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  1. My wife and I are getting out of debt in 2011! We’re sick of debt and have made an aggressive plan to be debt free by the end of March! Click my name to follow our progress on my website! :)

  2. We’ve been systematically eliminating debt and reducing spending for the past two years and have our sights on knocking out our mortgage in the next two years or sooner. It is a good feeling and nice to see the finish line for going debt-free in sight. But would not have gotten there without all this great advice from GRS.

  3. I think I will take a crack at tracking my spending. We’ll see how that goes. Thanks. You’ve finally convinced me to take that plunge.

    I’m adding to your list. Declutter, simplify and minimize.

    It’s amazing when I go through all the crap I have, some things with tags still on. Supplies for projects uncompleted. Duplicates of small and large items. Three nail clippers, two sets of gardening gloves etc… My overspending is sitting in over 20 boxes in the shed waiting to be sent to goodwill.

    I’m not in debt and some of that is stuff I should have pitched years ago, but I realize I have spent too much in the past. It is quite humbling and I’m ashamed.

  4. This is a collection of probably one of the most useful tips collated in an article. What i feel, however, is most people who are careless with their money lacks basic organizing skills. In order to follow the above mentioned tips, the most important thing is to get organized and being responsible. People with these skills with find the article extremely useful. For others, it’s simply another year of debt.

  5. As I had in my reader story a month or so back, our goal for 2011 is to get that year of salary socked away in the bank. As of right now, we’re about 4 months away from hitting it.

    The major financial goal beyond that is to find out what the “pain” point is for savings for us. Currently, we save my wife’s paychecks every month 100%. But before she got this job, we were living entirely off of my salary and still saving about $900 per month. Since she became more fully employed, we stopped saving out of my paycheck altogether.

    So every month, I’m increasing the automatic savings plan by $100 per paycheck (so an extra $200/mo)until we hit the “Ooof, we don’t have enough money” point, and then scale it back to the month previous and set that as our regular savings rate. Starting in January, we’ll be putting away $2k into savings every month. I figure if we are smarter about our spending, we can get that rate up to $2600 – $2800/mo.

  6. I just started blogging last year, and one of the best things that came of it was the learning. I started created separate savings accounts for vacation and such using Smarty Pig from the advice of others. (I switched to a credit union 23 years ago when Comerica was killing me with their constant fees, at least I did that right!)

    I made goals for the first time this year, and I am curious to see how it goes. I realized that I need to frequently revisit my goals, or they will drop by the wayside real fast.

    Great post.

  7. I think, for a lot of people who find themselves in debt, a fundamental philosophical change is in order. A lot of these suggestions, while incredibly helpful to those just starting out, treat the symptoms rather than the disease. Step #11 in JD’s list should be step #1 — educating yourself on what lead you astray is the key to taking charge of your time and freedom.

    It’s no accident that a lot of the personal finance blogs double as blogs about minimalism and mindfulness; it’s a philosophy that drives the real change. Debt just means you’ve sold your future hours. When you realize that true wealth is the ability to dictate how you spend your own time and not just a fat bank account, that’s when you see how detrimental all debt is to your life. Yes, all debt. Even a mortgage, which many finance pundits say is “good” debt, still monopolizes your future time. When you owe money to someone else, you owe them your time.

    Once you start evaluating how you got into debt, what debt means to your life and your future, and you see why getting out of all debt is integral to living a fully aware and present life, the rest of it comes naturally. You won’t need to be told to make a budget or track every penny because you will live the philosophy and not just live a check list or a how-to manual. Start right now.

  8. There are so many financial tips and advices out there but GRS consistently possesses the most practical, down to earth tips I have ever come across. Thanks!

  9. “Choose a rewards checking account”

    While Moneyrate.com is good, I find that you really have to do someleg work to find a bank with an AWESOME rate that will accept out of state customers. I think Kasasa.com is the best place for finding great checking accounts with excellent customer service. I used it to help me find a bank with 4.11% interest on checking, and the usual concessions of free Visa debit card, bill pay, etc.

    Of course – make sure you exercise due dilligence and check to see if the bank you’re switching to is troubled.

  10. Step 10 : # Earn Extra Money… I wish this to be in top most point.

    If you wish to earn little extra and make an execution plan for that, it will automatically reflect in all other points. You will be more organized, more planning & less spending. Every person should have an entrepreneurial venture in their inner mind, so they can work perfectly in full time business also.

