For my wife and I, our fiscal year starts on April 14th but since it's the end of a calendar year, I thought I would look back at what we have accomplished this year.
In terms of actually completing anything, not a whole lot really. The first year of the plan is probably the toughest or the slowest in showing results. Interest is financial inertia and reversing the flow from out to in takes some work and some time. It takes less time than most people probably think but then again, I don't know how much thought people put into interest. People have been trained that paying interest is just a part of life. Trained by the people who happen to be getting paid the interest. How convenient.
In terms of the plan, we have made progress in all areas.
1. Know where you are and where your money is going. We set up and have refined a system for this that I will discuss in more detail tomorrow. We know where we are financially and where all of our money is going. Not just who we are paying but how much of those payments are interest. Tracking that wasted money is great motivation. We generously gave the bank $705.40 in interest last month. That's the Christmas spirit.
2. Spend less money. We've been really good about this one since we started the plan in April. We have slipped here and there but not much. We spent some on Christmas but the good news about that is that we used cash. We didn't charge anything. January's bills won't be any more stressful than any other month.
3. Make more money. My wife and I have both increased the amount of money that we are bringing in. You don't need to do this step to make the plan work but this step can really change things around quickly.
4. Use the difference to pay off debt or invest. We have paid off more than 2/3rds of a large loan. Had we put the car at the top of the payoff list, it would have been paid off. We went with our second largest loan for a couple of reasons that I may explain at a later date. As a general rule, I advise that you start with the smallest loans and work your way up.
5. Keep doing it. We have been doing it for almost 9 months now. 9 months has been long enough that even though nothing seems to be "completed", we can see that it is working. It's also been long enough that it has changed how we see and think about money. That is a key component of this plan
And I've been writing this blog for nearly 9 months as well. I have learned a lot as I researched information to post here and I hope that by sharing it, you have all learned something as well.
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