By Gina Jordan
http://stream.publicbroadcasting.net/production/mp3/wfsu/local-wfsu-912218.mp3
Tallahassee, FL – It's swimsuit and vacation season, and while some are working to shed pounds for the beach, others are going on a debt diet, hoping to shed unwanted financial fat.
Meet Todd Middleton. He's 42-years-old, married with three young kids.
"I was so tired of living paycheck to paycheck, so tired of writing a check for $200 to a credit card company and $170 of it going to interest."
With very little in retirement accounts and other savings, Middleton set out to tackle $25-thousand in credit card debt. His family was chosen to participate in the Florida Commerce Credit Union's We Live FIT Challenge. FIT stands for Financially Independent Today.
"If you're going through financial problems, and you're living check to check and worrying constantly about money, it puts a major strain on you, your marriage, your job, your kids, how you treat other people, how you sleep at night. And that's what I was going through."
The Middleton's have learned the importance of planning for unexpected expenses, like $500 worth of air conditioning and car repairs in the last few weeks.
"We paid cash for them, so fortunately we had an emergency fund available in savings. But I can tell you that prior, we probably would have put it on a credit card. We just would have. We would not have had a savings account available to pay for that."
Bill Losey is a certified financial planner and author of "Retire in a Weekend." He suggests that anyone in Middleton's financial situation start with a simple budget that shows where every bit of the money is going.
"Take out a plain white sheet of paper; draw a line right down the middle. On one side write down all the money that comes in, and on the other side write down all the money that goes out. Once you've actually made a list of that and you keep track of that for say a couple days, or a couple weeks, maybe even a month, then go back and take a look because you will be amazed at how much money you are just wasting on frivolous expenses."
Losey says it's common to find hundreds of dollars a month being spent unconsciously on junk. He says the ultimate objective should be to build wealth by paying down debt while putting money in savings, and having an emergency fund is essential.
"I am a firm believer that you should have at least one year set aside in expenses, preferably two years. That gives them something to shoot for. You need to develop the habit of saving money. Certainly the sooner that you begin saving money, the longer it has time to compound and grow. It's all about changing your habits."
Losey suggests making savings automatic by signing up for payroll deductions or asking a mutual fund company to take money out of your checking account at a set time each month. Middleton says those kind of changes have made his home life much happier.
"We are paying ourselves first putting that money in the savings account. We are running a tight budget and just making sure that we are not spending money where we don't need to. And the money that we have left over is going to go into a savings account."
Losey reminds his clients that no government or company will take care of them, so they must take responsibility for their finances. His get out of debt suggestions include taking a second job, selling stuff you don't use anymore online, ditching the costly SUV in favor of an economy car, and paying off small debts first.
"The benefits here are psychological as well as financial because let's say you have four debts and you've got a couple of small nuisance debts. I would rather that you knock off those small debts and have an accomplishment to build on, which is the encouragement to erase bigger debts."
That's what Todd Middleton did. He says he and his wife are communicating 1000% better, and he doesn't worry like he used to, because he knows they will get out of debt.
"We're still going to achieve our goal, and that's to be financially independent and not worrying, not having a credit card, payments to worry about, having money in the bank for emergencies, to go on a vacation, to do things like that."