This past weekend when I went shopping for diapers for my new daughter, I came upon a wall of packs of diapers of varying quantities and brands and prices. It was an overwhelming sight.

Our diaper brand of choice is Pampers, so I focused on those packs. The three sizes were appropriately priced:

But after considering the $1 off coupon I held, the pricing balance changed just a bit:

Suddenly, after applying the $1 coupon, the largest pack was no longer the best option.

While you’re generally not able to use coupons at warehouse stores — where unit prices are generally lower than retail stores — coupons can really change the game at a retail store.

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

Three years from now when I look back on finishing our basement, I’m probably going to say it was a financial mistake. What was originally going to be a $9,000 project has easily cost us at least $13,000 if not more. The careful planning and budgeting we set up before starting this project is all out the window and now we’re left with just days before the baby arrives and we’re as good as broke. It’s disheartening to work so hard at getting out of debt only to be undermined by one or two poor decisions along the way.

When you’re distracted by other events, it’s easy to let little receipts build up into a huge problem. I just looked at our credit card and out of the blue it screamed “$3,700 Due!” After tapping part of our emergency savings to help cover the piling bills and taking a family loan from my parents, it looks like I’m going to have to sign up for a new credit card (don’t worry, it’s only my 2nd card) and execute a 0% balance transfer to help our family’s cash flow problems.

Paying the balance transfer fee of 3% and spreading my payments out over 11 months will help us keep from tapping more of our savings to finish the project on time. After doing some research, I decided on the Discover® More Card!* since they have a 0% APR promotion for balance transfers and Discover is offering a bonus $50 cash back on the More card.

I’m a little disappointed that we’re adding more debt right after we finished paying off two other debts, but that’s how it goes sometimes. I won’t be using this card – at least until the transfer is paid off – so I’m not worried about racking up extra debt on this new credit. My basement office has to be completed before the baby arrives if I’m going to be working from home and we need to move the stuff that’s stacked in our dining room back down to the storage area. Fortunately, the extra earnings from the blog and the extra cash we freed up by paying off the other debts will cover this “loss”. I guess I need to add a couple more debt bars to my Financial Health list, huh?

When you’re busy and all your attention is focused on one or two major events, it helps to keep a mind on your money and a lock on your wallet. Those “little” Lowe’s trips add up quickly. We’re in for some major hurting, but it won’t break us. We just need to get smart again and handle our money properly while we work ourselves back out of debt again.

* Affiliate Link

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

Photo by: ansik

As we stood in line and waited for a cashier to free up, a wave of excitement washed over me. This is a loan we got into because we were desperate for a new vehicle to replace an old, dying car. We didn’t shop around enough and we didn’t work hard enough to secure the best deal, so the frustration of a minor failure has shadowed this loan from the day we opened it.

I stood there with my restless daughter in my arms and my wife ready to write out that final check and I was feeling a rush because this poorly-executed decision was almost behind us. We learned a great deal and we paid our dues and we’ll not make the same mistakes again – and now the slate was almost washed clean. In mere moments, the car would be completely ours and the loan would be gone almost a year ahead of schedule.

Finally, a cashier motioned us forward and we explained to her that we intended to pay off our loan. She nonchalantly typed in our information and read our closing balance to us: $738. With a quick sweep of my wife’s pen, our debt was gone. Nothing more than another zero in a database somewhere and one less payment holding us hostage. For a moment, there was a quick breath of freedom and it smelled nice. And, boy, that smell was addicting because all I can think about now is paying off the next debt as soon as reasonably possible.

In a year of chronicling our financial journey, I have often written of the debt snowball and now we finally have the opportunity to implement it ourselves. The $300/month we had allocated to paying for this car will go toward paying off the short-term loan my parents have floated us to help us finish our basement and toward driving down the 8.375% home equity loan that we took out to secure the mortgage we needed to purchase this house. With the extra income I’ve been making and the snowflake money we’ve been accumulating, it shouldn’t be too long before we’re nearing another pay-off day and another rush of joy.

