As promised, here are the top 10 things I learned from hitting my goal of being debt free.
1. Quit going deeper in debt! In other words, the first step to get out of a hole is to stop digging! I know it's common sense, but you wouldn't know it with how some people act. I was that way for a while.
2. Budgets aren't bad. A budget isn't paying your bills and then spending the least money possible. That's no fun, and it's not wonder budgets get a bad reputation if that's what people think they are. A budget, or spending plan if you prefer, is decided how you are going to spend your money before you get it.
3. Things go better if you have someone to talk to. I love spending money on computer stuff. My wife is super-frugal. Together we balance each other out nicely. From what I've heard, this is very common for married couples but you wouldn't know it unless you work TOGETHER to be smart with your money. For those of you who are single, find someone you respect & trust when it comes to finances to talk to.
4. Be out of debt & have an emergency fund before you buy a house. We nearly lost ours when I was laid off because we didn't do this. This is where about half of our credit card debt came from.
5. When buying a house, be sure you have enough money to buy stuff to put in the house. This goes along with item #1.
6. Keeping with the house theme, don't buy more house than you can afford. When we bought our house, the crack-headed rules they have would have let us buy a massively expensive house. If we bought the house they said we could afford, we would have had enough money to pay the house payment, electricity, and enough gas to get to work and back.
7. Things go much better when you have a goal to shoot for.
8. The goal has to have a time limit. Getting debt free went so much faster once we had a set time to hit the goal: Christmas 2007.
9. The goal must be believable. I'm sure we didn't do as well as we could for a while because it just seemed like such a huge deal.
10. It is good to have rewards for hitting goals, just make sure they are in proportion to your achievement and keep you going in the right direction. For example, if your goal is to lose weight, don't celebrate by pigging out at an all-you-can eat buffet. Going out for sushi may a good way to enjoy that - you'd be continuing your habit of eating healthy. Just don't eat too much of it!
When we started trying to get out of debt, I had a goal of paying off our credit cards and write down "buy a new laptop" for the reward. That would have delayed paying off the student loans at least a month!
Showing posts with label debt-free. Show all posts
Showing posts with label debt-free. Show all posts
Wednesday, December 19, 2007
Sunday, December 16, 2007
We made it! Debt-free by Christmas 2007!
What a wild ride it has been. At the beginning of this year, my wife and I set a goal of being debt free by Christmas. I did a spreadsheet showing how the finances would work and she created a wonderful motivation poster using colored markers and stickers, including one that looked like our cat.
We sent in our last payment to the student loan on Friday, December 8th and received the notice that said PAID IN FULL on Tuesday, December 11th. We paid off $21,888 in about 27 months!
I'm going to start with a look back on our journey, follow up with a post of the top 10 things I've learned, and then share some of the interesting reactions my accomplishments have received.
Our journey to be debt-free started on September 1, 2005. My wife and I had enrolled in the Financial Peace University class taught by Dave Ramsey. He had a no-nonsense very simple way of talking about money. He shared a way of creating a budget that made sense, some steps to dig out of debt, and how couples can and should work together to agree on what to do with their money. Exactly one year previous I had been laid off from my job, and we were still feeling the impact of that, even though I was working again.
The best part of the class was the accountability. Someone was there to give you a friendly thump and then some support when you screwed up and celebrate with you when things were going well.
Things were a bit bumpy - trying to stick with the budget despite medical issues and totaling the car when we hit a deer. We hit a major pothole on the road to being debt-free on August 31, 2006. I was laid off AGAIN. This time we had a budget, were used to spending less than we make. We had a plan. During the layoff in 2004, our credit card bills had doubled and hit a grand total of over $12,000. The 2006 layoff, using what Dave teaches - we didn't even have to dip into savings except to fix the car. And my in-laws paid for that for us for Christmas.
In December 2006, I found a much better paying job. As I started messing with January's budget with the new income, I came to an exciting realization: if we really watched our pennies, we could be debt-free by Christmas the following year, 2007!
I told my wonderful wife this, and we both exclaiming "I know exactly what to do!" About half hour later, we were both in the kitchen. She was hanging this great poster on the fridge, and I had a spreadsheet of how it could happen on the kitchen table.
Things looked good until sometime in June. The new job wasn't working out. I ended up leaving their on July 17th. I figured that was going to blow the whole plan. But we left the poster up and just figured we wouldn't be paying any more than the minimum payments in July. We cried, we prayed, we hung in there. God blessed with two job offers in August. Both even more than the previous job. One of them ended up offering more than I imagined I could ever make any time this decade. I took it.
After redoing the budgets with the new income, another realization. It would still be a tight squeeze, but we could still hit the debt-free by Christmas goal!
The closer we got to being debt, free, the more exciting it got. In November and December, we were throwing over half my income every month on the debt snowball - paying down the credit cards and then the student loan.
So here we are - debt free two weeks earlier than our goal, paying CASH for Christmas, and we don't owe a cent to anyone except the mortgage company. I'm already seeing my stress level go down and the balances in my bank accounts go up.
