Saturday, January 31, 2015

Financial Freedom: What Now?

If you're just tuning in, you can check out the other posts about our journey to debt freedom.  Check out these posts about our financial history how we acquired $34,000 worth of debt, the first step we took to get out of debt, what started to happen when we began Financial Peace University, how we manage our budget, and some things we do to save money.  

We've been MIA for a while. Sorry about that!  Neal and I both sincerely hope that us sharing our journey with you all is an encouragement to you and your family in reaching financial freedom! It may take you 6 months or it may take you 16 years.  Regardless of the timeline, we'd really encourage you all to use some of these tools to leave a legacy of financial freedom for you and your family.  I know that's our ultimate goal for our family!

So..we've paid off all of our debt.  If I were you, I'd be wondering....what's next?!

The next goal should always be Baby Step 3: Put 3-6 months of expenses in savings.  Build up that full emergency fund! Neal and I were able to do this immediately as we had more money than we thought sitting in a savings account (wish we would have paid more attention because we could have paid off our debt even earlier!).  That was a huge blessing!  We were pretty dang excited about that!

For Neal and I, our next goal is to purchase a home.  We set a goal to put at least 10% down on whatever home we decide to purchase (or build).  We have a timeline in mind, but if we're not ready to purchase by then, then we plan to just continue to save until we have 20% to put down.  With Neal's job, this is a definite possibility for us.  It's possible that we may move around a bit more..and in that case it makes no sense for us to purchase a home just because we have our 10% saved.  Speaking of purchasing a home, we plan to stick with Dave Ramsey's "rules" for purchasing a home.  We plan to purchase a home with a 15 year fixed rate mortgage (yes, we realize that with a 30 year mortgage our payments will go down.  And, no, we still don't want one), a monthly payment that is only 25% of our monthly income, and then, as I just said, we plan to put 10% or more down.  We also plan to budget that 25% based on Neal's income because our long-term plan is for me to stay at home with our children (when that day comes) so we don't want to set ourselves up to financially fail by relying on my income now and then not having it later. 

I know that all of this can sound so serious and some of you are probably wondering, "What about the fun stuff?"  We do build "fun stuff" into our monthly budget.  Trust me.  But we also believe that it doesn't make sense to take a $5000 vacation when you owe someone thousands of dollars.  (I mean think about it, if someone owed you $20,000 but was going on an expensive vacation to the Caribbean, that wouldn't make much sense to you, would it?) that we're debt free AND have our emergency fund squared away, we're planning a big vacation somewhere within the next year.  Woop woop!  We never went on a honeymoon, and well, who doesn't want to go on a vacation?  BUT, we'll still be paying CASH for ALL of our expenses.

After we purchase a home and finally go on a "honeymoon" we plan to move onto Baby Step 4 (saving for a down payment is Baby Step 3b).  We each already contribute to a 401k through our employers,  but we're certainly not putting 15% of our total income away at this point.  Neal's company matches up to a certain percentage so we already put that amount (I think it's 5%) into his 401k.  But after Baby Step 3b is completed, we will begin putting 15% away each month. 

Then, we'll just keep trucking along, knocking out Baby Steps 5 and 6 and then, the REALLY awesome part, living Baby Step 7 for the rest of our lives
Our progress chart for working through the Baby Steps.
Does all of this take time?  Absolutely!  But is it totally do-able? Without a doubt, YES!

If you would have asked me, say, three years ago where I thought I'd be financially in 2015, I for sure would not have described the situation we're currently in.  Thankfully, some people stepped in, shared their journey with us, and it's changed the trajectory of our lives, and our family's lives, forever.  We pray that we will be able to raise a family who is financially free.  But that doesn't happen on accident!  And, y'all, just because your family didn't teach you about what to do with your money (or maybe they did and you just didn't care) please know that it's not too late.  You can change your family's legacy! 

