We’re DEBT FREE! Now What?

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This post is part of Our Journey to Become Debt Free series. To see the others, please click here.

Let me just repeat this from my last debt free journey post (which can be seen here)–

“That means that yes, except for our mortgage, we are now DEBT FREE!!!”

Ahh! Like I said in my very first post of Our Journey to Become Debt Free, our goal is for me to be a Stay at Home Mom. So guess what, I’m now home full time with my 2 year old ball of energy. Of course, since my Etsy shop Aqua Anchor Designs has been doing so well, especially during the holiday rush I just made it through, I’m more like a work at home/stay at home Mama. But you get my point.

It’s surreal reaching this goal we’ve worked toward for nearly 2 years though. In 23 months, we paid off $23,491.25  in debt!

So surreal, I was afraid to quit my job. I kept telling Clint, but what if this, or what if that. I’ve told you, I’m a worrier.

But now I need something new to focus my busy mind on. And I’m a goals kinda gal. So we’ve decided to not let our momentum down and keep trucking it and set some new goals for ourselves. I mean, really, the last two years has not felt that depriving to us. We still eat out, more than we should, and we’ve been on two weekend trips since then.

Here is a little brainstorming we did to help us set our new goal(s):

  • We want Baby Girl to be born debt free.
  • We need a Fully Funded Emergency Fund.
  • We want to do some maintenance/upkeep on our home.
  • We may want to pay extra on our mortgage and/or save up for a downpayment on a bigger home.
  • We may want to save up for a vacation soon.

So we know these things now… we just have to make a plan of what order we want to do them in and how we’re going to do them.

For now, Baby Girl being born debt free is first and foremost. We’re praying that my shop income over the next few
months will build up enough savings to make that possible. Once that’s done, we’ll most likely focus on our Emergency Fund.

Do you set financial goals for yourself/your family? What do you do when you reach them: celebrate, make new goals, etc?

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Month 15-18 of Our Journey to Become Debt Free: March-June 2014

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This post is part of Our Journey to Become Debt Free series. To see the others, please click here.

Money, money, money! Let’s talk finances! Our finances have seen a lot of changes this year.

As you know from this post, I quit my full time job in January and started a part time one in February making around $800-$1000 less per month. And then.. you got no more updates about Our Journey to Become Debt Free. I would love to break down each individual month for you, but since that would several weeks, I’m just going to do it in 2 parts. 😉

If you’ll go back and read our Month 14 – February 2014 post, it may refresh your memory a little.

MONTH 15 – MARCH 2014: March is when the “part time” income really started to affect us. We only paid down $491 that month and $234 is our regularly budgeted amount- so really NOT MUCH. That brought the balance down to $6,765.27.

Through June 2014

MONTH 16-18 – APRIL –JUNE 2014: With a little overspending and a little extra money being put aside for the next baby, we were only about to make the budgeted $234 payments on the Civic each month for these 3 months. In June, the balance was $6,109.84. Even so, we had paid off over $17,000 in 18 months at this point.

Monthly through June 2014

BUT in June, my Etsy shop Aqua Anchor Designs started to pick up and finally started showing a profit! At first, I was really scared to touch the money. I thought it was just a fluke and if I drained it, I’d be pulling from our personal budget the next month. Finally, Clint suggested that I should make a Baby Emergency Fund the shop, just in case I had a bad month or something, so we weren’t pulling money from our personal budget. I’d tell you a little more about that next week.

Things are about to get exciting… but I’ll get you updated from July to November in next week’s post. 😉

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Month 14 of Our Journey to Become Debt Free: February 2014

Debt Totals through February 2014
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I’m a little late with this post, but Happy March! 🙂 Our February finances were only partially affected by my new part-time job, so we still made pretty decent progress. Our budgeted snowball amount for March looks pretty meek compared with what we’ve been doing. BUT, I am home with my little boy 2 days out of the week that I would not have been, so I’ll happily take it.

Here’s what we look like on our Monthly Snowball Totals:

Snowball Total through February

Like I said, don’t look for March to be as high next month. And here are our debt balances as of now:

Debt Totals through February 2014

So we paid the Civic down another $1,134 and are currently sitting at $7,242.71. That totals to 69% of our debt paid off. Yay!

If you’ll remember, I had set another small goal for us to have the Civic down to at least $7,000 by the end of March. We got this!

Not only do we have less income coming in now, but we’re also thinking of beefing up our $1,000 Baby Emergency Fund a  little bit. Our reasoning behind this is normally we have an extra $1,500 or so a month so if something did come up it was usually cash flowed through our budget. Being that we’re only going to have an extra $300 or so every month now, we feel like it would give us a little more security to have some extra. I’m not really sure when we’ll become “debt free” now though. Things are changing and I’m just so blessed that I have this opportunity to cut our income and be home more.

Our groceries came to $440.15 for the month. I am determined to get this D..O..W..N! Maybe March will be the month? We also went over in our clothing, eating out, and entertainment budgets by $25.70. We really need to get a handle on things like this now. We’re trying really hard to keep ourselves in check, but it’s HARD!

