Tuesday, January 27, 2009

(Not) Afraid to Look

A couple of years ago, I didn't know where we stood financially. I was clueless. I could only vaguely recite my credit card balance ($3000? $4000? Somewhere around there...). I had no idea what Trent owed on his cards. I couldn't have told you what my school loans looked like. To be quite honest, I wasn't even sure what our average monthly expenses were - which might explain why, on several occasions, our checking account dipped into the negative numbers.

I finally started to get a handle on our finances when we began shopping for a mortgage on the house we now own. The bank needed to know where we stood, so therefore I needed to know where we stood in terms of both our debts and our earnings. I became even more interested in this when we came up with our sailing goals.

Taking an honest look at our finances was painful. Deep down, I'd always known we were dabbling with debt, but seeing the numbers - large, red numbers - on a spreadsheet made it a reality for me.

Admitting we had a problem changed how we handled our finances. In the last couple of years, I've gone from being a fiscal ostrich, always burying my head in the sand, to being a fiscal owl who peers at the family accounts on a regular basis. Every day, we stop by our checking account, savings account, and credit card accounts, just to be safe. At least once a week, I look at my school loan website. And every Saturday, Trent and I pull out our debt spreadsheet and fill in how much we currently owe on 1) each credit card, 2) each school loan, and 3) the mortgage. Sum up those columns and, yes, the number seems colossal. But we've also seen those numbers decrease significantly in the last six or seven months, and that motivates us.

Additionally, we've made an effort to start cataloguing our regular expenses. We've tried to calculate how much we spend per month on water, gas, electricity, groceries, Internet access, and fun stuff like going out to eat (more on how well our fun budget is working in an upcoming post). Our exact monthly budget changes, but getting a general estimate allows us to have a better idea of how much money we can expect to put into savings and debt relief. 

I'm not always pleased with the amount we have in our bank account or the rate at which we're reducing debt, but one thing's certain: having the courage to look was the first step in getting the numbers to go in the right directions.

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