creating a debt free life

Archive for the ‘breaking up with debt’ Category

Finances for life

DSCN0888

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.

picking up our car

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 !!!

453

IMG_6828MA29519941-0001

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.

IMG_6915

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 !!!

Stephie

love this old avon bottle I found at a friends yard sale

DSCN0895

Advertisements

Just a quick post

This is just a quick post to update and then Monday I will write a lot more.

We were able to talk to our wonderful debt coaches Jeff and Robin  at Debt Free  Squad , please check out their site,  the link is to the right of this page, you will be so glad you did !! We got the budget hammered out and given our instructions for the week.

It was interesting to look at at a budget in a new way. Figuring in just a bit of money to blow and some entertainment money built in , that is something I would never have done on my own and it would have caused us to crash and burn !! I will explain that more on Monday, it is very exciting !!

I have to read the first two chapters of Total  Money Makeover by Dave Ramsey and my husband has to as well, tonight !! I already read it while he decorated sugar cookies with our grandkids and now it is his turn. Sundays are a  no money talk day and that is great by me, we all need a day off and then Monday I will jump in and really get going. I will post what we are doing in more depth and tell you how our budget is looking.

We discussed the debt snowball and what we are to work on first in paying down the debt.

So, until Monday, that is a quick update but Monday I will give you more info and  tell you more of what they taught us tonight. It was a very enlightening conversation and we are really excited to get started this week !!

So, everyone enjoy your Sunday and I will be back Monday to talk about what we are going to be doing, how we are attacking our debt and what steps we will be taking .

Thanks for stopping by !!

Stephie

Getting real with our debt

Getting real is the first thing we had to do. Add up our debt and see what exactly we are dealing with.

After adding up our credit cards we found we owed  $8,632.04 . Not that bad really, but then we had to add in,

a signiture loan we owe on at a credit union                $5,982.33 that is getting a bit bigger now

our total of debt so far is                                                   $14,614.37  wow, that is a lot, then we have to

add the new car we just bought,                                      $23,756.81  this is the loan amount, with interest it says we will pay 27,197.94 lets hope not !!

our total now is                                                                   $38,371.18 and if we have to pay all the interest on the car it will be $41,812.31

this scares the heck out of me. That is a lot of money for stuff that is not worth what we owe on it. We do own a  home, we are renting it out to our oldest daughter and family for a while, and we are renting up closer to my hubbys work, but when they move out in the next  year or so, we will move back in.

Our mortgage is                                                                 $101,050 , not too bad but all of it added together is

$139,421.68

I know for a lot of people they owe more than that on their house alone, but it is a lot for us. My husband makes good income but with our credit payments and life expenses, we are very tight. I just think what it would be like to have those payments freed up.

all together, all our debt payments come to  $901.00 without the house, and add that in and it is aprox  $1873.00 per month, that is a lot of money. I can only imagine, after a lifetime of rent and mortgages AND bills,  what it must feel like to wake up every morning and not owe anyone a dime other than  utilities . How awesome must that feel ?

We want to know that feeling. So, we are going to listen to our coaches, do what they advise us to do and kick our debt to the curb once and for all.

Our wonderful debt coaches have a website you can check out, I will put a link after I post this . they have a 30 day challenge you can take and we started that this week.

Their names are Jeff and Robin and if you want to get out of debt, check out thier site and see what they can do for you !! I will be writing more about them and our journey to being debt free with them, but I wanted to introduce them for now and just put our debt on the site as promised.

I will post updates each week on our progress, and a monthly update as well. I will post what we learn as we learn it and share everything so maybe we can help someone else in the same place we are !!

Well, I am going to post this and then get that link up as fast as I can. Please check the site out, they have a story of thier own they share there and they are extremely inspirational !!

thanks for stopping by !!

Stephie

Breaking up with debt !!

Welcome to my new blog site. I have been blogging on my beading blog for a while and I am having fun there and will still be blogging there and working on my jewelry but I am starting this blog because I want a place to come to document our journey to being debt free.  My husband and I have gotten to the point in our lives where we want to be free of debt. We are tired of being broke because we have too many bills. It is a stupid way to live and we need to address it while we still have time . We are tired of living check to check. It is a rotten way to live. We do not want that to be our future, we want it to be our past.

We are in our early fifties and  have less than  twenty years until my husband will retire from his job. He has said for years he probably will never retire completely. He will retire from this job, but he and I both want to start a business and find something to do together to make money and keep us busy after he retires. We have to make sure we are debt free to have a secure retirement .

So, we decided to break up with debt. We are cutting our relaxtionship with debt off. We have cut up our cards and are going to take every penny we can make and throw it at this debt until it is gone. We are choosing to live a debt free life.

Can we do this overnight. Nope. In fact we have new debt to deal with. We recently bought a car. We had one car and I want a job so we bought a car. Did we need to buy as expensive a car as we did, 19 grand, but we bought a safe, certified used car, a service car only owned by the dealer ship and we wanted a safe, reliable car. Our payment is pretty high and honestly that is what kicked us in our back sides and got us looking at our debt. We have more month than money and we cannot live like this anymore.

We are very intelligent people, so why do we make such dumb decisions with money ? I do not know the answer. We pay all our bills and have a good credit score, which would be great if we were debt free. It is eye opening to be told you could have had a 2.25 percent car loan if our debt was paid off, and instead we have 4.8.  Good news is, get the debt paid, we can still get that great rate, so that got us going.

We are pretty typical . Some credit cards, a car loan, a signiture loan, furniture loan. Our debt is beginning to grow and once we really sat and looked at it, we got a bit worried. We are okay right now, but on the edge, it would not take much to topple us off that edge. That is no way to live.

So, we were lucky and got debt coaches and they are going to help us. We cut up our credit cards

Feb 2013 004

004

003

into tiny little bitty pieces and put them in this wine glass. I will keep them on display so I know every minute what I am working for. I even added a green wine charm  I made and even drew a money sign on with a gold sharpie  to symbolize our money  !! We are going to go at this debt with everything in us !! It does not stand a chance !!

We are going to be writing down in a notebook every dime we spend. Every single penny !!  We started that two days ago and have two entries already. Gasaline and a few groceries. Wrote them down, wrote they were debit card purchases and put the reciepts in a manilla evelope tucked into that notebook.

Starting this week on pay day we will take out cash for groceries and any spending money. Gas money is moved to a checking account we  use just for gasaline so my husband knows how much gas money he has for the week. All recipts go into the envelope and any purchases made written down in that book.

We have a lot to still learn. We have to sit down and talk to our coaches and will see what they advise us on our debt and emergency savings  and then go from there. We are just starting and taking baby steps. But cutting up our cards, writing it all down, and using cash that is predetermined for the weeks expenses is a start.

I will write about what we learn and the progress we are making. I will also write a post about our debt and what we owe but not today, I just want to get things started and get this blog up and public.

I hope to find other people out there who are paying off thier debt and  learn everything I can.

To quote Dave Ramsey,  Broke is normal, be weird,

We look forward to being werid !!