I read a comment in the newspaper the other day about people who “brag about paying off their debt” and how wrong it was to be talking about it with others. I couldn’t NOT post about this guy’s comment. So just a few tidbits:
If you blog about it, share with the rest of us why you do it!
We are feeling the pressure now. Once we started getting rid of our debts and are now just down to the line of credit loan and the mortgage, we feel the need to be debt free except for the house NOW. Not three years from now. Definitely not 5 years from now. NOW.
That’s easier said than done. But guess what has happened that has me more excited than the “getting out of debt” plan itself? Pool Boy is now totally on board! When both partners believe in the same philosophy on money, amazing things can happen.
Because of our intensity, we already have a very healthy amount of money that is able to go toward our debt each month. That doesn’t mean we aren’t looking for other sources. Last night we held a very informal money meeting, and here is what we came up with:
So while we aren’t going to be debt free except for the house today, it looks like we will reach that goal within the next 9-12 months.
Yes, 9-12 months. I want to share with you something about that timeframe. When we first got started on this journey, we listed all of our debts and matched it up with our income. With the numbers we had, it looked like it was going to be 3-5 years before we were debt free but the house, and 5-7 years before we were totally debt free. Now, if we stay on track as planned, we will hit the first goal in just over 18 months. We are so close we can smell it!
If you aren't familiar with Dave Ramsey's Baby Steps, here is an excellent overview of them.
Hey, ladies. I know many of you are SAHMs, and some of you may have had to research health insurance that has maternity benefits. Did you find a company that was reasonably priced? One of my readers is on the search for this and I told her some of you may be able to help her out.
I love free stuff.
This morning while reading the paper, I ran across a notice about a free teleseminar being offered by Principal. When I logged on, it showed they have one each month PLUS an archive of all their previous teleseminars. These seminars are geared for women in the workplace. All for free!
Some topics include:
The Five Secrets of Millionaire Women Business Owners
Good to Great - Secrets of Success from Savvy Business Women
Ready, Set, Goal! How to Get Real and Get Goalsettings
In preparation for a project I’m doing, I need your feedback. This may be not the best crowd to ask, since most of my readers are here because they have the same financial goals that I do.
Feel free to comment anonymously. It’s not important who you are.
I want to know what reasons people have for not aggressively getting rid of their debt.
Does it seem like an impossible task?
Do you not want to cut back your lifestyle?
Does following a budget seem to difficult?
Do you think investing the money is better use of your money than paying off debt?
Do you have the philosophy that “everyone has debt” so you are just living like most Americans do and don’t see a problem with paying minimums on all of your debts? By the way, this would have been my answer a year ago.
For those of you who are now aggressively getting out of debt, tell me your reasons for not doing it earlier.
Spill your guts! Once I complete the project, I will let you see it. BTW, this project is for you, Iowa Mom.
Dave Ramsey is offering this deal to anyone, so take him up on it! Now is the time to get your Total Money Makeover book! Let's go shopping, friends.
I tend to have a lot of stuff lying around my house. I hate dealing with the paper coming into our house (school papers, meetings, mail, etc.) so I end up grouping it into nice piles and set aside to deal with later.
Debt consolidation is much the same, putting the various debts into one big pile because you don’t want to deal with it. But a pile of debt is much more dangerous than my pile of paper.
I can certainly understand why debt consolidation looks good to people who are drowning in debt.
“My monthly payment on the consolidation loan will be less than what I’m paying in monthly payments now.”
Yes, this is probably true. But do you really think paying less money will lower the amount of debt you have?
“If I could get my bills all put together and into one payment, it will be so much easier to manage.”
It will be easier, because you won’t be doing the managing! You are leaving it up to someone else to pay your debts with the little bit of money you give them.
“I’m sick of the bills. I just want to wipe my hands of them.”
Debt consolidation is the easy way out. By not putting forth your own blood, sweat and tears to beat down the debt, you’ll not go through the suffering that is oftentimes required to get rid of the poor spending habits you have.
“The only way I can make the payments is to consolidate.”
I don’t buy this one. If you are in this position in the first place, I can guarantee that you aren’t in control of your money. You have a rough estimate of how much you make each month, but you don’t have a clue how much you are spending. If you can’t make the payments on your bills, sit down at the kitchen table and get it all figured out. Go through each bill that you have decide how you will pay for it. You also need to cut out all extra expenses you have. You got yourself into the mess. It’s up to you to get out of it.
I’m writing this paragraph last. I thought it would be helpful to share what we have cut back on in order to gather up more cash to work off the debt. Yet, when I tried to think of what we cut back on, I found it difficult to come up with a list. That’s great news because what we originally thought we could not do without, now we aren’t even really missing. So here’s the list of things I was able to come up with. I’m sure I’m missing some, and I’m sure you have some ideas where people could cut back even more.
Eating Out = $140
We used to eat out at least once a week.
Using Online Bill Pay = $5, cost of envelopes, stamps and checks.
Not to mention an evening dedicated to writing out checks. I hated those nights. Now I pay each bill as soon as it arrives in our mailbox. Love it.