The CR-V also had some work done to it in February. It was leaking oil and had gasoline in the oil. It was in the shop about a half a day and cost us $190. The amazing thing there is normally when a vehicle needs work, it makes me mad. Somewhat irrational I know, but I think modern technology and we have this newer car and blah blah blah is going out and look at how much it’s going to cost me! Not this time. Instead I thought.. yep we knew buying an older vehicle might need more repairs here and there because some things are just wearing out and that’s okay. I mean at least it was only $190. I’m really excited that I have heat now! The thermostat had gone out so Lucas and I did not have heat on these cold mornings. Yes, Mississippi gets some cold weather too! It’s cold to us anyhow. 🙂

Have you started your Debt Snowball yet? How are you doing in 2014?

You Need A Budget {Part 3}

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Part 3: It All Comes Together..

Happy Monday! And it’s now March–already. Have you gotten your budget ready yet? Well, this is the final part of the You Need a Budget Series, which means you should have decided why you need a budget and what categories you need and how to figure out your monthly income. Today, let’s talk budget amounts.

Of course you know some things like your mortgage and your phone bill, car insurance– anything that is the same amount every month.

Things like electricity and water you may have to estimate until you have a better idea, unless you can see what you spent over the last year. I average it out for the year and budget that amount monthly. Some months it will be a little less and some it will be a little more but you will have money accumulated in that budget category for the “more” months from the “less” months.. does that make sense?

I would take everything but the groceries, eating out and entertainment budget and subtract it from your monthly net pay (ours will be $3,000).

ynab3

So in this case, you’d have $662 left for groceries, eating out, entertainment and any kind of savings and/or debt you had. I would budget $400 for groceries, $40 for eating out and use the rest as savings and/or a debt snowball on that car payment. 😉

That will all just give you an idea though. I’m visual so I like to show numbers with what I’m talking about it. I think it’s really important to budget to $0 though. If you have $10 left in the budget, call it “savings”. If you leave it, it will get spent!

Another really great tool for this to give you some perspective is this budgeting tool that Dave Ramsey has on his site. Each category has a little drop-down that explains what would fall under each category. I wouldn’t just use this, but I do think it’s a neat tool to see what you are “supposed” to be spending with your income level.

Isn’t that neat? Budgeting doesn’t have to be such a pain though. Of course, it’s annoying when you run out of money before you get to the end of your budget.. but you only have what you have. Unless you want to be rolling around in credit card debt, of course. I take it as a challenge though.. for instance, I want to get our grocery budget below $400. Every month we seem to be pretty much right at $400. I’m challenging myself to do less convenience stuff, even though we do little now, and just be more frugal with it and get it down. Even if it’s only to $380 every month! That’s an extra $20 for our Snowball! 😉

And you all know I’d recommend YNAB to keep track of it all. 🙂 Here’s my referral link if you’re interested in getting $6 off the purchase price. There is a 34 day free trial to give it a test run if you aren’t sure, also.

Have you got your budget planned and ready for March? Are there any other aspects of making a budget I could touch on that would help you? 

You Need a Budget {Part 2}

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Part 2: Now What?

Happy Hump Day! Hopefully you have had a chance to sit down, by yourself or with your spouse, and decided WHY you need a budget and what categories are appropriate for your budget. Now things get a little more detailed, because you have to actually figure out how much money you have to budget with and how much to budget for each of those categories.

Of course, you could just go and put in numbers for every category because that’s what you think they should be and try to stick to them. But if you budget $200 for groceries and then 2 months from now, realize you are actually spending $500 a month, you may just give up budgeting right then and there.

Obviously, I like numbers and budgeting– give me my YNAB and a spreadsheet and I can sit here for hours– I know I’m a nerd. But since everyone is not that way.. I’m going to tell you the way that I think would be best to get started for this step. It will take you a while that first time of doing it, but then you’ll see what you are spending and should only need to update your budget from time to time.

So, again, I’m going to give you my little plug for the budgeting software I use, YNAB (You Need A Budget). This link is my referral link and will give you $6 off your purchase. Unless you are really good with spreadsheets or love writing a bunch of stuff down, I think it’s the easiest way.. I’m telling you. If you aren’t sure, you can always do the 34 day free trial to see if you like it.

Monthly Income – how much money do you make?

 

If you are paid monthly this is a super easy step for you. However, since most of us aren’t you’ll need to get out your calculator.

So if you are paid weekly and your paycheck is $750 you are going to get 52 paychecks a year for a total of $39,000. Either you can be conservative and budget for the at least 4 paychecks you’ll get every month which will be $3,000. Or, you can divide the $39,000 by 12 months for a total of $3,250 a month. I prefer to be conservative and plan on the $3,000 a month and have 4 “extra” paychecks throughout the year to make large snowball payment with or build up savings.

Maybe you get paid every 2 weeks though, or bi-weekly and your paycheck is $1500. That means that you get 26 paychecks a year. Either you can be conservative and budget as if you make $3,000 a month or you can take your annual net pay of $39,000 ($1500 x 26 paychecks) and divide that by 12 months and come out with $3,250 monthly. Like I said, I prefer to be conservative and plan on the $3,000 a month and have the 2 “extra” paychecks throughout the year to make large snowball payments with or build up savings.

