I've never been one to make new years resolutions. I don't like to set myself up for failure and that is generally what happens when a bunch of goals are made all at the same time. Dan and I have had one major goal for as long as we've been married.....to be debt free. However, we've never really been any good at it.
We both came into our marriage with debt, 2 car payments and some credit card debt. Then we went even further into debt with buying a house.....it needed new floors and some TLC and it seems that with home ownership comes projects, many many projects. Then came kids which didn't really cause debt, but they can be expensive and money that was going towards getting out of debt started going towards diapers and extra food and clothes. It's an ugly cycle I tell ya! About a year ago we went through a series with our small group called Mind Your Own Business, through Life Church. It was a really good series that talked about getting out of debt and saying no; now (to things that you would like to own, but can't afford) so that you can get out of debt and say yes forever. Here is the link to the series in case you wanna check it out. After the series we again set up a plan to systematically pay things off, but I guess we just weren't really ready because it didn't happen.
This October the stool (replacement for other word beginning with s) hit the fan and we just got really sick of essentially living hand to mouth, and waiting on quarterly bonuses to afford things like plane tickets to California, or new tires for our cars. Dan and I sat down and went over our budget with a fine tooth comb. We set up an aggressive snowball schedule for our debt and decided that this time it was gonna stick. A change needed to be made. If you don't know what debt snowball is, it basically consists of finding $200 extra dollars per month in your budget.....where that comes from is up to you.....it might mean getting rid of cable and internet, it might mean cutting out gymboree classes for the kids, it might mean totally stopping eating out. For us it was getting rid of cable and our home phone and not eating out. Anyway, you take that $200 a month and apply it to paying off debt....start with your lowest balance, say it's a master card and the monthly minimum payment is $35.....you pay $235 every month until the master card is payed off. Then you take the $235 and apply it to your next lowest debt, say it's a Lowe's card and the minimum monthly payment is $25.....you pay $260 every month until the card is payed off......and so on until all of your debt is gone.
And now we come to the reason for this blog and all my gibberish.....other than our mortgage we are debt free!! Our cars are both paid off....the Escape was taken care of a couple months back and we sent the last payment off for the minivan a couple weeks ago. We have no more credit card debt.....although Dan lost his ATM card and while waiting for a new one to be mailed to us used his Lowe's card to pay for some garden supplies. But that will get paid off right away. I doubt that we won't ever have credit card debt again....I don't know how realistic it is to live completely without credit cards, but our goal is to not spend money that we don't have. We closed a lot of our accounts back in October and only have one credit card in each of our names. And we have filed them away so that we don't even carry them with us.
Part deux of our plan has 2 goals. First we are going to save money. All of the money that we have freed up from car payments and credit card payments and that $200 snowball is going straight from Dan's paycheck into a money market account that we won't be able to easily access. We want to save up as much as we can because we want to move. We are running out of space in our current house, and I would like a little more city. The second part of the plan is to pay down our current mortgage. We have our mortgage payment set up so that we make payments twice a month.....at the end of the year that gives us one extra mortgage payment and each extra payment a year knocks off approx. 7 years from the life of your loan. So, if we do nothing more than let the bank divide our monthly mortgage payment and take it from our account our house could be payed off in as little as 5 years. Hopefully we wont be here that long, but the less we owe on our house the better situation we are in for trying to sell it or keep it as an investment property.
I don't know what my point is with this post other than to share my excietment. Our debt was like a huge wall in our path that we kept slamming into. We got fed up and made a plan and sacraficed some of our luxuries and buckled down and broke down that wall. Now we are on the other side and I must say it feels good. Paying bills has never been less stressful. Stay tuned to see if we can make the second part of our plan happen. We are planning on saving for at least a year.....no one said it was a fast process! lol Wish us luck!!!!