Last year my husband lost his job, we almost lost our house and we still haven't quite bounced back yet. It scared me so bad..what if we didnt have a home to bring our child to after he was born? On the brink of foreclosure, my husband got a low paying job and we are finally getting back on track. That incident was enough to scare me into thinking "Will we always have a roof over our heads?" Something I thought I would never have to think again after we signed our mortgage contract. So it's official, I'm paying off all my debt starting as soon as I can get a job. These bills are ridiculous, anyway, and if we didn't have debt our bills would be under $300 a month! How amazing would that be?
It does mean choosing between being a stay at home mom and a working mom, but I could pay it off before his third birthday and I think he would benefit more from a debt free childhood and being away from me for a few hours a day than he would with me home with him 24/7 struggling to pay bills! And I'm so sick and tired of worrying about money, anyway..I would much rather work than worry another second about paying a bill.
So here I am, starting my journey..I committing to it right now!
A very kind lady sent me Dave Ramsey's book free of charge and I've taken a few goals from him, ok maybe this whole quest was inspired by him..but I've thought about being debt free for a while!
1. Get caught up! [check!]
2. Save $1,000 (for emergencies )
3. Start paying off AT&T (Only $60 left) [check!] and Family Loan ($5000/$6,785)
4. Pay 5 years off the house ($7,157)
5. Pay 10 years off the house (Additional $7,868)
6. Pay more in principle than interest
7. Pay 15 years off the house (Additional $9,488)
8. Pay 20 years off the house (Additional $11,441)
9. Pay 25 years off the house (Additional $13,845)
10. Pay off house! (Additional 14,527)
(12/41) current loan maturation date
(05/42) original loan maturation date
To help me in my journey I bought an app called Pay Off Debt to show me where I'm at in my goals, it also shows me how much time I have left on each debt I have and how much sooner I'd pay it off if we started paying extra..I really love this app..I keep going back and looking and playing with it haha. I also joined a payoff debt group on Facebook and got a free book on iTunes called debt mindset reset. The book has 7 steps to resetting what you think about debt.
1. What's your freedom number? How much money is going to debt payments?
As of right now, it's $658
$30 to AT&T
$100 to a personal loan from a family member
$528 to our Mortgage
2. Dream your dream. What would you do without that payment?
In no particular order...
I'd go to school, and pay in cash!
Send my husband to school!
Land our dream jobs!
Go to Disneyworld in 2020 (when my infant son will be old enough to love it)
Have another baby!
Start building our dream home!
3. Arm yourself. What's your "I never want to be in debt again moment?"
Almost losing our home!
4. Rome wasn't built in a day! It took a while to get here and it will take a while to get out. When would you be out of debt if you didn't pay extra.
We would be out of debt August 2042.
5. Narrow your focus. Pick the most pressing thing and start paying it off.
I would love to say this is my house, but its the personal loan from family. They helped us when we needed it, and now they need it!
6. Believe you can do it!
I believe it, I really really do! It will take sacrifice and discipline (and maybe a cheat month or two) but I can do this!
7. Confront reality. Brainstorm 3 alternatives to spending too much or borrowing money.
-eating in instead of out
-wait for the movie to come out in redbox
-finding a similar used item at a reduced cost
Its a really good feeling paying things off! OH was lucky enough to do a 3 week offshore stint so that made a debt in our debts, and then, thanks to that we refinanced the debt at like 1/3 the original interest rate and so it will save us 50% of the interest.
I was getting myself in a tizzle to try and clear it all off by April and basically us all living on beans, but we have sorted it to yes, it will take a year longer but it means that should an emergency happen we have spare cash (given my luck with cars its needed!).
Have you looked into You Need a Budget? I go to their forums quite a bit, and the program is geared to people who are in debt and are budgeting to dig their way out of it.
Last year my husband and I were not in debt but still living paycheck to paycheck. I couldn't understand what was going on! After a year of using YNAB we have built an emergency savings, a car emergency savings, an entertainment fund, and are 1 month ahead on our bills. We no longer live paycheck to paycheck! It wasn't an easy thing, and it most certainly did not happen overnight, but I really think YNAB helped me with the progress.
Another excellent program is Mint. I could never get into it, but I know others who have sworn by it. Good luck! Hope you see good results in the near future.
Well, to be fair we have a lot of things in our favor that allows for us to save the way we do:
1) we live in a VERY low cost of living area
2) we have no debt
3) we have no loans, our cars our free and clear and we rent
4) we have not suffered anything catastrophic as you did, such as a job loss
5) when we started YNAB we started with a savings already
We also live a frugal lifestyle. We do not have cable, my husband rides his bicycle to work, we have a strict budget for entertainment. All of this allows for us to put away 43% of our net income into savings. Our goal is to increase. I don't think our method is for everyone, lol, obviously, but it is what works for us. We sound like boring people, but being so careful with the daily things has allowed us other pleasures (we traveled in Europe for a month, all paid with the money we saved).
To give you a more realistic scenario, though, on paying debt, I really think it is about prioritizing things, and being firm in your resolve. I can give you an example: My husband's father passed away while we were in Austria and we had to put $5k on a credit card to get home asap. We put half on my credit card, and half on his. His we paid off immediately.
Mine, for the month of October we ended with a balance of $2432.02. We decided since the card is at 0% until February to just carry the balance and pay it off before the interest hits.
My husband and I are paid bi-weekly on the same week, and we have a modest income.
So in one month we paid $1200 to the card.
I am paying another $400 to this card on Friday, as well as putting my husband's Christmas bonus ($450) to it. This will leave a balance of $582.02. This does not count the fact that we have two more checks this month, and that is another $400 that will go to the card. By January the balance should be less than $200, which will just be paid off.
This isn't easy, lol. This money that is paying the credit card is money that we would usually put in savings, or spend on us for fun stuff. The Christmas bonus is what hurts the most. I wanted a new purse!!! But I want this credit card paid off more, and that's what's important.
I don't mean to blabber, just know that you are being heard. I really believe everyone has it in them to be debt free, reach their financial goals, and be financially independent. It's just a matter of creating and budget and sticking with it.
I personally think that you should start savings for that $1500 emergency fund right now. If you get money from taxes, you can also use that for emergencies.
If you don't mind me asking, but do you have credit card debt? I don't agree with everything Ramsey says, but I do love his snowball method approach.
Any opinions, advice, statements or other information expressed or made available on BabyandBump.Momtastic.com by users or third parties, including but not limited to bloggers, are solely those of the respective user or other third party. They do not reflect the opinions of BabyandBump.Momtastic.com and they have not been reviewed by a physician, psychologist or parenting expert or any member of the BabyandBump.Momtastic.com staff for accuracy, balance or objectivity. Content and other information presented on BabyandBump.Momtastic.com are not a substitute for professional medical or mental health advice, counseling, diagnosis, or treatment. Never delay or disregard seeking professional medical or mental health advice from your physician or other qualified health provider because of something you have read on BabyandBump.Momtastic.com. BabyandBump.Momtastic.com does not endorse any opinion, advice, statement, product, service or treatment made available on the website. If you think you have a medical emergency, call your doctor or emergency services immediately.