Thursday, February 24, 2011

Day 133 - Step 11: Reassess

February 24, 2011

I have developed a guide to help you (and me!) achieve the mindset and principles required to successfully become debt free.  This is the eleventh in a series of posts about my Twelve Steps to Debt Freedom.

Step 11: Reassess
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Failure is simply the opportunity to begin again, this time more intelligently.  ~Henry Ford
My job consists of a lot of planning.  I manage training, implementation and support issues for certain IT solutions.  Before the year begins, I am expected to have a twelve month plan that outlines milestones to achieve, tasks to complete and resources required to accomplish my goals.  Every quarter I present a more detailed plan for what will be accomplished in the next 90 days.  I am also expected to outline what was accomplished in the last 90 days. Time and time again I realize I learn the most about how to better accomplish my goals by consistently looking back at what I didn't accomplish and why.
The same can be said for a debt free program.  Now that you have worked through the first ten steps to debt freedom, it's time to take a look back at your successes and shortcomings.

Successes: What went well for you during your first bout with debt?  Figure out why specific actions were so successful. For us, documenting exactly what we spend our money on each pay period - down to the penny - has provided us with a means to see how our money used to "mysteriously disappear".  When we saw (and were surprised by) exactly how much money we spent eating out, we could easily reduce the money leakage in that area after seeing it on paper.  In addition, we now have multiple pay periods to compare because we create a new spreadsheet for every pay period so we have some built in metrics to compare prior periods and measure success quantitatively.  For example, if we spent $500 on eating out in October and reduced it to $100 by December, that is an 80% decrease in spending - a major success in my book.

Shortcomings: One area where we had major difficulty was creating a budget worksheet that worked for us - interesting because this also ties in with our success story.  We wanted some type of tool that would act almost like a check register during the month we use it, but also allow us to plan out recurring and non-recurring expenses we expect to have in the future.  I create a new tab in my Excel spreadsheet (insert nerd joke here) every pay period so I can see the evolution of our budgeting tool from month to month. The first few months are pretty horrible - and coincidentally Mike and I had several arguments during that time period. By December, though, we had really ironed out the kinks and now feel comfortable with our debt progress and also how much money we have available for expenses. We expect no surprises and that results in less arguments.

So now it's your turn. What has gone well for you so far in your debt removal process?  More important, where have you faltered? Remember when you were two years old and you decided to come running out of your bedroom only to realize (too late) that the staircase was closer than you expected?  After making the mistake of falling down a flight of stairs, you probably were a bit more careful the next time you took off at a sprint from your bedroom. If you hadn't made this mistake, you would not have had such a great (and painful) learning experience.

So brush your shoulders off, ice that bump on your noggin and figure out what you can do better this next month.  If you aren't aware of the journey as it happens and learn how to maneuver those stairs, I truly believe you won't be able to maintain a debt free lifestyle once you actually achieve it. Don't be afraid to fail - it's just a bump in the road on the way to your success. Ready, set, go!

Stay tuned,

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