According to The Total Money Makeover, the first step is to make a budget and stick with it. Man I have never been happier to start pinching pennies. It feels nice that we are choosing to be cheap rather than having to be cheap because we can't afford anything. the next step is to get a 1k emergency fund. Check :-) now that feels good, and I have no desire to touch that money. Since the decision was made to get out of debt, I have been planning and making calls and writing lists and rewriting lists and coming up with plans of attack. We listed our debts smallest to largest and man it wasn't pretty. The final calculation was over 50k in debt including the one car we do still owe on. I knew to get motivated and to stay at it we would have to pay off several of the smaller debts at once to feel like we actually accomplished something. We bought a 3 paneled display board and wrote down the steps outlined in Dave Ramsey's book and used the large center panal to list our debts in order of payoff. Thanks to careful planning and Uncle Sam, we were able to pay off 11 items in full. This will give us over $500 each month to apply towards the next debt. I also have my little boutique Tuu Tuu Cute which will bring in a little money as well. Adam is lining up side jobs and we are finding things every day that we don't use that could be posted on craigslist. I have become a mad woman again, and the bills bag is back out. I don't care if i'm the bag lady, ill also be the lady who has no debt and can afford to focus on my own business, stay home with my children and have another baby as well as a fully funded savings account, and my children's college education paid for. Since we no longer have the $570 car payment, and I am saving at least $400/month working closer to home, and now I'll add $500/month from paying off these first debts. We will be out of debt in no time. With the new budget we will be able to live off of adams paycheck and my checks can go directly to debt. Now I have to admit that I'm on a little high from being able to pay off so many of the little items, so now we will start to attack the larger debts, but it won't be the immediate statisfaction of paying off a $200 in full. One debt may take several months to pay off until we get to the next one, so this may be where it gets to be not so fun and seem like there's no end in site. These are the moments I will have to find my own motivation, and I think being stuck in a cube all day will make it easy to find this kick in the pants.
When I go on a diet, I usually try to motivate myself by saying, when i lose 5lbs, I'll buy myself a new shirt, when I lose 15, ill buy a pair of new shoes. This type of motivation usually doesn't work so well because ill lose that 5lbs go by myself a new shirt then next month im buying another new shirt because i have gained and lost that same 5lbs. Why should I reward myself for reaching only part of the goal. If I have 20lbs to lose, why should i reward myself at 5? I should reward myself when I reach 20lbs and have kept it off for a few months. Same goes with paying of debt. Oh when I pay off 5 things we will be rewarded with a weekend in San Antonio. Ok we go to San Antonio, spend too much money that could have been going towards debt then break out a credit card that has already been paid down or off to live on. Isn't that just dumb? Seriously we could have stayed our butts at home, use that money to pay down more debt kept the paid off cards paid off and enjoy a nice week long vacation somewhere when we have no debts and have all the cash to do it. Man, what a smart idea ;-)
Sunday, February 27, 2011
Saturday, February 26, 2011
The Step Before Step One - Fall Down Go Boom
Or in adult termanology have something happen to you that changes your way of thinking in an instant. (Now it's time for me to be brutally honest and admit things that aren't so plesant) For us that was coming home from spending $300 at Ikea to see that Lightning Mcqueen had gone bye bye. I had been contemplating letting it go back for a while, but that was just a thought. Since working so far away was taking away my income i had fallen behind on my car. I had made a payment online to catch it up and even be a little ahead but since I did not call and speak to someone the payment was applied too late. I wasn't upset, it was more like a weight had been lifted off my shoulders. I'm not saying that it was a great moment or that it isn't going to follow me around for years, but the feeling of no longer having $600 payments was such a relief. We immediatly got the payment that I had made refunded and bought a cash car. My husband works for a car store so we were able to get a quality car, paid in full. it also dropped the insurance by $50. I was also able to get a job that is right down the street and great benifits.
This is the thing, we had done all of this spending and were riding high but it didn't last, now we have so many monthly bills that we can't afford to do anything, and if things don't change, it will just get worse. I used to live at the mall, serious shopping addiction, now I can't even stand to step foot in the mall. all the people, the kids, the noise, the girls dressed like skanks trying to "ask you a question and try this scrub from the dead sea?" The thought of shopping is exhausting, heck debt is exhausting. The stress, the worry, the writing of the checks and typing to use online bill pay. Yawn, i seriously just yawned thinking about it. Now comes step one. Open the Total Money Makeover by Dave Ramsey and read it.
This is the thing, we had done all of this spending and were riding high but it didn't last, now we have so many monthly bills that we can't afford to do anything, and if things don't change, it will just get worse. I used to live at the mall, serious shopping addiction, now I can't even stand to step foot in the mall. all the people, the kids, the noise, the girls dressed like skanks trying to "ask you a question and try this scrub from the dead sea?" The thought of shopping is exhausting, heck debt is exhausting. The stress, the worry, the writing of the checks and typing to use online bill pay. Yawn, i seriously just yawned thinking about it. Now comes step one. Open the Total Money Makeover by Dave Ramsey and read it.
Light Bulb On!
So, I have never blogged before, but I feel like this journey needs to be documented. For readers and most importantly for me, when I get that shopping itch and I just "need" a new pair of shoes, I can look back and remember all of the sacrifices my family has and will be making to reach our goal of debt free.
