Money is something I don’t like to talk about much. Honestly, I’ve never really had to worry about money in my life, until recently. My parents always provided more than enough for me and my brother growing up, and I was able to buy my first house right out of college and save for a hefty down payment on a new car a few years after that. Although I never did a “budget” per se, I always knew in my head how much I had and never spent over my limits.
Then Huebie and I got married. And along with him came a very large sum of student loan debt. Honestly, more than I realized he had. And then we bought a new home and the next day (literally, the day after we moved in) Little A came along.
A little back story for you…
My plan after my 5 month maternity leave was to go back part time. I’d agreed to 6 months with my boss, but was hoping that it would workout so well they’d let me just stay part time….indefinitely. Wishful thinking, I know. After a few months of work (and a new boss) they asked me to return to work full time, but I just wasn’t ready. I knew that I wanted to be home more with my daughter and if I had it my way I would be staying at home with her full time. I didn’t (and still don’t) want to only see my child a few hours at night before she goes to bed. It breaks my heart thinking about that.
I was fortunate enough to find a part time opportunity at my current employer, and after over 7 years at Boeing, I quit. No one tried to stop me. To this day that still really irritates me. I put my heart and soul into that company and no one fought for me. I know if I’d had different managers things may have been different, but I guess it is what it is.
But I digress…
I do wish I could stay home with Little A. Unfortunately with Huebie’s student loan debt, mortgage, car payment (more on the car in a bit), etc. we can’t afford that.
We’ve done a lot of work to pare down our bills to a minimum (for us), and we’ve learned a lot over these last few years about budgeting and how we can quickly pay off our debt.
Here is what we did:
1) We cut our monthly bills where we could. We switched our internet to a lower cost provider, asked for a promotion on our cable, shopped for lower insurance rates and bundled everything to get a larger discount. I highly recommend shopping around for lower insurance. If you bundle your auto and homeowners insurance you usually get a discount.
2) We did Dave Ramsey’s online Financial Peace University. This was probably the most helpful thing for us. We learned how to set budgets for everything in our lives. And I mean everything. Food, gas, home projects, eating out, entertainment, clothing, etc. Everything. The four areas we really focus on are food, gas, home and eating out. We have a specific bi-weekly budget for those 4 areas and follow the budget. Every month. If we know next month we want to buy clothes, we set a specific limit and stick to it.
I’ll be honest here. We aren’t always 100% compliant, especially when it comes to budgeting for extras like clothes (Little A outgrew most of her clothes and had nothing in the next size up, so we had an emergency shopping trip one evening to buy her a few things), but we do our best.
3) We set up an emergency fund.
Now. Here’s where I tend to disagree with Dave. He says you should have a $1000 emergency fund. I know it’s just a guideline, but he hammers it home pretty hard in his course. So that’s what we did. But $1000 doesn’t cover much when you need to fix your car ($500 bill), you owe almost $10k on your taxes and get over $1000 in medical bills all in a 3 month time period. When this happened to us I was SO MAD AT DAVE! I wanted (and still want to) call into his show, tell him our situation, and ask him how his $1000 emergency fund is going to pay for all of this. So, that said, my recommendation is for a $5000 emergency fund. Not everyone will need this large of an emergency fund, but for us, it’s more realistic and what we’re working toward. $1000 will cover you if you have to fix your car, or need a new refrigerator, or something small like that. Not if you are unfortunate enough to have every thing happen all at once, like it did to us.
4) We don’t have a car payment.
When I was pregnant with Little A we bought a brand new, beautiful Dodge Ram. It was Huebie’s dream car. But with it came a decent car payment. When we started to really look hard at where our money was going, we decided to sell it. This was 100% Huebie’s decision. It was his truck and something that he’d worked really hard for. But we didn’t need the car payment. We were able to sell the truck and use the equity to pay cash for a used SUV. I was so proud of him for this decision. It really took a lot of pressure off us, and we love our SUV! We do miss the truck, and one day we’ll get another one, but it was the right thing for us to do. Huebie’s read a lot of books about how to build wealth and one common theme is that most millionaires don’t drive brand new cars. No one ever got rich investing in a depreciating asset. There’s no point when you can get a perfectly good 3 year old car (most cars lose significant value in the first 3 years) and pay cash. That is our future goal, pay 100% cash for any new car we buy.