If you are working toward debt freedom, keep at it because the feeling of reaching the finish line is something everyone deserves to feel. I don’t think I can adequately describe it in words; it’s something you have to experience for yourself. And once you do, it’ll take you over and soon you’ll be addicted to debt elimination. And there’s certainly worse things to be addicted to! Good luck. It is so worth it!

Photo by: iDanSimpson

I knew that our debts were really punishing us and dragging down our family, but I really didn’t consider the scope of the impact this debt has. Of my monthly salary, over 40% of my take-home pay is used to pay our debts. Over the course of the month, my fixed monthly debts leech away around $1,800 and my credit card adds anywhere between $500 to $1,500 depending on what purchases we made. That’s at least $2,000 each month that could be used to fund our retirement, help my children through school, or even let us take a less-than-frugal vacation once in a while.

At the beginning of each month, Quicken reports to me that the following balances are due to be paid soon:

• Mortgage – $1,000
• Home Equity – $200
• Student Loans – $300
• Car – $300
• Credit Card – $Ouch

Because of choices I made in my past (not that I’m begrudging any of them), I am limited in what I am able to do today. Because of this debt, I am less free than I would be without it. That is why debt elimination is so important – to achieve that freedom that can only come through unshackling yourself from the chains of debt.

I anticipate that we will pay off the car in November and free ourselves from that debt burden, but it won’t be long before we’re forced to replace my truck with a newer, baby-safe vehicle. We certainly won’t have enough savings by then to buy a car outright, so that will mean adding more debt back to our household. Again, debt comes back as a consequence of choices we make.

I know that if I ever hope to achieve financial freedom and truly feel rich, I’m going to have to dig myself out from under this load of debt I’ve piled up. Total debt elimination may not be something on our near future, but knowing that it’s on the horizon at least gives me hope to attack it with everything I can.

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

After “suffering” through a couple of hours of Olympic gymnastics with my wife, we finally got down to the good stuff: Swimming. After a night of close races and upsets, it looked like the favored French 4×100 freestyle relay team would take the gold in world record-crushing fashion. With the third leg complete and the USA team nearly a full body length behind, it looked like the race was already won. And that’s where I was dead wrong.

Jason Lezak, the 31-year old relay anchor, posted a mind-blowing, fastest-ever 46.06 second leg and snatched the gold away from the French by 0.08 seconds and just a shade below 4 seconds under the previous world record. As I sat there in amazement at what might be the best relay in the history of the world, I realized the team’s individual and collective performances are a good metaphor for dealing with debt.

Phelps: It Helps To Have a Strong Start

• Michael Phelps, whose (now 14) gold medals may be worth $100 million to him in sponsorships over his lifetime, led off for the American men and pushed hard though his leg of the relay. Although he came in 2nd behind the Australians, he set an American record with his effort.

The best way to stay out of debt is to never get into it in the first place. If you keep your mind focused in your early years, you can avoid or minimize your debt load. Yes, there are some debts you may not be able to avoid, like student loans, a car loan, or a mortgage, but by navigating around “stupid debt” such as credit cards, you set yourself up for success later.

A strong start is very important, but notice I didn’t say you have to have a perfect start. Heck, most of us won’t. But as long as you don’t make any huge mistakes, you’re at least going to be in the running and lead your way into later victories.

Weber-Gale: Never Coast; Never Look Back

• Starting in a good position, Garret Weber-Gale responded by pushing even harder. By the time he was finished with his leg, the Americans were in the lead by nearly a half-second.

Once you see yourself going well, it’s easy to let up on the intensity and chew up some of your gains by relaxing. To be genuinely successful, you can’t ride the crest of a gain; you have to keep pushing. After watching the balances decrease while you’re eliminating your debt, temptation to return to your debt-growing ways will kick in hard.