So let me start by saying this. I used to be obsessed (seriously) with paying bills the moment I got them. I had notepads, spreadsheets, I even had a bag that was attached to me 24/7 that I called my "bills bag" It was a cute Victoria's Secret tote that was my second purse. I had some credit cards, but they were all paid in full WAY ahead of time. I had never received an overdraft or late fee in my life, and I was proud. I was 21 when I had my first child, got married (Adam), got pregnant again and bought our first house, dragging my poor hubby along for the ride. oh you know he loved it :-). So here we are going on our happy new family journey when it happened. Adam made fun of the bills bag and called me bag lady. I know it was a joke, but that bag didn't hurt anyone. It had kept us on track and on budget and gave us the ability to have good credit and o live within our means. After that the bills bag and its contents were discarded in the back of my closet, while I attempted to be less type A, and to relax a little. Oh i received a bill? i'll put that on the counter and pay that later, hey let's go shop! credit card approval? why not, let's go out to eat, sure we can afford to finance something else. This was my new attitude and mama was finally fun. I was getting caught up in the "American" way of spend spend spend and all financed so what great way to extend on that idea? well of course a New Car (in the price is right voice) I was the cool mommy with the brand new Lightning Mcqueen red 4 dr Civic Si, with all the bells and whistles and it's awesome (sarcasm here) $570 payment. we also had another car with a $400 payment. So that put us at 5k in bills every month including daycare and home expenses. Mommy and Daddy worked so it was all good. The first time we had an over draft, it hurt, oh i cried about it and promised to make changes, got the Dave Ramsey book, Total Money Makeover, read about half of it, put it in the closet. It happened again about year later, but it didnt seem to hurt as bad, then it became a normal part of life. I got a new job with a very long transit and 3-4 tolls a day, and that added up quickly, i was basically working to afford to work with travel expenses and daycare. It really hit me when I had to miss my son's first recital and asked my mother in law to volunteer in his class because my job wouldn't let me take off. I sat on the other end of the phone tears pouring down my face as my husband held his phone in the air so I could hear my son sing. This was the day I vowed that things were going to change. Working full time so far away and always being broke just wasn't worth it. Luckily thanks to a great friend, I was able to get a job close to home, like literally right down the street, so now I am able to attend some things. But I'm still sitting at a desk all day making money just to pay bills on debt and have nothing left because we chose to not be smart with our finances. I want to have another baby, but I refuse to do it if I can't be home with my children. I'm not going to work to pay someone to take care of my children. So the Total Money Makeover book was dug out of the closet and so begins our journey to being debt free.
So let me start by saying this. I used to be obsessed (seriously) with paying bills the moment I got them. I had notepads, spreadsheets, I even had a bag that was attached to me 24/7 that I called my "bills bag" It was a cute Victoria's Secret tote that was my second purse. I had some credit cards, but they were all paid in full WAY ahead of time. I had never received an overdraft or late fee in my life, and I was proud. I was 21 when I had my first child, got married (Adam), got pregnant again and bought our first house, dragging my poor hubby along for the ride. oh you know he loved it :-). So here we are going on our happy new family journey when it happened. Adam made fun of the bills bag and called me bag lady. I know it was a joke, but that bag didn't hurt anyone. It had kept us on track and on budget and gave us the ability to have good credit and o live within our means. After that the bills bag and its contents were discarded in the back of my closet, while I attempted to be less type A, and to relax a little. Oh i received a bill? i'll put that on the counter and pay that later, hey let's go shop! credit card approval? why not, let's go out to eat, sure we can afford to finance something else. This was my new attitude and mama was finally fun. I was getting caught up in the "American" way of spend spend spend and all financed so what great way to extend on that idea? well of course a New Car (in the price is right voice) I was the cool mommy with the brand new Lightning Mcqueen red 4 dr Civic Si, with all the bells and whistles and it's awesome (sarcasm here) $570 payment. we also had another car with a $400 payment. So that put us at 5k in bills every month including daycare and home expenses. Mommy and Daddy worked so it was all good. The first time we had an over draft, it hurt, oh i cried about it and promised to make changes, got the Dave Ramsey book, Total Money Makeover, read about half of it, put it in the closet. It happened again about year later, but it didnt seem to hurt as bad, then it became a normal part of life. I got a new job with a very long transit and 3-4 tolls a day, and that added up quickly, i was basically working to afford to work with travel expenses and daycare. It really hit me when I had to miss my son's first recital and asked my mother in law to volunteer in his class because my job wouldn't let me take off. I sat on the other end of the phone tears pouring down my face as my husband held his phone in the air so I could hear my son sing. This was the day I vowed that things were going to change. Working full time so far away and always being broke just wasn't worth it. Luckily thanks to a great friend, I was able to get a job close to home, like literally right down the street, so now I am able to attend some things. But I'm still sitting at a desk all day making money just to pay bills on debt and have nothing left because we chose to not be smart with our finances. I want to have another baby, but I refuse to do it if I can't be home with my children. I'm not going to work to pay someone to take care of my children. So the Total Money Makeover book was dug out of the closet and so begins our journey to being debt free.
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