If you have been following along, this is part 3 of the Digging Ourselves Out post. In this part I am going to give you our plan for getting ourselves out of debt. While everyone's situation is different, I hope that by sharing this it can inspire you to make better decisions for yourselves, so that you may also become financially free.
May 2010- I graduate from college. I am unable to find a great paying job in my desired city. We move back to our hometown area. I am making more money than my husband now, but he isn't able to find a job right away. This is okay, though because we were able to move in with my in-laws and they had enough room to accommodate our family of four.
October 2010- We find a home of our own. It is near the top of our price range, but it was the best choice at the time. Looking back I realized was far too picky. I also quit my job at this time, as my husband has found a full time job that pays better with health care, and we are now expecting baby #3. (I did not quit my job just because he found a job. It was a crap job.)
May 2011- Baby #3 is born.
June 2012- I start working outside the home. I am ready to work, and we found care that we can trust for our children. With this job I pay half to daycare, and the other half, as diligently as I can, I put towards student loan payments.
March 2013- I quit my job for a couple of reasons, the biggest of which- I missed being at home with my children. Looking to the future, we are going to be living off of one income, in a house that is stretching our budget too thin. We make the decision to sell our home, and search for a less expensive one in the area.
June 21, 2013- We find a foreclosed home that is half of the price of our current home. It needs work but we are very handy, and a lot has already been done by the bank. Downside- we are now making two payments. Thankful that we have savings.
August 2013- My husband lands his dream job. He now works for the union making literally twice as much as he was at the last place.
October 2013- Our home sells, and we are given the proceeds, which was a lot- given that we put a lot of work into our first home. We put most of that money into our new home mortgage- About a third of the house cost.
Now that you have our history here is OUR PLAN: My husband now makes twice as much. Save half of his income, and live off the other half. We were already able to have a comfortable life with his previous income, and even more so now that we have a cheaper home. That half that we have been saving, we have split into saving and debt. We now make double payments on our house, and will have it paid off by the end of 2014. Our student loan debt, our only other debt outside the mortgage, will be paid off by June of 2015.
We could have chosen at some point to just spend more, to get nice new vehicles, better house, and everything else we wanted. But we have chosen to spend it on debt, and honestly, it feels better. Each month I can breathe easier knowing that our debt is going away, far far away, hopefully never to come back again.
Saturday, June 14, 2014
Digging Ourselves Out Part 2
I mentioned our education debt last time, but this time I want to focus on our debt as a whole.
To start with, we do not have credit card debt. I have my parents to thank for that. They helped me apply for my own credit card when I left to go to college in Montana, far from home in Eastern South Dakota. They only gave this to me for emergency use. They were very strict about it, and warned me to not buy anything with my credit card that I didn't absolutely need. So there is our credit card story. We use our credit cards now when traveling, or making large purchases, all things that we have the money for in our checking account. We just use the credit card for the cash back for things we already have the money for.
Second, we do not have any loans on our vehicles, and never have. This was out of luck, but also out of realistic expectations. We knew it would be in our best interest to buy our cars with cash and not buy more than we could afford with cash. The luck part was that my husband bought a house before we got married, put equity into the house, then we sold the house, and used the proceeds to buy our vehicles. IMPORTANT! We did not go out the next day and buy two cars. In fact my husband was still forced by his frugal wife to bear with the current crappy car he had until it stopped working all together. We also did not spend all of the money on the cars. We bought two cars, spaced about a year apart, several months after the house sale, with far less than the entire proceeds.
It makes me sad to know that there are so many people out there struggling with debt and with spending and saving. I think that Dave Ramsey put it really well when he said
To start with, we do not have credit card debt. I have my parents to thank for that. They helped me apply for my own credit card when I left to go to college in Montana, far from home in Eastern South Dakota. They only gave this to me for emergency use. They were very strict about it, and warned me to not buy anything with my credit card that I didn't absolutely need. So there is our credit card story. We use our credit cards now when traveling, or making large purchases, all things that we have the money for in our checking account. We just use the credit card for the cash back for things we already have the money for.
Second, we do not have any loans on our vehicles, and never have. This was out of luck, but also out of realistic expectations. We knew it would be in our best interest to buy our cars with cash and not buy more than we could afford with cash. The luck part was that my husband bought a house before we got married, put equity into the house, then we sold the house, and used the proceeds to buy our vehicles. IMPORTANT! We did not go out the next day and buy two cars. In fact my husband was still forced by his frugal wife to bear with the current crappy car he had until it stopped working all together. We also did not spend all of the money on the cars. We bought two cars, spaced about a year apart, several months after the house sale, with far less than the entire proceeds.
