WE'RE DEBT FREE!!!

Via

This afternoon I scheduled our LAST payment to be made on our debt! We are thrilled!! It's certainly been a journey. About 16 months ago, we made a decision that we were done with debt. We were tired of having so much of our money going to pay for our school bills. At that time we still owed $37, 717.96 of our nearly $55,000 in school loans. The number felt overwhelming and impossible, especially trying to pay for it on an annual salary of approximately $60,000. Now, as we look back we are so happy we made that choice on July 27, 2010. It has forever changed our lives!

On that day, I made a chart to track our progress of getting out of debt. After counting up 38 boxes, I felt a little hopeless, but each time we marked another chunk off it just gave us hope and the enthusiasm to keep plugging away at it. All of the excitement hasn't fully sunk in yet. I'm looking forward to our next paycheck when we won't have to use ANY of it for debt! :) What a relief. Best. feeling. ever!

If you're just hearing our our debt story for the first time, you can find out more by reading this page, or read the posts under the "Debt" labels. 

Money Savvy Kids

Came across this article about raising kids to be money smart. So I'm passing it along.

Debt Update!

It's been quite a while since I've filled you all in on our debt snowball! Trust me, even though you haven't been hearing about, we have been going full force.

God has blessed us so much through this year and this process. We are so thankful and give him the praise for all HE has given us. He is the giver of all good gifts and we know that all we've been able to accomplish in our debt snowball has been because of His faithfulness to us. So awesome!

I'm SO happy to give you the update that we are so, so close to being done! We are down to approximately $3,000 left on our final school loan! AND, there are some payments scheduled to go out in the next few days that will bring that number down even more! So. very. exciting.

I hope our update encourages you on your journey. As hard as it seems when you're looking up from the bottom to the top of your mountain, keep going! Each step, each payment (even the ones that feel small) are bringing you closer and closer to the top. When we started we never imagined we'd be able to get out of debt as quickly as we have been. The big lesson we've learned is that the more you're willing to sacrifice the quicker you'll be free.

You can have an update like this one too! I can't for you to share it. I can't wait to hear it.

One Year Anniversary--Debt Diet

YAY!! We've made it. A year ago today we started on this journey to become debt free. If you haven't been following along since the beginning you can get all caught up on our debt story here. Rather then writing a whole long post about all the challenges along the way and our determination to make it past this financial "hurdle" (that you've all heard before), I'll just share the highlights today. :)

-A year ago today we owed just under $38K on all our school loans.
-Today, we owe less then $8K! :)
-During this year we've paid $29, 959. 58 (not that we're keeping track! ;)) on school debt.

We didn't even imagine we'd be this close in just 12 months. It's so exciting!

This how we feel today--like we're soaring. It's so worth celebrating today! :)

Making it to this place, seeing that large of a number paid off in a year and now being in the "single digits" left, has been worth all the sacrifices we've had to make. 

Thanks for all your support and encouragement along the way too. We are grateful for friends that have come along side us to stay focused and make this goal a reality, hopefully in the near future. Thank you!

Top 10 Ways to Get out of Debt--in a hurry!

First, here's a friendly reminder to go vote on the poll! :)

Now to the real post--I just found a Top Ten Tuesday blog hop and thought this would be a perfect time to give it a try! :) So here is my list for the week.


1. Start with the truth
First things first, you have to start telling the truth about your financial situation. Usually the first one you need to tell the truth to is yourself and/or your spouse. I've found that a lot of people don't actually know the number. It's time to add it all up friends, and face the truth. No more vague numbers. The sooner you know what you're really dealing with the sooner you'll move into action.

2. Get on a Cash Budget
Set yourself up on a cash only budget. Even if you pay off your credit card in full each month or you think you'll spend the same amount--chances are you'll save! Statistics show that nearly all of us spend more when using a piece of plastic over holding those little paper bills. Get yourself set up with cash so you can SEE your money coming and going. It'll also help with #10. If you'd like some ideas on how to set it up, check out this post or this one.

3. Hit it with all you've got
Here's where you get to fight, hit, kick, punch and yell at your debt! They've been winning long enough, now it's your turn to fight back. Get serious about paying off your balances, the more you pay each month the more determined you'll be to keep it up--and stay OUT of debt!

