I have discovered that working on your finances and working to get rid of debt is the same as trying to diet to lose weight. There are no shortcuts and diets do not work.
The only way to lose weight is to figure out what works best for you long term. What changes you can make to your eating habits that you can sustain for life and make a plan based on those changes that will help you not only lose weight but maintain that weight loss for the rest of your life . It is that simple. Make a plan, based on what is working to get you to your goal and then maintain that plan to keep you were you want to be. Small fun rewards should be factored in, a planned meal that is not in your plan, but really IS in your plan becausae you figure it in. That is how to lose weight, and keep it off .
The same is true with personal finance.We came in all excited last year. We were blessed with a wonderful couple to be our debt coaches. We applied to win a debt scholorship and were working hard to pay off debt. It was not sustainable. It was not sustainable because our heads were not completely in it right. We thought we had our heads on straight, but we were still in that diet mentality. We had not gotten it , not really.
LIfe is up and down, and changes day to day . YOu have to have a plan that you can maintain and that you can adjust to help you through all of lifes quick turns.
We were living in a lovely house we had owned for ten years. Our daughter and her husband and kids had moved in with us from out of state where jobs were few and they needed to find a new life in an area where they could afford to live and find jobs. After three years they were ready to move out and on thier own. Before they had moved in we had talked for years about moving up an hour away closer to my husbands work. He has been at that job for ten years this month. We thought we would love him having a short drive and enjoy having more time together. So, we told the kids they could rent our house as long as they needed for our mortgage payment, as that was way cheaper than the rents in our town for a house that would work for them until they were ready to buy thier own house and at that point we would make our house a rental. That had been our plan since we bought it in Feb of 2002 eventually buy another house and rent out that house, so everything was falling into place.
We loved the change and the excitement of moving for about three months. Then the holidays hit and we were an hour away from our kids and grandkids. We missed them and the holidays were not that fun being so far away. We k new we would not be staying up there but would be moving home. We just had to wait it out until our 14 month lease was up Aug 11 , 2013.
Early this year we bought a nice used car , a 2011 Passet , because we only had one car and when that car died on a thursday, my husband had to rent a car to drive to work for the weekend until it could be repaired so he did not lose an incredible weekend of overtime and his regular pay on Friday. We knew we had to get a second car and we bought that nice used VW Passet from a dealer. It was a dealer owned car, a loaner car that buyers used when thier new passet was in the shop for maint or repairs under warrenty.
here is the picture the dealer took for our personalized calendar the day we bought our first Passet. Yes, I said first.
Great car, wonderful price, we had just bought it when we got our debt program started and we had such regrets about that purchase and wondered what we had been thinking but what was done was done and we had to live with that decision, and then three weeks later, we were involved in a pile up on the high way. My husband missed hitting the pile up in front of us, but we lost our car anyway because of a car coming up behind us, swerved to miss us and his large enclosed trailer hit the back corner of our car and it was totaled. We were so excited when he was able to stop and then bam, what a shock !!!
most of the car was pristine, just that back corner totaled it. We thought it would be okay, but on the road, we could not see the full damage.
When we went to see it at the repair place , we were devestated, we did not even recognize it as we walked up.
We had not put a dime down and had not made a payment on this car and we still ended up with some money to put toward debt and that is what we did. We paid off a few grand in debt, we were thrilled. We did get another car, a trade in from the same dealer but it was a horrible car and we had to keep taking it in so after a month, still no payment, no money down, we traded it in for the 2013 we are driving today.
Ironicly, we got the personalized calendar weeks after we lost the car !! I still have it but we never did use it, lol !!!
