The opportunity came up for Scott to go to a one-day conference about 4 hours away. He went to the same conference last year, and we all went with him for a mini vacation. It just so happens to be on a day that the kids have off from school, which works out perfectly. When Scott goes the company pays for the hotel, his meals, and mileage. Because the mileage rate is so high, he actually makes money off the trip. However, if we were to go with him, the amount he would "make" would be eaten up with meals for the family and extra travel. So, we were faced with the choice: free vacation for the family (aka swimming in a pool hotel while daddy is at the conference) or Scott goes alone and we put the extra money towards debt.
AT our weekly family home evening, we proposed the two options. The younger ones seemed easy to convince either way, but the older ones were quiet at they pondered the difficult decision. But in the end, we decided to stay home and put the extra money towards debt. I know that we will miss out on some fun, but a imagine that this will be a lesson the kids will remember, so it's worth it. As Patrick stated..."Not go on a small vacation now but be able to go on a bigger one later?" Yes... that's exactly the idea. :)
Tuesday, January 22, 2013
A Conversation
Last week I set to task at estimating what out tax refund will be because I feared it would be less that I had hoped. Sure enough, the estimate looks bad. This REALLY dampened my mood, and so my dear, sweet husband talked to me about it. After some conversation about our goal to eliminate debt quickly, we determined that there is a difference between good debt and bad debt, meaning, our largest debt, his student loan, might be a separate issue than the debt we have on our last house and the amount we owe my parents. He also talked about how the student loan was a blessing (and so worth it) because in enabled him to have a much better career and income.
So, we have separated the two debts, and are concentrating on the "bad debt" first, continuing with gazelle intensity until it's paid off. Then we need to re-assess and determine how to move forward from there. I feel much better about this goal, especially in the wake of the looming less-than-hoped tax return. It also shortens the term. Right now, the house loan will be paid off in April and my parents in August. BUT, because we keep so much in our checking account (a cushion of at least $3000) we could pay in off sooner. I would LOVE to see it done by the time school is out for summer, but we shall see.
So, we have separated the two debts, and are concentrating on the "bad debt" first, continuing with gazelle intensity until it's paid off. Then we need to re-assess and determine how to move forward from there. I feel much better about this goal, especially in the wake of the looming less-than-hoped tax return. It also shortens the term. Right now, the house loan will be paid off in April and my parents in August. BUT, because we keep so much in our checking account (a cushion of at least $3000) we could pay in off sooner. I would LOVE to see it done by the time school is out for summer, but we shall see.
Thursday, January 17, 2013
Getting the kids on board
On Monday night we had our Family Home Evening lesson on family finances. I cut out pictures of different items, including every budget line item, and had the children decide if they were needs or wants. Then we went through all of the "needs" and discussed how much each of them cost out of our budget. At the end we asked their help in our goal of paying down all of our debt this year. They came up with some ideas of how they could be better at not wasting, being more responsible, etc. And everyone agreed that we should also make this a matter of prayer through out the year. Yes, the small ones were completing lost and bouncing on the couch, but all in all I think it went well.
The next morning over breakfast I asked them to help me come up with a list of fun things we could do as a family to have fun that didn't cost much, if anything. They LOVED this and jumped right in. Tanner even asked if he could see the list later after school. My favorite entry was from him: snuggle. Yes, snuggles are always free!
While the boys were at school today I played outside in the snow with Annabel. She kept asking me to make more snow angels with her. As I got up to look at our many large and small snow angels the thought came to me that snow angels, like snuggles, are also free. We are blessed with so much that I think we forget these simple but very impactful bonding experiences with our children.
So onward we go with our free fun list... it includes playing board games, going to the beach, taking a nature walk, going sledding, camping in the backyard, going to the library, etc. Some inexpensive ideas are going to the observatory or the 25 cent movie downtown.