It makes me sad to know that there are so many people out there struggling with debt and with spending and saving. I think that Dave Ramsey put it really well when he said
"We buy things we don't need, with money we don't have, to impress people we don't even like"
I hope that this can encourage some of you to avoid using that dreadful credit card on things you don't need. Next time I will give you our plan to getting out of debt.
Digging Ourselves Out
Like so many people our age, we have DEBT. The word just disgusts me, but for the most part, this debt was inevitable. Now I said for the most part, because there are things that we could have done earlier in our lives that would have helped ease this current burden, but we were young, much too young to realize the importance of saving and being frugal. After all we didn't have kids yet, and I did what I was told, which was go to college.
Let's talk about college. Because this decision has played a major role in my life. If I could do it over again, I would still go and do pretty much everything exactly the same. But I was left with debt.
Here is what I have learned from that:
1. Only borrow what you need to go to school. Do not borrow enough so you can get a PS4, or to have just some extra money laying around. You are paying major interest on this money, and you should only take what you ABSOLUTELY NEED. Like Books and Class. Also, and this should go without saying, but I will say it anyways. APPLY FOR GRANTS AND SCHOLARSHIPS! My husband went to a tech school and only he and one other guy applied for the scholarships the school was handing out. That worked better for him, he got more money, but it was sheer laziness why the other guys didn't apply. It doesn't hurt to try, but it will hurt you if you don't.
2. Work. If you can, which pretty much everyone can, find a job and work while you go to school. Everyone says that they can't get a job, because school just takes too much of their time, and if they had to work their grades would suffer. These are also the same people that would frequent the bars and frat parties. They had time for that apparently. SOAPBOX WARNING: I was a wife with two children while I attended school, and my grades were better than my peers, far better, and that is because I used my time wisely. And by time, I mean the small amount of time that I got after my kids went to bed and before I went to bed.
3. Save. If you are working, then save, save every penny that you can. Because when you get done with school, you are going to have to find a job, which will probably require you to move to another city, which will cost money, and if your loans were deferred until you graduated you only have 6 short months to get your budget lined up to accommodate these new loan payments you will have to make. SHOCKER! You may not be able to find a great paying job in your field immediately after you graduate. You may have to put in some time at a lower level position somewhere, that pays crap, until you get experience or your big break and land you dream job. I was at the top of my class, but because the economy was tanking, no one was hiring. Saving money while in school will ease this stress.
I know that the information above should be a no-brainer, but I hope there is someone out there that can benefit hearing it from someone who has come through to the other side.
Let's talk about college. Because this decision has played a major role in my life. If I could do it over again, I would still go and do pretty much everything exactly the same. But I was left with debt.
Here is what I have learned from that:
1. Only borrow what you need to go to school. Do not borrow enough so you can get a PS4, or to have just some extra money laying around. You are paying major interest on this money, and you should only take what you ABSOLUTELY NEED. Like Books and Class. Also, and this should go without saying, but I will say it anyways. APPLY FOR GRANTS AND SCHOLARSHIPS! My husband went to a tech school and only he and one other guy applied for the scholarships the school was handing out. That worked better for him, he got more money, but it was sheer laziness why the other guys didn't apply. It doesn't hurt to try, but it will hurt you if you don't.
2. Work. If you can, which pretty much everyone can, find a job and work while you go to school. Everyone says that they can't get a job, because school just takes too much of their time, and if they had to work their grades would suffer. These are also the same people that would frequent the bars and frat parties. They had time for that apparently. SOAPBOX WARNING: I was a wife with two children while I attended school, and my grades were better than my peers, far better, and that is because I used my time wisely. And by time, I mean the small amount of time that I got after my kids went to bed and before I went to bed.
3. Save. If you are working, then save, save every penny that you can. Because when you get done with school, you are going to have to find a job, which will probably require you to move to another city, which will cost money, and if your loans were deferred until you graduated you only have 6 short months to get your budget lined up to accommodate these new loan payments you will have to make. SHOCKER! You may not be able to find a great paying job in your field immediately after you graduate. You may have to put in some time at a lower level position somewhere, that pays crap, until you get experience or your big break and land you dream job. I was at the top of my class, but because the economy was tanking, no one was hiring. Saving money while in school will ease this stress.
I know that the information above should be a no-brainer, but I hope there is someone out there that can benefit hearing it from someone who has come through to the other side.
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