P.S. Stay tuned! Neal's working on a post to talk about some things from his perspective.  It's definitely worth reading :)

Tuesday, January 13, 2015

Financial Freedom: Frugal Living

If you're just tuning in, you can check out the first five posts about our journey to debt freedom.  Check out these posts about our financial history how we acquired $34,000 worth of debt, the first step we took to get out of debt, what started to happen when we began Financial Peace University, and how we manage our budget 

We sincerely hope that sharing our journey is encouraging y'all and making you feel that you can have control over your finances.  It's near impossible to describe the joy and relief that we feel since paying off all of our debt. We really believe that our income is a blessing from God and we need to strive to honor him with the decisions we make with our finances.  For us, becoming debt free is the first step to doing just that.  

But, let's be honest, we never could have paid off all of our debt had we not adopted some frugal habits.  Thankfully, Neal and I have both always been pretty frugal by nature....but definitely myself more than Neal.  And as I mentioned before, we saved in a lot of areas over the 2 and half years we've been married because, in a lot instances, we had to.  When I wasn't working, it was impossible for us to eat out all the time, buy whatever we wanted AND run hard and fast toward being debt free.

So what exactly did we do to save?  First of all, we got really honest with ourselves and each other about what our needs and wants are.  This was difficult at first, but as long we kept our focus on the prize (being debt free) giving up those "wants" really seemed like no big thing.  

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First to go? Cable.  As long as we'd lived on our own, we'd each always had cable and it always seemed like a must-have.  I don't remember the exact numbers, but I know we cut our bill about in half by cutting back from our cable/phone/internet package just to internet.  We used our home phone approximately never so that was an easy choice to cut.  And once Neal got over losing his hunting channels and I got over losing HGTV, we decided the cable definitely had to go too.  (In Washington we bought a $40 indoor antenna...think rabbit ears...and because of the way our apartment was situated we got like 30 HD channels from that thing!  Here in Virginia, we spent $100 on a long-range outdoor antenna which we mounted on the roof and we still get 30 HD channels with that.)  While we're not huge TV-watchers (i.e. we don't really have any specific shows we keep up with) we do like to sit down and enjoy a TV show/movie together, so we do  pay $8.99 a month to stream Netflix through our PS3.  But we're about 2 years cable free, and we don't miss it a bit. 
Pinterest is my best friend when it comes to meal planning!
Another thing we did to save was to seriously cut back how often we eat out.  I started to meal plan and cook all of our meals at home.  We're blessed in that I really enjoy that whole process.  I meal plan and plan a grocery list based solely on what we're going to eat that week.  When I go grocery shopping, there's no "Oh yeah, that looks good!" or "Yeah, just throw that in the cart."  Nope.  As a matter of fact, Neal basically refuses to grocery shop with me because he can't stand how I only buy what's on my list.  He wants to throw random stuff in the cart, and I just won't have it.  Haha.  This also forces us to eat a heck of a lot more healthy! Win-win!  I'll warn you that because I only shop based on what we'll be eating, by the end of the week it looks like we're starving because our refrigerator, freezer, and cabinets are basically empty.  But I count that as successful meal planning!  I should also mention, it's not that we never eat out, we just don't eat out if we don't have the cash.  Our "us" money is where our eating out funds come from in our budget.  

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Next up, date nights (or just time spent together).  Neal and I are homebodies.  We have a lot of at-home date nights.  (This is easy for us as it's just the two of us in our household. Parents would definitely have to plan ahead for at-home date nights.)  This has helped our budget tremendously. We get pretty creative with date nights.  Board games. Puzzles. Video Games. Movies. Trivia.  Projects around the house.  We also like to make homemade pizza (way better than any take-out!) and homemade desserts for our date-nights instead of ordering in (but we do that sometimes too!).  In the past we've avoided high costs by celebrating holidays like Valentine's Day at home too.  (You can make a delicious surf and turf dinner and enjoy it by candelight for a fraction of the cost that it would be at a restaurant!)  While we are homebodies, we do enjoy getting out and exploring too.  We frequently just find a new place to visit (a park, trail, body of water, beach, landmark, historical site, anything) and we make an adventure out of it!  We pack snacks or lunch and hit the road.  It's  Going on adventures together is one of those things that has not only been good for our budget, but it's been GREAT for our marriage too.  On our adventures, we frequently like to go geocaching.  (If you haven't tried geocaching, DO IT! It's so fun! And it's FREE.)