There's one more benefit from cutting back on the children... I have more time for them! Today my gymbucks were officially redeemable. I happily made the decision that we didn't need anything and therefore didn't shop. Normally I would have spent an hour or more finding the best items for the best deals for just the right amount. It wasn't until today that I realized that gymbucks isn't really money... it's just a 50% off coupon with the stipulation that you have to spend at least $25. I am not wasting anything by not using them!
The next morning over breakfast I asked them to help me come up with a list of fun things we could do as a family to have fun that didn't cost much, if anything. They LOVED this and jumped right in. Tanner even asked if he could see the list later after school. My favorite entry was from him: snuggle. Yes, snuggles are always free!
While the boys were at school today I played outside in the snow with Annabel. She kept asking me to make more snow angels with her. As I got up to look at our many large and small snow angels the thought came to me that snow angels, like snuggles, are also free. We are blessed with so much that I think we forget these simple but very impactful bonding experiences with our children.
So onward we go with our free fun list... it includes playing board games, going to the beach, taking a nature walk, going sledding, camping in the backyard, going to the library, etc. Some inexpensive ideas are going to the observatory or the 25 cent movie downtown.
There's one more benefit from cutting back on the children... I have more time for them! Today my gymbucks were officially redeemable. I happily made the decision that we didn't need anything and therefore didn't shop. Normally I would have spent an hour or more finding the best items for the best deals for just the right amount. It wasn't until today that I realized that gymbucks isn't really money... it's just a 50% off coupon with the stipulation that you have to spend at least $25. I am not wasting anything by not using them!
Wednesday, January 16, 2013
A little history
So, where to begin? I guess it started with the way Scott and I were raised. I grew up in a middle-class home, never without all needs and many wants. I never doubted that my parents had enough money for whatever they wanted, although they didn't always give me everything I wanted. Whenever I wanted to go out with my friends, my dad would hand me a $20. I also made my own money through household chores, babysitting, and typical part time jobs in the summers. When college time came, my parents paid for it. They also gave me the old family car for my graduation, and then bought a new one for themselves. I was never taught about living on a budget, and although I was highly encouraged to save money, I never really had a reason to.
Scott was raised quite differently. Money was always a struggle, and the children were aware. He went without many things he wanted, but again, always had everything he needed (even if it was the bare minimum). Saving was never taught because there was never anything to save. Living on a budget meant living paycheck to paycheck and seeing what they could afford at the time. He worked year-round as early as possible to try and pay for the things his parents couldn't. Scott bought his own first car on credit, a convertible, which his parents ended up having to finish paying for. When college time came, he used what money he had, and the rest was paid for through student loans.
When we got married, Scott was working at Wendy's as a manager and going to a community college. I had graduated with my MBS, and was working for a small company in administration. Together, our income wasn't fantastic, probably less than $40,000/year. We started off renting an apartment, the best we could afford, and also sold the car my parents had given me and leased two new cars. About a year later, after Scott got a new job as a bookkeeper, we were able to buy our first home (with the down payment provided by my parents). Things were a little tight, but thanks to credit, we were able to buy a riding lawn mower and some furniture. We were in this situation when we had our first child.
I was able to get fairly nice pay raises, so when Scott decided he didn't want a future in accounting, we managed to get by as he went to school by day and was a hotel auditor by night. This enabled us to not need daycare, as Scott was home with our child during the day. However, it was hard on me, not being able to be at home with my baby, and it was hard on Scott, not providing for the family like he wanted to. Shortly into this scenario, we decided that Scott needed a better education, and we moved to East Lansing so that Scott could go to MSU and major in finance.
We were able to rent our home out, and the renters eventually bought it (luckily for a good profit, so we could pay back my parents for the down payment). We had been able to pay off our consumer debt, thanks to selling off the tractor, snow blower, and other large items. I was able to keep my job through commuting and work a bit from home, although for less hours. Scott took as many classes as possible so that he could graduate quickly. We had to use daycare about 2 days per week. The leases came due for the cars, and we bought a brand new car to share. Student loans were necessary, since we had no way of paying for Scott's schooling.