Merry Christmas everyone!
Expect the top 10 things I learned from this early this coming week and the reactions this news is getting by Friday.
We sent in our last payment to the student loan on Friday, December 8th and received the notice that said PAID IN FULL on Tuesday, December 11th. We paid off $21,888 in about 27 months!
I'm going to start with a look back on our journey, follow up with a post of the top 10 things I've learned, and then share some of the interesting reactions my accomplishments have received.
Our journey to be debt-free started on September 1, 2005. My wife and I had enrolled in the Financial Peace University class taught by Dave Ramsey. He had a no-nonsense very simple way of talking about money. He shared a way of creating a budget that made sense, some steps to dig out of debt, and how couples can and should work together to agree on what to do with their money. Exactly one year previous I had been laid off from my job, and we were still feeling the impact of that, even though I was working again.
The best part of the class was the accountability. Someone was there to give you a friendly thump and then some support when you screwed up and celebrate with you when things were going well.
Things were a bit bumpy - trying to stick with the budget despite medical issues and totaling the car when we hit a deer. We hit a major pothole on the road to being debt-free on August 31, 2006. I was laid off AGAIN. This time we had a budget, were used to spending less than we make. We had a plan. During the layoff in 2004, our credit card bills had doubled and hit a grand total of over $12,000. The 2006 layoff, using what Dave teaches - we didn't even have to dip into savings except to fix the car. And my in-laws paid for that for us for Christmas.
In December 2006, I found a much better paying job. As I started messing with January's budget with the new income, I came to an exciting realization: if we really watched our pennies, we could be debt-free by Christmas the following year, 2007!
I told my wonderful wife this, and we both exclaiming "I know exactly what to do!" About half hour later, we were both in the kitchen. She was hanging this great poster on the fridge, and I had a spreadsheet of how it could happen on the kitchen table.
Things looked good until sometime in June. The new job wasn't working out. I ended up leaving their on July 17th. I figured that was going to blow the whole plan. But we left the poster up and just figured we wouldn't be paying any more than the minimum payments in July. We cried, we prayed, we hung in there. God blessed with two job offers in August. Both even more than the previous job. One of them ended up offering more than I imagined I could ever make any time this decade. I took it.
After redoing the budgets with the new income, another realization. It would still be a tight squeeze, but we could still hit the debt-free by Christmas goal!
The closer we got to being debt, free, the more exciting it got. In November and December, we were throwing over half my income every month on the debt snowball - paying down the credit cards and then the student loan.
So here we are - debt free two weeks earlier than our goal, paying CASH for Christmas, and we don't owe a cent to anyone except the mortgage company. I'm already seeing my stress level go down and the balances in my bank accounts go up.
Merry Christmas everyone!
Expect the top 10 things I learned from this early this coming week and the reactions this news is getting by Friday.
Saturday, September 1, 2007
Terrific news (belated update)
Things got crazy busy and just plain crazy in a good way. After a couple weeks of not a whole lot of luck with the job hunting, I heard back from the first place I applied this time around. They scheduled me for an interview. I ended up having another interview that same Monday. By 4:30 PM Monday night, I had a job offer, but I was also waiting to hear back from the other interview. The next day, I get a call with the other job offer. I ended up having two companies more or less fighting over me.
In the end, I ended up on a contract-to-hire position at a little company called Chase. I'm in with a group that handles the systems that stores images of checks for later viewing, so I'm not in a place that I have to worry that my job is putting people deeper in debt.
The best news is the pay: because of losing my job twice in the last year, I've ended up with a salary that is over DOUBLE what it was a year a go!!
My first paycheck was yesterday. I had started saving up some cash when I realized my previous job was looking not nearly as secure as I thought it would be. After this check, paying the bills, and setting aside enough to live on for the month, I had enough to absolutely destroy what was left of my smallest credit card balance. There is now $1,718.24 and one credit card less between my family and being completely debt-free!!! The debt-snowball is rolling and rolling fast!
The bizarre thing about this: I thought for sure when I lost my last job in July, there was no way we'd be able to make the goal we wrote down at the beginning of the year:
DEBT FREE BY CHRISTMAS 2007!!!
In the end, I ended up on a contract-to-hire position at a little company called Chase. I'm in with a group that handles the systems that stores images of checks for later viewing, so I'm not in a place that I have to worry that my job is putting people deeper in debt.
The best news is the pay: because of losing my job twice in the last year, I've ended up with a salary that is over DOUBLE what it was a year a go!!
My first paycheck was yesterday. I had started saving up some cash when I realized my previous job was looking not nearly as secure as I thought it would be. After this check, paying the bills, and setting aside enough to live on for the month, I had enough to absolutely destroy what was left of my smallest credit card balance. There is now $1,718.24 and one credit card less between my family and being completely debt-free!!! The debt-snowball is rolling and rolling fast!
The bizarre thing about this: I thought for sure when I lost my last job in July, there was no way we'd be able to make the goal we wrote down at the beginning of the year:
DEBT FREE BY CHRISTMAS 2007!!!
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