4. Know your weakness
There are some places I just can't go right now. First of all, malls aren't a usual hang out place for me currently---it's just not wise! ;) Target--no go! Basically any store with cute clothes, home accessories, crafty projects, and anything else other then groceries--not going for a while. If you're serious about getting out of debt, it's important that you identify what your spending weaknesses are. My husband's is eating out. ;) Once you've realized what these areas are, you'll know how to say no to them with  more strength and determination. Avoiding these tempting things will help you save tons! :)

5. Wait for the deal
No more impulse buying allowed! It's time to start putting off purchases until you can pay for them. Often times all those I-can't-live-without-it items will be on sale before you know it! A little patience will save you loads of cash in time.

6. Go green
Not only is it better for the environment, it's better for you pocket book--that's a win-win!

7. Take it when its free
Want to read a great new book you just heard about? Check your library or borrow it from a friend. There are SO many things that are free, just doing a little research and you'll find all sorts of entertainment for free, food, household products and more. Have you ever checked out the free section on Craigslist? You have to be QUICK, but if you are you can score some great finds! :) Do a little google search for what you're looking for before you buy it.

8. DIY
It's time to let out that inner crafter in you! Don't let the Do It Yourself words scare you. This can be all sorts of things. If you're good in the kitchen start looking at ways you can make things from scratch to cut your families budget. I've done some of that and have learned all sorts of new things! Here's my instructions for homemade baby food and a bulk cooking day to make for simpler dinner time prep. You can also learn how to can or freeze food properly. Not a kitchen guru, how about making homemade cleaning supplies? Here is a post that will lead you through the steps for laundry soap and dish washer soap.  There are also so many great ideas for crafty things you can make or fix yourselves. Get a little inspiration online if you are looking for some ideas! This can be one of the most fun parts of getting out of debt--let you imagination take over!

9. Be a Team Player
Getting out of debt is a team effort if you're married. You will have to work together to be successful. The closer your goals are to each others the easier your process will be. Make it a project you can both focus on and put effort into making happen. Both of you will have a part to play, so figure that out in your relationship and get to it!

10. Learn to say NO
This is by far the hardest part. No one wants to say no to themselves. Adults want to have the freedom to have what they want, when they want it. It's hard to see other people buying and getting things you just can't have for a while. But here is what keeps me motivated and on track, "Live like no one else, so later you can live like no one else." -Dave Ramsey. We've had to make sacrifices to get where we are and you will too. I'm not gonna lie, I don't like it, it's NOT fun! The fun day will be when we can live stress free of bills and have the cash to do/buy what we like! :) That's TRUE freedom, I find a lot of American's are living in a false sense of freedom (living the way they want to, while having piles of debt). And, we're back to the beginning--start living in the truth.

Motivation Challenge

I thought I'd give some extra 'get out of debt' motivating challenges every once in a while to help people see how much difference a small change can make.

So the challenge is:

1. Go through all your bills and add up all your debts.
-That would be anything you owe to a bank, car dealership, school, health care provider, etc. (Anything that is not a monthly living expense--utilities, rent/mortgage, groceries, etc).

2. After you have added them up, now multiply that number by 3 months, then 6 months, then a year.
-Remember that doesn't even include all the interest you'll be paying them over time too!

3. Answer this question: what would you be doing with that money if it wasn't going to the person/company you owe it to? What would your family be able to do with that money if you had it each month or within a year?

4. Start to dream. Would you be able to quit that second job you don't enjoy? Maybe you'd have enough to take that family vacation you just can't ever afford. Would you be able to set aside more toward your retire or savings for your future? Could you be more generous and give to people/organizations you've been wanting to help, but just don't have the extra money to? Maybe you'd finally have the money to fix/remodel a part of your home or yard.

Amazing how quickly it can add up, isn't it? It's just as amazing how quickly you can pay it off when you are ready to have the money to realize your dreams. What are you willing and ready to give up to make that dream come true?

Motivation, please!?

I was asked about a week ago, what I think keeps people from 'taking the plunge' when it comes to really working hard to get out of debt.

So, here is my answer. Remember, most of this is my opinion and I don't think everyone has to live the way we do--although I would highly recommend this program!