It’s almost as if things will pop up deliberately just to try to get you to stumble. Your car’s radiator may drain out on the side of the road just a few days after you make a huge payment to your credit card; your computer will crash just after clicking the submit button on your bank’s bill pay website; your clothes washer will get fed up and decide to lock you out of your house. It seems so malicious, but it’s all part of the game. As long as you don’t give in and power through the pain, you’ll find great success.

Jones: Sometimes You Do Fall Behind

• Although Cullen Jones posted a time better than more than half of the rest of the field in the finals, the Americans were in 2nd place by over a half-second after his leg. His consistent pace was simply outrun by the 3rd leg of the French team by over a full second.

Even the most successful debt warriors find themselves overrun upon occasion. As dutiful as you attack your debt, there are outside factors that weigh heavily on your ability to repay your balance. Interest rates change, jobs are lost, markets tumble, and emergencies happen – there’s nothing you can do to prevent outside problems and little you can do to adequately prepare for them. The best you can do is play through the punches and never lose sight of your goal.

The numbers may be running in reverse, you may see your opponent pulling away from you; but if you give up, you’ve lost for sure. The only way to have a chance at beating debt is to stay in the game and remember that bad times do not last forever. There will be a period of recovery sometime in the future, you just have to hold on until then.

Lezak: You Can Always Catch Up

• Handed a difficult job – a half-second deficit and a pairing against the former world record holder in 100m freestyle – the race was up to Jason Lezak. Instead of bowing to the “odds” and letting the favored French make good on their taunts to smash the American team, he rode the wake of the French anchor swimmer until the time was right to attack and steal the lead.

You’re going to fall behind occasionally, but success depends on how you respond to defeat. The best thing to remember when facing what may be insurmountable odds is to remember that a setback is not a knockout. You may not be winning right now, but that doesn’t mean that you’re out.

There’s nothing more exciting than a come-from-behind win, and the American team is feeling that now. My family has been feeling that as well in our battle with debt lately. After months of what felt like just treading water, we’re finally making some serious advances against our debt as well as getting great news about interest rate reductions on our student loans (down to 4.22% from a high of over 9% earlier this year). If we had given up and stopped our assault, we wouldn’t be experiencing this joy right now and we’d probably be in even more pain.

Team USA: You’re Not Just Swimming Laps

• This was a big race and theirs to win. All the projections had the French blowing past the Americans in the final – nobody expected to walk away from this final saying it may be the best relay ever. And that’s the clincher: The race isn’t decided until the swimmers actually get in the pool and make it happen. And when it was all over, the four unlikely gold medalists stood atop the podium with the pride of a nation ahead of them and a shattered world record behind.

Debt elimination isn’t some routine exercise; it’s not a preliminary heat; every day is a gold medal opportunity and results are final every night. None of the swimmers’ previous times counted in the final, but every one of your actions today count toward your running total. Are you going to swim like everything’s on the line and go for the gold, or are you going to let your red inked enemy win the race?

To hell with the odds or the “favored” team; this race is yours to win. Now get in the pool and swim!

Photo by: mattlehrer

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

Man, snowflakes can really pile up fast if you’re not paying attention! When I started squirreling money away from surveys, “found money”, and side income, I didn’t think it would ever amount to much – and that’s why snowflaking is so successful.  Little by little, your snowflakes grow into a full-blown snowstorm to freeze away your debt.

Snowflakes don’t have to start as much.  By definition, many snowflakes will be just a few dollars, but the size of the snowflakes isn’t what matters – it’s their impact on your debt over time.

Since January, here are the snowflakes I’ve tallied up so far:

• Side Business – $500
• Ad Revenue – $180
• Surveys – $82.93
• Selling Stuff on Amazon – $53.54
• ING Direct Referrals – $40
• Product Rebate – $29.95
• ING Direct Sign-Up Bonus – $25
• Product Referrals – $15.34

In all, I’ve earned $926.76 extra so far this year that will go to paying down debt.

