New plan for killing debt

[Mounds]

I'm all about personal finance systems. Last year, I paid down $14,000 in debt by slashing spending and automating everything I could.

This year, I haven't been doing so hot. I stopped doing what I did last year and stalled my debt repayment (and added a solid $4000 to the bill). Not cool! So here's what I'm doing now.

I'm going directly back to my old system. It's a personalized version of what Ramit Sethi teaches in the book, I Will Teach You To Be Rich. The beauty of saving money is that it's really passive. You just live your life, time passes, and the debt vanishes. It works as long as you follow the plan.

The big change this time around is that I'm going to focus on making more money. Check out my set up:

- I shopped around for the best interest rate I could find and put all of my debt on a line of credit. This line of credit is deposit only. No money can be removed.

- I visited this bank on Monday and got a blank cheque. Set it up so that any Paypal withdrawals go directly to the line of credit.

- I can easily send money from my regular bank to the LoC, all through online banking. No need to drive around.

- I've already got clients, skills, confidence, and knowledge. Everything I need to create some dollars. The hardest part here is to start and I'm past that point.

This is a new frontier for me and I'm curious to see where it leads. If I stick to a plan, saving money is pathetically easy for me. I'm hoping to get making more money to the same level.

Thoughts?

[James81]

You ever try to deal with a spiderweb? This is sorta what this reminds me of in a way. You ever tear down a spiderweb one day only to come back the next and find it rebuilt right back where it was? That's because spiders are tenacious little ****ers. You keep tearing down the web and they will keep building it back. If you want to get rid of a spiderweb, you're most likely gonna have to kill the spider.

It's the same sort of thing here. When I hear you talk about your finances, it sorta reminds me of that. Like, you try something, it works for a while, but then you revert back to old habits and that's that. Then you try something else (or you "refind" your focus) and it works well. You seem to be really good at getting results, but perhaps not as good at making them stick.

I really only base that on the fact that since I've known you, it seems you talk about dealing with debt and managing finances quite a bit. Every few months you come at it with some new technique.

You've been dealing with the spiderweb...I'm wondering when you're gonna kill the spider?

(Spider being whatever it is that's creating your financial issues in the first place...or, more likely, it seems you have problems with SPENDING money moreso than anything. Like, you're really good at creating solutions, but it doesn't seem like you take a lot of time to consider the issues that are driving these repetitive things you keep facing...things like personal finance issues, consuming personal development stuff, etc.)

Perhaps a good idea would be to slow down and take a moment to see what those two things have in common. Perhaps it would help you create a more permanent solution.

[James81]

Oh, and since I've been trying to model a feedback method, I just realized I left out the payoff there.

The payoff being that if you were to find the source of your issue with finances, the many spiraling issues that come out of that will also be dealt with (i.e. such as needing PD info and the like).

[Mounds]

I see it more as an evolution. I went a full year without any problems and at the beginning of this year, complancency struck. I've seen it happen to some huge PF bloggers and this time it happened to me. The result? Improved skills

I wouldn't have started making money online if I hadn't done a big old slide back in my finances. I'd still be thinking about it. I might have never started on it. In that sense, I'm in a good position.

Might also help to know that personal finance is a passion for me. I like tinkering with it a bit, seeing if I can make it better. Adding this portion to my skill set is huge, as you can only cut costs so far.

So anyhow, I think the reason it comes up for me a lot is because I like it. Since I became financially responsible, this is the first time I've truly overspent. Poop happens!

[Peterw]

Sounds like a good plan.

What I did also was draw up an investment plan and saw the paying off of debt as 'investing' in my financial future. I had a spreadsheet with columns for asset allocation (cash/funds/stocks/FX). I then planned how much of my surplus disposable income would be assigned to each asset class on a month by month basis.

While I was paying off debt I had an extra column for debt repayment and assigned 100% of my investment capital toward that until it was gone. Seeing the whole exercise as a positive one that was working toward building a solid financial future was very motivating and the debt was just a temporary glitch that had to be dealt with ASAP before the real fun began.

Was quite motivating and I stuck to it. I also did one of those Robert Kiyosaki income statement/balance sheets that I updated and now the liability colum is empty and the asset column is growing. That was also very motivating in really throwing everything I could at paying off all the debt as quickly as I could.

[danthony]

Sounds like you are back on the path, building wealth is definitely about the mechanics of building passive and saved income and reducing your debts.