Wednesday, December 10, 2008


Like most twentysomethings, I'm in a hell of a pickle. I graduated from college in a crappy economy and took five and a half years to find an appropriately compensating job. Having to pay student loans six months out of school (and only two months after starting a full time job, not for lack of trying), I was seduced by credit cards as a supplement to my income and got deeper and deeper into the game. Honestly, if Congress wants an easy fix to easing the credit crisis, they should give new grads a year instead of six months to start paying back.

Today I had some positive financial news and decided to rededicate myself to beginning the serious commitment to getting out of debt. I tried to figure this out a few months back using the debt snowball calculator, which is by all means handy, but showing all that accrued interest is psychologically cloying. Playing around with the numbers to make the journey a little more palatable (and to allow myself some money to live with while I'm working on this goal), I came up with a "Meghanomics" approach.

This will take four years to do, but with only one real "crunch year." By year two the money I used to throw on my credit card will come directly from my bank account and by year three I can start saving. By year four I'll have half a downpayment saved, which I'll be able to round out in the "debt-free" year five.

The method that I am using it to start with paying off 40% of my existing debt in Year 1. Instead of using the "one credit card at at time" approach, I'm paying off 40% across the board. Yes I realize I'll be more screwed on interest this way, but psychologically it looks like I'm making a bigger dent.

In Year 2 I pay off 50% and Year 3 60%. By year 4 I can pay off the balance in one fell swoop.

Granted there are factors I'm not adding in at this point, like the possibility of going back to school (likely) or co-habitating/getting hitched (highly unlikely).

I will need the help of my friends to make this happen, in particular Year 1, but I'm confident it will. This is the best hare-brained scheme I've come up with yet. As with the other challenges I've self-issued for next year, I will use this blog as a forum to explore my achievements and failures.

Here are a couple of ways I've thought of to get through the arduous Year 1. Please leave your suggestions in the comments.
  • Give myself a "per diem." After expenses, divide each paycheck by 14. That's how much I get to spend each day. I can "carry over," but at the end of the cycle the money goes into a "fun" money savings pot.
  • Limit travel. For crying out loud, I'm going to India to start off the year, I think that will hold me over. The only other trips I HAVE to take are to Portland for Christmas '09 and to the Bay Area for an undermined wedding (thanks to Homeland Security). I would like to get to Phoenix, New York and D.C. to visit friends, and if airfares do drop to Europe it will be hard to wait, but I can hold out. I am happy to become a tourist in my own city and state. Lots more blog posts about Wisconsin's wonders!
  • Eat healthier, work out more. For some folks this gets expensive, but for me, I've already paid for half my CSA for 2009, which will certainly feed me for the summer and beyond. By combining smart dietary habits with a consistent workout routine, I'll be able to fit into my old wardrobe, which will prevent me from shopping!
  • Be social, but be conscious. I am not going to give up my active life because I don't want to waste money. I need to learn to have one cocktail and switch to water. Skip out on food, or just order soup or salad.
Have you been able to control your finances? What tips or words of encouragement do you have? Anyone interested in taking on this challenge for themselves?


  1. This is a noble and lofty goal. I think you will find as with anything, you really have to get your mind to buy into this. Every time you're tempted you have to really THINK: Do I need this? Can I live without this? It's tough, but I know you can do it!!!

  2. What's really helped me out is that I auto transfer my "fun money" into a separate bank account each month. It helps keep me from dipping further in than I've planned because I know I don't have access to it.

  3. Way to go with the CSA. I did that for the first time this year and loved it! besides all the fresh delicious chow showing up each week, I noticed that I was spending peanuts on food. Maybe it was just an illusion since I had prepaid, but it definitely seemed like I was spending less than I would have at the grocery store.

    Also, when spending money on enterainment, it can help to think of things in terms of dollar-per-hour value. For example, $25 for a ticket to a show can pale in comparison to $25 for a book that will take you a week or more to read. Unfortunately, this approach can start to slowly suck the fun out of everything if overused.

    Buy stuff used and/or online! Unless it's brand spanking new AND in pretty high demand, odds are you can find it cheaper on, ebay, amazon, et al. I buy lots of books and CDs online and I try not to pay more than half of the "sticker price." This can apply to larger purchases as well.


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