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Wednesday Welcome: Man Vs. Debt

This week we welcome Joan Otto, editor of Man Vs. Debt. She’s here to talk about UNautomating your finances, which is the opposite of Jean’s standard approach. (If you’re familiar with her advice, you know that she’s all about automating — your bill payments and your savings contributions. In fact, it’s a Money Rule: #62: Automate.) But we’re all about showcasing different perspectives, and what works for Jean may not work for you — as you’ll read below, Joan is knocking out a hefty amount of credit card debt with her method.

My husband and I are in the trenches of a war to pay off just under $90,000 in credit-card and loan debt. Since we started in early 2011, we’ve dropped that number by almost $33,000 – and we’ve done it running, in a way, contrary to most major financial advice.

We pay our bills online, but we receive hard copies of most of them, rather than email statements, and we sit down and pay them one at a time. We keep a calendar with what bills are due when. We make regular contributions to our savings account – but we do so manually. And we’re opposed to debt consolidation, because we want to be the people in control of where our money is going and when.

And the thing that surprises people the most – I keep a by-hand transaction register (a “checkbook,” though it goes well beyond checks) that I balance at least weekly if not more frequently.

When I explained all of this to the community at Man Vs. Debt, where I’ve been chronicling our debt-payoff journey for more than a year, a few people were critical. “You’re making things too hard,” they said.

When I started reading Man Vs. Debt in early 2010 – almost two years before I became editor and community manager – its founder, Adam Baker, had just released a guide called Unautomate Your Finances (which is now available for free).

At the time, I had most of our bills automatically deducted from our checking account. I had 401(k) and regular savings accounts with automated contributions. I was still keeping a transaction register – sort of – but I wasn’t worried about balancing my figures with the bank’s; when in doubt, I checked the online balance and estimated.

Baker’s guide suggested I quit all that. And if what I’d been doing had, you know, been getting me anywhere, I’d have fought him tooth and nail.

It wasn’t working, though. We were doing a lot of the “right” things, and we were tanking hard financially. All the systems in the world don’t fix a broken mathematical equation. When money out is greater than money in, you’ve got a problem, right?

Well, the problem was, we didn’t know we had this problem, because we’d automated the knowing right the heck out!
The act of writing down each bill I have to pay on our calendar is tangible. It helps me be conscious of what I’ll owe when, and it actively changes my behavior, because I’ve imprinted in my memory something like, “Oh, I know I have to pay Discover $50 by the 12th.”

The same goes with making our payments. I highlight each paid bill as I take care of it. And it feels wonderful! (I have said on Man Vs. Debt before – I hypothetically may be the kind of person who writes something already accomplished on a to-do list just to be able to cross it off. Don’t laugh.)

I love this tangible, physical, visual act of highlighting. To me, it serves a real purpose. Could I use an online calendar and mark things as “done?” Well, sure. But I like to physically take action.

Even more importantly, I love the feeling I get when I pay our most-hated debt, a credit card that at its worst had a balance of almost $40,000 and is now down under $17,000. Every time I pay bills, I pay this most emotionally charged debt last, and it leaves me with a great feeling.  I’ve described it as ending the game with a grand slam, or a 90-yard touchdown pass. You might win either way, but when it’s the last moment, and when you are the person taking action, it feels amazing.

So does tracking our payoff progress (again, manually, in a spreadsheet I update monthly). I love the idea of money-management systems that keep track of your finances, making sure everything balances and showing you neat graphs of your remaining debts. But I don’t love them in practice. I need to be forced to really LOOK at where the money is going, and at the same time, to get the concrete positive feedback of typing in those new, lower numbers!

Maybe you’re already debt-free. Maybe you’ve automated your savings, and you’re having good success. That’s awesome! But whether you’re just starting the long road to debt freedom or already onto the savings and wealth-building path after it, if your motivation is ever waning, can I suggest giving unautomation a try?

Take it from me: It feels amazing to see your success!

About Joan: Joan is the editor and community manager for Man Vs. Debt, where she’s documenting her family’s journey to pay off almost $90,000 in non-mortgage debt. You can follow the Man Vs. Debt crew on Facebook, Twitter and Pinterest, and check out more about the “big why” behind Joan’s debt-payoff – quitting her full-time job to begin working from home and homeschooling her 13-year-old daughter – on the family’s personal blog, Our School at Home.

Welcome Wednesday: Enemy of Debt

This week we welcome Travis Pizel, the blogger behind Enemy of Debt. We receive a lot of questions about the process of credit counseling, so I asked Travis to share his experience paying off over $100,000 worth of debt through a debt management plan with a credit counselor. First-hand accounts are always helpful!

Driving through the treated road sludge of Minnesota winter roads had left our van extremely dirty, so I took my place in the car wash line late on a Sunday afternoon.  Once I entered the car wash, little nozzles shot detergent, and then water at our vehicle.  Finally, the dryers kicked in, blowing hot air at the van.  But the van didn’t move an inch.  We allowed the work to be done around us while we sat still.  I couldn’t help but think to myself how nice it would be if getting out of debt was like that.  I could just close my eyes and wait as someone else did all the work.

But it’s not like that at all.  Let me tell you my story.

During the first 13 years of our marriage my wife and I accumulated $109,000 of credit card debt.  Due to a minimum payment policy change with a major creditor with which we had multiple accounts, we found ourselves in a situation where we could no longer meet our monthly  financial commitments.  It was then that we enrolled in a debt management plan.  They negotiated a lower interest rate and monthly payment with each of our thirteen creditors that would allow us to eliminate our debt in just under 5 years.  Our overall payment was not significantly lower, but because of the drastic interest rate reduction, we were finally able to make progress on the principal of our accounts instead of just throwing all our money away each month on interest.  We are approaching the end of our fourth year in the program, and have paid off $84,000 of that debt.

But there’s so much more to our story.

Getting out of debt is not like the drive through car wash described earlier.  We couldn’t just enroll in a debt management program and expect all the work to be done for us.  It’s more like parking the car in your driveway,  filling a bucket with water, grabbing a sponge and a towel, and getting to work. We have to be active in our program to make sure we’re headed in the right direction.  Each and every month we check our creditor statements to ensure the lowered interest rate is being applied, and that our payments are being received on time.  As creditors are paid off, we need to contact our debt relief company and tell them where we want those extra funds applied for future payments.

There’s also the matter of how we got into debt in the first place.

Eliminating our mountain of debt wouldn’t do us any good if we didn’t address the lack of communication and bad spending habits that got us there in the first place.  My wife and I have made significant lifestyle changes in order to live within our means for the first time in our lives.  To be honest it didn’t happen all at once.  It took us over a year of constantly re-evaluating our monthly expenses and cutting out unnecessary expenditures to fully understand how deep those cuts, and how big those changes had to be.

We have also worked tirelessly to improve our communication skills.  For the first thirteen years of our marriage we hardly talked about money at all.  Changing that by forcing ourselves to talk almost daily about the state of our finances and coming up with a budget system that works for us has been extremely hard.

Our hard work is paying off and we are finally able to see the the finish line.

In twelve months, with the help of our debt management program, we will have eliminated our mountain of credit card debt.  We will also have learned and practiced the tools needed to handle our finances the right way for the rest of our lives. After that last payment is made, we will then in a way start over, leaving the mistakes of our past behind us and focusing on bettering our future.

I think our future looks pretty bright.

About Travis: Travis writes about personal finance at Enemy of Debt, where he candidly shares his personal journey to pay off $109,000 of credit card debt and the tips he’s learned along the way. As a father and husband, he provides a unique perspective on balancing debt, finances, and family. Follow him on Twitter.