  11. Last night I was reviewing some old journals and realized I don’t make frantic budget lists in my journal anymore because I have an actual budgeting system thanks to GRS. It’s true what was said in a recent post about how money in the bank is the best pillow to sleep on! I also know our household net worth now. True, it’s a “large” negative number, but it’s a life change for me to even know what that number is or to believe that it can change. Happy New Year!

  12. I do most of the above, but Budgeting is the big exception.

    I don’t budget, but if I were to do so, it would be to increase my spending. I say this because I would like to use a budget to set an amount to spend for entertainment each month and then stick to it. So I flirt with the idea of budgeting just for that alone!

    I would like some more side income opportunities too!

  13. “The single biggest investment mistake you can make [is] not using your [retirement] plan and not maxing it out.”

    I am always a little bit confused when someone throws this one out.

    “Maxing” out a 401(k) technically means putting $16,500 (or whatever the inflation adjusted amount is now) into the account each year. Now…I put away a healthy amount (roughly 2/3 of that) but am I really making a mistake by not saving another $6K per year? That would entail sacrificing some of my liquidity in the short term (i.e. savings) for some more long term investments.

    So do they really mean maxing out 401(k) or at least maxing out up to what your employer matches? I can never tell the true intent of that comment…

  14. Excellent tips, there’s little I can add to this. (I’m going to link to it in today’s blog post.) Perhaps a little something about making the IRS a priority would be good to add? (I can’t help thinking about it, I work with people who owe every day).

    It’s a new year to start fresh with the IRS. Resolve debts, claim all the best deductions to reduce taxable income when you file this year. Paying tax debt is paramount to other debts. Normal creditors won’t seize funds from your paycheck/bank account like the IRS can and will.

  15. My husband and I sat down over the weekend and as usual made a list of goals for the coming year: a list of things to buy (starting with a new mattress) and a list of things to fix around the house (starting with the sidewalk). He understands goals but hates to talk about money. At the very end, I slipped in that we were also paying off the car and two education loans this year. He survived the sneak attack!

  16. Thanks for the reminder. I am one of the back sliders when it comes to tracking my expenses. Like you, I felt I had my expenses will under my income, so why bother.

    I will jump right back on the horse this year!

    Thanks again!

  17. Mint just did not work for me rither. Quicken Deluxe is on sale for 1/2 price and includes willmaker.

  18. All good thoughts, but a lot of thoughts for someone just getting going. Even if you just focus on #1, write down your goals and stick with them, you’ll be better off.

  19. I’m SOOO disappointed that you would share viewing porn as a way to earn extra money. With all the problems porn addiction causes to families and our society in general (every sex offender starts with porn), any money earned that way is ultimately a loss.

  20. I personally feel overwhelmed by online programs to track finances. They may be simple to learn, but I like to stick with what I already know, so I just created a standard spreadsheet in Excel to track my finances, and use that each month.

  21. I was going to pay down some debt, but now I am having second thoughts with that money with all the predictions about the booming economy this year… All my interest rates are dirt cheap, so my compromise will be no debt accumulation this year and invest the rest!

  22. Oh wow, huge huge post. Too many things to comment on so I’ll just focus on what I like most.
    – spend less than you earn. This is the most important early step toward building wealth. You should already be doing this, but if not do what ever it takes to achieve this goal.
    – fund your retirement. The earlier you start the better off you’ll be. This is extremely important.

  23. Great post today. I think it’s key to work in manageable chunks. One of my goals for my week-long winter break was to get a handle on our money situation. I say this every year but a big reason to actually do it this time was facing the fact that we’ll have to start payments on my husband’s grad school loans this month. I was very interested to see how the amount we paid monthly would impact the loan over time. Besides our mortgage we have no other debt and I’m not comfortable having this one hanging over us. (In typical fashion I put this off until Sunday night…)

    I started by dusting off an old Excel budget spreadsheet that I had started in 2010 but hadn’t kept up with. It’s simple, basically tracks income and expenses in general categories. I used my account activity statement from my bank to track the past three months to get a feeling of where we stood and just how much ‘extra’ we had that we could put towards the loan. Happily, I discovered that we should be able to pay more than our minimum and with a little push at the beginning (taking a bit out of savings to reduce the principal up front) will be able to pay the loan off in about 4 years instead of 10, and save thousands of dollars overall. It only took a couple of hours to do this and I instantly felt in control of the situation, instead of controlled by it. So we’ll strive to pay as much as we can each month, and knowing the benefit of that will help in those moments when you catch yourself saying ‘do I really need to spend this money right now?’

