When I first mentioned my credit card debt last summer, tons of people commented with relief, “So it’s not just me who’s working on this!” I still can’t believe that I shared my total number, but I’m going to do it again. And also a cool tool you might want to try.

My numbers, today:

Total: $28,621 (down $1,784 since last August!)
Card 1 9.9%: 4,712 (down $679)
Card 2a 2.9%: 1,420 (down $633)
Card 2b 34.9%: 2,522 (down $56)
Card 3 23.9%: 14,467 (down $416)
(Update: Bank of M&D Loan 0%: $5500)

The bad news:

Out of the $4,800 I’ve actually paid to these companies over the last 5 months, only a fraction of that amount went towards paying down principal.

But it wasn’t just the interest rate that got me. I take responsibility for the 2 late-fee payments because my bill-paying system isn’t working effectively enough. And the increased APR on Card 3 as a result of one of those late payments. It’s ouchie, yes. I had some big emotions about it (mad, sad, giving up, etc.). But there it is. Those slip-ups cost me cash.

The good news:

Gosh, it feels good to be in the 20’s – and out of the 30’s!

The plan: Even with the setbacks, I’m on track. My plan is working: pay a set amount every month that exceeds the minimum payment. I won’t bore you with the intricacies of that plan, but in short, I’m paying as much as possible on the highest APR accounts first. And this highest % happens to be the lowest balance, so I’ll be excited to get that one outta here!

New laws: On February 18th, the new credit card legislation goes into effect (CCARD details) and the payments I make to Card 2 (which has 2 different interest rates) will start going to the higher interest account, not the lower. Thank you muchly, Pres. Obama, Congress and Senate! That will put more of my money toward paying them off.

Cool tool: The cool tool I found is a credit card pay-off calculator. According to this tool from CNN Money, it will take me 3 years and 3 months to eliminate my debt if I keep paying the same amount ($800/month). And only about 25% of that will be interest. What, you might wonder, would it be if I only pay the minimum balance? A nice, round 30 years to pay it all off – and about 75% of that would go toward interest.

If that’s not an incentive, I don’t know what is.

Do you wonder how long it will take you? Get out your most recent statements and fill out the online debt calculator (completely anonymous).

Share if you like – what are your most recent successes toward getting out of debt?

.
I want to thank everyone who commented on the first part of this series. Although I’m sad to know I’m not alone (because of what that means for you), I am happy to know that so many of us are working our way through and out of debt.

An update and tepid celebration

Last month, I owed $30,702. This month, my debt total is $30,162.

And I can feel a big, old depressing sigh escape from me as I type that. Yes, you might cajole me into celebrating the over $600 I made in payments, but… wow. I do want to celebrate that I paid more than minimum balances on all my payments. That felt really good.

I tell you, though, I’m gonna party next month when I get down into the 20’s. Maybe I’ll even give a prize away here or something fun.

So, start practicing your happy wiggle dance. We gonna party like it’s 1999.

Where I’m going with all this

If you own the Wish Kit, you know that the best place to start is at the end. The beginning is too hard and depressing and frustrating. But the end? Ahhh. That’s where all the inspiration and sunshine and roses are.

So, if I were to dream a little, here’s where I envision myself at the end of this process:

• honoring the commitment I made to my parents
• freedom from debt
• depositing all $700 monthly (that’s been going to the credit card companies) into savings or retirement
• (dare I say it) surprising Inspired Spouse with a trip to Hawaii

This seems awesome. However, it’s funny how hard it is to write this description of my future life. I’ve been so identified with having debt, that it’s challenging to imagine my life without it. Just the same, as I wrote this, I could feel my shoulders loosen and my breathing become easy. I felt lighter.

I’m going to keep sitting with that vision and see what else bubbles up. I’ll check in again next month with an update and another insight into the process of becoming debt-free.

Imagine…

What would your life be like without debt?

I welcome your comments on your own financial or debt situation. I also request kindly, firmly, that you not give advice to me or others unless it’s specifically requested. This makes exploring safe and learning possible for every reader.

So. Dreams. Hopes. Visions. What thoughts come up for you as you read this post?

How I got into debt in the first place

I’ve just typed this title and now I’m staring at it. Thinking hard.

How did I get here, anyway?

In all likelihood, I got here by spending a little here and a little there. A few extravagant dinners a year didn’t seem like much. A vacation there – well, I deserved a break. I quit my job and started a business. Twice. My car needed repair. I bought groceries, heating oil and gasoline.

I didn’t wake up one day and say, “You know, I feel like spending 30,702 bucks! Charge!”

Debt arrived in dribs and drabs.

In truth, I feel a lot of shame about this debt. When I feel ashamed, I want to make excuses to explain my behavior. But explaining also leaves me feeling like a victim of my own choices. Which is crazy because I made them. I signed the receipts. I just didn’t realize how many.

So out of this mental pickle came a realization: I’ve spent unconsciously.

Two things I’m doing about debt

Back in elementary school gym class, we had these colorful, sturdy cups with a looped string attached. You’d stand precariously on top, a cup under each foot,  and hold the string while attempting to clomp forward. Remember those?

Getting out of debt, for me, has felt like walking on those cups. I’ve been taking one awkward, clompy step at a time.

Step one is compassion and forgiveness.

I have such a hard time with this. I mean, I know it’s good for me to be kind and compassionate with myself. I talk about this all the time. But it’s hard.