School went well for Scott, and he was able to secure a great job with General Electric. It required us to move, and keep moving, so we accepted that I could no longer work. It was also at this time that we found out we were expecting our second child. We decided that our small sedan wouldn't fit the family and decided to buy a used mini-van. Unfortunately, we owed more on the sedan than we could trade it back in for, so we had to again, borrow money from my parents so that the deal could go through, in the amount of $4000.
The first year of Scott's new career was hard financially, because the one income didn't stretch as far as we thought it would. I think we had this assumption, that we had finally secured a "real" job and could afford to live better than we had in our college days. We had become accustomed to using a credit card for our daily expenses, but for some reason, we just weren't making enough to pay off the balance each month. I believe it was during this time that we had to borrow another $2000 from my parents, even though I can't remember what it was for.
We tried cutting back and introduced the idea of a budget. Even though we at least had a better understanding of what we could afford, I had a hard time accepting my limitations. My definition of need and want probably weren't even close to accurate. We decided one car was not working out well, and leased another new car. Consequently, we were always just a little behind, and felt that the next raise or a future promotion would fix the problem.
A year and a half into our GE adventure, we felt the need to make a change. Scott was able to get a job in his home town (near family) for about the same salary he had been making at GE. Since he worked for a bank, we were able to cut a few corners and attain a loan for another house. This one needed a LOT of renovation before we moved in, but thankfully Scott's dad (a carpenter) helped us do the needed work to the house in a about 2 months time. Since we had to pay very little for outside labor, the sweat equity paid off. Just as we finished up the house, we found out I was expecting child #3. We fit fine in the house (looking back) but I though we needed more room.
Shortly after baby #3, Scott had been promoted and was told and increase in income would be around the corner. We took this as a sign that we could buy the bigger house we wanted. Thanks to the sweat equity and just selling in time before the big real estate crash, we were about to move into the bigger house we wanted. This proved to be our worst financial decision to date. Scott never got the increase in pay, and the bank started to fail. His bonuses ceased. We still had the guilt from having borrowed from my parents and using Scott's Dad's sweat equity, and knew we couldn't ask for anything more. So, living on our tight budget became a REAL priority. I finally learned how to live on less. I bought things at garage sales and resale shops, and learned how to spend less on groceries. I actually enjoyed this process, especially when I realized that we didn't really need as much as I thought, and our children were just as happy. And, of course, it was at this time that we (very unexpectedly) had baby #4.
With the impending doom of the bank failure, Scott was able to search and find another job, this time in my home town. THIS job was a much better position with better pay. Of course, now the real estate collapse was in full swing and getting out of our house wasn't as easy as the other 2 had been. We were luckily to sell quickly, but at the cost of a $20,000 loan. Meanwhile, we had not a penny to spare, so we had to live with my parents to save up for a down payment. For me, this was the biggest financial wake up call yet. There is something about having to live with your parents when you are 35 and have 4 kids. I never want to be in that situation again, but how grateful I am that we had that opportunity.
After a few months we were able to buy a home, albeit a smaller and less expensive home that our last. We had to immediately finish that basement so that there were enough bedrooms (one again both sets of the parents to the rescue to help on this project). Again, we were grateful, but I never want to have to ask them for something like that again! Unfortunately, we made yet another, and perhaps our last, unwise financial decision. We bought a newer, but used minivan with many bells and whistles.
Enter: Dave Ramsey. Shortly after buying our new home and car, Scott was asked to help teach financial peace university. I was unable to attend, so he brought the videos home for me to watch. What a blessing! What a wake up call! But best of all, it gave us a plan to finally get out our stupid finance cycle. At this point this was our situation: Debts: $18,000 for the house we didn't own, $18,000 for the minivan, $18,000 in student loans, $6,000 that we still owed my parents, and $2,000 in basement renovations (on credit). Plus, we still had a leased car for Scott.
