Month 4 of Our Journey to Become Debt Free: April 2013

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This is the fifth post in Our Journey to Become Debt Free series. To read more of them, visit this page.

 

April was a good month for our debt free journey. Nothing special happened, but we were able to Snowball a pretty good chunk of money by sticking to our budget. Here’s a rundown of what we’d contributed to our debt payoff through March:

Debt Payoff Progress through March 2013

And here’s where we stood at the end of March:

Debt Balances through March 2013

In April, I had to pay the final $50 to close out our contract with Dish Network now that we had returned all of the equipment to them. Since I had decided I wanted to keep groceries around $440, it had pretty much been a breeze. In April, I spent $442.80 on groceries. Of course, I estimated what I really thought we could do, but I was very pleased with our ability to stay within the $440 budget.

We added another line item to our budget in April. It’s what we refer to as “Blow” money. Basically, it’s a weekly or monthly allowance of a certain amount that you can kind of spend on whatever you want. We were already spending the money, so we hoped that by creating a budget item for it and limiting it to a certain amount would help with some of the frivolous spending. We decided on $160 for the month, which was $20 each per week.

The stomach issues I went to the doctor for in March ended in a Colonoscopy in April, so we paid $598.17 towards that, mainly using the leftover $515.74 from March’s Snowball.

We were also able to make a $664.27 payment on the Chase and redeem points for a $25.98 bill credit. That brought our Chase down another $690.25!

Isn’t it crazy?! A few months earlier we were adding to our credit card debt every month and now we’re making $500 and $700 payments on those credit cards every month!

Do you have a realistic budget? Would you benefit from budgeting software like YNAB ($6 off here)? What’s keeping you in debt?

 

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Month 3 of Our Journey to Become Debt Free: March 2013

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This is the fourth post in the Our Journey to Becoming Debt Free series. To read more of them, please visit this page

 

Let me start by saying that I am absolutely loving the feedback I am getting on this Our Journey to Becoming Debt Free series. It is great to think that I am inspiring someone else to tackle their own debt to better their life. I know several of you have even started using You Need A Budget. (If you use my referral link here, you’ll save $6!)

Like Dave Ramsey says, if we’ll live like no one else now, later we’ll live like no one else.

We’re a little bummed right now about our debt payoff though, to be honest. As I mentioned Monday, Lucas had an overnight hospital stay this past weekend. Obviously, I know that it was necessary.. but I feel so defeated. Who knows how many months the bill will add to our journey!  I just need to remember to be thankful that Clint has a job that provides such a great insurance plan. Help me remember that when I get the bill, please?

So, let’s talk about March. Here’s what we looked like at the end of February:

Total Debt Month Ending February 2013 Clint gets paid bi-weekly, so twice a year he gets 3 paychecks for me to budget towards one month, instead of the usual 2. March was one of those months for us which meant a nice Snowball.

I hit just a little bit under my $440 grocery budget in March, coming in at $438.42. Go me!

We used the rest of the tax refunds and some of the Snowball and made a $500.00 payment on the Chase. I also finally went to the doctor to have some stomach issues I’ve had going on for around 3 years looked into, so we had an extra $175 in co-pays.

After all of that, we still had another $515.74 to Snowball. But I’ll admit it, I was scared. The idea of throwing every extra penny to debt is hard for someone who has always tried to save, which is silly because what’s the point in building a savings account while you’re building debt on the other side of your finances.  But I was scared, so I held onto that $515.74 into the next month. Don’t worry though! We reaffirmed our plan in April and used every bit of it. Come back next week to read about that.

Do you have a “savings” and debt? Why not just put that savings onto your debt? What do you think about the concept?

 

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Month 2 of Our Journey to Become Debt Free: February 2013

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This is the third post of the Becoming Debt Free Series. If you’ve missed any of them, you can find them here.

 

Happy Wednesday!

In February, the pace started to pick up a bit. It was so exciting!

Although we made small payments on both credit cards and payments on the car notes, our total went up from January to February because of debt charged to the credit cards and interest charges. Here’s where we stood at the end of January:

Total Debt Month Ending January 2013

First things first, since we were without living room furniture, I scoured Craigslist every day for a leather living room set. Leather seemed like it would hold up better than the microfiber we previously had with a new baby in the house. I did not want to spend over $400 though, and I did not want furniture someone left outside for their cats to scratch up, so my options were limited in that price range. Finally, I came across a nice set for $250 and it included a nice big glass coffee table. I wasn’t actually interested in the coffee table but I knew I could resell it and I did, for $80. I basically got our new living room set for $170 and I had sold the other set for $600. Not too bad, huh?

We both got our W2’s at the end of January and I completed our tax returns. Since we had Lucas last year, our tax liability had gone way down so we were set to get back $2,774 from federal and $1,136 from state. Right after I filed our taxes, I estimated what our tax liability would be for the next year and we immediately adjusted our withholdings to have less tax taken out of our paychecks. I mean, of course it’s nice to get $3,910 all at once. But can you imagine having another $325 each month throughout the year to pay on debt?

