To start this chapter off, I have a few questions for you: Do you know how many current credit cards you have? Do you know their interest rates and yearly fees? Do you know what day your bills are due? Do you know how much money is in your bank account right now? Are you feeling anxious that I am asking you all of these questions?

The reason why you may be anxious is because all of these questions are hard to answer if you have cluttered finances. Do you think you have cluttered finances now?

A major part of going into recovery mode as a Spender is to educate yourself about your own finances, take control of what is going on, and discover a new sense of peace. In this chapter, I will walk you through the steps needed to completely declutter your finances. By the end, you should be able to know exactly what is going on financially in your life, so you can move forward with success.

1. SET UP A MONEY FLOW CENTER

One of my favorite things to say to my kids when I have them pick up their toys is, “Everything has a place.” Take that advice for setting up what I call a Money Flow Center in your home.

First, you’ll want to assign a designated place in your home for your Money Flow Center. I like having mine in the kitchen since that seems to be where everything ends up anyway. When bills come into your home, they should immediately be organized in your Money Flow Center. Sit down with your significant other, if you have one, and talk about how you are going to organize everything in this area, so that you are both on the same page and know where to find everything. You are going to put anything that has to do with money in your Money Flow Center. Here is what I suggest you include:

Once you have a place set aside, remove everything from it that doesn’t have to do with finances. This is a dedicated space now—don’t let your kids color there or turn it into a place to store old newspapers. This area needs to be decluttered and recognized as being for financial stuff only!

Now for the organizational part. You want to grab a few things at the store—I like to have white envelopes on hand (for my cash), a coupon accordion for my coupons (you can find these at the dollar store), a calendar, and a calculator. I prefer to keep my Money Flow Center simple and place everything in a small wicker basket.

I have folders for bills, medical documents, items to file and items to shred, school items for my kids, and miscellaneous odds and ends. When something comes into the house, it gets filed right away. Now both Mark and I know where everything is and how to find it.

If you need to buy some items for your Money Flow Center, don’t go crazy. Find affordable but functional options. Try your local thrift store or dollar store, recycle things from around your home. Make it as simple as possible. Danger: Do not go on Pinterest and search for “bill organization”; you may want to throw things at the screen because of the unrealistic and beautiful color-coordinated budgeting systems. Nobody has time for that! Put some dollar-store folders together and call it a day!

Step 1 is easy but so effective. Anyone can do this, even if they are organization-challenged like me. Part of my disorganization problem is that if I don’t have a place for something, I either lose it or it ends up on the floor after one of my precious kids picks it up and throws it somewhere.

2. SELL ITEMS YOU DO NOT NEED AND SET UP A RAINY DAY FUND

In order to stay out of debt, you need to set up a rainy day fund where you keep $500–$1,500. If you make under $50,000 per year, I recommend saving $500; if you make over $75,000, I would recommend $1,000; if you make over $100,000 per year, I recommend savings of $1,500. You need to do this before paying off debt because you want to make sure that if there is an emergency, those expenses do not end up on your credit card.

When setting up this emergency fund, Mark and I opted to use a different bank from our regular one. That way we had to drive across town to get to that bank and actually walk into it to take out money. Keeping our fund at this separate bank helped us save the money instead of spending it. We tried at first to put it in an account at our regular bank, but we would tap into it occasionally to transfer money in the case of overspending. Set up your emergency account in a different bank, and leave it there untouched.

Start by decluttering your home and continue to put things aside that you can sell. There are many ways to sell your things, and with the help of Craigslist, Facebook buy/sell groups, and eBay, you should be fairly successful. I’ve walked many families through this process in live features on TV shows including Good Morning America and Nightline. It’s always so much fun—and so rewarding—helping people go through their houses, finding what they can sell, and teaching them how and where to sell it.

Here are some general rules of thumb for selling:

Furniture and larger items—List these on either Craigslist or through Facebook local buy/sell groups. Keep in mind that you should never have someone come to your house if you are alone, and try to meet people outside of your house as much as possible.

High-end name-brand clothing—Sell on eBay or through websites such as Thredup.com or Tradesy.com. Brand names such as Anthropologie, Lululemon, Michael Kors, Coach, and Athleta all sell well on eBay.

Books that you’ve read—Sell these on Amazon by setting up a free Amazon seller account. Simply scan the barcode on the back of the book using the Amazon Seller app and it will show you what that book is selling for. You can choose to either ship the books directly to Amazon and they will take care of listing and selling them for you, or you can ship them from home yourself using Media Mail. Most people are able to find $200 worth of books lying around their house, so go and sell them and put that money in the fund.

Small appliances—Do you have a bread maker or blender that you rarely use? Sell it online using a local Facebook buy/sell group. If you have a broken appliance, you can sell the parts that are still in good shape on eBay.

Old sports equipment—Sell online on Facebook buy/sell groups or find a local sports consignment store that will buy them from you.

Musical instruments—Mark sold his drum set and cymbals online by splitting them up on eBay. He made more money selling the set by parts. We agreed that he could buy himself a new drum set once we were out of debt.