Just late last week, my wife sent off an extra car payment of $800 (taken from the snowflake money) which will be followed soon by the “regular” car payment of $300.  By the end of the month, we should owe less than $3,000 on the car loan and by the end of the year it should be paid off entirely! Next, we’ll work on knocking out the student loan debt as my snowflakes grow through overtime at work and more side business and ad revenue.

What snowflake sources have you found?  I’m curious to hear some other snowflake success stories.

Photo credit: wvs

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

Two Fridays ago, I put a down payment on the bike I wanted since the bike shop had to order it for me. After picking out my color, the salesman rang up my order to get my final total. With sales tax, the amount came out to be around $330, but what I heard was, “This bike costs 13 hours of your life.”

I don’t think I’ve been keeping it a secret, but I make $70k each year. After taxes and withholdings for insurance and my 401(k), I bring home around $52k anually. If you break that down into an hourly wage, my effective earning rate is about $25 an hour. (Divide a salary by 2,080 – the standard number of work hours in a year – to get an estimated hourly rate.) So I need to work for 13 hours to bring home enough money to pay for a $330 bike.

That got me to thinking about some of the other things I spend my money on. My mortgage payment, including tax and insurance, is $1,434. That means that I have to work almost 58 hours each month just to pay for my house. And over the course of a year, I work over 688 hours for my house. Considering the previous mark of 2,080 hours in a work year, I’m working 33% of the year just to pay for my house!

Each month, we allocate nearly $2,300 to pay for our debt. I work 92 hours a month, 1104 hours a year, or 53% of the year to cover our debts. Talk about being a slave to one’s debts!

This is exactly why every personal finance-minded person focuses so heavily on paying off debts. Once you’re free from those shackles, you can start working for yourself instead of working for the bank. A good personal finance strategy is all about freedom, and what is more free than being able to use your money to live your life instead of paying for stuff?

Take a moment to think about how many hours of your life you’re burning just to cover your debts. Like me, you may realize that most of your life is being stolen away by your random purchases. That is when you realize that frugality is more than just reducing unnecessary expenditures – it’s about reclaiming your life.

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

I was analyzing our overall expenses this weekend and I was amazed at how much of my salary goes toward paying debt. Each month, after withholding for taxes, insurance, and my 401(k), I bring home $4,300. Over that same period, the car loan, student loans, home equity loan, and mortgage bleed away $1,700. That means I’m throwing almost 40% of my disposable income at debt. And that number doesn’t include the more than $400 each month I have to put away to pay property tax and insurance.

That weight that debt puts on your finances is why nearly every personal finance professional encourages you to pay off your debt as soon as possible. Freedom from debt is the biggest step toward financial freedom. Instead of being a slave to the bank, you are able to decide for yourself what you will do with your money.

I won’t be paying off my mortgage any time soon, but we could reasonably kill off our other debt within 5 years according to our snowball forecast. That would provide a relative “raise” of $715 per month, so that got me to thinking what I could do with an extra $715 each month, or $8,580 each year…

• I could max-out a Roth IRA (I don’t currently have one) and put the other $3,580 into a education savings plan for my daughter (another thing we don’t have yet).
• I could save up over the course of a year and buy a good used car outright (or nearly outright) to replace my old truck.
• I could finish my basement and give us more usable living space, a new office for my business, and a workout room to replace our dropped gym membership.
• My wife and I both could get the LASIK procedure done.

There are so many things that freedom from debt can bring you, as long as you don’t get stupid with it. It’s very easy to get too wrapped up in your new lifestyle and fall right back into debt again. The goal is to achieve freedom and stay free.

You just have to decide to not let debt hold you back any longer and then do something about it. It may take a few years, but you have to stick through it. You don’t reap what you sow today; you reap what you sowed yesterday and you will reap tomorrow what you sow today. So there will still be hard times ahead for a while if you’re just starting to pull out from under the load, but if you stay focused eventually you will start benefiting directly from your hard work. That is when you will truly start feeling free.

