Let me preface this by saying this is what works for us. We're no experts, we are living and learning as we go!
A year ago, we decided we were going to tackle our debt.
We had nearly $40,000 in debt as of January 2012.
As of January 2013--we have paid off nearly $30,000.
We're still a work in progress! (Mind you, we had a baby--and thousands of dollars of out of pocket pay-thanks to the health care reform!) --
Literally, thousands and thousands...boo!
Our debt came from an array of things, but mainly it was from business.
Justin has his own business and we had to invest (and still invest) a lot in his work to make money long run.
I'd say about 98.9% of this debt was due to his business, tools, scanners, parts etc.
Some was medical.
Like I mentioned, we wanted to get serious about this debt.
We had read Dave Ramsey's Total Money Makeover (ok, so I read it).
And we started working on a budget.
I'm not going to lie and say we worked out a monthly budget. Because, we did not.
If I wanted to tackle every expense and watch every penny that comes and goes, then I'd have to make
my full time job as an accountant for Justin.
When you work for yourself, you're constantly spending--and transactions are a daily, constant thing.
So, we did as best as we could on watching our money, but mainly we did a lot of SMALL things that quickly add up.
- I sold things on Craig's List. I seriously went around the house, taking things OFF our walls to sell. Justin thought I was crazy! I can't remember all what we sold--but we sold a few hundred dollars worth of things.
- We buy in bulk. We are big Costco people! We buy toilet paper, paper towels, cleaning supplies, meats, diapers, wipes etc. all in bulk. It really does help you save!
- We don't have car notes. We will NEVER buy a new car and we will never have a monthly car payment. If we can't buy a car in cash, then we won't get it. Those are the worse "investments." (This comes from a mechanic's wife.) Btw, we also got a new car this year. So, buying cars in cash is very do-able! In fact, we bought a 'new-to-me' Land Rover. It has 7 seats, and we wanted extra space for the car seats.
- Justin works for himself, so he was able to work, and work...AND WORK. This was the biggest sacrifice. Justin is rarely home. Justin is gone before I wake, and he is often gone late into the nights. He does make a big effort to be home most nights for dinner and bathes Kie. After the dinner, he returns to work. He is a workaholic by all accounts and love his work so he is not a bitter or angry man. He truly loves what he does. And like the saying, when you do what you love, the money will come.
- I cut expenses in every way I can. I don't often buy new clothes (I still do, but not near as much.) I don't get my hair done often or nails done ever. We don't have Kie enrolled in day cares or clubs etc. We do have a YMCA membership (a family one that is cheap) so that we can swim during the hot Texas months and I can workout.
- We eat our meals in most days a week. I also cook big dinners so we can eat them for lunch the next day or send it with Justin. (We still eat out, but not near as much with two kids--it's just a hassle!)
- I work a small part-time job. It helps with the extra spending, however we LIVE on one-income.
- For Kie's birthday and Christmas this year--we had presents stowed away he got from previous Christmases and birthdays. He is TWO! He can't remember and won't remember presents for awhile. So we simply store them in a closet, pull them out--wrap them and give them again. He has gotten some of the same gifts twice and every three times and doesn't know the difference.
- I don't buy lots of toys. Toys=clutter. To me, kids have a better imagination when they have less. Call it what you want--but I think LESS is better. Kie's favorite toys are balls and simple cars. We play a lot outside or at parks.
- Barter. Justin trades work for a lot of things. We also have great clients. The new-to-me tree house we have for Kie was from a partial work trade. The client who gave it to us, appreciated all of Justin's hard work over the past year--and he gave it to Justin along with paying him. It pays to be a good worker! Justin also does work for trade at a local nursery. So we always have new plants, trees, flowers and herbs (saves $$) for the spring.
- We also use the income tax return money to further pay off our debt. Of course we always want to throw the money on a new house project or an up coming vacation, but instead we put it to bills. It's hard to do, but we do it nonetheless!
Additional things that helped:
- We split our debt in TWO. We put it on two credit cards--with 0% interest. Paying interest off is for the birds! So search around and see if you can put existing debt on a credit card with little to no interest rate.
- We listened to Dave and paid off ALL small debt first! That credit card you opened to save 5%? Pay it off now and close it for GOOD! It's just going to tempt you to buy more down the road!
- We always pay WAY more than the minimum on the our debt. Say we had monthly payment of $75. We often would pay $250 or more. On 'good' months--we would pay $1,000 a month on our debt overall. Yes, $1000 extra a month IS a lot. BUT--if you can do it. DO IT! If you can't, keep throwing whatever money you have towards your debt. YOU DON'T WANT TO PAY THE INTEREST LONG TERM!