The bottom line, how motivated are you to meet your financial goals? We have been trudging along our getting out of debt journey for our whole married life and it's exhausting, stressful, and VERY limiting. When we'd look at our income vs our bills each month, nearly all our money was accounted for because of all the bills we owed. It's so disappointing and then it forces you to put things on credit cards because you have other expenses that come up, creating another debt cycle and the hole gets bigger! We never have had the credit card debt, but we were always stressed about what our credit card bill would be each month and we'd just pray we had enough money to cover it! If we didn't, we'd end up taking money out of savings, setting us back on goals we'd had for that money. The constant money stress just got to be too much and we came to a point where we were DETERMINED to end the misery--sooner then later! That was it. That's our motivation. We want to be DONE with having all our money accounted for each month, going to other people and causing us endless amounts of anxiety and stress each paycheck! We don't want every decision we make to come back to money. 'Do we have enough money for that?' 'How much will that cost?' 'We have to have jobs that make X amount of money or we can't pay our bills.' 'We can't quit X job, because we need the money.' You get the picture. It was the story of our lives and it's exhausting. It's also very depressing and limiting. We were sick of it and wanted out from under the bills!

So, we got to work! We have decided that being extra strict with our budget and making temporary sacrifices was better then always living with the financial stress. The great thing about getting out of debt is that there is an end in sight. You know that the way you are living isn't forever. So it's easier to give up on some of the 'extras' you love, because you know you'll have them back soon. If you go in with the mindset that the harder you work, the more you save, the more you put on debt, then sooner you'll be free and the sooner you'll have your life back, it's so much easier to get started.

Again, I ask, how motivated are you? How tired of being in debt are you? How much do you want freedom from your bills? How much do you want to have a say in how you spend YOUR hard earned money? The answer to those questions, will determined how motivated you are and how willing you are to give up things temporarily for the long term benefits.

We went in with the goal of getting out of debt, but we're already seeing the benefits of this budget. Yes, it has been HARD to stick to our really tight budget. There are things we really want, but we can't have right now. But I know even after we are out of debt we will still live on a cash budget (with hopefully some larger amounts!! ;)) because it has relieved SO much stress. We are communicating better about our finances and what we need to save for, how much things cost, how we will pay for things that are coming up, etc. We don't have the anxiety about bills coming in the mail that we can't pay for. We haven't taken money out of savings to cover our expenses. We've only taken things out for the reasons we've set it aside. We are in control of our budget and can change it whenever we need to. We have a say in where our money goes. It's awesome! On top of all that we are making huge strides on our debt and only have one bill left!

It's really a personal answer to what will help some one take the plunge, which is why I'm sharing our story as an answer. Every couple will tackle it a little differently, but for every story I've heard the results are amazing. I'd recommend you listen to The Dave Ramsey Show on Fridays, where he lets people call in that are recently debt free. They have amazing stories and I literally tear up each time I hear them. I'm so excited for them and it keeps me motivated to stay the course, so we too can scream, we're debt free!

I hope this motivates you! Maybe at least enough to sit down and have a conversation about figuring out your 'essentials' and start eliminating things that don't fit that category--remember it's TEMPORARY! You are in control of the time frame too, the more you cut and the harder you work, the shorter the time frame!

Paid in full!

We just got another 'paid in full' letter from one of our Sallie Mae loans. It was one that totaled $19,779.07 and it is DONE! We no longer have that stress in our lives, it is so exciting. We still have our final loan, but we are making progress one pay check at a time on that one. Hopefully soon we will have our final 'paid in full' letter in the mail. :)

Debt Update

I know it's been a while since I've given y'all an update on the debt diet, so here is the quick update. We are down to ONE loan! Count them with me friends, ONE--yep, that's it! :) It is the largest, of course, because the way we've been paying them off is smallest to largest, but nonetheless, it's our LAST one!! :) Very exciting, very exciting!

Hard worker

I'm so thankful for my husband who is working extra hard these days! His job is requiring some extra hours at work for trainings for a transition they'll be making this summer. Then, on top of it, he's added a few more responsibilities at our church for a short time frame too. All this to say, he is busy! He's working a lot of extra hours right now, which has been a bummer for our family time, but great for our debt plan! Thankfully, this craziness is temporary!! :)

Debt Update

Thanks to our tax return, we are in the 'teens' now! :) for those that have been following along since the beginning that puts our paid off total around $21,000 in 7 months! Can some body please stand up and cheer about that?!?! WooHoo! :) I can't explain how happy this makes me. That's not even counting the almost $17,000 we paid off during the 41 months before starting this program. This process has gone so much quicker because of our diligence in saving money and living on cash only. I wish we'd been doing this during those first 41 months, we would be done by now, but no use looking back now. We are going to be debt free soon! :)

So, we've had a debt free date set for a few months, but I've been nervous to post about it because I don't want to fail...BUT, I'm going to now. I'm feeling hopeful we can do it, it'll for sure be a stretch, but hopefully it'll help us push through and get it done! Now, with that build up, I feel like I need a drum roll to tell you...