Hand-me-downs.  As I'm sitting here on our 15ish-year-old couch writing this, I'm looking around and thinking about our furniture and I can only think of one piece of furniture that we actually bought new.  Literally everything else in our house, is a hand-me-down.  And you know what?  That's 100% okay.  Our dining room table and chairs (which Neal bought at Big Lots when he was in college) is the only furniture we own that was purchased new.  Neal did buy a brand new couch and loveseat set when he was in college, for a couple hundred bucks, and we had it in Washington, but it was junk (live and learn) and never would've survived the move back to Virginia, so we sold it before we left Washington.  But seriously, our living room furniture was donated by my parents when they bought new furniture (this stuff has been around for at least 15 years and it's still in great shape!), our bedroom suit is my old one but was a hand-me-down my Mom bought from a co-worker when I was like 16, our guest room furniture is Neal's college furniture, our office furniture is my old stuff (probably 10 years old), and any other pieces of furniture we own were purchased at thrift stores or given to us by other family members.  We frequently dream about what our dream home will look like; I make Neal walk the aisles of Home Goods with me, we pick up those books at Lowe's where you can design your kitchen, and we look up house plans and design our own floor plans.  We have big plans.  But we're in agreement that for right now, in this season of life, we're 100% okay with living with used items.  When the time comes to buy or build a home, we'll invest in nicer, newer things, but in the meantime, we'll just save that money!
Clothes.  I don't love to shop, but I love clothes.  This is the biggest way I blow my money.  I spend a pretty big chunk of my spending money on clothes (I'm getting better though!).  Neal used to tease me about not being able to go into Target without buying a new piece of clothing.  The thing is, he wasn't wrong.  Neal could care less about clothes and fortunately for him, my Mom loves to buy him clothes (seriously, most of his bright plaid/striped shirts are from her).  I frequently purge my closet and I've started using this in my favor.  I discovered thredUP (this link leads you to a free $10 credit if you want to buy yourself something...and yes, I get $10 too) about a year ago and ever since, it's been my best friend!  They send me a bag for free, I send them my clothes, and then they pay me for the clothes I sent them! And what they don't accept, they donate for me! Perfect.  I can then buy gently-used and new clothes on their site or cash out my credit (I've never personally done this).  I've always been extremely pleased with the clothes I've ordered from them. 
Be honest!  This one is so easy.  It's so easy when people ask, "What do you want for your birthday?" or "What do you want for Christmas?"  to just say, "Oh, I don't know!" thinking that you're being modest (which is not a bad thing!), but if we were being honest, I'm sure there's SOMETHING you want.  Our families always buy us gifts.  And we'd rather them get us something we desire rather than something we really hate.  So when our family asks us what we want, we tell them! This year we even made wishlists on our favorite websites (I used Pinterest) and it was SO MUCH EASIER for people to buy us gifts!  And remember, it's just that, a wishlist.  It doesn't mean we expect to get what's on the list, but a wishlist helps give people an idea of something you may really enjoy instead of just guessing.  (Seriously, several of our family members did this this year and it was so much more enjoyable to know we were actually getting people things they wanted!) It also helps our families not waste their money.  And if we want something really expensive, we'll flat out tell family, "Get me a gift card to ______" or "Cash would really be great, I'm saving for _______". 

These are the main ways we limit our spending, but we also cut costs by: limiting our subscriptions (gym, magazine, etc.), run errands all at one time to cut down on gas costs, research items before purchasing, buy books for free from sites like BookBub, only run appliances (washer, dryer, dishwasher) when they are full, and we do use coupons if we have them. 

Neal and I would love to hear some tips from you all as well as I'm sure you have some awesome tips to increase savings.  Next time we'll share all about what our big plans are now that we're 100% debt free! 

Monday, January 12, 2015

Financial Freedom: Budgeting

If you're just tuning in, you can check out the first four posts about our journey to debt freedom.  Check out these posts about our financial history how we acquired $34,000 worth of debt, the first step we took to get out of debt, and what started to happen when we began Financial Peace University.  

