The Debt Crisis

So, I am going to try my best to keep up with my blog. Mostly because I need an outlet for my frustrations but also because it may actually help more than just me.

Even smart people make dumb decisions. Well, I'd like to think we are smart anyway. In the past 6 years we have put ourselves in a lot of debt. I'm not ready to post the amount here yet but lets says it's more than we make. It never fails that something breaks and we have to use credit because we don't have cash. Or, we impulse buy because we deluded ourselves into thinking we actually NEEDED it. Really, who NEEDS a new DVD player? Our rationalization on that was that we have 4 kids, no cable or satellite service and we NEED entertainment in the form of movies. Just don't look in my basement at the thousands of toys my kids have or the board games, of which we probably have at least 50. And please pay no attention to how many video games they have! Anyway, that is just one example of us deluding ourselves into bad decisions but let's move on. It's rather embarrassing.

I discovered couponing extreme style a little over a month ago and boy what a difference it has made in our finances. What we do NEED is food and toiletries. Well, maybe we don't NEED the toiletries but who would be able to be near us?

So, this is what we did: BRACE YOURSELF, smart move ahead (well in my opinion anyway)!

We took 90% of our tax return and paid down a high balance credit card. The same card also has a 0% interest rate until Dec 2011 on all new purchases but the rate on the balance was above 15% or so. Then every month we put on the card the minimum due plus all the money we budget for the month for groceries, personal care, entertainment/eating out, gas, heating oil, haircuts, and chief's dues. The usual monthly payment is around $200 a month and we are plopping $1850 a month onto the card. Then, my goal is to spend less than I have budgeted on these categories so the extra stays on the card. Keep in mind I am using the card for the above said purchases. I have created a dummy account in Quicken labeled Household in which I add the amount I am allowed to spend a month. As I use the card for purchase I deduct the amount from that account so I know what I have left. This month there is no decrease in my budget because I am stocking up on groceries when I see really good sales. The following months we should see a decrease as our need to purchase decreases.

Sound okay so far? So, here's where couponing comes in. I am couponing like mad. Anyone on my FB page will tell you that. It's rather like a part-time job. To be fair and honest, I am spending around 20 hours a week on it. Since I am impatient for results, as you may have gathered from our "debt crisis", I am willing to focus on it extremely for a bit until I get it down pat. The justification is that I might just be able to save us $600 a month and that is like me working part time at minimum wage before childcare. The payoff happened this week when I bought nearly $60 of groceries the other day for just 99 cents. Nope, no typo. 99 CENTS! I owe a lot of this to http://www.livingrichwithcoupons.com/ and http://www.thekrazycouponlady.com/. They guide me weekly to great buys of things I need and use. Sometimes there are great deals on things I don't use so unless they are money makers and I can donate them, I don't buy them. So, what's a money maker? Buying 4 toothbrushes this week (that I don't like and won't use) for .99 each, so $3.96. Then using 4 $1.00/1 coupon for a total of -.04 cents and getting back a $4.00 catalina (or coupon) for use on my next purchase. I did this twice so I made 8.08 before taxes on toothbrushes I hate. That begs the question why buy them if you won't use them? Because I am making up a stockpile of donations. If I can make money off it and give what I don't use to someone who can, why not? I may not be able to donate money but I can donate goods. I call it "passive donations". Kind of like my "passive savings account" but that's another day.

Next post....To Freeze or Not to Freeze.