That first year of Dave Ramsey, we were able to pay off the renovations and buy Scott a car with $5800 in cash when he lease came up. The second year we were able to sell the minivan (for about what we owed on it) and buy an older minivan for $6300 in Cash. Then we started paying down on the house loan, which we were able to decrease to about $8000. All the while we followed our budget much better, but I wouldn't say I was in any way "gazelle-intense". After all, we had to make up for not being able to buy of replace anything prior to the job change. I needed a little breather.
That brings me to our current time. Now, though, I am all about gazelle intensity. I want debt out of my life! Our used cars won't last forever, and we need to get from debt payoff to building savings quickly. This is our moment to finally turn the tides. SO, I have set the lofty goal of paying off the rest of our debt in 2013. Right now, that comes to about $30,500. According to my excel spreadsheet, this is not possible. But with prayer, dedication, and hopefully a couple of miracles, I am hoping to make this happen. This blog will detail that journey!
Scott was raised quite differently. Money was always a struggle, and the children were aware. He went without many things he wanted, but again, always had everything he needed (even if it was the bare minimum). Saving was never taught because there was never anything to save. Living on a budget meant living paycheck to paycheck and seeing what they could afford at the time. He worked year-round as early as possible to try and pay for the things his parents couldn't. Scott bought his own first car on credit, a convertible, which his parents ended up having to finish paying for. When college time came, he used what money he had, and the rest was paid for through student loans.
When we got married, Scott was working at Wendy's as a manager and going to a community college. I had graduated with my MBS, and was working for a small company in administration. Together, our income wasn't fantastic, probably less than $40,000/year. We started off renting an apartment, the best we could afford, and also sold the car my parents had given me and leased two new cars. About a year later, after Scott got a new job as a bookkeeper, we were able to buy our first home (with the down payment provided by my parents). Things were a little tight, but thanks to credit, we were able to buy a riding lawn mower and some furniture. We were in this situation when we had our first child.
I was able to get fairly nice pay raises, so when Scott decided he didn't want a future in accounting, we managed to get by as he went to school by day and was a hotel auditor by night. This enabled us to not need daycare, as Scott was home with our child during the day. However, it was hard on me, not being able to be at home with my baby, and it was hard on Scott, not providing for the family like he wanted to. Shortly into this scenario, we decided that Scott needed a better education, and we moved to East Lansing so that Scott could go to MSU and major in finance.
We were able to rent our home out, and the renters eventually bought it (luckily for a good profit, so we could pay back my parents for the down payment). We had been able to pay off our consumer debt, thanks to selling off the tractor, snow blower, and other large items. I was able to keep my job through commuting and work a bit from home, although for less hours. Scott took as many classes as possible so that he could graduate quickly. We had to use daycare about 2 days per week. The leases came due for the cars, and we bought a brand new car to share. Student loans were necessary, since we had no way of paying for Scott's schooling.
School went well for Scott, and he was able to secure a great job with General Electric. It required us to move, and keep moving, so we accepted that I could no longer work. It was also at this time that we found out we were expecting our second child. We decided that our small sedan wouldn't fit the family and decided to buy a used mini-van. Unfortunately, we owed more on the sedan than we could trade it back in for, so we had to again, borrow money from my parents so that the deal could go through, in the amount of $4000.
The first year of Scott's new career was hard financially, because the one income didn't stretch as far as we thought it would. I think we had this assumption, that we had finally secured a "real" job and could afford to live better than we had in our college days. We had become accustomed to using a credit card for our daily expenses, but for some reason, we just weren't making enough to pay off the balance each month. I believe it was during this time that we had to borrow another $2000 from my parents, even though I can't remember what it was for.
