February was a great month for me. I used my tax returns to pay down 23% of my debt. However, I didn’t make nearly as much progress in March.

I paid off another 2.8%, which isn’t that good, but I’m still on track to achieving my goal of getting out of debt this year.

The red and green squares are visual reminders of my progress. Each time I pay down another 4%, I change the color of one square from red to green.

I didn’t get to change any squares this month, but I did make some progress, even if it wasn’t that much. Why didn’t I make more progress? Two reasons.

First, I took two weekend trips. It was worth it. I love travelling, and had a great time with friends and loved ones. I didn’t use credit on either trip, but my spending did eat into my debt payments.

The second reason I didn’t make as much progress is that I’ve been saving all all of my extra money for a landscaping project. Our irrigation is out of control. Our back yard is a muddy mess, and water is flowing towards the house in a few spots.

I need to hire someone to do this, as I’ve tried several times and failed. I’m not going to put my house and foundation at risk, nor do I want to deal with a tore-up yard and muddy dogs.

It’ll cost a pretty penny to get it fixed, but luckily I saw this coming last month. I’ve set aside a good amount, even on top of my other commitments (like my emergency fund, vacation fund, and paying down debt).

My March progress was disappointing, but I’m still on track to accomplish my goal of being debt free by December 31st. Even after a slow month, I’m a little ahead of schedule.  By this point, I should be 33.33% of the way there.

However, most of my progress came from my tax returns, which only happen once a year. I need to pay down $867 a month if I’m going to do this. Right now, I’m only setting aside $700, which is good, but will still leave me short in the end.

So what’s my next step? First, I’m not going to get discouraged. I’m going to keep plugging away. And second – I’m going to rework my monthly budget to make sure this goal actually happens.

After all, it wouldn’t make sense for me to share tips on improving your finances or accomplishing goals, and then not listen to my own advice.

I started off the year with $10,793.86 in credit card (all on 0% balance transfer cards). Here’s how much progress I made in February.

(drum roll please)

I paid off another 23%, bringing my total progress to 32.99% ! 

About the chart

The chart above shows my original debt ($10,793.86), my current debt ($7232.74), and my progress towards paying it all down (32.99%).

The red and green squares are visual reminders of my progress. There are 25 squares total, and each time I pay down 4%, I change a square from red to green. It’s a simple, but extremely powerful movitator.

I strongly recommend this for anyone that needs a boost in achieving their goals. If this is something you’d like to try, keep on reading. I’ll help you do it.

How I did it

February was a good month for me. I got a pretty large federal tax return (which is not a good thing…I need to adjust my W4 to keep this from happening next year).  I put a good portion of the return towards debt, but not all of it. Here’s why.

I am trying to create sustainable changes, and I have some big expenses coming up in the next few months. Instead of using all my money now and then coming up short later, I decided to plan ahead and make sure that I’m setting a budget I can stick to. It won’t do me any good to pay down debt now, then rack it back up later.

Some of the things I’m setting aside money for include:

• Car insurance (lesson learned: I should set aside money from each paycheck so I can cover the six month bill)
• Chainsaw (absolutely need it for yard work…we had two big trees come down last year that we need to cut up)
• Exercise equipment. If you’ve been reading this for a while, you know that I’ll never sign up for a gym membership again. I’m thinking about getting a basic cardio machine (like an elliptical), and eventually some free weights. I know this isn’t something I need, but I’m not going to sacrifice my health to save a few bucks. I feel better mentally and physically with regular exercise.

Want to do this too?

Want a chart of your progress? I’ll make it for you.

All you have to do is comment on this post, or send me an email (at david@pimpyourfinances.com), and let me know the following things.

First, let me know what your goal is. It could be paying down debt, saving $1000 for an emergency fund, saving for a vacation, etc…. It doesn’t even have to be a financial goal.

Second, let me know the starting point for your goal. In my case, I hadn’t paid off any of my $10,793.86 in credit card bills.

Third, let me know where you’re at in achieving your goal. For me, it’s how much I’ve paid down so far.

That’s all there is to it. I’m so confident this will help that I’ll make the chart for you, and will update it for you as often as you’d like. Then you can use the it for whatever you want. Publish it on your site, print it out, etc….

I also believe there is strength in numbers, so if anyone is interested, I’ll make a regular post of everyone’s progress. At least once a month, I’ll post how we’re all doing in accomplishing our goals, and will include a link to your blog, along with some info about you and your site.

Give it a shot…there’s nothing to lose, and it could help you achieve your goals quicker, inspire others, and drive traffic to your site.

I haven’t set any specific benchmarks, but I have been tracking my progress.  Last month, I paid down 9.96% of my debt!  That’s slightly ahead of schedule.  I’ll need to pay down around 8-9% each month to achieve my goal.

Since this past October, I’ve paid down a total of…9.96%.  I know that means I had a few zero-progress months, but during that time I also got married, went on a honeymoon, and made it through the holidays without going deeper into debt.  I’m proud of that, even if I didn’t make any progress until now.

Here’s a snapshot of my original debt, and progress so far:

In case you’re wondering why there’s so much red and yellow, it’s because I love visual reminders.  Just like a traffic light, yellow is something to be cautious about, and red is something I need to stop altogether.  It’s simple, but effective.

The top portion shows how much debt I’ve paid off.  There are 25 squares, and each time I pay down 4% of my debt, I change the color of one square from red to green.  It may sound cheesy, but its a great motivator.  I love changing the color of those squares.

The bottom section shows the dollar amount of what I’ve payed off.  I like knowing exactly how much I have to go.