Taking my lunch to work instead of eating out = $100
Coloring my hair at home instead of salon = $60
Buying pop by the six pack rather than individuals at the gas station = $50
(I know, I know. I shouldn’t buy pop at all, so don’t bother mentioning it.)
Family Entertainment at home = $300
We used to go to Des Moines for the night at least twice per month. We would go to a movie, or just browse through the mall. At the end of the night, we would have spent at least $150 each time.
Cancelled Netflix - $10
Monthly Savings = $665
And that’s only the things I can remember!
I really don’t consider myself a frugal person. I think in order to be REALLY frugal, you need to have time to commit to it. But I work full time, and I don’t have tons of hours to research sales, figure out how to shop at Walgreens for almost free, make our own sandwich bread instead of buying it, and make laundry detergent. But what I am able to do makes a huge difference to the amount of money we have left over at the end of each month. I challenge you to take a look at what you are currently spending unnecessary money on.
Have a suggestion for the rest of us? Please share!
Now that our cars are paid for, it's time to attack the line of credit loan. It's our last item in Baby Step 2. (We already have baby step 3 done because we are rebels and don't always follow the rules.) This line of credit was used to pay for all kinds of things it shouldn't have, which really frustrates me. This balance consists of landscaping projects, an in-ground swimming pool, business expenses, and possibly a credit card balance or two that was transferred over here. The only valid expense, I suppose, is the new roof on our house. I'm really not exactly sure what the debt all entails - all I know is that it's a large amount of debt and I want it gone.
The line of credit balance is just a little less than the remaining balance on our mortgage. (as a side note, most of you would probably kill to swap me mortgage balances.) Last night my Excel program was smoking as I was punching numbers. I was able to come up with a plan that had us debt free except for the house by January 2009 - less than one year away!
Those little payments of extra cash (book sales, refunds, etc.) are now being sent straight to the heloc. So far this month I've sent $121.75 of additional cash to the heloc, and because we've really cut back our expenses, we are looking good to have a hefty balance left over at the end of this month to send to the loan.
Debt free except the house within 11 months. Sounds sweet!
Dave had a caller the other day who was mad at her bank and wanted to make sure others knew to be on the lookout for the same problem she had.
She had a bank account with $5.00 in it.
She paid a parking fee with her debit card for $1.00.
A week or so later, she went out to eat and spent $5.00, using her debit card for this account again.
She got a $35 overdraft fee and she was pissed at the bank! Dave was much nicer than I he had to be, because seriously lady – FIVE MINUS ONE MINUS FIVE means you have overdrawn your account! She was mad because she thought the $1.00 charge should have processed immediately and it was not her fault that when she checked her balance there was still $5.00 in there so the bank should not have charged her.
But the real problem I have with this story is…if you only have $5.00 in your bank account, why the heck are you going out to eat?
Crazy people. They are everywhere.
Congrats, Sarah! You are the winner of my extra Larry Burkett book! Wait a sec, how come everyone who wins my contests is named Sara/Sarah? Weird.
The random number chosen was actually 3, which was Chilihead. But because of her wisecrack about Larry Birkhead, she's automatically disqualified. he he...
So send me an email, Sarah, and I'll get the book shipped out. Congrats!
Yeah, I know I ended the contest early. But there were only 7 people who wanted it and I was ready to be done with it. And it's my blog so I can pretty much do whatever I want over here.
Oprah's offering Suze Orman's book, Women and Money, as an ebook for FREE until tomorrow late afternoon. Get it here.
JC, and anyone else with dialup - I would not attempt this with your connection. Get up to speed!
Thanks to all of you who participate in my surveys! It’s very interesting to see where people are at.
This is continuing my series on the common denominators of those who successfully build wealth.
5. Their adult children are economically self-sufficient.
This goes along with the previous one. Their parents did not provide financial assistance to them, therefore they are not providing financial assistance to their own kids.
6. They are proficient in targeting market opportunities.
I have often heard the phrase, “They were in the right place at the right time!” However, I believe you have to be the RIGHT PERSON in the right place at the right time. There are plenty of people who were in the right place at the right time, but they weren’t knowledgeable enough to know it or act on it.
7. They chose the right occupation.
This goes without saying…
There, series done! Now I can move on to talk about more interesting things. Any ideas? What do you want me to talk about next? Any suggestions from the audience?
This is continuing my series on the common denominators of those who successfully build wealth.
Ummm, ok, I didn't mean for it to be this long before I continued this series. And this, my friends, is why I don't do series like this. Life gets in the way, blogging gets delayed, yadda yadda yadda. So here are next two thrown together, short and sweet.
3. They believe that financial independence is more important than displaying high social status.
As I was walking to my car the other day, I was nearly run over by a Hummer. As it went by, I noticed the driver was probably around my age, which is mid-30s. For REAL. I hate to make assumptions, but I think it’s pretty safe to say that she drove home that day to a highly-mortgaged home in the best neighborhood in town.
There really isn’t any reason to own a Hummer other than to try to impress people and make them think you are wealthy. “Think” is the key word there – most millionaires wouldn’t think of wasting money on such a thing.