Another big thing in February was our garage sale. As I said in my last debt series post, we had gone through the house and rounded up anything and everything that we did not need or use so it was a pretty good garage sale. Lots of waffle makers and dishes. I can’t remember the exact number, but we made between $300 and $400. $220 of that went directly into our BEF, which completed Baby Step 1.

Now that our BEF was complete (such a great feeling), we could move onto Baby Step 2: Pay off all debt using the Debt Snowball. By all debt, Dave Ramsey means everything but your mortgage. The idea here is to pay off all of your debt from the smallest balance to the largest balance. I know it’s weird, but we didn’t take any interest rates into consideration. Dave Ramsey says that 80% of debt payoff is behavior and I completely believe that. You want to pay off your smallest debts first so that you build up motivation and momentum and get excited about paying off debt.

Using our newly scrutinized budget created in Baby Step 0.3 and entered into our handy dandy YNAB software, we knew that we should be able to use our “extra” $45 every month to go towards our Snowball. We knew $45 wasn’t much though but we were working on cutting other items in our budget. We were realistic in our budgeting though, we knew there was no point budgeting $300 for groceries if we knew we were really going to spend $500. Our grocery budget was one of the biggest ones we needed to cut. In 2012, I spent anywhere from $500 to $800 a month of groceries. That is WAY too much for 2 people. In February, I got it down to $473.37. Go me!

Another thing we considered was that once we did pay off some of the different debts that it would free up those monthly payments we were making on them and that money would be available for the Snowball. Oh, and February was our first month without a Cable bill. I did not miss spending that $50 one bit.

When our tax refunds came in, we paid off the American Express and Lucas’ surgery, which were our two lowest debts. We also made a $70 payment and redeemed $25.35 in reward points towards the Chase. It felt amazing!!

Do you get a large tax refund every year? Do you use it to pay off debts or in a needed area?

 

I hope you’ll be back next week as I share our March 2013 report in Our Journey to Become Debt Free.

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Month 1 of Our Journey to Become Debt Free {January 2013}

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This is the second post of the Becoming Debt-Free Series. If you’ve missed any of them, you can find them here.

I think people need goals in life. Our goal is for me to be a SAHM. After I finished reading [amazon-product text=”The Total Money Makeover” type=”text”]159555078X[/amazon-product], in December of 2012, Clint and I agreed to start Dave Ramsey’s program at the beginning of the new year.  At the end of 2012, we had $26,652.92 in debt, not including our mortgage.

That’s almost $30,000!

Here’s the breakdown:

2012

Dave Ramsey’s program is broken into Baby Steps. There are actually 7 primary Baby Steps, the first of which is to save and set aside a $1,000 Baby Emergency Fund. Before we could do that though, there were a few other things we had to tend to. The baby steps can be further expanded upon, and these are the pre-Step 1’s:

pre-step1

Most of these we already had covered before starting. We did lower our retirement contributions, but did not stop them and we did cut cable and have cut down on all of the extras like eating out and buying nice gifts for each other at holidays. Yes, I said it, we cut our cable off – and we love it!

We worked on completing Baby Step 1 in January so it wasn’t a big month in terms of paying down debt, but it was huge for us because it was the first month that we really and truly focused on where our money was going.  I’ve always been a budget fanatic and had a frugal mentality to some extent, but I’m also impulsive and impatient, as is Clint. When we want something, we get it. So in January, we really tried to not give in to those emotions and only spend the money we actually had and was budgeted.

We didn’t do great, we still created more debt. It’s really hard when you are used to spending money and living above your means, to just stop. We added another $595.30 in charges to our credit cards in January.

We definitely did not beat ourselves up, though. We were getting things in order, we were learning to live within our means, and it would take some time—we accepted that. Although we did charge some things to credit cards, we were busy busy making cash to fund our $1,000 Baby Emergency Fund, or BEF for short. Here’s what we did:

  • Set aside a measly $40 from the budget
  • Sold a name brand purse for $40
  • Sold a gaming system for $50
  • Sold our living room furniture for $600
  • Sold a dining room table for $30
  • Sold a wicker chair for $20

This brought our BEF to a total of $780, only $220 more to go.

At this point we had a bean bag and rocking chair in the living room as our furniture to watch our Netflix and Hulu since we had no cable. We were also going through the house rounding up anything and everything that we didn’t need or use to be sold in the Garage Sale we were having in February. Things were starting to get fun!

I hope you’ll be back each Wednesday to see the progress we’ve made this year. If you’re interested in learning more about Dave Ramsey’s Baby Steps, check out [amazon-product text=”The Total Money Makeover” type=”text”]159555078X[/amazon-product]. Are you ready to become debt free? What is your goal or motivation to do it?

 

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