    This kind of goes along with comment #12 about budgeting to actually increase spending. Our situation is similar – taking the excess we fortunately have and putting it to good use. In our case we’ll make a good effort to ‘spend’ now to actually save money down the road, if that makes sense.

    I’ve also decided to make the rather nebulous goal of ‘managing our money’ a little more concrete and manageable by modifying it to be ‘update our budget spreadsheet’ just one a month. I’m not a nickel and dimer at all but this exercise showed me it’s not that hard to just take a little time now and then to make sure things are still on track. And I admit I got kind of nerdy about seeing the numbers work out. Once you have data it’s kind of fun to analyze it…

  24. Even though I like most of these items (especially “have goals”), I still don’t track my spending nor set an explicit budget. Maybe because none of my goals are focused around much I *don’t* have, which is what these (especially tracking spending) focus on. Tracking spending seems a bit like building a house, and keeping very detailed records not of what you still need, but of all the materials you’ve previously used. Will this help you build another house more efficiently in the future? Maybe, but I still think it serves me, personally, better to focus on things like “we need shingles for the roof” rather than “we used 385 2x4s in the walls”.

    And on a less critical note – I agree with J.D., goals are key. Without goals, none of the other stuff is going to matter because eventually you just find yourself thinking, “But why bother?” and losing your motivation.

    And “automate your finances” is a real headache-saver. It frees up so much of your attention if you don’t have to worry about actually paying your bills (as opposed to earning money to pay them with). Just knowing they pay themselves and no one will come calling that they’re late because you forgot, or because you were on vacation while they were due, etc.

  25. I was also shocked that you shared watching porn as a means to add extra income. I won’t be following Get Rich Slowly anymore. For those who wants to be debt free I suggest reading Dave Ramsey book or Howard Dayton’s book Free and Clear.

  26. @21 Esther and @27 … Read Donna’s article before passing judgment. She was watching porn for science. Not a job available on a regular basis and not a job for marketers. The article is about being a research subject, not about porn specifically. I believe she also got an MRI. I’ve done stuff like put my hand in ice cold water and spit into a test tube for science (and money).

  27. Reward Credit Cards

    I’ve been on the lookout for a good rewards credit card couple of years now. The offers I get sent in the mail always have the annual fee. I tried signing up for one that I found online, but they told me that I already had “sufficient credit.”

    Because I have been good about paying my credit cards off each month, the credit card companies have raised my credit limits beyond what I need. Will it hurt my credit score to ask them to lower my limit or to get rid of some of my cards so that my credit limit is low enough that I can get a good rewards card?

  28. I really want to track my spending this year. It all seems to trickle away through the little things, so I want to know where it all goes to see where I can make savings and where it’s OK to stay at my current spending level. I’m hoping to spend much less on clothes this year, but more on accessories, so I need to make sure it balances out.

  29. I’ll do a follow-up on Mint when I’m certain what I’ll replace it with. I’m trying Yodlee now (and, in fact, need to finish setting it up when I’m done with lunch). The biggest problem I had with Mint was that I couldn’t track my investment accounts. It simply refused to connect with Fidelity. Yodlee connected immediately.

    I still may wan to go back to Quicken, though. Time will tell.

  30. One thing I’ve noticed is that a number of the checking accounts I opened in 2010 for the $X bonus of opening the account are now sending me “we’re going to start charging you fees unless…” letters. And the hoops for me to jump through that they list in the unless part are beyond anything I want to bother with. So I’m closing those accounts. It’s time to get things under control anyway and consolidate, so what better motivation than to avoid new bank fees. It goes along with my simplify and declutter goals for 2011 :)

  31. Thanks for the great post. On the topic of budgeting – one of my favorite quotes is “A budget tells us what we can’t afford, but it doesn’t keep us from buying it” – How true!

  32. One of my new financial goals is to be out of debt by the time I’m 30 (I turn 25 this March). My partner and I have about 44 000 in student debt between us (consumer debt has never been an issue). A few days ago, I copied a tip from one of the reader’s stories a while ago. I made a paper chain where each link represents $500. As we pay off our debt, we’ll cut the links. Right now, I’m a grad student and my partner is waiting for his provincial license to start work. Once he gets it, we’re going to seriously start tackling our debt. Our ultimate dream right now is to get out of debt and save up for a small farm.

    I think a lot of these tips are really useful, and are good ways to figure out where one is on the financial journey. Looking forward to reading more tips throughout 2011!

