We made it through the first year of our debt and clutter free journey.  I know we have been somewhat absent from this blog and we also suffered quite a bit of data loss when our host deleted all our posts. However, these setbacks did not deter us from our goals and progress.

Although embarking on this new lifestyle was not without its frustrations, it didn’t take us long to find our groove and have a debt and clutter free focus.

Here were our 2009 goals:

1. Do NOT charge anything on credit or loan money to anyone.
2. Create a budget and stick to it!
3. Have a budget meeting twice monthly.
4. Reduce total credit card debt by $30K.
5. Put all supplemental income towards paying off debt.

Now to evaluate how close we came to achieving those goals…

1. Although we did not charge any new debt onto an existing credit card nor loan anyone money, we did decide in July to purchase a new hybrid car, thus acquiring a new car loan.  I would love to say we accomplished this goal, but the car loan did end up putting us further into debt.  On the plus side, not only did we not loan any money, we actually managed to recover all money borrowed from us. C
2. We created a budget and very successfully stuck to it.  I was very apprehensive about the whole budget thing in the beginning, but now I actually look forward to our budget meetings.  It is great to continue to see how well we are doing and these meetings tend to be a positive emotional boost! A+
3. For 2009, we averaged at least two budget meetings per month, usually one per week.  :) A+
4. At the end of December 2008, we had $82,314 in debt.  I am very proud of how well we did in 2009 in reducing our credit card debt.  We paid off a total of $48,128  toward debt repayment.  However, we added $25k to our debt with the new car.  Therefore, our total debt amount at the end of 2009 was $62,407 .  So unfortunately, I would say we failed this goal even though we paid more than $30K towards debt, our total debt only went down almost $20k.  Steve says we accomplished this goal because we did lower our CREDIT CARD debt by more than $30K, and that our car loan is secured debt vs unsecured debt. B-
5. 90% of our supplemental income went directly towards debt repayment.  I know we said “all” supplemental income, but 90% is pretty darn close.  :) A-

All in all, it was a very positive year for us. I would say a B+.  We honestly accomplished a lot more than we thought possible, and we didn’t kill each other in the process.  I look forward to posting our debt goals for 2010 very soon.

by taosaur via Flickr

Have you ever stopped to think how much your clutter costs you?  Most people don’t even think about the monetary consequences of their belongings.

The blog Becoming Minimalist, they talk about the statistics of clutter.

Some illuminating numbers:

• Harris Interactive reports that 23 percent of adults say they pay bills late (and incur fees) because they lose them.
• If you rent a storage facility to store your excess belongings, you’re contributing to a $154 billion industry – bigger than the Hollywood film business!
• 1 in 11 American households rent a self-storage space and they spend over $1000 a year in rent.
• It costs an average of $10/square foot to store items in your home.

I like numbers because they can help me make quick comparisons. I can use these numbers to decide whether something is worth storing or not. Although it doesn’t specify, I think the $10/square foot cost is probably per year.  It’s just an average so you should calculate your own cost.

by Arrowswiss12 via Flickr.com

A disorganized closet can be the worst place for clutter. It’s already smaller than a proper room and it typically has more items per square foot than any living space.

Cloe Cabrera of The Tampa Tribune lamented the fact that her walk-in closet had lost its “walk-in” feature and she shared her struggle to get it organized. She sought help from Lorrie Marrero of The Clutter Diet.

Organizing “is difficult because it’s about making decisions,” she said. “Every single thing you touch when you organize requires a decision: Keep? Toss? Donate? Sell?”

It’s also difficult because a lot of those decisions are influenced by fear and guilt, she said: “What if I need this later?” or “I can’t believe I spent so much money on this!” or “I don’t want to be wasteful.”

And at the core of all the clutter is procrastination. The longer you put it off, the worse it becomes.

It’s like dieting, she said. “Just as crash dieting doesn’t work, neither does crash organizing. Getting organized requires making lifestyle changes and then maintaining those changes.”

Cloe goes on to share the tips she learned from Lorrie and cleaned-up her closet in two weekends.

We recently installed a new closet organizer from www.easyclosets.com (separate post forthcoming). We know it will improve our closet space but keeping these tips in mind will help keep it organized.

Having trouble identifying what to keep and what to get rid of?  Here are 20 Signs You Really Don’t Need That Thing.

If you still can’t decide what to get rid of, head over to Keep or Toss and let impartial strangers help you!

by Credit Card Debt Consolidator via Flickr

Well, we have survived the first quarter. March was monumental in that we paid off our first credit account!

We were fortunate to get a very nice bonus check from Steve’s employer. I will admit it was extremely tempting to go on a shopping spree after being so frugal for the past few months. In previous years we would not have hesitated to “reward” ourselves with some frivolous expense.

We used most of his check to finish filling up the tile budget category, paying for our daughter’s trip to NYC this summer, and couple of home improvement items. The rest ended up helping balance our budget as our primary income was lower in February (only 4 checks). However, even though we had a weird month budget-wise, we were still able to keep our eye on the bottom line and our feet on the ground.

We reached our $3000 per month towards Debt Repayment goal and paid an extra $1440 to our focus account to finish paying it off! It is very exciting to see the green portion of our pie graph getting bigger each month. Our starting debt total was $82,314 and we have reduced it to $72,808. It is unbelievable that in just 3 months we have paid off almost $10,000 of our debt!

The next highest interest account balance is $23,217 and it is our goal is to have it paid off before Christmas.

by debtcovered via Flickr

Would you believe a simple phone call can help you get rid of that pesky credit card debt faster? It’s true. Five minutes could save you thousands.

