I Had Plastic Surgery!

I went to see Dave Ramsey live this past weekend and returned motivated. I have been a slave to credit and my credit score. I love my credit cards. The hardest thing I have done is to really let them go. A savings account can provide for emergencies. It still feels like I am limiting my options. Can you really live without any credit cards? It hurts. McDonald's did a study on the use of credit cards in their stores and found that people spent 47% more when they used a credit card as opposed to cash. When I stopped using credit and started to be on a strict cash basis I encountered a cash crunch. It takes some adjustment. Now, when I want to make a $5,000.00 impulsive purchase, I have to think it through. Here are the things I have wanted to put on a credit card since I started: $4,800 hearing aids, $4,000.00 for dental implant, a new drive way at the triplex, and that is just in the last 60 days. I have not made any of those purchases. I realized that things do not have to be done the moment they come to my mind. I can wait and save for it. The other thing I have done which I have not done since I started working for myself in 1995, is put myself on a set draw. My budget was the limit of how much money I brought in, not a preset budget for which I had to plan. This has already helped me tremendously. I always said when you are self employed without a set paycheck it is impossible to budget. Wrong. I am not an employee on a set draw. More about that later.

The Financial Inventory, Time to get Real

Dr. Phil says "You cannot change what you do not acknowledge". My first step was to make an accurate list of all of my debt and all of my assets. I set this up in an excel spreadsheet that calculates my net worth and automatically adjusts as any one item goes up or down. I have used this type of spread sheet numerous times with my divorce clients but never really did a complete one for myself. It was time to get real about the exact numbers. I had underestimated my debt in my head by $10,000.00. When debt is spread out in little accounts here and there it is easy to be unaware of the exact total of your debt. Each month when a mortgage statement or credit card bill comes in, I input the new number and I see my net estate increase each time. It is the positive feedback I need to keep motivated in this process. When I start to make a purchase, I think, what is this going to do to my net estate.
The hard part of this process was figuring out where my money was going. By most standards I make a very good living. When I told a friend of mine how much money I make she said, "There is no reason you have to have budgetary issues". Wrong. The more money I have made the larger my budgetary issues have become. I have historically spent 110% of everything I make. The more I make the more I am in the hole. I know I am not alone because I see this in my clients everyday. Families that have earned a fortune and have very little to show for it after a decade of high earning. I started with my QuickBooks. I set up a personal account and started entering every expense. It is not a checkbook ledger, it is an expense ledger. When I spend cash, it is entered into the QuickBook. I set up categories of all of my spending. I have been doing this now for less than a full month. Immediately something is becoming clear. I spend ALOT of money eating out. ALOT. I eat out 1-2 times per day. This has got to change. I will be posting on this topic later.

I got rid of the stove and put in a washer/dryer

It came down to a choice. What is more important, a stove or a washer and dryer. I cannot live without a washer and dryer. I learned about a new technology. It is a convection oven/microwave. It is the size of a large microwave and it can be used as a regular stove and a microwave. It can be built in or set on a counter top. In my case I put it no top of the refrigerator. It did not take away any functional space. I works better than a traditional oven. I have baked cookies, cake, pot roast and used the microwave. The convection aspects circulates air and everything is baked evenly. That solved the oven delemia but what about the burners? I bought an awesome burner online. It stays stored away unless it is being used. I notice how much I primarily use the microwave anyway. Planning a kitchen in a small space is an art. There are several websites, mostly aimed at New Yorkers, specializing in smaller than standard appliances.