I decided it was time to try out some carnivals again this last weekend.  I submitted posts to FOUR carnivals and am just amazed at how much content people are writing these days.  There’s just so many good posts out there just begging to add feeds to my reader!  For my weekly (when I participate) carnival posts I’m going to just list the carnivals I submitted to along with the post I submitted and a couple of others that I enjoyed in it.

So here’s the list for the 2nd week of February!

Carnival of Personal Finance #139 - hosted by My Dollar Plan

Carnival of Debt Reduction 126 - hosted by DebtFREE-Revolution

46th Carnival of Money Stories - hosted by Mrs. Micah

Festival of Frugality #112 - hosted by Lazy Man and Money

Wow, that took a lot longer to put together than I’d expected.  There’s so much good stuff out there. 

One reader, Zach, shared his thoughts on one of my posts about comparing ourselves to an out of control family in some horrible debt.

I have to admit that I was actually raised in a frugal home.  My parents always had debt to pay off and grew up with a hate for it.  My wife was in a similar situation as well, but was very spontaneous with her spending in college.

Why Did We Start Spending More?

Photo by blake

The biggest change for us was when I landed a very well paying job in IT after college.  We saw these huge numbers (with respect to our parents) and immediately started a spending habit that was way beyond our means.  It was way too easy to just let things get out of control when you thought you could just make up for it in a couple of months.

This is exactly the kind of thinking that gets people into debt to begin with.  Thinking you have control of the future and can make up for things later in order to get that instant gratification that you want today.

How Did It Turn Out?

Well, as you can see by just being on my site, it didn’t turn out all the great.  In only 10 years, we’ve managed to accumulate over a QUARTER MILLION DOLLARS of debt and end up with a negative net worth!  I could go on and on about just how much this has effected us, but all you really need to see are those massive numbers.  Every example I could come up with were because of the same thing, thinking we could pay for something tomorrow what we thought we needed today.

How Do We Get Back In Control?

Photo by Almaz

The biggest thing we had to do was to acknowledge that over time our bad debt habit was going to bury us in financial problems.  Not only that, it would bury our children in our financial problems as well.  That was where we had to draw the line.  A very important part of breaking this bad habit was to stop thinking we could pay for things later.

Once we began to enforce the rule that if we don’t have the money to pay for it, we simply can’t get it.

"What?" you say.  "That’s it?"  Well, pretty much…yeah.  Simply stop the procrastination.  Our debt habit was completely based on the fact that we thought we could control our actions AND our circumstances.  Ten years of that not going right and I think we’re finally on to something…we can’t always control our circumstances.

Have any of you found yourself with bad debt habits that were difficult to break?  How long did it take you before you realized you even had them and had to do something about it?  Drop a line and share with us. 

Last week I became extremely frustrated with myself for letting my credit card interest rates raise obnoxiously high.  The worst part of it was that it happened totally unbeknownst to me, so I shared my tip about checking your interest rates often.  (it shows how out of hand my rates were on my cards and how much I’m wasting every year because of it)

So, today I saw Mrs. Accountability’s post about how she just opened a new card that has an offer for for a 12-month 0% interest transfer with no transfer fee on the first transfer.  That’s the part I hate about most of these card offers is the 3% transfer fee attached to the whole deal.

My initial credit line is only $6000, but that’s how big my largest card is, so I won’t bother asking for more.  All additional transfers will require the 3% transfer fee.

Here’s a snapshot of my confirmation page:

I have a feeling this is the beginning of a series of card transfers to completely get rid of the $300 a month worth of interest I’m throwing away to credit card companies every month.  I’m not too happy about having to manage all of these cards, and the last time we did this I ended up with an extra $5000 worth of debt.  But doing this will pay us more than my wife’s part time job! 

Anyone else out there doing something similar to this?  I’d like to know of any other cards or offers out there that I could utilize to get the other $12000 worth of credit card debt in an interest free state for awhile.

Well, I almost got by today without spending any money at all, but then the boy scouts pulled the annual request for money speech on us tonight.  I typically give them $25/year just because I enjoy what my kids get out of the organization, but don’t have a lot of money to share.  (heck, let’s face it…I don’t have any money, LOL)  I don’t give out to that many organizations, so this isn’t something that really sets me back a lot every year.  I try to keep my giving down while getting out of debt so that I can give much more freely someday when I’m no longer a slave to the lender! 

Today’s Progress:

• Earned - $0
• Spent - $25.00 (boy scouts)
• Debt Reduced - $0

This year I think I’m going to end up with a tax return in the $4-6000 range. This has always been a huge part of our financial planning because of our inability to save money on our own.  We’ve always used it as our "force-us-to-save" method.  (I know, lame.)  The problem with that (and our solution) was addressed in my post about how to choose your W4 elections.

Photo by flippin’sweet

So, this is the last year we’re PLANNING on getting a large return, but people still get returns pretty often…so my question is, "What will you do with your tax return?"

Obvious Options:

• Blow money - spend away!
• Apply toward bills/debt.
• Save it for emergency or rainy day.
• Invest it.
• Pre-withhold for next year’s taxes.

I’m sure there’s lots of different variations on the options I listed, but I’m looking for some personal spin on these.  That’s what makes it interesting, especially with the huge range of amounts possible.

My Plan

My plan at this point is probably just to establish my emergency fund and get ahead on my bills.  One thing I’m going to do just a little different though, is start building up the "next month’s budget" ahead of time.  By the time I get to March 1, I want to have every dollar I plan on spending available in my account so I can just start paying bills and stuffing envelopes full of money for the entire month.  This living paycheck to paycheck thing really sucks.

As for the emergency fund, $1000 just doesn’t seem like enough for me.  With such a large family and all the chaos that comes with it, I would feel much more comfortable with $2000.  I don’t think that’s too unreasonable.  I’ve always heard Dave Ramsey tell people below the poverty line with small families that $500 is enough to start, so why not apply it the other way a little?

In order to do exactly what I need, I’ll be using $2000 toward the emergency fund, and roughly $5000 for a monthly expense buffer.  I know that seems kind of high, but that’s the budget for us.  I don’t think I’m going to get a return quite that large, but I think I can get the buffer in place and start toward the emergency fund.

So how about you?  Got some bills lined up already?  Vacation plans?  I’d love to see what everyone else is getting return-wise and how you plan to use it.

Today we finally ordered a newspaper for the next 12 weeks.  The last few months our neighbors have been giving us their coupons from the weekend paper.  This was great until they all saw how much money we were saving and started using all the good ones themselves!  LOL!

So, the paper company called and said we could get on an intro program for $1/week, renewable for the first year.  We don’t really like spending that, but we get about $5 in savings on average from it, so we figured we’d give it the 12-week try and see how it goes.

Today’s Progress:

• Earned - $0
• Spent - $12.00 (newspaper)
• Debt Reduced - $0