Sorry to leave y'all so abruptly last time.  There's so much to cover!  So it was October 2014.  We were paying $1000 a month on the only debt we had left and we were determined to pay it off within the next three months.  From October to December 2014 we paid $1000 a month toward our auto loan.  And I'm OVERJOYED and relieved to, once again, report that we paid off that final debt right on time.  Just this past week, on January 6, I wrote the LAST check for our auto loan.  Our lien-holder is working on submitting all the appropriate paperwork and the Certificate of Title will be sent to us shortly.  WOOP WOOP!  

From the time we started Financial Peace University, and chose to dump all of our debt for good, until we mailed in our last payment, it only took us 15 months to finish paying off our debt.  In total, we paid on our debt for 3 years and 2 months.  We paid my student loans off in 2 years and 2 months which means we paid them off 7 years and 10 months early.  We paid our auto loan off in 2 years and 8 months which means we paid that off 3 years and 4 months early.  So really, y'all, you can make it happen! did we do it?  First of all, let me start off with tithing.  Neal and I were both tithing intermittently prior to getting married.  This pattern continued into our marriage.  We were tithing intermittently but we were, for sure, not tithing 10% of our income.  When we went through FPU, we prayed about it and both agreed that no matter what we were going to start tithing 10%.  I don't find it coincidence at all that at the time our church had just begun a series on finances and was doing a 90-day challenge.  The church challenged everyone to tithe 10% of whatever their income for 90 days; if after 90 days you felt it was just making you broke and saw nothing else come out of it, they offered to return people's money.  We figured we had nothing to lose (although, who is really going to ask for their money back? Just sayin').  We began tithing 10% consistently at the beginning of October 2013.  After applying for SO MANY jobs in the 6 months I was at home, I finally got a call for an interview at an agency I really wanted to work for. I interviewed and then began work the next week.  Again, I don't find it to be a coincidence that as soon as we began to first give back to God, He blessed me with a job in my field.  This is just an example of one of the many blessings we have experienced since tithing 10% above and beyond everything else.  In sharing that, if you don't take anything else away from any of these jumbled thoughts, I'd encourage you to pray about tithing if you're not doing it already.  
Averages are: Tithe: 10-15% | Saving: 10-15% | Housing: 25-35% | Utilities 5-10% | Food: 5-15% | Clothing: 2-7% | Transportation: 10-15% | Medical: 5-10% | Insurance: 10-25% | Personal: 5-10% | Entertainment: 5-10% | Debts 5-10%
Now, more about our budget.  Prior to going through FPU, I was already doing a budget and keeping track of all of our expenses.  If you're not doing this.  Start.  We believe the only way to control how you spend your money is to know where your money is going.  Like I'd mentioned before, we knew how much we were eating out, but to see the weekly or monthly total of restaurant costs, we were appalled and, I don't know about Neal, but I was kind of embarrassed.

FPU was just the encouragement Neal needed to get involved with our finances.  I was ecstatic to make this into a team effort.  FPU encourages you to have a "Budget Committee Meeting" (Sound familiar, Baptists? Haha) that lasts no more than 17 minutes and have both parties (especially the free spirit, aka Neal) change something on the budget.  Our first meeting was comical.  I had so much to say I was afraid we'd run over 17 minutes.  Neal literally set a timer.  He had just about had it and the dog was barking to go out.  As soon as he got up let the dog out (he was so itching to be done with the meeting) the timer went off.  I was disappointed and Neal was SO RELIEVED.  That still gives us a good laugh. (I read this post to Neal before posting it as I do every time and we both laughed at this yet again.  It shows our personalities so perfectly! Haha.) 

However ridiculous our first meeting was, that was the first step to us doing this as a unit.  We've come a long way since then, folks!  I still create the budget, and then I run it by Neal, he contributes, makes changes as he sees fit, we discuss things if they need discussing, and then we call it done.  (Just an FYI, we used Microsoft Excel to write and track our budget for years but just this year we're using Google Sheets. We like that we can access Google Sheets at any time and I can create under my account and share it with Neal so he can also access it anytime he wants.) 