- LIVE below your means! We do live in the city--so our small house costs about the same as a really BIG house in the suburbs. However, our house in the city is really good for work. Justin has NO commute to work--and his clients and customers can easily come to him for work because we're so centrally located. If we were to move to a BIGGER house out of the city, we would lose a lot in gas money, lose customers and Justin would truly never be home. Also, we would have to heat and cool a big house, which means bigger bills.
- Be smart about money. Whatever change or loose bills I get, I stash away like a squirrel prepping for the winter. If we have a vacation or something we need to save for, I put it in a jar in the kitchen and literally watch the money grow! It keeps me mindful about buying things! This past year a lone we went on TWO vacation we paid cash for. We also bought a car in cash.
- We are firm believers in doing what we can do without paying others to do. Obviously we never have to go anywhere for car work, but Justin is also a jack-of-all-trades. He maintains our house and many appliances himself. He also paints my toes! (Don't tell him I told you that.)
- Get an accountability partner! We have a couple that is trying to save for a house. We often talk about fiances or what we're doing to save! It's also nice to open up to others! Plus, we will have dinners together and game nights--instead of going out to eat. We get to have great fellowship with friends AND SAVE!
- Use your trade or job to make more. Our key has been Justin working. He also bought two cars to flip them. He fixed them up, put in a new motor in one car and re-sold them. These were cars he got for cheap because they required a lot of labor. Since he can do the labor himself, he invested in new parts and could easily sell! So a BIG chunk of our debt comes from selling two cars. --I'm also able to write and edit (video footage) a lot of different projects in freelance. So I get Christmas/Birthday and some savings money by editing and writing.
MY LAST PIECE OF ADVICE....
HUSSEL!!
When I feel the walls caving in, I start finding more work.
I start listing things on Craig's List.
I dig through my jewelry and pawn things that I haven't worn in ages.
I start pulling items out for a garage sale (hopefully having one this Spring to jump start the last of our debt.)
I do think Dave Ramsey has some GREAT points and his insight has helped us out a lot. However, we have NOT followed all his suggestions.
We do live below our means, but we do LIVE! We go out to dinners (not often but we still do)--we go on family vacations, we buy clothes when we need to--but we're smart about it. We never spend unless everything else is covered and then some.
We have a savings, a 401K, an additional small nest egg and two college savings for Kie and Kix...
We also have our mortgage, health and life insurance.
We're not done yet with our debt--and we're still expecting a BIG bill from Kix's birth....
but overall, we're doing a lot better than we were last year. (One of our biggest payments was to pay off the loan we took out for the hospital--and it's nearly gone.)
**A payment to our hospital was required 5 days before my csection of $7,000---we took a loan out so we didn't have to dip into our savings. We were able to pay off this loan by selling a car Justin had restored two weeks later. We WOULD not of taken out that loan if we didn't have the car to sell and we had a very serious buyer previously lined up.
It was a BIG hill to start to climb, but it is nice to see where you've gotten in a year.
After we're done with our debt--we're forever done with the credit cards.
In fact, we have not used them in two years, so that's a habit we already broke.
We also believe in working hard. I'm blessed over the moon and back to have an amazing hard-working husband. He truly gives himself 110% to his clients, to his family and to friends. He would give his shirt off his back to help someone.
We know God helps those that helps themselves...and though our government doesn't believe in that--we truly do!
We will continue to work hard(er) this year to pay off everything so we can truly be debt free very soon.
Our dreams is to have both our boy's colleges paid off--a BIG, FAT nest egg---and of course, rainy day funds that would cover us for awhile if needed. Also, we want to have our mortgage paid off--and invest in some more land.
We could definitely cut out MORE in our lives, but like I had mentioned--we do want to live some while we're at it.
There's no easy button to make debt go away, but lots of little things can certainly help out. Don't fall in line with everyone and think you have to keep up with the Jones'. Our country is in DEBT! We have to make our children's future brighter than our current one. And I'm hoping to do my little part to be in a GREAT place financially so my children will learn to do the same!
-hk
Another wonderful Saturday night. Here's two of my three men, snoozing away. (The pictures are all from my phone) We had a beautiful, sunny cool day in Austin today! Justin, Kie, Kix and I all went to Town Lake for a stroll. I love it when we go on walks. It's probably one of my favorite things we do. Besides all laying in the bed having flying contests. (We lay on our backs and fly both brothers in the air. It's a sight to see, but since we both have our hands full I doubt there will ever be any footage, ha!) As for our walks, sometimes we do the trails around the lake.