4. Their parents did not provide economic outpatient care.
This refers to parents providing for their kids, such as helping them pay their bills. If kids learn that they will always have your parents to fall back on, how will they ever learn to be responsible?
The Millionaire Next Door is a must read for those of you who are working to make a change to your financial situation. Below are the 7 common denominators among those who successfully build wealth, which I’ll be discussing over the next several posts.
1. They live well below their means.
2. They allocate their time, energy and money efficiently, in ways conducive to building wealth.
3. They believe that financial independence is more important than displaying high social status.
4. Their parents did not provide economic outpatient care.
5. Their adult children are economically self-sufficient.
6. They are proficient in targeting market opportunities.
7. They chose the right occupation.
They live well below their means
This is so basic, yet it eluded me for years. The more money we brought home, the more we spent. At first we lived about equal to our means. Then as our cars got fancier, our closets became fuller, our toys became more expensive, and our vacations more costly, we slowly watched our savings account start to drop and it became apparent that we were living above our means. Not only was our “nest egg” savings account balance dropping, but the amount of debt we had started to get higher.
It’s so simple that it’s laughable that people don’t follow this. But I can’t laugh because I lived that life for years. We always knew there was money in the bank so we never kept track of how much we were spending.
I can’t tell you the day it hit me, because it was kind of gradual. Those checks I wrote every month for the car payments really bothered me. We were paying $455 per month on Pool Boy’s truck and $535 per month on my Yukon. Yes, almost $1000 per month just on cars! Then we installed the swimming pool, so we had that monthly payment. Not to mention the mortgage and heloc we already had. Plus we had several little loans to Best Buy, a carpet company, a furniture store, and on and on. Even though this is considered “normal”, I was no longer comfortable being “normal”.
The “what ifs” of our situation scare the hell out of me. What if I hadn’t stumbled upon Dave Ramsey’s podcast on iTunes that day? What if we kept living as we had been and never realized what our situation truly was? What if our kids went to college fully funded by student loans, and started their lives deeply in debt? What if we had no money saved back for retirement other than my 401K and my husband’s retirement? What if we were still trying to “look” good instead of actually BEING good? What if we never realized how horrible debt is?
Please don’t let my “what ifs” listed above be your reality.
I have a parenting question for all of you, because if there’s one thing about parenting where I’m failing, it’s loose teeth.
Green has “issues” with loose teeth. They scare him, for who knows what reason. When a tooth gets loose, he refuses to eat until it literally FALLS out of his mouth. He won’t pull it, won’t wiggle it, won’t let anyone else even look at it. And the part about not eating? Yeah, he gets weak, can’t stand, all of that business.
So as of this morning, he hasn’t eaten since a late breakfast yesterday. I told him he was absolutely not staying home from school. I even wrestled him to the ground this morning, kicking and screaming, trying to get it out. I went ahead and sent him to school, but I already got a call from the school nurse saying he was very weak. They gave him milk and a pudding cup, but he didn’t eat much of it. Green is well aware that if I have to come get him from school, he’s in big trouble.
What the heck do I do??
We spent the weekend celebrating our car payoff, which means we spent a few days spending money like we used to. But we had a lot of fun (which included adult beverages and dancing on her bar, which resulted in a raging headache) and now we're ready to get back on board tomorrow morning.
On a side note, any of you know anything about pnuemonia? Like, can it seem to come on within just a few hours? And are the symptoms sudden chest congestion to the point where you think you should go to the ER but don't, along with a high fever? And does it cause you to say, "Oh man, my CHEST" throughout the entire Super Bowl? Hmmm. He's fully medicated and in bed now. I've been given instructions to check on him later to make sure he's still alive.
Let's take a break from talking money and have some fun, shall we?
After the kids went to bed, I wasted way too long looking at vintage Sesame Street clips on You Tube. It amazes me how some stuff just sticks in your brain and you never forget it. I can still sing all the words to The Ladybug Picnic!
And of course, the Yip Yips. This one made me laugh out loud. Please do yourself a favor and head over to YouTube and search on Sesame Street. Ahh...the memories.
And the winner is… Only two debts to go: home equity loan and mortgage.
Green3! Here is your trophy, a paid off car! 
Oh my gosh! Ok, I’d like to thank the Academy of Debt Reduction and all of its members who encouraged us to get our butts out of debt and start living the life we want to live. I’d like to thank all of the people from craigslist, eBay and half.com who bought all of our extra stuff because you contributed to this! I’d especially like to thank Green, Three and Pool Boy for going along with this crazy plan of mine and agreed to quit buying crap we didn’t need. Because of your commitment, whether voluntary or forced, we’ve made incredible progress over the past 8 months - $28,000!! And of course Dave Ramsey, who encourages me every single day.
I hope you use my little celebration here as encouragement for yourself. If someone told me that I could get rid of $28000 in debt in 8 months, I would have laughed. REALLY loud. We’re just a regular family with regular incomes. What we are doing is something that every single one of you can do if you are willing to make the commitment. It’s so worth it – jump on board.
Living like no one else so that we can LIVE like no one else
Check back after 1:00 CST. There's going to be a celebration here on the green3 blog, and I'll write my post over my lunch hour.