Sell everything you can think of to help decrease clutter and free up extra cash for your emergency fund. You will be shocked at how many random things sell online. American Girl doll boxes can be sold for upward of $50 each. iPhone and iPad boxes sell for around $30! Don’t think that anything is unsellable; search online and see what you can come up with. You will be shocked!

If your house starts to feel empty, you are doing a great job! All of that money you make from selling things should go into a savings account until you reach at least $500. Then start paying down your debt with the rest.

3. GET A COPY OF YOUR CREDIT REPORT

When digging my way out of debt, I was clueless as to what my credit score was or even what was on it. For Step 3, you will want to sign up to receive a free copy of your credit report through Credit Sesame or Experian. Beyond the value of knowing what your credit score is, this is a good way to see if there are any credit cards you’ve forgotten about or that are in collections.

When I first got my credit report, I realized I had forgotten about a lot of small store cards that I had signed up for. One of them had even been reported to collections and I was unaware of it because I had changed my address so many times. When you get your report, call all of the companies that have reported outstanding balances and pay them off as soon as you can. You will also need to remind them to put your account status back in good standing so that your credit can be repaired.

4. CANCEL ALL OF YOUR CREDIT CARDS

Any cards that you are not using should be canceled. Think of it like having an open can of gasoline next to a fire. Extra credit cards are just not necessary, and since you are a Spender, all they offer is a dangerous temptation to go out and spend again. Take that ammunition away.

I have proven time after time that the only way for me to stay within the fence is to use cash only. It is far too easy to spend money without thinking about it when you are using a credit card. I tried going back to credit cards once, and it was a royal mess! If you don’t want to act as drastically as me by shredding them, place them in a Tupperware bin full of water, then put it in the freezer and literally freeze your cards. If you have an emergency, you have them, but it takes a while to get to them.

If you have debt on multiple credit cards, consider consolidating them all into one card with a low interest rate (zero percent would be the best). Keep in mind that this may ding your credit report just a tad, but it is worth it to have a clear frame of mind by having only one card to keep track of. Start to pay attention to the offers that are mailed to you; open them and see what the transfer rates are and what the introductory APR is. You also want to take a look at what the APR goes up to after that introductory rate has expired. You can also go into your local bank and see if there is a card that they can offer you as a valued customer.

Having all of your balances on one card will help you to focus, and I truly believe that even if you have to pay a little for balance transfer fees, it’s worth it. The mental focus of only having to pay for one card instead of ten is huge and can help you mentally prepare for the large task of paying them off.

If you can’t get approved for a zero percent card, call your current credit card companies and ask them if they can lower your interest rates. We had success doing this. Just making that phone call and asking works wonders.

5. SET UP AUTOMATIC PAYMENTS FOR CREDIT CARDS

What is more annoying than thinking you are getting somewhere, only to realize you forgot to pay a credit card minimum? There goes your budget, right? One thing I did to avoid this happening in the future was set up automatic bill payments through my bank to make the minimum payments on my credit cards every month. That way I didn’t have to worry about missing a month and getting charged a late fee. You can easily do this through most online banking portals, and it’s nice to know that your minimums are covered. I would pay extra on the cards whenever I was able to, but was also thankful that I didn’t have to worry about forgetting the minimum. I would put the dates when the card minimums were paid on my calendar in my Money Flow Center, and then make a note of it during our budget night when I could pay extra on them.

I don’t recommend setting up automatic payments for any other bills at this time, because you want to start getting used to knowing your expenses. You need to get in the habit of being aware of when money is being deducted from your account. Not knowing can add to the chaos. Many finance experts recommend that you learn how to automate everything, but we are Spenders so that doesn’t work for us. We need physical proof in our hands so we can hit ourselves over the head with them when we make a mistake.

Decluttering is not just a one-time thing, but a new way of life. Don’t think you can declutter your life in a day. I tried it, and I ended up on the couch the next day too exhausted to do anything, ordered pizza for dinner, and broke the budget. It is best to split up organizing tasks into zones and tackle them on different days. Take one day to do the bathroom, one day for the living room, and so on. Step by step and little by little, your house will start looking better. Remember that you should not be bringing anything new into the home during this time, because not only are we decluttering our homes to make extra cash and free mental clutter, but we are decluttering our finances as well.

1. Clean up your house.

2. Set up a Money Flow Center.

3. Sell things you don’t use/need.

4. Set up an emergency savings account of around $500–$1,500 at a different bank from your regular one.

5. Get your free credit report and carefully analyze it.

6. Cancel your credit cards.

7. Set up automatic bill payments for credit card minimum balances.

Chapter 22

Recovering Spender Step 9:

Declutter Your Finances

1. SET UP A MONEY FLOW CENTER

2. SELL ITEMS YOU DO NOT NEED AND SET UP A RAINY DAY FUND

3. GET A COPY OF YOUR CREDIT REPORT

4. CANCEL ALL OF YOUR CREDIT CARDS

5. SET UP AUTOMATIC PAYMENTS FOR CREDIT CARDS

ACTION STEPS FOR THE RECOVERING SPENDER

STEP 9