Debt free date goal is: March 2012, hopefully by that first week. :) It will be the week we both turn 30. I don't think there is any better way to ring in our next decade then being able to yell, "WE'RE DEBT FREE!" :) Now, I can't wait to turn 30! :)

I'm hopeful and I pray we'll be able to make that goal. It sure would be awesome. It'll also be the year we celebrate our 10th wedding anniversary, so it'll be a BIG year to celebrate in our house.

If you are just getting started, I hope this motivates you and encourages you to keep going. You too, can be debt free soon!

Sallie Mae

Ugh! Can I just tell you how ready I am to be done with Sallie Mae? They are the company that has our student loans and they are a PAIN to deal with. I don't think we've ever had a month go by that they didn't some how mess up our payment in some way or another. We actually have to call them every single payment and have them fix their mistake even though we CLEARLY write the loan number on EVERY single check. A pain, I tell you--a real, royal pain! On that note, I'm off to fix this months payment now too. *sigh*

Here's to getting a little closer to having them out of our life!! :)

National Debt

Info about Obama's plan for the national budget, good information to know regardless of your political position.

$835

Paid on debt so far this month!! :) Making progress, one dollar at a time.

Another $1,000 Done!

That's right! :) Another reason to celebrate. We've hit the $2,000 mark (actually it's over that, but I have yet to figure out the exact amount). Either way, it's a fantastic accomplishment.

Part of what makes these milestones so exciting for us is that we have been scrapping up every extra penny we can find in our budget to make these payments. We haven't had a large surplus each month and these milestones are happening, one small payment at a time.

We will get out from under this! I hope you are doing the same in your lives!

PAID IN FULL!

I love those three words. They are magical to me right now! ;) We made our final payment on my student loan from my bachelor's degree about a month ago. Today, though, I got the lovely letter that makes it official that I owe them NOTHING! That I have no debts with them, that I'm free from their bills, that I'm free from the stress and interest that so quickly accumulated by that "number" they held over me. I'm pretty sure I should frame those letters and hang them next to my degree because it feels like even more of an accomplishment then the degree sometimes!

It's a freedom day, friends! Not a complete freedom, but it's one of them along the way and it feels awesome!

I hope some of you are experiencing a freedom day or one is in your near future, I wish this for all of you!

Slightly miscalculated...

I knew that we had to have been close to our first $1,000 mark on our debt pay off plan, but I didn't actually know the exact amount. So, when I posted about making it that far, I knew we had and was excited to reach that milestone. Well a few days later when my payment had gone through, I decided to actually do the math and get the exact number figured out. I had actually failed to keep in mind that our payments, even the ones that aren't extra, are still paying down the principal some too. So to my surprise we had not just barely paid the first thousand, we had actually paid off over $1,600! YAY! Progress-sometimes it feels slow, but either way, it's happening and that's exciting.

First $1,000 done!

Woo Hoo!! A super exciting milestone was hit this week with a $235 extra payment made on a student loan. We've officially paid $1,000 worth of debt off since the beginning of August. That's awesome. Hopefully we'll keep the momentum going and be able to pay at least that much, if not more, on that loan again with the next paycheck. I'm keeping my fingers crossed! ;)

Side note: HUGE blessing, our car ended up being about $300 less then we had anticipated. God is good!

It's PAID for!

My bachelor's degree that is. I officially paid my last payment today!! WOO HOO!! It feels so wonderful to take bills off our bill pay page! :) Not to mention not having to worry about it each month. So, now we're going to pile it on full force on to my husband's school loans. Something to celebrate, for sure! :) YAY!!

Cash Budget FAQ

As I've been talking to people about our cash budget I've heard some of the same questions. A lot of people have tried the cash budget system before (we did too) and have had problems. Our first attempt failed miserably as well, so we've learned a few new things this time that have helped with some of the "quirks". I figured I'd do some FAQ to get some of the answers out to people that are looking to give it a second try!