Between the two sections, I get the best of both worlds.  A strong visual summary, as well as the detailed numbers.

As good as January was, I expected February to blow it out of the water.  I get my federal tax return this month, and plan on using all of it to pay down my debt.

Do you have any tricks you use to motivate yourself to pay down debt?

Thanks to No Debt Plan for hosting it.  It’s got a great “Historic Moment” theme.

All of it is on 0% interest cards, but I’m still uncomfortable having any debt, let alone that much.  It’s manageable now, but if something happened to my health or job, I’d be screwed.

So I decided to get out of debt as soon as possible.  I’ll sleep better at night without it, and I could use the extra money to generate wealth.  I’m treading water now, but I’m not getting anywhere.

I track my debt in real time, but this is the first update on the site.  After 75 days, I’ve paid off 4.68%, or a little more than $500. 

I thrive on visual motivation, so I put together a graphical summary of my progress:

Each square in the “Credit Cards” section represents 4% of my original debt.  As I pay down more debt, I change the color of the squares from red to green.  My one green square is looking lonely, but I’ll add more soon.

Paying off only $500 in two and a half months may not seem like much, but I’d like to give it some context.  In October, I got married.  I went on my honeymoon in November.  My wife and I paid for the wedding and honeymoon ourselves, and we did it without generating more debt.  I’m proud of that.  We even did some major home improvements before the wedding, like building a 400 foot fence, without using credit.

So ideally I would have paid off more by now, but I’m happy with what I’ve accomplished given the circumstances.  I’m expecting things to move a lot more quickly in 2009.

Do you have any tricks you use to motivate yourself to pay off debt?

I’m even more thankful for my job than normal

I always try to be thankful for the blessings and advantages I’ve been given, but I’m even more appreciative now. I know a lot of people are not as fortunate (like the 53,000 Citi employees that lost their job today).

Debt is a prison

Although my credit card debt is manageable and I’m paying very little interest, I feel like I’m in chains because of it. Recently, I’ve been losing sleep, thinking of it when I wake up in the night.

I feel like if a financial crisis came up, my wife and I could manage – if it wasn’t for the debt.

I’m a bigger believer in emergency funds

I’ve never been in a position where it made sense to have an emergency fund. I have debts with interest, so I always put extra money towards that first.

Even in theory, I didn’t think much of emergency funds. Maybe as a little bit of padding, but nothing more than that. I always thought it makes more sense to put the money somewhere that is not readily available, but generates higher interest.

To some extent, I bought into the idea that if an emergency came up, I could always use credit cards. Or withdraw from a Roth IRA (assuming I had one).

But now I realize that having an emergency fund can equal peace of mind when the economy is troubled, and there are layoffs in the air.

I’m not prepared for a recession

My house and my well being could be in danger if I didn’t have a job. I feel like I was responsible in choosing a house, but my debt and lack of emergency funds threaten my finances.

I am not happy with where I’m at, and it’s stressing me out. I’m going to do everything I can to turn things around, so that by the next time the ecomony turns sour, I can safely and calmly ride it out.

As I type this,  I owe $10,793.86 on three credit cards.  My goal is to pay them all off by March, 2010.

Here is where the damage came from:

• $912.64 – used credit card for all purchases to save money for a down payment on my house
• $2609.70 – took advantage of interest free financing to furnish my house
• $7271.52 – used credit card to have my driveway paved

To tell the truth, I don’t feel too bad about these.  They all represent one time purchases, and they’re all on interest free cards (thanks to special deals or balance transfers).

The first debt actually saved me money.  To save cash for a down payment on my house, I used my credit card for all expenses for a month or two.  By paying 5% down on my mortgage, I saved .25% on the interest rate.  Over the course of a 30 year mortgage, that saves me $12,088.07.  While I admit that I should have saved the money before hand, using my credit wisely  worked to my advantage.

The second debt was a bit of a splurge, but it’s made the house much more enjoyable.  To me it’s still a good purchase.

The last debt caught me by surprise.  I have a very long driveway – about 300 feet uphill.  It was a gravel driveway when we moved in, but quickly turned to mud.  It became difficult to get up or down the driveway, so we had to do something about it.  Again, ideally I should have saved the money first, but it’s made life much easier and also increased the value of my home.

I want to get out of debt, but at 0% interest, I’m going to take my time.  My goal is to take as long as I can to pay off all three cards without paying any interest.  This means I have to pay $810 a month until April 2009, then $606 a month until December 2009, then $522 a month until April 2010.

To make sure that I pay everything off in time, I set aside money from my budget IMMEDIATELY after I get paid.  I make the minimum payments due, then store the rest in an online savings account.  I basically make payments to myself (and use interest to my advantage).

I’ve got a visual way of tracking my progress.  Here’s what it looks like when I open my checkbook spreadsheet:

I smack myself in the face with my debt every day.  What better way to remind myself of my debt and goal?

The number in the middle is my original debt.

I use the red squares to track my progress.  Every time I pay off another 4% of my original debt, I change the color of one square to green.  It’s a good motivational tool.  It feels so good to change the color that it encourages me to pay it all off (and not spend any more on credit cards).

The yellow section at the bottom shows how much debt I started with, and where I’m at.  I like knowing exactly where I stand.

It’s a simple – but effective – system.  Debt is bad (red), paying it off is good (green).  I think having something I can look at is more effective than just seeing a number or percentage alone.  It gives me more context and makes it seem more real.

What are some tricks that you use to motivate yourself to pay off debt?