  33. I kept expecting JD to mention YNAB (You Need A Budget) in #2 or certainly #3.

    I’ve used personal & business financial software for 20 years and it is THE best thing I’ve ever come across for getting a handle on your money.

    If you want to track every penny, and develop a budget, take a look at YNAB. You can try it free for 7 days, then there’s a 30 day money back guarantee. http://www.youneedabudget.com/download/

  34. Don’t forget that lots of folks don’t have the 401k option. Teachers, like myself, do have the Roth IRA option but also the 403b. My school district doesn’t offer a match, although I have heard that such districts do exist (but perhaps they are just mythical).

  35. A note on the “automate your finances” tip. I’ve historically been hesitate to do this because of a concern that someone may well withdraw they aren’t supposed to. Unfortunately, this sort of eventually came true.

    We moved, and switched car insurance offices to one in a new state. Word never got back to the old office (despite it being the same company) and they went ahead and auto-renewed, without letting me know ahead of time, and using an older checking account I only keep a couple hundre dollers in. $40 in overdraft fees later, I’m still sorting out the whole mess. And it wasn’t even my intention to set that bill up to automatically withdraw.

    I reserve auto-pay to small bills, like utilities, that have no risk of ever causing too much harm (or time-wasting). Just something to keep in mind.

  36. Great list!

    My wife and I are writing our plan for 2011 and the years to come. Hopefully we’ll concentrate on building up our Roth IRA, which we seem to neglect.

  37. Great post, thanks! One question regarding budgets. When it says to save x percent, does this include 401k/IRA type saving, or is it more saying cash on hand? What are you guy’s opinion?

    I am 27, I invest the maximum that my company matches (6%)into 401k and I save 15% of my net paycheck into a separate savings account.

    Thanks again!

  38. JD this was just what I needed, and therefore, bookmarked. I feel like with some of these things, I’m definitely on the right track, but for the others, I opened up your links which I’m about to read in a minute. Thanks so much!

  39. Wanted to say thank you so much for writing this blog. You’re helping so many of us take control of our money, of our finances in general, instead of letting it control us.

  40. JD,

    I’ve been reading your blog for awhile, but this is my first comment.

    I love all the posts, but I love the comments even more. I had read personal finance books before, but it wasn’t until I read all the comments on some of your posts that I realized that there are many ways to set up your budget.

    So I’ve done that for 2011. Our goal is to pay off our cars and have a 2 mth emergency fund by the end of the year. We just paid off the credit card in Dec.

    And I’m am living proof that it isn’t about the math: I teach math at the college level!! I can do the math, I just couldn’t figure out how to make it work for me. The comments helped me do that.

  41. I’m not so sure about #9 (Automate your finances). Automatic payments can make you lazy and less likely to review and optimize your expenses (#3 and #4). I think you should always be aware for what exactly you are paying for and how much. Bills and payments should be electronic, of course, but not automatic.

  42. JD

    This article may be an annual one, but it’s a perennial favourite and worth reading – and acting on – every time. Happy new year to you.

  43. Hi JD,

    I became debt-free about six months ago and I can’t even begin to tell you how freeing the experience has been. It has made such an impact on my life. I no longer worry about money and having ‘enough’. I’m fortunate to have a good salary, but retail therapy was my downfall, especially after a stressful day at the office. I think there’s a mindshift that has to be made to get a handle on your finances and that many ways will get you to that goal. If one thing isn’t working, try another. No one gets out of debt in one-day, so the process is really important and you need to have faith, especially when you see the debt go down each month.

    You’ve given some fantastic ways to decrease your debt and at the same time, increase your money to pay off that debt. Now that I’m debt-free, I know that I will never go back into that trap.

    Thanks so much for sharing,

  44. I read the entries for yesterday and today and was inspired to open an ING savings account with higher interest.

    The other day I realized my savings account of $3000 was earning me only .10 to .13 cents a month. ING will do a bit better than that.

    Thank you for the encouragement!

  45. Last month, my husband and I paid off the last of our debts except for the money we still owe to a line of equity. We’ve also set aside money to use for the inevitable car and home repairs. Best of all, we’ve set aside money for monthly date nights.

    Your article is inspiring me to set paying off the line of equity as our goal for 2011. I look forward to writing you in a year to tell you that we did it and are completely debt-free. Then we can have real fun building wealth, giving more to charity and more $$ for travel. I have your book on my bookshelf and look forward to reading and using its suggestions soon.

    Thanks, J.D.!