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

With the passing of my birthday last weekend, I decided it was time to make some major changes in the direction of my life. Adding to the financial changes we’ve made, I also began some personal, physical changes as well.

Since graduating high school 10 years ago, I have steadily gained weight every year, with only one year of genuine weight loss (about 20 lbs that year). Sadly, I am now 50 pounds heavier today than I was when I gleefully tossed my mortarboard into the air. These added pounds have taken a toll on me physically – I look bad and I’m in poor shape. But that will change this year as I start taking off that weight and getting into better shape.

After reading an interesting resource, The Hacker’s Diet, by John Walker, I began to notice some interesting parallels between the science of losing weight and losing debt.

We, as Americans, are overweight and financially obese. We have overspent much more than we’ve overeaten and now we’re too fiscally fat to move. We have no choice but to take a debt diet.

The problem is, just like starting a food diet, it’s uncomfortable to ease back on spending. We’ve become addicted to spending and the stuff it acquires and our bodies go into shock when we suddenly pull back. The biggest pain in starting a diet occurs over the first 3 days before your body starts to adjust to the changes. Similarly, a debt diet really feels the worst for the first few months. That pain is why most people quit diets, but those who quit often end the diet just before the benefits really start to show themselves and things get easier.

And things really do get easier… Once your body adjusts to its new reality, it’s a lot easier to cope. Soon you’ll start seeing the weight or debt fall away and you’ll start getting addicted to seeing results. You’ll be less interested in food or spending and you’ll be eager to lose even more. And you might be surprised by how big the results can be!

The maximum “safe” weight-loss plan loses about 2 pounds per week on average after the ramp-up period. That means I could reasonably lose all of my desired fat in just 25 weeks – I’d be thin before fall! Your debt can fall off in the same dramatic fashion. As I illustrated over the past two weeks with the power of the snowball and how to make your snowballs work in overdrive, when you earnestly start paying your debt and even paying extra, even a sizable debt can melt away in just a few months to a few years. All it takes is the discipline to start and keep pushing through the hard times.

I won’t lie: dieting is painful. You are voluntarily starving yourself of what you previously desired for the sake of your health and wallet. It’s only reasonable that it won’t come easy. The goal is to start losing and then lose steadily until your goal is reached.

If you are in need of a diet, there is no reason to not start immediately. Cut back on calories or spending and start working toward your future right now. You’ll have plenty of cheerleaders along the way, myself included, and you’ll thank yourself when it’s over.

Good luck!

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com

The other night, my wife and I realized we haven’t updated our debt graph poster since we built it three months ago. A lot has changed in that time and we wanted to see the fruits of our labor. So, once again, I pulled out my trusty ruler and calculator and sat down to work calculating the percentages and the appropriate bar lengths.

As I marked and then trimmed the red bars, it felt as though I was physically cutting away at our debt. I can’t tell you how satisfying it was to hold up the “huge” section removed from the car loan and how funny it was to try to pick up the small sliver of red construction paper that represented the home mortgage’s balance reduction.

Then it occurred to me: This is why we created this graph. Sure, I have the same thing on the blog and I can update it with relative ease, but the physical act of attacking these bars with the scissors gave a visceral sense of victory over our debt. In time, I will be able to completely rip away the remaining red and leave nothing but a happy field of green.

To make the graph even more relevant, I decided to add the snowball targets that I wrote about yesterday. Now as I cut away at the debt bars, I can see us approaching an even closer goal that will let me cut off even more red every month. If you have defined goals for your debt, I suggest adding them to your graph as well. Psychologically, you may be overwhelmed by the debt as a whole, but achieving a string of minor victories will help you build up momentum and keep you from getting discouraged. Avoiding discouragement is worth anything you have to throw at it because once it sets in, it will throw you off track faster than anything can.

It’s great to get back to the first project that got me truly interested in our personal finances. And now that I’m finally seeing results, there’s really only one appropriate thing to say: Goodbye debt!

(c) 2007-2009, That One Caveman, http://www.thatonecaveman.com