If you have a high APR, call your credit card company and ask them to lower it. You can find the phone number on the back of your credit card.  Call them and ask what your current rate is.  Now, ask them to lower it.  No, really.  Ask them to lower your rate.

The first person you talk to may refuse or tell you they aren’t authorized to lower your rate.  Have them transfer you to their supervisor.  If they say “no”, call back.  You may have to repeat this a couple of times.

If you feel you may be uncomfortable speaking assertively, a book like Scott Bilker’s, Talk Your Way Out of Credit Card Debt!: Phone Calls to Banks That Saved More Than $43,000 in Interest Charges and Fees may help.

His book contains transcripts of fifty-two recorded phone calls so you can be prepared for your conversation with your friendly, yet trained customer service representative.  The savings Bilker achieved were significant. In one phone call, Bilker got the bank to lower the interest rate from 13.72% to 8.75%.  On a balance of $5000, that could save you $2000 and get you out of debt 14 months earlier!

That’s worth a few phone calls, right?

by Credit Card Debt Consolidator via Flickr

In January, we started a debt snowball type repayment plan and YNAB budget to help focus our efforts on eliminating our debt. I have been very excited and anxious to tally up our total at the end of our first month. We stuck close to our budget and made some reductions to our monthly expenses. We had decided to try to devote at least $3,000 per month to debt repayment. As planned, we paid the minimum required payments on all but one of our accounts, and budgeted the remaining amount of $1,621 to this “focus” account. In addition, we agreed to take any unused funds left in our budget at the end of each month and make an additional payment to “focus”.

At the end of January, our unused funds totaled $513, for a grand total of $2,134 paid towards our Focus. We were fortunate this month to receive some unexpected supplemental income / refunds that will not be typical, but I am happy to see we are making progress and off to a great start. Our debt not counting mortgages totaled $82,314 at the end of December 2008. As of February 1st, our total is $78,764.

Although I know this journey will free our lives, this process continues to be very stressful and emotional for me. Barely a week goes by that I don’t break down and “lose it” over something related to debt, clutter, or who-knows-what. Steve continues to be patient with me. The calm frustration shows on his face when he is trying to figure out what to say or do to help me cope with whatever is plaguing me at the moment of my breakdown. A common theme is my overwhelming desire to document every detail of our progress as some sort personal validation that we are succeeding. Psychologically, I need the mini achievements along the way to help stay motivated.

by Firefighter Spot via Flickr

Often when we are going through our stuff to relieve ourselves of clutter, we run into problems parting with things of perceived value. They may have been expensive when we acquired them, or perhaps they meant a lot to us at one time. While things can and do have significant monetary or emotional value, these factors can cloud an item’s true value. The true value of an item is what importance it has to you.

This little exercise may help you determine the true “value” of something. Assume your house is on fire. All living things are safely out of the house. You have time to retrieve one item from inside the house. Size and weight are not issues and collections are considered one item. With that in mind, what do you save? What is the one thing that would pain you the most to lose forever? (If you can’t decide on just one item you can start with five if you have to.)

The point of the exercise is to show you what item truly holds the most value in your mind.

I did this exercise myself, and engaged my family and friends in the game as well. My wife and I both picked our photos. My daughter was adamant that she would grab her laptop.

Someone else said they would take their filing cabinet with all their important papers. I thought this was a good idea so I changed my answer. I decided that I would scan all my papers and photos onto an external hard drive. Then, I could just grab that single item. Of course, this has the added benefit of reducing the amount of “stuff” in our house.

Do the exercise yourself and leave a comment. What is the one thing (or few things) that you would save?

Each bedroom has a lightweight, collapsible laundry hamper. Dirty clothes go into the hamper and when hamper is full it is taken to the laundry room for sorting.

The clothes are sorted into a laundry sorter and then the hamper is taken back to the bedroom. The clothes are put into the three-compartment sorter by colors, whites, and darks. We have a separate hamper for linens, like towels and sheets. Each compartment pretty much holds one load of laundry, so when a section of the sorter gets full, simply lift it out of the sorter and dump those clothes into the washer. This method makes it easy to do laundry because you can quickly visualize which clothes need to be washed next.

When the load is done, we have simple laundry baskets that are used only for clean clothes. We have different colored ones for each “bedroom” of the house. The clothes are taken out of the dryer, sorted, folded and carried in a clean basket back to the bedroom. After the clothes are put away, the baskets make their way back to the laundry room where they are stacked up waiting for the next load.

This system helped us reduce clutter because clothes don’t end up on the floor or in heaping piles waiting for laundry day. Using the separate hampers and baskets, dirty clothes don’t get accidentally mixed up with the clean ones. I end up with less stress and anxiety over having to do laundry, because I spread out laundry day by doing a load every other day instead of putting it off until every piece of clothing in the house is dirty.

Steve and I decided to dive in deeper and analyzed what we really needed. Internet is a must and I was hesitant to give up the landline (even though we all have cell phones). We get basic cable as part of our HOA (which means we pay for it through our dues and thus actually pay more than $103 per month). We had been having some Internet connectivity issues lately and had considered switching to FiOS, which is now available in our area. Steve suggested we try Skype for our phone service and found an adapter at Amazon for $10 that will allow us to use our regular phones.

We canceled BrightHouse completely, except for our HOA basic cable with the channels we normally watch. Verizon installed FiOS for $59 per month and signed up for Skype with unlimited US calling and a local online number for $5.45 per month. We have our TiVo unit, which we were lucky to have been able to pay the lifetime service fee 4 years ago when we purchased it, so we can still record our favorite shows and watch them at our leisure. In the end, we are saving close to $40 a month without really giving much of anything.