  46. To spend less than you earn should be the basic idea for everybody. Well every reasonable person, I hope, realise that… Anyway thanks for all useful tips they are perfectly ordered that should suits for everyone. To take control of personal finances should become a routine for us not just like a resolution for New Year. Wish you all the best!

  47. Happy New Year, J.D.! Discovering your column in 2010 has changed my financial life and outlook in more ways than I can list, and it has had a positive ripple effect to my grown children. Thank you!!

  48. A second job, side job, freelance gig, consulting, contract work or temp work can be a great way to get ahead. When I was starting out in my career, I often picked up side jobs like freelancing and consulting, so that I could top up my emergency fund, have a car, save for a downpayment on a home and so on. I think, though, that these sorts of projects can also be great for building self esteem, a sense of independence, a portfolio and a better work history. For example, if you’re stuck doing lower end stuff at work or stuck in a job where you’re not getting a chance to do the stuff you like, you can use side jobs and side businesses to build up your work history in other areas. In my case, I was able to build up a really great portfolio and move into a management position when I was still very young.

  49. This is a really good post. You’re touching on many major areas of personal finance here, and what I really like is your focus on learning and continuing financial education.

    One thing that might be good is to schedule some of the tasks. Set goals, make them actionable, and put a timeframe around them. Example: Find highest yield checking account by 2/25.

    Making a personal finance calendar out of these steps can go a long way to successfully following through. Anyway, good post!

  50. I’m glad you posted this! It’s a good way to start off 2011, and for me it was actually a morale booster. I’ve accomplished most of the things on the list already, less than a week into the new year!

    You should post a follow up a few months into the year, to remind people to keep up the good work :) I know my determination to stop the slow leaks in our finances (coffee, buying lunch, etc) will wane, and it’s always good to have encouragement! I do get frustrated sometimes when we seem to have trouble making ends meet month to month, but then I realize that it is because we are saving and investing so much that we have less to spend on frivolous things. Once I remember this, my anxiety turns to enthusiasm to save as much as possible!

    Because I’m proud that I’ve got most of these done already, I’m going to run through them below.

    1. Set goals
    – already done! (top goal is to pay off smallest student loan this year, second goal is to bring the emergency fund up to $10k)
    2. Track spending
    – already done! (using Mint)
    3. Develop a budget
    – already done! (updated it a few days ago)
    4. Review accounts
    – already done! (my car insurance company wanted to raise my rate 150% after an expensive accident, I found another company yesterday that would insure me, even with accidents, for the same amount I’m paying now, with better coverage!)
    5. Optimize accounts
    – already done! (a few targeted ING accounts for savings and a rewards credit card that we use to pay for flights)
    6. Emergency fund
    – already done! (sitting around $6,000 right now, but we want to get it up to $10k by the end of the year)
    7. Get out of debt
    – long work in progress (~$100k in student loans, have a plan in place to pay it off in the next 10 years)
    8. Fund retirement
    – already done! (contributing ~15% plus a 3% company match to a Roth IRA and Roth 401k, my husband contributes about 10% to his plans)
    9. Automate finances
    – already done! (minimum payments are all automated so I don’t miss any, then I pay any extra I can in a separate payment)
    10. Earn extra money
    – already done! (got a part time job tutoring for SAT/ACT prep, I make ~$70 to proctor a practice SAT on a Saturday morning during which I can do homework or read a book, and all extra income goes toward student loan repayment)
    11. Educate yourself
    – already done! (get books from the library and read finance blogs – especially this one! – every week)

  51. @21 Esther: Statements like “all sex offenders start with porn” cannot possibly be substantiated.
    Yes, some adult-related films and books subjugate and depersonalize women (and men!). But not all of it does. In fact, the short film I watched was written and directed by women, for women.

  52. Great list J.D.! We think that 2011 will definitely be a year where consumers “open their eyes” to the way their finances have been treating them. It’s time to be MAKING SOME MONEY when you trust it to a bank or credit union. Rewards are out there, and people will be doing their due diligence to find them in 2011.

    Big thanks to Joelle in the comments for plugging Kasasa.com – high interest with a focus on local resources is a win-win for a stronger and healthier financial future for all. ☺

  53. utterly exhaustive and amazing list of resources!

    Starting late last year, my wife and I made that resolution. No more stupid shit until our debt was paid off. Well, we paid off our wedding in 4 months, and as of today, we are credit card debt free, moving from CA to NY and are SAVING money on the whole thing.

    Financial Freedom is a great feeling. Now just to pay off the 2 cars and 2 houses!

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