We tried cutting back and introduced the idea of a budget. Even though we at least had a better understanding of what we could afford, I had a hard time accepting my limitations. My definition of need and want probably weren't even close to accurate. We decided one car was not working out well, and leased another new car. Consequently, we were always just a little behind, and felt that the next raise or a future promotion would fix the problem.
A year and a half into our GE adventure, we felt the need to make a change. Scott was able to get a job in his home town (near family) for about the same salary he had been making at GE. Since he worked for a bank, we were able to cut a few corners and attain a loan for another house. This one needed a LOT of renovation before we moved in, but thankfully Scott's dad (a carpenter) helped us do the needed work to the house in a about 2 months time. Since we had to pay very little for outside labor, the sweat equity paid off. Just as we finished up the house, we found out I was expecting child #3. We fit fine in the house (looking back) but I though we needed more room.
Shortly after baby #3, Scott had been promoted and was told and increase in income would be around the corner. We took this as a sign that we could buy the bigger house we wanted. Thanks to the sweat equity and just selling in time before the big real estate crash, we were about to move into the bigger house we wanted. This proved to be our worst financial decision to date. Scott never got the increase in pay, and the bank started to fail. His bonuses ceased. We still had the guilt from having borrowed from my parents and using Scott's Dad's sweat equity, and knew we couldn't ask for anything more. So, living on our tight budget became a REAL priority. I finally learned how to live on less. I bought things at garage sales and resale shops, and learned how to spend less on groceries. I actually enjoyed this process, especially when I realized that we didn't really need as much as I thought, and our children were just as happy. And, of course, it was at this time that we (very unexpectedly) had baby #4.
With the impending doom of the bank failure, Scott was able to search and find another job, this time in my home town. THIS job was a much better position with better pay. Of course, now the real estate collapse was in full swing and getting out of our house wasn't as easy as the other 2 had been. We were luckily to sell quickly, but at the cost of a $20,000 loan. Meanwhile, we had not a penny to spare, so we had to live with my parents to save up for a down payment. For me, this was the biggest financial wake up call yet. There is something about having to live with your parents when you are 35 and have 4 kids. I never want to be in that situation again, but how grateful I am that we had that opportunity.
After a few months we were able to buy a home, albeit a smaller and less expensive home that our last. We had to immediately finish that basement so that there were enough bedrooms (one again both sets of the parents to the rescue to help on this project). Again, we were grateful, but I never want to have to ask them for something like that again! Unfortunately, we made yet another, and perhaps our last, unwise financial decision. We bought a newer, but used minivan with many bells and whistles.
Enter: Dave Ramsey. Shortly after buying our new home and car, Scott was asked to help teach financial peace university. I was unable to attend, so he brought the videos home for me to watch. What a blessing! What a wake up call! But best of all, it gave us a plan to finally get out our stupid finance cycle. At this point this was our situation: Debts: $18,000 for the house we didn't own, $18,000 for the minivan, $18,000 in student loans, $6,000 that we still owed my parents, and $2,000 in basement renovations (on credit). Plus, we still had a leased car for Scott.
That first year of Dave Ramsey, we were able to pay off the renovations and buy Scott a car with $5800 in cash when he lease came up. The second year we were able to sell the minivan (for about what we owed on it) and buy an older minivan for $6300 in Cash. Then we started paying down on the house loan, which we were able to decrease to about $8000. All the while we followed our budget much better, but I wouldn't say I was in any way "gazelle-intense". After all, we had to make up for not being able to buy of replace anything prior to the job change. I needed a little breather.
That brings me to our current time. Now, though, I am all about gazelle intensity. I want debt out of my life! Our used cars won't last forever, and we need to get from debt payoff to building savings quickly. This is our moment to finally turn the tides. SO, I have set the lofty goal of paying off the rest of our debt in 2013. Right now, that comes to about $30,500. According to my excel spreadsheet, this is not possible. But with prayer, dedication, and hopefully a couple of miracles, I am hoping to make this happen. This blog will detail that journey!
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