5) We refinanced our home.
When we bought our house, we didn’t have 20% to put down, so we had to pay private mortgage insurance (PMI). PMI is a lot of money! Money that goes to nothing! And even when you have an 80/20 value on your home, unless it’s been 5 years, you still pay PMI. Thanks to the housing market last year the value of our home greatly increased. So we decided to refinance our house with a different lender that charged no closing costs. We were able to get rid of our PMI and save hundreds per month.
6) We don’t spend beyond our means and we don’t charge anything.
We have a specific monthly home fund. If we have a larger project we need to do, we save our home fund for a few months to accomplish that project. We don’t charge it, then pay it off later. We need a new fence, which is going to be around $1000. So we will not be doing much else around here over the next few months in order to save for that. We simply don’t use our credit card anymore. When we bought our house, we racked up quite a bit of money on our card. Once it’s paid off, it will only be there in case of dire emergencies.
And with all these things we’ve been able to save hundreds of dollars a month and are well on our way to being debt free. Yes there are months I get frustrated with it. Want to give up and charge something on my credit card (usually clothes or stuff for the house). But we just talk about the future and how freeing it will be when we have no debt. Our next goal is to consolidate Huebie’s student loans into one to try and save a bit more, and get them paid off as quickly as we can. We’re well on our way to being debt free, and by making a few small (and some big) changes, we’re getting there faster!
Is anyone else on a debt free journey? What steps have you taken to reduce your debt? Has anyone done Dave Ramsey’s FPU course? I would love to hear your stories!
LOVE LOVE LOVE this post, Tiffany! 🙂 You know me and budgeting!
Y’all are doing so well! I’m just so happy for you and the progress you’ve made and how well you stick to it. Kevin would love this post too, btw. 😉
So many things to say…I feel for ya and the student loans…though I was the one with them so Kevin had to take them on when he married me. Thankfully we were able to pay them off in the first few months of being married, when I sold my condo. I know it’ll be such a big relief to be rid of them. I felt such a weight lifted when mine were paid off a few months ago.
Oh and I would have felt the same way about leaving your old job. I’ve heard that so much lately…about leaving a company you put your heart and soul into and they don’t seem to care much when you leave. It hurts. Glad you’re able to work part time now!
I’m with you on the emergency fund thing. We actually think it should be enough to cover at least 3 months of expenses (more if you can afford it). You never know if you’ll lose a job. $1,000 isn’t enough but I suppose it’s a start for people who have a $0 emergency fund.
No one should have a car payment if they can help it. We save up and pay cash for cars. The problem is that too many people want the newest, nicest vehicle and should just get a dependable car that’ll get them from A to B.
Ugh…PMI. I’ve actually heard that if you don’t have 20% to put down now, you can’t ever get rid of the PMI. They’ve changed the rules on it. Thankfully Kevin got his house before that and this month we’ll be able to drop the PMI. It’s such a scam, I think.
#6…agreed! We never pay interest to the CC companies. We pay off the balance each month and get cash back. We make money off of them. 🙂
Love this! Sorry I wrote a book of a comment. Love that we’re on the same page about…pretty much everything. 😀
We’ve been paying off debts for the last five years and are just (just!) about clear now. I have been a stay-at-home mum since having our little boys, but it is because in the uk my salary would pay for childminding and car/fuel to get to work, with nothing significant left. It has been tough, but we’re proud of doing things the old-fashioned way like you guys i.e. having a plan, the right car, shopping for food with a strict budget, planning carefully. So many people in the uk live on credit or just go bankrupt when they’re in debt and then start spending again! : /
That’s awesome! It can sometimes be a long journey, but so worth it in the end. We are in the same boat with me staying home. It’s almost not worth it for me to work, but my hubby has to make just a bit more and I’ll probably stay home.
