I'd Like to Dedicate this Post to Aldi!

For those of you not familiar with Aldi, it is a European-based supermarket chain located throughout the US that offers low prices on everyday grocery items. Aldi cuts advertising and convenience costs and in turn allows customers to save on groceries. I highly recommend following the link above and checking out their "Shopping Smarter" philosophy.

That being said, there is a short list of things you need to remember before making a trip:

1.) Aldi does not provide grocery bags- Go frugal, go green or go home!

2.) Bring a quarter with you. Carts are locked and you have to insert 25 cents in order to release it from the cart corral. But...when you return the cart you get your quarter back. You will never see a cart rolling aimlessly through the parking lot!

3.) Bring a list- in general this helps you save because you get only what you need. But, Aldi does not have everything so chances are you may need to hit another grocery store for those occasional items.

I'm on a mission to do 98% of my grocery shopping in 2009 at Aldi. My weekly budget for groceries is $25 and so far things are going well. I have been able to find everything I need, and you can browse every item the store has to offer in 30 minutes flat:) As I mentioned above, there are some items Aldi does not carry so the other 2% of my grocery shopping will have to be done at Kroger.

Even if you have to drive a little further, shopping at Aldi's is so worth it!

Where do you see yourself in 5 years?

I never will forget being asked this question during my first interview after college. At the time my answer to the potential boss was "Not here." Can you believe I said that? Can you believe they still hired me?

It is now 4 years later and I have changed employers twice since then. Just as I knew my career would eventually change, I also know my financial situation in 5 years will be very different than where it is today.

I would like to humor myself for a few minutes and tell you exactly where I see myself financially 5 years from now:

1.) No credit card debt, in fact I have not put anything on credit in over 5 years:) Although I do have a Discover Card hidden in my sock drawer in case of extreme, and I do mean extreme, emergency.

2.) Traded in my 2005 Honda Civic and paid cash for a new to me car.

3.) Established a cash emergency fund consisting of $5,000. This is enough to cover my basic monthly living expenses for at least 3 months if I should lose my job or have to cover a major expense, i.e. new roof, new furnace.

4.) Invest 15% to retirement every month. I plan on retiring earlier than average 25 years from now.

5.) Make double-payments on my mortgage every month and hope to have it paid off in the next 5-7 years. It is the only debt I currently have.

6.) During the early stages of my debt elimination I made the decision to temporarily suspend vacationing for 12-18 months. Since I have paid off all non-mortgage debt, I have made it a point to take a vacation every year to a city or country I have never visited.

7.) I GIVE like it's no body's business. Every month I am able to give 10% of my earnings to local charities and organizations within my community. This has been and will continue to be the most rewarding part of shaping my financial future.

Thanks for letting me tell you what I see in my crystal ball!

Frugal Find: Area Rug on Craigslist

I've been in my house now for a year and a half and have been on the prowl for an area rug for my dining room. I've looked at various stores and could never quite justify spending between $120-$200.

But...I decided to check out Craigslist because I've heard lots of great feedback about it. Can you imagine how surprised I was when I saw the posting for this area rug for $60? It was exactly (almost) like what I was looking for and for 1/2 to 1/3 of the price I would have paid at a retail store! I actually ended up paying $58, that was all I had on me in cash and I figured the seller would be somewhat flexible...and she was:)

I have a monthly budget of $10 for household items- so this just about uses half of my yearly budget in that category; and I am okay with that. This is something I've been considering for a while and I want to be able to continue to make my house look nice and make budget friendly improvements while I work on my debt elimination.

This is the first item I've ever purchased from Craigslist, but definitely will not be my last. If I'm in need of anything in the future Craigslist is the first place I will shop!

What...Now How

In an earlier post I detailed my 2009 Financial Goals. Now I would like to discuss how I plan on accomplishing these goals.

Let me preface this by mentioning my very average yearly salary from my full-time job; which is my way of saying that debt-reduction can be possible for anyone if you make it your priority...above average incomes are not required. Many of the steps were gleaned from advice given in Dave Ramsey's book "Total Money Makeover" and from a variety of frugal/debt reduction blogs I have visited over the past year. I highly recommend www.moneysavingmom.com for information on all aspects of living frugally!

Below are changes I have made regarding my income and spending habits in addition to ending credit card usage.