What are your budget categories and how to you do know what to put under each category?
Our categories are Groceries, Entertainment, Gas/Car, Clothes, Personal and Individual "fun" money.
Groceries only includes food for us. You can do it however works for you, but we decided to take toiletries, cleaners, diapers, etc out of that category. Entertainment includes any outings or hanging out that the family goes on, eating out also goes under this category. Gas/Car includes oil changes and money for registration each year. Clothes is one category for the whole family. Personal includes all the household items that don't go under groceries. It also includes things like haircuts, one time expenses that don't go under other categories like carpet shampooing. This also includes pet expenses if you have them. In our relationship it works well for each of us to have some money that is ours to spend any way we want. It's basically a little bit of "freedom" money for each of us and it protects against our family entertainment budget being used by one individual's hobby/hang out times. So we each (the adults) have a monthly spending allowance too. Gifts is not taken out monthly, but we set money aside for those special occasions each month. 


Keep in mind that if you are working on getting out of debt, you need to be willing to make sacrifices in EVERY category of spending. There is no category that can be "off limits" to have some cuts for a month or two. If it's gas money, then maybe you'll have to stay home a few nights a week or find things to do that are closer to home. Same goes for every category, sacrifices will be required of you in all areas in order to get out of debt. 


What do you do if your income isn't consistent each month? 
This was one of the ways we messed up the first time. We tried to figure out how much we needed for each category every month without figuring out that each month might need to look a little different and that our income might not always be exactly the same amount either. This time around, we made some changes. First of all we evaluate our cash budget every two weeks, based on my husband's paycheck. Second of all, we have learned that some areas are going to have to be "flexible" amounts and some weeks we'll have to make do with less in some categories.

How do you know how much to take out for your budget?
We estimated a reasonable amount for each category. We used Dave Ramsey's percentage chart to help guide our amounts too. During months that we have the full amount to spend, we'll take it all out and categorize it, otherwise we have to cut in the areas that we are able to for that month. For us it didn't work to do all the cash budget for the whole month at one time. We ended up taking out too much of one paycheck and didn't leave us enough to cover all of our bills. 


What do you do with large budgets that are spent at a certain time of year (ie. Christmas, car registration)?
You can do this a few ways. You can have it as a category in your cash budget and set it aside all year in an envelope designated for that expense or you can have a savings account that you transfer money into each month to keep that money available. If it's something like Christmas, you can shop throughout the year and have an amount you can spend each month and just keep the presents hidden away until December. It still needs to be part of what you are "spending" each month, so that it doesn't land all in one month. 


How do you handle automatic payments? Online Payments?
Any automatic payments that we had scheduled on credit cards were cancelled. Now we either do it on our debit card or through bill pay. We don't use our credit card for anything any more. If you are used to paying your bill online for each individual company, then you would start using a debit card for those payments. Remember to account for these purchases when figuring out your total outgoing for the month to make sure you don't over spend. 


What do you use for online purchases?
Again, credit cards are banned! If you need to make a purchase online (which we have continued to do regularly) you need to use your debit card. If it is bought after you've figured out your cash amounts, then you'll need to take the cash out of the envelope for the category it falls under and re-deposit it into your account. This may require you putting off buying it until you get to the bank. 


How do you use Bill Pay with the cash system? 
I still pay all our bills online through our bank. Every two weeks when we get a paycheck I'll first pay every bill that is due before the next paycheck and subtract that from our income. If there are bills due after the next pay check, but I'm not sure we'll have enough to cover them from one check, then I'll pay additional bills with the first check. Once the bills are all paid, then I will figure out our cash amounts. Keep in mind that since I'm doing it every two weeks, the cash budget totals are in half, so that it gets us through the whole month. 


**Side Note: Tithing/Charitable Giving
This is part of our personal conviction and family values, but it is also addressed through the Dave Ramsey program, so I'm addressing it in case this is a question others are wondering about. Our family believes that we should give 10% of our monthly income to our local church and when we have it to give we give above that amount to other charities, missions' organizations or ministries we feel the urge to support. This is an area where Dave Ramsey agrees with us, even during the debt diet, giving to God is never eliminated from your budget. In our house it is the only "budget" that is non-negotiable. We have always believed that no matter what our financial situation, living in obedience to God's instruction about giving has been our priority. It is also what has carried us through really difficult situations. When you live by faith, God provides for you. Now who doesn't want God to be your financial advisor and institution? 


I hope this helps with some of the quirks of a cash budget. If you have other questions, leave a comment and hopefully we'll be able to come up with an answer, if not me, maybe another reader!