If I’m so not happy about the debt, it makes some sick kind of sense that I should be mean and judgmental with myself about it. That somehow this would help. But it doesn’t. I can learn from my choices without being hurtful to my spirit.

So, whenever I pay a bill, I take a deep breath and say, “You made a choice. You have a plan.” And I breathe some kindness toward myself. Clomp clomp.

Step two is honesty.

Mind you, I’m no financial expert. And I don’t play one on television. So my process for getting honest with myself comes from my own research and a stalwart desire to get the heck out of debt – not a degree in finance.

I started with a debt summary. That’s a fancy way of saying: “I wrote down all my loans and all my credit card balances.” Last month, I added them all up and got $30,702.

(Can you feel yourself reacting to that number?)

Maybe you’ve got more debt than that. Maybe less. But discovering the actual number was powerful for me. I was being honest with myself.

It was a clompy, awkward step. And stressful – so I gave myself some compassion.

And even though I’m wobbly, I’m finding my balance

As I’ve been alternating between compassion and honesty over the last 6 months, I’ve managed to shave off about $1500 from the total debt. And – WOO! – that feels good.

Feeling some control over the situation finally came from cultivating a few effective, soul-nourishing systems.

Granted, the total still feels to staggering to me, but like I tell my clients, “When you change any part of a system, the whole structure changes.” Even the tiniest action begins a snowball of progress that grows larger over time.

Holding the space

I’m taking other steps that I’ll reveal in other posts, but I want to stop here in case you want some room to digest this topic. We like to take small steps around here. Or try.

My plan is to check back in next month and let you know how it’s coming along, celebrate my successes, and share the journey. Would you like to, too?

I welcome your comments on your own financial or debt situation. I also request kindly, firmly, that you not give advice to me or others unless it’s specifically requested. This makes exploring safe and learning possible for every reader.

So. Debt. Small business. Honesty and compassion. What thoughts and ideas come up for you as you read this post?

Okay, so I’ll come right out and say it:

Budget.

Sounds terrible, doesn’t it? It almost sounds like “diet.” Add a little free association and you get cutting back, cracking down, belt-tightening, and more. (cringe)

You’re smart – you realize that a budget is a good thing, but what’s a creative person to do with all these painful-sounding restrictions? Ouch! And yuck!

Nerdy words

When I find myself confused about a term, I usually look it up to see where the word came from (thanks, Mom). In this case, I am in complete resistance to the word budget (maybe you are too), so I looked it up.

What I discovered was fascinating! Budget is derived from French, Celtic, Latin, and Old English and means “leather pouch or bag.” In fact, the Middle French derivation, bougette, actually means “cute bag.”

Leather pouch? Cute? These are not exactly the words one associates with budget.

Further inspection

The dictionary also had a long and scary definition of budget that would have made an MBA or CPA grin maniacally. Let’s ignore that part and stay with the word origin instead.

The thing I love about the leather pouch is that I can imagine holding it. You can really imagine the softness and smell of leather and feel the weight of your money inside it. It’s an evocative image, this bougette.

With your bag in hand, you can imagine going to the market in Old England and spending what you had in the pouch – arriving home with an armload of tallow, fresh eggs, and cloth. Tactile yum-yums!

Modern day hiccups

Confession: My relationship with money (like a lot of people’s) hasn’t always been healthy. Neglectful, even.

Most of my spending is virtual (debit cards, online purchases, online banking, etc.). I’m a whole step removed from that leather pouch because I have only theoretical numbers instead of real live coins and bills.

The convenience of virtual financial transactions is a huge time-saver, but some money gurus say that it’s better to use cash, because you can hold it in your hand. It’s real. Make your own determination on this, but I believe that the outcome of virtual spending in my life is not knowing where it goes and spending more than what’s in the pouch.

The reality is…

Abundance theorists will hate me for saying this, but there’s a finite amount of money in the pouch. Someday you can grow more, but right now, you have what you have.

The leather pouch, the budget, creates structure. Without this structure, your money slips away, bouncing down the cobbled streets and willy-nilly into others’ hands.

The walls of the pouch, the budget, help support who you are and get where you want to go. And knowing the exact nature of the container means you can plan what you do with the contents.

Dood! What does this have to do with organizing?

Ha! Have I drifted too far afield? I’m having a lot of fun with this Old England analogy.

Okay. If you have dreams and goals for yourself and your business, get familiar with the shape of your container. Consider spending time developing a healthy relationship with your money facts.

A budget isn’t about sacrifice. It’s about making decisions that are in alignment with your goals. That’s all.

For example, if your goal is to be gainfully self-employed doing work you love, buying a yacht might take you off course by giving you debt you can’t afford. If you dream of building a home for your family, buying decor and furnishings beforehand might delay the groundbreaking. That new (fill in the blank) might look adorable, but how does buying it fit with your goal of being debt-free? Just notice.

There are no right answers. There are only actions that bring you closer or farther from your goals and dreams. You still have to live while you’re reaching those dreams, so be kind to yourself.

Things to try:

To organize, become familiar with your money container, your bougette.

1. Write down your answers to the following questions: What do you dream of doing with your life? What are your goals?

2. Determine your average monthly income (the money in the leather pouch) and monthly expenses (what you let out of the pouch) based on your current income and spending. Remember to add in expenses (like insurance) that happen less frequently than once per month.

3. Draft a spending plan (budget) that will support progress toward your goals. Adjust it as time goes on to reflect the realities of life. Be sure to celebrate your progress!

And let me know how it goes!