Getting Accountable With Our Debt- Our Debt Update

It’s amazing what sitting down and really looking at spending and money habits can do to your financial life.  So last year I had posted about really wanting to focus on getting out of debt.  It was a terrible feeling and I was at my wits end and decided then and there that I would focus on getting us out of debt.

Guess what?  We have made a major dent in our debt.

Here’s the last update I had posted.  So where are we today?

We are not living paycheck to paycheck anymore and we have not used credit cards at all.  If we don’t have it we don’t spend it!

Let’s see, I worked on a budget and kept to it pretty closely.  I paid all the bills first before we did anything else and I am happy to say we are on our way to being debt free.  We paid off so much that we actually can breathe again and I am not as stressed.  We have our mortgage, student loan and one loan left to pay off and we are selling our RV this week so that will be one less debt we have to worry about and another $237 to go towards our debt.  I’m so proud of our success and although it was not easy it has been well worth the struggle.  I’m not stressed about money any more and I’m not feeling overwhelmed when the kids or Hubby asks about our spending.

We’ve paid off about $8,000 in debt in the last year and I know that doesn’t seem like much but with all the interest and stress it is like a million dollars to me.

We are actually in a better place when it comes to our financial life and when we talk about money we don’t get stressed out or have an argument.  It feels good.  Now we have to focus on the student loan debt and need to start saving a little so I can buy a car in the next year.  Jacob will driving so he’ll get my car.  I’m thinking it won’t be a new car, but that will all depend on where we are at that point.

I shopped for school clothes and school supplies this year and we did not use credit cards, it was nice cause I had budgeted how much we needed and I set it aside just for that.  I started using a CapitalOne360.com online account to save for these items and I am so glad because it was easy to set up an automatic transfer every paycheck and we didn’t miss it.  Now I’ll just continue that habit for Christmas and we will be sure not to have to use credit there too.

If you are in need of some help and want to get real with your money let me know.  I created an awesome spreadsheet that helped me manage our money and our debt and it kept us accountable. I’m always here to help.

 

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Budgets Can Be Sexy!

“It’s not your salary that makes you rich; it’s your spending habits. – Charles Jaffe

That is 100% true!  We’ve been tracking our spending habits over the last month and really looking at our money and our ugly debt and honestly the above statement couldn’t be further from the truth.

We had a wake up call in December. Seriously, it was so bad I cried.  And I cried some more.  This post started our get out of debt journey.

I learned the hard way that I am actually a spender.  I hate it and I vowed from that moment on to get us out of debt.

So what did we do? We created a budget!

 

Budgets can be sexy!

Budgets are not sexy until you start to really see what they can do for you.  A budget pretty much help you tell your money where it needs to go.  Before our wake up call we had a budget but we never really followed it.  And we have no excuse as to why we didn’t use it, I think the biggest excuse is that we didn’t care.  Now I am following it to the T.  I have a zero based budget, meaning all the money that comes in goes somewhere and will equal zero at the end.  So if there is money left over it is directed somewhere. It might be moved to our emergency fund or to a bill we really need to get out from under.

The first thing we did when we created our budget is to focus on paying ourselves.  In this case it was really about creating an emergency fund.  We were bad about this too.  I know there are probably at least five reasons why you need an emergency fund, one being a major bill coming your way that you did not expect like a car or home repair.  So we added this to the budget as our top item.  The goal is $1,000 because we are following Dave Ramsey’s baby steps.  If you haven’t read the Total Money Make over you should and really read it!  I read it before and I’m reading it again right now.  You know when you tell your kid “No!” at least two or three times and they finally stop doing something at the third No, that works for adults too.  I kept hearing it but didn’t pay attention until now.

The second thing we did was figure out how much we owe to everyone and wrote down the minimum payments for each debt and when each item was due.  From here we created a debt snowball strategy.  Another one of Dave Ramsey’s baby steps.  The idea is that the smallest bills get paid first.  I sort of tweaked this because my concern is that we have one credit card that has a time limit; a zero interest promotional period.  So that one has to be paid first as the promotional period ends October.  As much money as we can is going to go to this bill and then every other bill will get the minimum payment. Once the first bill is paid off the money we were allotting per month to the other goes to the second and so on.  You can learn a little more about how the debt snowball method works here.

Our spending habits have made us poor, very poor.  We both make very good money and here we are living paycheck to paycheck. Seriously, I graduated from college why is this so hard?  Because we weren’t following a plan; we weren’t following a budget. The amount of money we spend outside of the things we need to survive is ridiculous. The budget I created really shows a clear picture as to how rich we could really be if we did not owe money to other people.  It feels bad to know that we are in this situation.  I am honestly ashamed and wish I could turn back time but that is not possible so we have to own our decisions and work at keeping our heads in the game to get out of this mess. Debt just like gaining weight doesn’t happen over night and it sure isn’t go away over night.

I realize that many of us make this mistake but I also know that I am smarter than this and should have never gotten here in the first place. I used to read stories all of the times of folks digging themselves out of debt and now I know why it was reason to celebrate. I want freedom, freedom from the stress of worrying and freedom from being tied to someone else.

 

 

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