He backs this up with a lot of science – which I like:

Psychologists, economists and legal scholars often speak of people as having multiple selves. This odd idea helps to explain a lot of our mistakes – we just don’t always know what will make our future selves happy. In fact, we make predictable errors, says Carnegie Mellon University economist George Loewenstein, thanks in part to a mental habit called projection bias. We put too much weight on our current tastes when thinking about our future ones.

This article got me thinking about some aspect of my own life that I have a tendency to try and plan.

I read a lot and some of the books I lately I’ve been reading a few books on Zen and how your mindset shapes your reality. I just started reading a book titled, “Zen and the Art of Happiness” and right off the bat there was a concept that I wanted to share:

“Every event that befalls me is absolutely the best possible event that could occur.”

By this, the author is basically asking you to understand that you cannot plan your life. Things happen, some things you will consider to be “good”, some you will consider to be “bad”. But really, you don’t know what the future holds and how it will shape your life, your beliefs and your opinions of “good” and “bad”.

For instance, I have been writing recently that I expect to lose my job soon. The economy is bad and I feel that my boss – whether deserved or not – is not happy with how I do my job.

Here’s the thing though, I don’t like my job. I don’t like where I’m working or what I am doing. It’s causes stress in my life and relationship. It doesn’t interest me or fulfill me as a person. Why am I still doing it? ‘Cause I make a living from it, I have bills to pay and it’s tough to find other jobs right now. But I would be forced to re-evaluate my career, life, goals if I were to get fired, right? So maybe…

“Every event that befalls me is absolutely the best possible event that could occur.”

Just a thought. With that said, I want to share a few other quotes that I feel are related to this subject (I’m a big quote guy). I wrote these down in my planner a long time ago and randomly came across them today – maybe someone’s trying to tell me something?

“Whosoever desires constant success must change his conduct with the times.”
-Niccolo Machiavelli (don’t be scared…it’s still a good quote)

“It’s never too late to be who you might have been”
– George Eliot

Another month down and I’m pleased that the numbers show that I’m making some progress chipping away at my debt. The credit card pay down combined with a decent increase my emergency fund due to the renewed focus have my net worth being a thousand dollars better than last month. Still a negative number – but I’m starting to see light at the end of the tunnel and hopefully am picking up some momentum. At least that’s what it feels like – which is good.

My tax refund should be in my account by the end of this month. If all goes to plan, this should materialize as a reached (initial) goal of $1000 in my emergency fund by June and the milestone of getting my credit card debt below $20K. Not bad for the 2nd month of the year.

I know there’s still a long road ahead, but I am really starting to feel good about my finances and my debt plan. Some scary things still loom on the horizon – job insecurity, economic uncertainty, etc. – but I’m trying to plan for the unexpected now so that it doesn’t set me back if anything were to happen. Something I should have done right from the start of my career – or sooner. Oh well, lesson for my future kids – if they’ll listen.

Last note, I mentioned the economic uncertainty as being something that I need to watch out for in the future. However, I have to say that I am really proud of myself for buckling down and improving my finances little by little during the current economy. Each time I read a story about consumers buying less and saving more, I feel like I’m reading a story about me. It’s nice to be part of a statistic that I can be proud of – instead of the usual statistics associated with my type of finances.

Anyway…onward.

I’m plodding along – that’s for sure. For the most part, debt is being reduced and assets are being increased. I did have to dip into savings a little bit in order to pay for some bank fees and budgeting mistakes, but all and all I’m slowly making progress.

Not all foreign investment is leaving. Foreign companies and sovereign wealth funds are taking stakes in private equity firms and other U.S. companies, but Global Insight economist Nigel Gault says the foreign flight from U.S. securities means in the future credit will be more expensive and Americans will have to rely increasingly on their savings.

Ouch – as if I needed more reason.

Well – apparently I became too aggressive in my debt reduction plan, which became costly due to my lack of an emergency fund. So going forward I am cutting my larger credit card payments slightly and placing the difference into a debt elimination account. That account will act as my mini-emergency fund account for now.

Also, speaking of emergency funds, (or the lack thereof) it turns out that I made a mistake in filling out my W4 when I started my new job this summer (figures – since I hadn’t filled out that form in in over 3 years). Anyway – according to me I messed up and ended up owing money on my federal taxes and barely getting anything back on my state taxes. So that means no quick emergency fund builder or large debt payment to start off the year. Disappointing, but c’est la vie.

Well, here we are, 2008. I’ve updated my monthly budget to reflect an all out attack at my credit card debt. Those of you that have been reading my posts, know that I have decided to focus most all of my money at knocking off my debts one-by-one. I have knocked off one credit card so far (7 credit card in total – 5 to go) and am now focusing as much money as can be spared toward the card with the lowest balance.

I’m using the debt snowball method now. So, I’ve adapted my 2008 Budget/Spending Outlook to reflect increased payments due to paid-off loans as I go. This (hopefully) will help me not only keep on track, but see this plan in a realistic light. I will not be debt free in 2009 – barring any new-found luck in the lottery (and yes I know the lottery odds and how it’s bad and so on…), but I will be closer. And as that’s a very good thing.

My decrease in savings is due to a car repair and a debt payment. I’m hoping to use some of my tax refund to replenish my emergency fund to $1000. Whatever is left I will put towards my large debt payment.

So, again, I actually did it and so now the goal is to stick to the budget. Now, interestingly enough today I read an article on CNN/Money that was about just that…

It was titled, “Top Tips: Debt-proofing Your Holiday” and it lists 4 tips. Now it’s a Gerri Willis article, so it’s already pretty short, however I’ll quickly sum it up (and toss in some of my own thoughts) anyways.

