The Downside of Debt

In January, we took a loan out for the RV we purchased.  I justified the purchase at the time (we always do when we really want something, don’t we?) but when the first payment of over $1,000 was due in February, I was reminded of how much I hate debt. 

The day we signed the loan papers on the RV was the day that my husband was let go from his job of over 8 years and therefore we went without a paycheck for nearly 3 weeks until he was on payroll with his new position.  The very next week after his first paycheck I was informed that my hours (and therefore pay) would be cut by25%!  

It has been over a month, and we are still juggling our income and expenses to get on some sort of regularity, but the budget has really been kattywampus.  Part of the reason is that extra $1000 payment that is being sent out each and every month on top of a decrease in income.

I mentioned in the post about our RV that we will be paying off the house by October.  I have changed my mind about that.  I want the RV to be paid off – AS SOON AS POSSIBLE! I do not like the uncertainty that this $1000+ payment brings to our lives.     

To me, debt feels like I am trapped, suffocating and out of control with uncertainty peaking its head around every corner.  Debt has made our 6 month emergency fund a 3 month emergency fund and this is unsettling.

My new goal for this year is to have the RV paid off by October and I never want to be in debt every again (except for a (very small) mortgage if we choose to settle down in one spot again in the future).  

We're On A Podcast!

This week, our story was featured on JW's Financial Coaching podcast.  If you'd like to learn a little bit about us, you can go to this website and hear our story.

Jon White has a great podcast on how to become (and stay) debt free.  If you havent subscribed, I'd highly recommend it!

 Enjoy!

10 Reasons I Love Being Debt Free

It has been over 2 months that we paid off our last consumer debt and I am still in disbelief that we have no other debt other than our mortgage.  I have had debt in one form or another since I was 18 years old.  It started with a credit card (to get the “free” t-shirt), a car loan, and my first mortgage at the age of 22!  I was thinking the other day about why I love being debt free, and it looks a little something like this (in no particular order): 

1. Security in knowing that if anything were to happen, we have nothing compromising our income.
2. There is more money than month (for the first time in our married life!)
3. We now discuss (and plan) purchases before making them: no more impulse buys.
4. No more credit card statements clogging up our mailbox.
5. Monthly bills are much easier to keep track of when you have only 4 of them (vs. 12!)
6. There is no way possible to miss making a credit card payment and in-turn get a higher interest rate and penalty.
7. We are saving nearly $100/month in interest by not having debt payments.
8. We watch our net worth grow!
9. We can freely donate to charities and organizations we believe in.
10. There is disposable income to do frivolous things once in a while.

For those who are looking to get debt-free, this would be my advice:

• Decide that enough is enough!
• Check out Dave Ramsey’s Total Money Makeover book from the library
• Listen to the Dave Ramsey Show podcast: it is very motivational
• Get started!

This is not a “get rid of debt in 6 months” scheme.  It takes time, patience, hard work and sacrifice.  It took us a year and a half to get out of debt.  Within that time, we made some stupid decisions (like putting french doors on a 0% financing program with Home Depot) but it all worked out.  We hit a few bumps in the road, and I can guarantee that you will too, but you get past them and move on. The relief that debt freedom brings every day is well worth the hard work and sacrifice.

As Dave Ramsey says, “Live like no one else so that later, you can live like no one else.”

This post is linked up with Homestead Revival's Preparedness Challenge and Homemaker By Choice's Weeklong Blog Hop.

We're Debt Freeeeee!!!!

I am proud to announce that for the first time in our adult lives, Todd and I are debt free except our mortgage!

We have been working since January 2010 to pay off our debts of over $26,000.  Within this process, we’ve freed up nearly $900/month in revolving debt payments!

This is what we have to show for all of our hard work over the last year and a half:

This is the house next door to our primary residence that we purchased to double our property size.  The house, though it looks decent from the front, is dilapidated on the inside.  The roof is caving in, there are foundation problems, and it is a flat out mess. We are looking forward to tearing the house down and putting up a 1 ½ - 2 car garage to use as Todd’s workshop (using cash!)

Todd test drove the Kia Rondo when they first hit the lots in 2006.  I remember him coming home talking about how much he wanted this car.  Two and a half years later, we bought one. The vehicle was purchased in 2009 (though it is 2008) as a repossessed vehicle with less than 400 miles on it.  We bought it at a nice discount, and it still had the “new car smell” to it!  It looks and drives even better now that it’s paid off!

We decided to change the front doors of our home to french doors in June of 2010: right in the beginning of our debt snowball.  Even though we love the new doors, we probably should have waited.  We put the cost of these doors on a Home Depot 0% financing payment, and paid it off before getting hit with the interest charges.

Unknown items from a credit card Todd brought into the marriage.  What “stuff” this consisted of, I couldn’t tell you, but I can tell you that I did not contribute to any of the debt on this credit card.  None-the-less, it is paid off and we are both debt free (except the mortgage) for the first time in our lives.

The next step right now is to save 3-6 months worth of expenses to use as an Emergency Fund in case anything happens.  This will be much faster and easier now that we have an extra $900/month to put toward this step. 

DISCLAIMER: I was in no way compensated or influenced to write this post.  I truly believe in the teachings of Dave Ramsey to help eliminate debt and build wealth.  I highly recommend his book, The Total Money Makeover as well as listening to his free podcast every day from iTunes. The encouragement and wisdom are priceless.

Normal is Stupid!

I was listening to a Dave Ramsey Show podcast on my way home from work yesterday, and Dave was ranting about how much debt the "normal" American has.  He also said that "normal is stupid!"  I couldnt agree more.

Since January 1, 2010, Todd and I have paid off $23,000 and change in debt.  We have been in debt since the very moment we met in 2005.  As of today, we only owe $2098 on our very last debt and I couldnt be happier.  The light at the end of the tunnel is definitely coming closer and closer.  I never thought we'd get this far, but day-dreamed of a time when we would.

By July 1st, we should be completely debt free (except the house).  We have been able to "snow ball" over $850/month to go toward this last debt by paying off the other debts we had.  Those included $375 for the property we bought next door, $227 for a car loan, Home Depot card (0% financing for a year), and $200+ for the credit card we are currently paying off.  We were paying nearly half of my take home income on revolving debt payments! No more!

We killed it this month by living so tight we squeaked! I think Todd is sick of hearing me say how broke we are and then in the next sentence, how much less our credit card balance is.  Even this week, we have only $95 to live off of.  This month, we both had extra pay due to 5 Friday's as well as Todd getting paid a little more money for training a new guy at work.

I told Todd that if we squeak through the month of April, we could breathe a little bit in May and June to pay off the rest of the debt.  May is going to be an expensive month for us due to a vacation the first weekend of May, our puppy getting fixed mid-May, and hubby's birthday the end of May (he's turning 40, so I am doing something nice for him!)

Do you have debt?
Are you working Dave Ramsey's Total Money Makeover?
How is the process going for you?