Saturday, October 1, 2016

September 2016- Small wins!

We OFFICIALLY made it below the 70K mark this month!!! I added in a debt snowflake (an additional payment) to pay off Card 1 last month. I did our budget for this month and am all set to pay off Card 2 by the end of the month.  It really is nice to see these small wins happen and be able to pay some things off. It also gives me comfort to know that once those are paid for there will be more money for the snowball and less actual minimum payments. It gives me comfort because we just never know if something is going to come up where we can't pay extra on our debts. I've been listening to The Dave Ramsey show on my commute to and from work. I'm also listening to Smart Money, Smart Kids by Rachel Cruze and Dave Ramsey so that we can start teaching our daughter early about money.  I highly recommend it if you have children. My daughter has been wanting to help out more and more around the house and I think a commission (not allowance) would be a great motivator for her to keep up the good work. I really enjoy listening to these podcasts and audio books about getting out of debt because it keeps me motivated to keep going. According to the snowball we are set to pay off our debt by September 2018, less than 2 years from now!  I'm hoping to try and pay it off sooner by selling some things lying around the house. I purchased supplies a few years ago to make hair clips for little girls but never got around to doing it. I'm more motivated now to make those, clean up the space the ribbon is taking up and sell them for a small profit to pay off one of our credit cards. Here's the dashboard for this month. I've budgeted for an additional snowflake of $998 to pay off Card 2 on my snowball, which increases the snowball amount for this month and puts us one step closer to paying off Card 3 next month.  I'm very excited about our progress. Next step on this debt free journey is to get my husband to stick to the budget that we create. I know a new phrase in our house is going to be "It's not in the budget" instead of "no we can't buy that".  I remember my parents always telling us that we couldn't afford certain things when I was growing up and I hated it. I don't want my daughter to ever hear the words "We can't afford it". Instead I will tell her it's' not in the budget or it's not something that we choose to spend our hard earned money on.



New Game Plan

I feel like the debt snowball is taking forever.  I've been listening to Dave Ramsey's podcast on my commute to work and he's gotten me motivated to get rid of this debt.  I can't wait for the day I can say scream, "We're Debt Free"! So I'm changing over to the lowest balance first method. I might switch back to the highest interest after we knock out a couple of these smaller debts. I also added to the debt snowball two lines of credit that we took out earlier this year (0% interest for 12 months and 18 months) for a sewing machine and lawn mower. Yeah I know! Which actually put us temporarily over the $70k mark again. But now we have the whole picture and I'm not being dishonest about our debt. So here's the new debt picture and debt snowball.

Wednesday, September 7, 2016

August below $70,000!

We did it! The debt amount is now below $70,000! It's so nice to see that number dropping!

In other news I've been listening to The Spender's Guide to Debt-free Living by Anna Newell Jones on Audible during my commute to and from work.  Although I don't think I will participate in a spending fast as extreme as she has her ideas have given me some much needed change of thinking when it comes to purchasing wants. I will be trying a modified spending fast or what Anna Newell Jones terms a "spending diet". I'm hoping this will help us reach our goal sooner!


Saturday, July 30, 2016

July long overdue post

I've been meaning to post for awhile now but haven't because I couldn't figure out a glitch in my online debt snowball. I finally figured it out! So here's the progress we have made so far.

I'm so excited about this progress. Next month that number should be below 70K! It still seems like a lot of money because it is a lot of money. But to see the amount decrease is amazing. Below is our lovely debt snowball. 


Debt #8 will be paid off in February 2017. Then Debt #1 in April 2017 and Debt #7 in May 2017 (I'll most likely pay it off in April since it's only $11 more). It's amazing for me to see that from having just those 3 debts paid how it impacts the rest of the snowball. I'm excited for us to get to that stage. My husband said to me a couple weeks ago that he noticed his credit score was getting better (not that his is bad in the first place). Paying down some of the balances and not adding more debt is making an impact. And according to the overall progress above were at 23.49% which is almost a quarter of the way there! Can't wait to share our numbers next month. 

Tuesday, March 15, 2016

February Progress

February was a little hectic with getting back into the swing of things.  We were still busy unpacking boxes and getting used to our new schedules with work.  I had to revamp our budget and I decided to add a few more things to our debt pay off and realized we had way more debt than I originally thought.  I thought we were going to owe money on taxes this year but we just found out that we are actually getting a large amount back.  I'll be using that to pay for my husband's tuition for grad school this semester, pay off one credit card and purchase a lawn mower for our house.  We've never had to own a lawn mower in all 10 almost 11 years of marriage because we've either lived in an apartment or in a community that paid for lawn services with the home owners association fee.  Now that we have a big yard to mow it's actually cheaper for us to buy a lawn mower and do it ourselves rather than pay for a service. I originally had budgeted for a lawn mower so now I can reallocate that money for debt repayment. Here's the new payoff plan



According to undebt.it we owed over $80,000 in consumer debt. That number makes me cringe! And this definitely motivated me to work on paying off our debt. I was successful in pay of Card #1 already and can't wait to continue to make payments and pay off some more debt. Our new projected pay off date is October 2018.  Here is what I see on my undebt.it account whenever I log in.


As our budget stands right now I don't have a lot of wiggle room so it will be a slow process at first.