Step #1- Part-time J-O-B:

Several months ago I was offered an opportunity to make a few extra bucks and help out with a friend's cleaning company. Because I knew I could use the extra money I said "Sure!". Now 4 months later I average about 10 hours a week. It happens to work out that this "vehicle" to debt reduction was in place before I really even began my journey. This has been such a benefit to me because after all the monthly bills are said and done, I don't have a lot of extra money left over.

Step #2- Temporarily stop 401K Contributions:

This is something Dave Ramsey suggests. I have invested 6% for the past 2 years and I plan on being debt-free except for my mortgage in about 18 months. Temporarily stopping the 6% contribution allows me to pay off my debt considerably faster and then begin investing again in 12-18 months with at least 15%. If my debt payoff plan takes longer than initially determined, I will begin investing in 401K in 18 months no matter what.

Step #3 Back to Basics:

I do not necessarily consider this a debt-reduction technique as I do a debt-avoidance technique. By living fairly simply I will be able to steer off any future debt and stick to my monthly budget. Basics: No cable television, 200 anytime minute cell phone plan (I'm not a talker:), pack lunch everyday, limit going out to eat to twice weekly, Brita water pitcher, lower thermostat when I'm not at home, combine trips in my car, envelope budget system.

Step #4 Absolutely no sense of Entitlement:

Debt is debt is debt. In the past I have told myself "I work hard for my money, I deserve..." I believe this is the way most people find debt justifiable. It has been absolutely crucial for me to change my mindset when it comes to feeling a sense of entitlement. There is nothing I need or "deserve" so much that I am willing to go into debt for it.

Step #5 Weekly budgets:

As I mentioned in step #3, I have initiated a budget for my weekly expenditures using the envelope system. Some details- $20/week for gas, $25/week for groceries, $40/week for going out to eat/entertainment (for me these are inter-changeable). I also have a monthly budget for household bills, hair cuts, oil changes, etc. but thus far the weekly budget has really helped me gain back control of my money.

Step #6 Temporarily stop Vacationing:

As I considered ways to save I began putting together a list of activities that can sap a good month's worth of debt reduction. Vacations are one of these things; mainly because they are not a basic necessity and I've decided PTO time can be better spent investing in my house by making inexpensive improvements. I will be fine without taking a vacation for the next 12-18 months. I took a 5-week trip to Europe 4 years ago, if I feel like I deserve a vacation I will simply look at my photo album from the trip and reminisce!

Step #7 Be Unwilling to pay for Convenience:

I want to note that this is much easier for me to do because I am a one-woman show and have no direct responsibility for others. The following are some conveniences I am no longer interested in paying for: car wash, frozen prepared meals (trying my best to switch to homemade), coffee-shop coffee, workday lunches, bottled water, non-clearance clothing and the list goes on and on and on...

I have by no means done anything drastic to alter my habits. Save for the part-time job, it has really been a combination of small changes that have made and will continue to make the biggest impact. Another significant change is simply an increased awareness of where my money is going...and ensuring that the "disappearing act" stops! As I stated in my first post, a positive attitude is the only way to approach debt-reduction and quite possibly the best change I will make on my journey to financial freedom.

Keep on keeping on!

2009 Financial Goals- Better Late than Never!

What better way to begin my journey to financial freedom than with a few measurable goals to track during 2009:

1.) Establish $1,000 Emergency Fund
-As of today at 5pm this has been fully funded with $1,001:)

2.) Pay off credit card debt- $1,950

-I consider this debt already paid off. I will receive my 2008 tax return in a few weeks and it will automatically be applied toward this debt.

3.) Pay off American Honda Finance auto loan by July 2009- $5,466

-My plan is to begin making larger payments on this loan by late February/early March. This will require a monthly payment of roughly $1,000 but I'm aiming high. July is my birthday month and I cannot think of a better way to celebrate than with a debt pay-off!

4.) Pay off $6,500 of my $13,455 Sallie Mae Student Loan

-After the car loan is paid in full it's on to Sallie Mae with my "super-sized" repayment plan. I will need to make roughly $1,200 payments for 5 1/2 months in order to have a nice chunk paid off by December 31, 2009.

I am being very idealistic in my approach; in my opinion a good attitude is the only way to approach debt pay-off. Although I have budgeted for unexpected items in my monthly budget, I certainly do not have the money on hand for something very expensive (furnace, for example) but I plan on doing what I can and dealing with the obstacles as they arise.

Here's to a wonderful start to 2009!