Tip #1: Get Organized

• Two-thirds of Americans didn’t bother with a holiday budget last year
• Almost three in five don’t plan one this year (both from Consumer Reports)

Some financial planners recommend you don’t spend more than 1.5% of your annual income on gifts.

Again, proud to say that I’m already doing this and only by coincidence am I almost close to that 1.5% mark. I saved about $600 for gifts by putting aside a little each paycheck. 1.5% of my net annual income is slightly over $700. Personally, I would like to sock away about $1000 just in case anything and anything left over would be rolled into an additional credit card payment.

Tip #2: Think outside the box

You don’t always need to spend a ton of dough on presents. Think about curbing all those last minute gift impulses by giving a donation to charity in the name of your friend or relative.

Don’t get me wrong – I’m all for charity – but there is something that just doesn’t sit right with me when I think of sitting down to exchange gifts with someone and giving them a card saying money has been given to a charity of my own choosing in lieu of a gift. That option just isn’t for me – sorry if I seem shallow or insensitive. I gave to my church and to St. Jude’s Hospital regularly in past years (reduced/ended contributions to focus on debt), I just wouldn’t do it as a gift.

I’ve also tried spending to set spending limitations with people – didn’t go over well, so that ended that. It’s not that they didn’t understand that I didn’t have money to ‘go crazy’, it’s that they didn’t want to be limited in what they could do/give me. Again – it’s more ‘keeping up with the Jones” , but it’s embarrassing to be given such gracious and sometimes expensive gifts when you don’t have something in kind to offer.

Tip #3: Compare Prices

You can save time and money by shopping online. Plus, you won’t be tempted by all those “Impulse” purchases at the store.

To do some comparison shopping, go to shopping.com and bizrate.com. These sites let you compare products and deals. Plus, if you do decide to shop online, you can often get free shipping.

I’m doing most of my Christmas shopping online – it’s easier to keep track of my spending and compare prices. However, I definitely don’t think it saves you from impulse buying. The impulses are still there and in some cases stronger.

Tip #4: Get the best reward card

If you don’t carry a credit-card balance from month-to-month and you have a good credit score, getting a rewards card that pays YOU back is a nice way to get something back from your holiday shopping.

…yeah, no comment. ; )

In fact, as I type that I see how debt is like the Greek myth of Sisyphus who’s punishment from Zeus (for trying to be on the same level as the gods – Sisyphus was mortal) was that he roll a huge rock up a steep hill, but before he reached the top of the hill, the rock always escaped him and he had to begin again.

Not that money makes gods of people, but you can’t deny that having money – true money, not available credit – is a powerful thing. And they say that to err is human and what is now more human (or a bigger error) than credit card debt. As ‘humans’ we pretend to be on the same level as those with money – spending borrowed money in an effort to keep up or show ‘purchasing power’. However, we are then only punished with having to fight a seemingly endless battle with that debt. Pushing the rock up the mountain only to lose our grip and watch it roll all the way down again.

…too deep? Eh – it’s late, whatever.

Anyway, so I was reading a few bankrate articles on improving your credit score and I seemed to either have lost site of the fact that an important factor is keeping the cards around 30% spent in order to not lose any points on my credit score (some articles say around 50% is okay). After doing the math this evening, the 6 remaining credit card balances that I am dealing with are 97%, 93%, 89%, 83%, 78%, and 34%.

Not good.

A while ago I read Dave Ramsey’s Total Money Makeover (on sale now for $10 on his site…wink.) and, honestly, I wasn’t overly impressed. It seemed like 200 or so pages which could basically be summed up with the sentence “Just pay it off”. However, maybe I read it wrong since Mr. Ramsey seems to be doing fine (yes…he does accept credit cards…another wink) and has a fairly large fan base. I don’t know – I just feel that debt is more a mental thing than anything. If paying it off were that easy – everyone would do it and no one would need advice, support or…ahem…a blog. But it’s not easy, it’s really hard and I think most books don’t address that. Anyhow…

Mr. Ramsey says to pay down your debt with the lowest balance first – and the term he uses to describe how to approach this debt pay-down is “gazelle intensity”. While, being from Boston, the metaphor to me is a little odd – I do understand what he’s saying and have decided to give it a try.

Those of you that have been reading a long know that I’m not a great budgeter and prefer to set up automatic systems as a way to dummy-proof things. So I’m going to refer to a basic budget that I had been piecing together and max out payments to the lowest percentage debt and work my way up to the top. With the help of an expected (knock on wood) Christmas bonus from the new job – I plan to have the first debt (34%) gone by the end of December. The next debt, with the help of another small and expected windfall in the form of a tax refund should help me eliminate yet another debt by February depending on when I receive my W2.

It’s exciting to think of this new plan and to actually watch chunks of debt go away – but I know that regardless of the plan, the amount that I have to work with (my paycheck) doesn’t change and that it will take time, perseverance and some of that mental toughness that no one writes about…well…except for a blogger or two.

It’s strange – I feel good now that I’m back tracking my net worth and beginning to write blog entries again, but I also feel frustrated to be almost starting out again. At least that’s what I feel like in terms of the credit card debt – but at least now I have the beginnings of an emergency fund.

Some of the numbers between this month and last are slightly inaccurate since my October update was created a little late – so this month’s update doesn’t count some payments that will go through soon. But those will be reflected in next month’s review.