Changa

February
3rd

Financial Fast February


So it has quickly become a custom in my household that every February we cut back our spending to bare essentials, buying only what we feel we must not do without.
This is a good thing, it brings us up and helps us examine what really matters to us, financially, emotionally, and as people. The idea comes from here, and we adapted it to ourselves: 21 day fast

The most interesting thing about this fast is the reactions we get from people around us. People are outraged that we would alter our spending based on nothing but a sense that spending money might not be healthy. To spend less because you are short on cash, or have creditors hounding you, that seems reasonable. But to cut back simply to stop spending and without any other goal? It angers people, and they cannot say why. And yet, I am not out to prove my superiority, nor even to improve my bank account. I am simply living now, without purchases to justify my existence.

Now, this did not originally come about because I am such a wonderful person that has found yet another way to look better than you. No, this came about because my spouse and I were desperately in debt and sought to end our cycle of running out of money and using credit, paying off the credit but then running out of money and borrowing even more...

Once we realized how hopelessly damaging this was, we stopped. We stopped buying things we did not need, we stopped buying things we somewhat needed. We also stopped paying our creditors. We simply lived within our means for five months. Now, this meant lots of angry phone calls to my google voice number by creditors -- calls I did not answer. But once our 5 months was up, I began paying bills, one by one. By the 7th month, I had made arrangement to pay off all my debts, at interest rates of 3-8% rather than 20-30%, and minus a great deal of fees and penalties. One has to call their bluff or they will never negotiate to take little more than they are owed. Of course, in the ninth month I did get a court summons, from one of the companies I was already paying. And another company I was trying to reach sent me to collections and won't talk to me now. But the collections agent is a very nice man, and he's working to ensure I don't get further trouble over it. In fact, my credit is very close to what is was before I stopped paying, and well on its way to a good score. This process was fairly painful, but will leave less of a mark than bankruptcy.

In August of 2009, I was worth negative $41,000. That is, I was slightly more than one year's wages in debt. As of now, my debt is hovering at $29,000. By August I will have payed off another 6,000 I think, putting me well on the way to living debt-free.
Additionally, as I pay off another large debt in the next couple months, my overall payments will drop off significantly, allowing me to put more into savings. Which is really good, since my car is very nice and quite reliable but really too old to depend upon without a backup plan.

And so, we return to February again, and we take stock by limiting our spending to essentials.