Hi all,

I thought I would share our story/plan for Starting late, In Debt and finishing rich.

Me and my wife in the last year and a half have went from $45,000 in Credit Card and consumer debt to investing to now investing in $2500/month in our Roth and 401K.

We setup a weekly spend plan with our weekly reoccurring expenses at the top of the spreadsheet and monthly expenses divided up as equally as we could for our two week pay cycle. Our columns would be like- Food, Gas, Church, Utilities, Car Insurance, Phone etc. Each budget item was somewhat higher than expected so that at the end of each week we totaled up any savings to be added to our debt snowball.

Starting in December of 2004 our Snowball was only around $900 however, we kept rewarding our snowball anytime the gas, food utilities would come in lower than budgeted. This way each week was not something that we dreaded so much it was a reward for good behavior.

Long story short, as the Credit cards fell and the spending below our means increased by the time we paid of this 45K of debt our snowball grew to $2600/month.

Here is what we did in May with our Debt repayment snowball. We wanted to give most of it two our retirements savings and a portion of it to start paying of our 30K HELOC. To start with we divided the budget up $1000/month for HELOC, $800/month Roth and $800/month 401K.

We did not want to just stop there. What we have done is keep track of how much our monthly expenses decrease and apply that budget savings to increasing our 401K, each time we find another 1% of savings we increase our 401K by a percent. Actually I only need to find around 0.8% from our spending to give us a full 1% pretax savings.

We now stand at retirement savings of $2500/month or around 30K/year. I wanted to share a point that controlling spending is not only a good get out of debt tool. We are finding that it’s a great way to find more money relatively painless for enhancing retirement funding.

Food for thought, Instead of waiting around for a pay increase to bump up savings. Looking for the cash 1% at a time is far less difficult. Oh and yes we do everything automatic. We are in our mid forties and In December 2004 we had only 15K in retirement funds, Now we have 37K even if we were so just stay at 30K/year retirement savings we should be in great shape by retirement.

We will continue to work down our expenses and go after the first mortgage as soon as the HELOC is gone, so that we can have a good retirement and be debt free around the same time.

Thanks Dave Bach for your great books, We are now saving above 25% of our income, as long as we keep lowing our expense we will keep splitting the savings between debt and savings 1% at a time.

Roy