The US is the same too. People live off credit their entire lives and it’s just the norm now. It’s that instant gratification need we have. 🙂
Thank you for sharing this! My husband and I have started following Dave Ramsey’s Financial Peace plan in January. Most of our married lives we have lived debt free, but a failed business and baby with a heart defect drained us financially and we began using credit cards to survive. Since January 2014 we have paid off over $14,000 in debt and paid for our daughter’s wedding with CASH. We have a long way to go, but it feels great not to have a plan.
BTW, I found you through the Shine blog hop.
That’s great Renee! You have paid off a ton of debt in a short amount of time! Congrats! I can understand how medical bills can add up and send you into debt. I had a few things come up this year and even though nothing like what you have going on, it really affected us financially.
Good luck on the rest of your debt free journey!
I just found your blog through the SHINE Blog Hop. I love hearing there are other people out there trying to live within their means get rid of debt. We really try to scrimp and save up for things rather than use credit. The best thing we do that helps keep us stay accountable is the envelope system! Once the cash is gone, it’s gone. Some months it’s really hard to be that disciplined, but other months I try to challenge myself save a little extra out of each envelope. Great post! Thanks for sharing! 🙂
I’m undertaking a major revamp of things right now…budgeting, meal planning, and housekeeping. I’ll either get us on the right track…or completely lose my mind, and then I won’t care, LOL
Lol! I hope you won’t lose your mind, and it will help you get organized! I have moments though, where I do want to pull my hair out. You just can’t do it all!
We’re on a debt-free journey… and what a journey it is! We already have a modest income because there’s just one of us working and I have juggled/scraped back the budget as much as I could. That being said… I just buckled and order Chinese food to celebrate my daughter’s completion of Grade 1. Completely an impulse but it sooooo rarely happens.
– We recently consolidated our line of credit and rolled it into our mortgage (which was just a few years away from being done). However, we needed a more aggressive regular contribution to line of credit debt. Otherwise we are free of credit card debt and have no student or car loans.
– My husband LOVES Dave Ramsey and regularly listens to his talk show. I would be interested in taking his program.
Good for you to be working on your debt!
Thanks for sharing (and for linking up to the SHINE Blog Hop).
Wishing you a lovely evening.
I don’t think I pinned this but it’s a refreshing post… will pin now.
Thanks for sharing.
Wow this is such a good list. You never cease to amaze me with your organization. I actually was the one with the student loan debt. I cut it short actually as you saw in my last post that I published because I left grad school. I was very grateful to have gotten smart and done that because it wasn’t the right fit for me. We have plans, but we haven’t been able to put a dent in much of the debt we want to for a while, but we know there will come a time because we are hopeful 🙂
Being hopeful is a great start! It’s small steps, but eventually they snowball into larger steps. It does feel good to get even one thing paid off. One less thing to worry about.
Glad you liked the list. We’re doing what we can, but still have a ways to go. 🙂
Indeed, money matters are hard to talk about. I believe your experiences taught you a lot of lessons and helped you in completing that awesome list. Aside from finding easier ways to pay your mortgages and loans, it’s also a wise decision to spend within your means. Congratulations on your debt-free life!
Barry Sutton @ Iron Point Mortgage
Thanks Barry! It’s a journey, and we’re learning more every day about how to live debt free and within our means.
Thanks for taking the time to comment!
LOVE this post, Tiffany!! I especially love the part about millionaires not driving new cars… I am in the market for a new vehicle and when I say new I mean a few years old because there is NO way I am buying brand new again… especially with kids!
Such great information, Tiffany! We do a lot of these same things, and I guess I’m like your husband in that I brought a lot of debt to the table when I married M. Five years later, and we’re in a good spot, but we still have so much student loan debt, it’s unreal. We do however live within our means, only have one car payment, and don’t charge anything to credit. It’s so freeing. I’d love to be totally debt free one day, and I know one day we will get there. Great advice!