This all happened end of Jan through March. IT was a crazy four months. Who buys three differant Passets in four months ? We did. But we ended up with a good car but like Dave Ramsey says, we paid a big stupid tax for it. We had to trade in the trade in and even thought it had only been a few weeks, we lost some money on it in the trade in. We did get a great interest rate at 1.90 but we have a high balance for six years. Not ideal for paying off debt and wealth building and if we could go back we would do the entire thing over. I console myself that the thousands we got from the accident more than covered what we lost in the trade in. But it was still a dumb situation. We do love the car, and it looks very much like the one we lost, but has much better features because it was a new 2013 model. We plan to drive this car for at least 10 year and probably longer to be honest.
The car is a blessing now that we moved. David drives it to work and the savings in gas from not having to drive his 1998 GMC full size extended cab pickup to work pays for aabout half the car payment so that is a good thing. Not putting those kind of miles on an already old truck is good too. We hate using up our 100,000 mile warrenty in four or so years instead of the seven allowed, but it saves us a ton on gas.
Fast forward to June and we knew we were going to be moving when our lease was up Aug 11. We also knew our house was not an option. Our son in laws parents had moved from out of state too and were staying with them until they got settled and ready to get out on thier own, a plan we knew about when we offered to rent the house to them and partly why we wanted them to rent it. No landlord in our area would rent even a large house to five adults, two kids, two cats and three dogs. We , knowing what incredibly clean and responsiblle people they all are, had no qualms about it, they will leave that house cleaner than they got it. But that option being off the table we could either rent in our town and pay upwards of 1000 a month or purchase a second home, IF they would let us.
So, we decided to try and we were able to do it. So we ended up with a 750 payment instead of a 1000 rent. It might go up a bit once the tax people find out we paid more for it than the previous owner did, so that 750 will probably go up next year to 800 to 850 but still much less than rent would be. We were able to buy another inexpensive house, more of a starter than the one we already own. A bit smaller, although much bigger living areas that our other house which is wonderful , but only one bath and three bedrooms in comprarison to the two baths and four bedrooms and two living areas we had in our other house. But it is ours, no landlord and the money goes toward our own home ownership and not to another person to pay off thier house. We had to save up 3,500 to pay off our old 401 k loan from five years ago, and get a new one for enough to put down 8 grand on the house , with closing costs, and pay for the basic move. We had borrowed a grand of the money to pay off the loan so the first grand of the 401 k went back to our daughter who loaned us the money. We closed on our house the start of Aug and moved in Aug 5, with a week to clear out the apartment we camped with basics as David took stuff home after work every day and then we moved on the 10th with a moving van.
We have been in the house two months and buying another older house has been expensive. We had to replace mini blinds, light fixtures and put in some shelves and buy paint , it has been ongoing. No regrets as we just hated renting for that 14 months we moved away so we are so happy to be in our own house, but the maint., and repairs on two homes is a bit overwelming at times, but we are ever grateful we have both of the houses. We have a lot of updating to do as we can do it. There is a huge pantry closet that is set up to be made into a second bathroom with sewer already set up under it . We have to put in a slider door in the living room where a window is, to get out into the backyard from the house as it is not practical going thorugh the garage to get to the back yard , so we basicly do not use the back yard. There is also no fence between our neighbor, the lady that sold us the house and her house, which was her moms house and why she sold us ours, to buy her moms. We need to put up a fence as her dog is in our yard and barks under our windows , and I am uneasy letting the grand kids out there with a dog, even a nice dog . for now we are going to put up a ranch type wire fencing and steel stake fence until we can justify spending what we need to on a six foot privacy. The door and second bathroom will have to wait, and with our son moving in this month, also planned, one bathroom will be a huge challenge for sure !!
Our debt payment, beyond minimum payments, went on the back burner and we actually added a lot of debt to our list, washer, dryer, fridge, microwave, all for no interest for 36 months, so at that is good. We started getting into some bad habits again, eating out way too much and not paying attention to our spending. Unfortunately, our default setting. What we have always done. We pay our bills, that is never an issue, but we spend, not save or pay off debt when we are not paying attenion. We spend any extra.
It had to stop.
