, how much you’d need to save to achieve your dream, and get ready for...

Third Question: "What are 3 things that we can do without, starting today?"

Say hi to your Debt Rocket Boosters!

“Wait,” you say, “didn’t you say at the top that this was supposed to be fun?”

“Yes,” I respond.

“Well, I’ll admit the first question (deciding what my aspirational goal is) was fun,” you continue, “but then you had me write down all my debts, and the amount of money I’d need to save, and that wasn’t so much fun!”

“Uh-huh,” I respond.

“And now!” you exclaim. “Now you want me to give up stuff? How is that fun?”

“I admit it’s not all rainbows and lollipops,” I acknowledge, “but bear with me here.”

Look at your aspirational goal. How cool would it be to get there? Very cool. Popsicle Pete-cool. So this is fun, because we’re giving up things that are less cool than your ultimate dream, in order to get you to your ultimate dream faster.

So come up with a plan to put extra money against your debt. Write down "Give up my morning coffee from [insert your coffeeshop here]." Add it up for a year: even just $3 every weekday for coffee adds up to $750/year!

Or write "Cancel our cable TV service and switch to Netflix.” It’s easy to drop $50-$100 a month on cable, but Netflix has tons of shows you can binge-watch to your heart’s content for only $8/month (with a freebie to get you started). Even if you’re on the low end of cable TV costs, you’ll be saving over $500/year with this switch.

For us, a few things we’ve sacrificed include Philip driving to work (he busses), cable TV, and a few games’ worth of our Blue Bomber season seats. With those three changes, a conservative estimate suggests we save about $2500/year. It’s not easy, but when I remember that we’re $2500 closer to soaking the winter blahs away in a hot tub or one day having a “Winter Cruise budget,” it’s a lot easier to stomach.

So what’s your aspirational goal? What are you giving up to get there? Make note of it in the comments so we can all cheer you on!

What the New Year has in Store

As you might have learned by now...I'm a big list person. I like to make resolutions, although I'd consider them more of goals (Philip says that's the same as a resolution), maybe they're more "yearly tasks/accomplishments".

One note made on the poll last week by Christine Steendam was that a lot of people don't make resolutions. While true, something to know is that you're 10 times more likely to make a change in your life if you make a 2013 goal. According to Real Simple anyway. They also recommend making your goals public, so while we share a couple of ours on this blog, feel free to add yours in the comments. We're back to polling through our site, the Facebook poll was not as well liked (didn't realize that it would show who voted for what - making it a little more public). We'll extend the same poll question this week so more of you can have a chance to answer. I'll share my resolutions for the big 2013, while Philip shares his next Tuesday.

I typically make a list of resolutions, addressing different areas of my life, and then in order to make them more achievable I break them down by quarter/month/week...that kind of thing. This year I kept it simple and I made a one page list of resolutions (color coded), followed by a break down of a couple things I can do in January to work towards accomplishing each of the goals for the year. We'll see how January goes, and then I'll work on a February list. In the interest of keeping things a bit briefer than Tolstoy's Anna Karenina, I'll share just one goal in each area of my life that I highlighted (this kind of back-fired...it got long, but hopefully sharing most of my goals keeps me accountable this year!)

The categories that I divided my resolutions into were: God Related, Philip Related, Health Related, Blog Related, House Related, and Finance Related. 

God Related: In addition to getting back on the Scripture-reading routine that we started out strong on when we first got married and have slowly fallen off of after moving, I really want to make sure to go above and beyond in the areas in which I volunteer at our church. That means doing a great job with my 4-year old Sunday School class, as well as in leading our care group.
In January, that means grabbing a devotion book that I can read each day - we were doing a chronological Bible reading plan and we were probably almost done but it became a little bit of a chore and so I wouldn't mind mixing it up for a little bit with something else. Any recommendations? 

Philip Related: Hopefully our new Date Jar will help with the resolution to have at least two intentional date nights a month. With a home renovation and a lot of other commitments, these can easily slide. 
In January I'll have to make sure we get those two dates in (I've already marked days I think will work on our calendar). 

*Swoon*

Health Related: One thing I've noticed since I quit my job back in March, and especially since Winter has come around, is that it's really easy to go a day or two without getting any sunlight. It makes me really tired and so one of my goals is to get outside for a bit each day. It's definitely a goal that haunts me as I look out my window at all the snow and neighbors in their winter jackets. Philip will like it though because it might mean coming home to an already shoveled walk, or more snow women to keep Concetta company (somehow she's still going strong). 

Our snow woman is still hanging out in our yard after over a month.

Blog Related: I am full of dreams for this blog, so hopefully 2013 will be an exciting year in this department. One thing I want to get better at is writing posts ahead so I'm not scrambling at the last minute, and so there is more time for editing and making posts as great as they can be (so bad at this one - but maybe I'm getting there - it's Friday and this post is for next Tuesday!). I also want to improve in things like Photoshop to make my posts better, and hopefully line up some special blogging series, posts about some other homes that inspire us, and maybe even some guest posts. If you have any ideas on how we can improve this blog, or would like to contribute in some way, contact us! Our information is on the About Us page and we'd love to hear from you!

House Related: You've already seen our ambitious To-Do list, and know some of our house goals for this year. The main thing that they all add up to is having a main floor that we're happy with and feel settled in. We know we likely won't get to the kitchen and living room for a year or two, so for now we want to finish the back part of the house (bedrooms and bathroom), and organize the living room and kitchen to be places that we feel content with for now. 

Finance Related: Philip shared our budgeting tool a little while back, but the one thing it requires to work is us entering receipts and expenses regularly so it's actually up to date. I'm almost caught up on the pile of receipts we'd let slide, and then I want to keep it up every day and review it together once a month so we know where our money is going and can save up for more renovation projects! 

That's it for me this year! If I can accomplish the above, I think I've had a pretty successful year. Is anyone else this crazy about their lists? Have you ever fully completed a resolution?