Lastly, you may even be paid semi-monthly, which I was at my last job where I was paid on the 15th and last day of the month every month. I’m not sure if it’s the same everywhere, but based on the $39,000 annually my paycheck would have been $1,625. There is no need for a judgement call on how to figure it here, because you’re guaranteed 2 paychecks every month this way which would total $3,250 monthly.

But, what if you have irregular income? You’re paid hourly and aren’t always guaranteed the same amount of hours or tips or commission or whatever. Well, in this case you’ll have to be a little more creative. This is the way I would do it. If your pay is not seasonal, meaning you make more in the Summer because of whatever industry you work in, then I would see how much you made over the last 2 or 3 months. Let’s say in December your paychecks totaled $3,275 and in January they were $2,850. The average of those is $3,062.50. This one will take a lot of judgement on your part. Because I am conservative, I would do my best to budget on the $2,850.

Basically, if your pay is irregular, I would budget on what you know you will get. If you have $3,000 worth of expenses budgeted, and only make $2,800 that month you’ll have a hard time so go with what you know and use the rest as a bonus 😉

How will you budget your income– conservative like me or with the higher monthly amount? 

 

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You Need A Budget! {Part 1}

You Need A Budget
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Part 1: Where Do I Begin?

Yes, you do need a budget. Everyone needs a budget, even those millionaire athletes, you know, those that often times end up bankrupt because they didn’t have a budget. If you’ve never made a budget before, that’s okay. Hopefully, I’ll give you some useful information in this series to help you get in control of your finances. Then, once you make a budget, you have to keep track of it. I believe that YNAB (You Need a Budget) is an EXTREMELY helpful tool in keeping up with your budget. So first and foremost, you have to decide why YOU are making a budget.

Of course, I think everyone needs a budget, but if that isn’t your state of mind you may need a reason to budget. Maybe you just want to save a little money, have a major expense coming up, or are just wondering why there is no money left in your bank account days before every paycheck. And this step is extremely important if you are married. Money is a major cause of disagreements in marriage so try to get on the same page before you even begin making a budget.

So after you’ve decided WHY you are making a budget and have gotten on the same page with your significant other (if applicable), it’s time to decide on your budget categories. Dave Ramsey’s form below will help with this.  

Budget Form

Click for printable version

That’s just a starting point for your categories. Don’t even worry with amounts yet. Once you decide where your money is going to go, you can fill in amounts. I’ll get into all of that next week though. 

Here are the budget categories we use (right now):

Giving
Tithes
Sponsor

Monthly
Mortgage
Internet
Phones
TV
Electricity
Water
Daycare
Life Insurance
Gym

Accumulating
Dogs
Medical
Car Insurance
Car Maintenance
Car Registration
Clothing
Blog
Etsy
Gifts

Fluctuating
Groceries
Fuel
Food Out
Entertainment
Blow Money

Other
Special Purchases
Misc
To Be Reimbursed
Car Payment
Student Loans
Snowball

Of course, yours will look completely different. I budget for EVERYTHING. If I didn’t budget for oil changes and car tags, what if I needed both the same month and it was a total of $150.. where would I pull that from? Your categories will probably change over time–a lot if you’re anything like me.

Do you have budget categories for every little thing or just have your “bill money” and “spending money”? How does your system work for you?

Month 13 of Our Journey to Become Debt Free: January 2014

Month 13 of Our Journey to Become Debt Free January 2014
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This post is part of Our Journey to Become Debt Free series. To see the others, please click here
Hello February! 2013 went quick and 2014 is already flying. January was one of those 3 paycheck months for Clint so it looked very good for our Snowballing efforts. We did a decent job overall though.

Here is where we stand on our monthly Snowball totals:

Monthly Snowball Totals

And here are our debt balances:

Debt Balances through January 2014

As you can see, we paid $1,199.07 on the Civic in January. We’re now at 64% of our debt being paid off. Of course, things will slow down now that my income is only going to be half of what it has been.

We came in at $402.57 for the month in Groceries, which is great at right around our $400 budget. We did go $110 total over in eating out, clothing, entertainment and blow money. We did eat out 5 times though so that blew our Eating Out budget by $50 right there. In my defense, one of the meals would have been $25 less, but we had a gift card/coupon error. The other $60 worth was a new to me jacket that I absolutely needed, a Mickey Mouse chair for Lucas, and my first haircut in 18 months. Of course, I can justify almost ever penny of what we “go over”, but I really can’t do that starting NOW.

Speaking of justifying, our weekend trip came in at $570.90. Not bad for staying 2 nights in one of the highest reviewed bed & breakfasts around us.

Other than that, we’re just trucking along here. I’m pretty anxious about the finances right now, since I am starting my new job today. Going from full time income to part time income is scary. I know that He will provide and things will work out one way or another, but I’m still going to be anxious until I get used to things. We are going to have about $800 less a month in income…scary!

How was January on your finances? Have you started your journey to become debt free yet? Any words of wisdom to share with me about my anxiety over finances?