My husband was able to get a new credit card and we put almost all our old debt on it , every single card but the Best Buys that the appliances are on and one large card I have that I also had put some debt on at at a much lower interest rate . His new account is interest free for 18 months on those transfers, It has a lower interest rate than all the cards have even if we could not pay it off, but we have to get that paid in the 18 months.
We have a new plan. Take his bonus the start of the year and pay off our personal loan that we took out to help our son start school and helped with our move up to by work. With the 260 per month freed up, we will attack that 18 month debt to get it all done by the time the 18 months is over. Then we will attack the card I paid bills off with and the Best Buy debt. If we stay with our plan, we should be debt free except for the car and houses by the end of 2015, probably even sooner, but that is a good and achievable date to have it all paid off.
All our credit debt, the transferred, old debt on my card, and current Best buy comes to 16,300. 00. This does not include the loan we will pay off next March, 2014 . It does not include the 401 k loan either. After paying off the loan which will be 2500 by the time he gets his bonus, it should be enough to pay off another 1500 to 2000 if his bonus is what it usually is. Lets just say 1300 for easy math, which will take us to $15,000 left on our debt. That is a great start and then we will have the 260 a month times nine months in 2014 and 12 in 2015 which is 21 months and comes to 5460 to put toward that debt, and then that gives us a balance of aprox 9540.00 Another bonus in 2015 should erase at least 3000 and most likely more, but I am being conservative here, and that leaves a balance of 6540 to pay off over the 21 months. That is only 311 a month total, including the minium paid on the interest free cards so the more I bring to the table each month, the sooner those can be paid off.
Our emergency fund got hammered by several big car repairs, along with the move, and so we are rebuilding it. I should have it back up to 1500 this month due to some wonderful and unexpected overtime . I am going to do 2000 instead of 1000 because of the fact we do have two old homes and three cars, our son drives one of them until he can buy a car. That one , in fact, is the one that has cost us so much. It is an 89 and a good little truck , but a lot of maint type repairs hit us all at once. We still have a few small ones to do, but they will fit in our budget.I should be able to get that 2000 by the end of the year. We are keeping the holidays really cheap, and plan to stick to that plan no matter what !!
So, I am optomistic that we can pay off all our c redit debt by the end of 2015 and my goal is to do it much sooner !! then we will hit that 401 k loan with the debt snowball, all the minimums from the paid off cards and that 260 a month, plus the bonus, and then the car. I would love to pay off that car a year and a half early and that will be my goal as we get the other debt gone.
I am hoping to be able to bring in some income. I am working hard on my jewerly and eventually I want to get a job but right now it is just not going to happen. But I am going to make sure every dollar I can make, and every dollar my husband can make goes to where it is supposed to go.
I made a promise to be transparent when we started this journey. I have not been here on the blog much and have not said much about our mistakes because I wanted to speak to Robin our coach first, I owed them the truth before I put it here. She was wonderfully supportive and I promised her we would make them proud .
We had messed up and fell into old bad habits. Grocery shopping and not keeping on budget and eating out too much and picking up stuff for the house, needed stuff, but stuff we should have budgeted in over time.
Stupid , old habits. Just like going off a diet, it causes shame and frustration with ourselves.
We are now actively working on both weight loss and the debt repayment and are excited about our future and what we can accomplish in the next few years. We have a lot of dreams and goals and before we can even start working on those, we have to get the debt taken care of.
But now we have a plan, one that is maintable, one that can take us to our goals. We had that before, but now our heads are on straight and we finally “get it !! ”
So, I wanted to update and tell what we have been doing and about our journey and our future goals. I want to have a place to be accountable and to keep track of our progress . I wanted to be completely honest about our mistakes and now we plan to fix them.
Thanks for stopping by, I appreciate whoever takes the time to read my blogs , and always love any advice or personal stores people would like to share here , so please comment if you want to share !! I would love to hear from you !!!
love this old avon bottle I found at a friends yard sale