Card #6 was a balance transfer with 0% interest that I will pay off in the balance transfer interest free period. I keep getting offers for 0% interest on balance transfers on this card and keep paying it off before the balance transfer interest free period ends. I pay a set amount on this card every month to make sure that I pay this card off in time. If they offer another balance transfer after this one is up I will most likely take them up on the offer, especially if the fee is less than I would pay in interest.

Loan #2 was for a pellet stove that we had installed in January before our big snow storm and it is the main source of heat for our house, otherwise we have an inefficient heat pump that would cost us hundreds of dollars every month. We took out a line of credit that has 0% interest for 12 months and as such this one will be paid off in the interest free period as well.

I fully expect us to be able to pay off Card #2 before the end of the year. My husband travels for work and the plan is to pay a big chunk of that card with the extra money he gets from traveling.

I'm even more motivated to get this debt paid off and look forward to a year from now when we'll have at least 3 of those debts paid off ($12,000 of debt + whatever we pay on the remainder).

Hopefully next month will show even more progress as we get our tax refunds back.

Wednesday, January 6, 2016

Debt Snowball

First let me just say that I'm a little embarrassed to show my debt snowball.  We used our credit cards to pay for home expenses, travel expenses, and every day expenses that we probably could have done without. After reading Marie Kondos "The Life-Changing Magic of Tidying Up" I realized how much stuff/excess I already have and that buying more "stuff" will not make me happier. It also made me realize that I should only buy things that will fulfill a purpose but that will also make me happy. A recent example for me was buying a much needed pair of pants. But instead of just buying the cheapest pair of pants I could find I bought a pair of pants that were a little more expensive but I knew I liked them and would wear them because they fit well and were comfortable. So instead of just buying a pair of pants that I might get rid of in a year I bought a pair that would last me longer and that I would enjoy wearing. So part of baby step two will be cutting out unnecessary spending and being happy with what I currently own. It doesn't mean I can't buy things I need or want it just means that I will be pickier about what I buy, same goes for my husband since he also has wants and needs. I factored some personal spending into our budget.

Now for the debt snowball:


As you can see we have a long way to go but I like breaking it down into smaller goals.
Card #1 paid off in 2 months
Card #2 paid off 6 months after Card #1
Card #3 paid off 3 months after Card #2
Card #4 paid off 5 months after Card #3
Card #5 paid off 5 months after Card #4

By looking at it this way the goal seems much easier to accomplish. I plan on celebrating/rewarding each small victory by allowing ourselves to either buy something we have been wanting within reason or by going out to eat somewhere nice but without cutting into our debt repayment money. That way we feel like we are accomplishing our goals. I will update our progress on a monthly basis and see what has been working and what needs to be adjusted. I also plan on paying additional payments when we get extra money or we don't spend all of our budgeted money for the month. If we stick to this plan we will have our credit cards paid off by October 2017 or 21 months.

Introduction

I started this blog to keep track of my journey to debt freedom and building wealth.  To do this I'm using Dave Ramsey's Baby Steps.  Baby Step #1 is to save $1000 for emergencies. I've had this goal accomplished for a long time. Now that I've graduated pharmacy school and have a wonderful job earning money it is time for our family to complete Baby Step #2 "Pay off all debt but the house".

I'm going to modify Baby Step 2 to "Pay off all debt but the house and my student loans". The reason being that I can qualify for student loan forgiveness if I pay my loan on time for 10 years using the income based repayment plan which is capped at 15% of our income and the remaining balance will be forgiven tax free.  I'll still end up paying back more than I borrowed and the amount forgiven will end up being equivalent to the interest they charge me, which is insanely high. Pharmacy School was not cheap, along the lines of what some people pay for medical school, but it was worth going into debt. There is no way I could have paid for it without student loans.  My undergraduate degree was paid for with scholarships and our hard earned money.

In order to accomplish Baby Step #2 I created a budget using mvelopes and used undebit.it to create our debt snowball. I've always used a budget but with my new job we updated our budget to include my income.  Although it might seem like it would be a no Brainer that my entire income could be used to pay for debt we actually need some of my income to pay for every day expenses. While completing my degree I used my loans to pay for childcare for our 3 year old so that is an expense that will come out of my income and daycare here is not cheap. We also just purchased a bigger home because we were able to buy a house in a great school district with a nice piece of land for an awesome price.  Where we were living was not terrible but my husband wanted a better school for our children. Other homes in our new neighborhood are 1.5-2× the price we paid for our house and we have a nice flat space for our children to run around outside and a house that is in great working order.  Plus we plan on having more kids in the not so distant future and now have space for them in this house. We plan on keeping this house for the long haul. We actually weren't planning on buying a house but the opportunity presented itself and we couldn't pass it up. Our new mortgage could also be paid for with just my husband's income if we needed. Now that we have a new budget I can see how much we have left over to budget for debt repayment.  I'll use that amount for our debt snowball and anytime we get extra money I'll use it to pay down debt.

Obviously we made some not so smart money choices along the way but we're going to change that now. First we will work on paying or credit card debt. Then we will pay off our car early. This blog will help me keep track of my goal to complete this part of baby step two since it will take about 2 yrs to accomplish. I figured it would keep me motivated, honest and maybe help a few people along the way.

Next up the debt snowball.