Put your debt on a simple diet

Enter the 'Today' show

Then the "Today" show contacted me last spring to ask whether any of the Women in Red would consider being part of a show on debt, Matulock was the first to raise her hand and volunteer.

Matulock didn't think Chatzy, the show's anchor and a financial expert, would find much to trim in her budget, but she agreed to the "Today" show plan:

• Matulock would take three months to track her spending, religiously, every day.

• She would aim to pay down her remaining $400 in credit card debt a month early, in September, when the show would be taped and aired.

• In addition to paying off her debts, Chatzky insisted that Matulock join the 401(k) plan at her job, contributing 3% to get the available match from her employer.

Chatzky also helped Matulock save money by renegotiating her cell phone contract (saving $30 per month) and raising her car insurance deductible from $250 to $1,000, for a $320 savings on premiums for the year.

Matulock notes that you can't just raise your deductible that much without planning for it. So she put her economic stimulus check into a savings account earmarked "car deductible" so she'll be covered in the event of an accident.

We all hate it, but it works

Matulock's appearance on "Today" was a success. She paid off her last credit card in September, she joined her company's 401(k) plan, and she now has put away almost $500 for retirement, plus an additional $600 into savings.

But of all the things she has done, Matulock says, doggedly tracking her spending is what has made the biggest, continuing difference in her financial life.

She bought a little spiral-bound notebook that she always keeps in her purse. In it, she jots down every penny she spends. If she can't find the time to write down an expense, she puts the receipt in the notebook and does it later.

Tracking spending is by far the most feared and loathed financial task known to woman (or man). Most people can barely do it for a week. Yet Matulock is still monitoring her spending, more than four months after she began.

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It keeps her honest, she says. But more important, it stops her from spending. "It's like being on a diet and having to record what you eat. You're not going to eat that cookie if you have to write it down," she says. "I am less likely to recklessly spend, because I know I have to write it down."

It doesn't sound like a lot, but by tracking her expenses, Matulock was able to save $10 one week, $40 or $50 the next. It added up. She was careful to put those savings nuggets toward her debt.

It's still adding up. Matulock has now paid off all her credit cards and part of the $5,000 personal loan she owes: a total of $18,531.19.

'Still trying to find the balance'

Matulock has freed up $600 per month in cash, which she is saving until the end of the year ("I want to have a cash-only Christmas," she says). At that point, she will save half the money in an emergency fund and put the rest toward her remaining debt.

But as Matulock now knows, from being down and back twice, you can't put your finances on automatic pilot. Financial sanity has only one cost: constant vigilance.

"I'm still trying to find the balance," she says. "I still wish I could go buy that skirt. But then I stop to think: I could put that money toward debt or savings or something more important."

Matulock knows that slow and steady is the way she'll win her race. "It can be frustrating when the debt isn't falling away as fast as you want." But she remembers an important motto she learned from a fellow Racer: You didn't get into debt overnight; you can't get out of it overnight. "I remind myself that by sticking to a plan, at least I'm making a dent. And that's still progress."

Published Oct. 8, 2008

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