So...the content of our budget.  I make a list of all the necessities each month.  For example, those currently include: Rent, Gas (heat), Water, Trash, Electric, Insurance, Gas (vehicles), Groceries, and Medication.  I write down how much they'll be that month, and if I'm not sure, I always overestimate.  I do that part on paper.  Next, I input everything into Google Sheets.  I list our spending by week.  I put our incomes, and then all expenses.  In the expenses category our tithes are always the first thing we list.  We plan for those first and foremost.  It's much easier to first do on paper.  I highly recommend using these budgeting sheets that Dave Ramsey offers.  They're the most detailed and inclusive budgeting sheets I've yet to come across.  
Compared to the "average" budget (above) we fall right in line.  Tithe: 10.2% | Savings 18.9% | Housing: 22.6% | Utilities 9.1% | Food 9.4% | Clothing: 0% | Transportation: 5.7% | Medical: .1% | Insurance: 2% | Personal: .6% | Entertainment 8.9% | Debt 0%|
I should also note that all of our health insurance, life insurance, and retirement contributions come out before taxes. 

 Depending on where we were at in our journey (two-incomes, one-income, three debts, one debt, etc.) determined how much of the "extra" stuff we added into the budget.  From the get-go, Neal made it clear that he's okay with a budget, but he didn't want to feel like he couldn't ever buy anything.  So, for us, we built in spending money each week.  Neal gets a little bit more than I do and we're both 100% okay with that.  

This would also be a good place to mention that we work primarily in cash.  Not as in cash versus credit.  As in, green, paper, cash.  We really benefit from using the envelope system.  We use our debit cards for buying gas for the vehicles and I pay our other bills either by check or online.  But everything else gets paid in cash.  I go to the bank each week and get our our allotted amount of money; this includes money for groceries, our spending money, and any extras (i.e. pet nail trim, gifts, vehicle repairs, etc.).  I then place the money in my envelope (I keep labeled dividers in my wallet) and I give Neal his spending money for the week.  For us it is easier to manage weekly amounts versus monthly but do whatever works for you.  The premise of the envelope system is that you can't overspend.  For example, if I go into Target with $50 cash, I can't buy groceries and those cute new $45 boots, I only have enough for groceries. We also roll over any money left over from week-to-week in each category.   

Currently, our budget categories include: Tithe, Groceries, "Us" Money (i.e. for date nights or stuff we want to do together), Spending Money (each of us get a separate line in the budget), Gas for vehicles, Rent, Electric, Water, Trash, Gas (heat), Insurance (we pay our renter's insurance in full up front and pay our car insurance monthly), Medication, Cell Phones, Gym (Neal plans to end that when his year ends in March), Internet, and Netflix.  These are our monthly expenses.  Previously our debts were added in there too.  We try to think ahead and plan for expenses ahead of time.  For example, we're already discussing a summer vacation and agreed on a plan to save for it.  Other expenses we plan for ahead of time are: clothes, doctor's appointments, vehicle repairs, gifts, magazine subscriptions, vehicle registrations, taxes, and vacations.  We also plan in advance for things pertaining to our hobbies.  Neal loves to hunt and I enjoy crafting.  Neither of those are cheap hobbies.  We always research a lot before making big purchases and those go into the budget.  Small things we use our spending money to purchase and even if something costs $100, we encourage each other to just save up for it or ask for gift cards or money as gifts for our birthdays or Christmas to put towards whatever it may be that we want to buy.  

We do all of this so that we stay in control of our money and our money doesn't control us.  We've always been pretty frugal, but we've adopted some good habits to help us save over the course of this journey.  Next time I'll share with y'all some of those habits so you can start putting them to use too!  And no, it doesn't involve couponing.

Saturday, January 10, 2015

Financial Freedom: Financial Peace University

If you're just tuning in, you can check out the first three posts about our journey to debt freedom.  Check out these posts about our financial history how we acquired $34,000 worth of debt, and the first step we took to get out of debt.  

As I left off with last time, Neal and I began Financial Peace University in October 2013.  This was a serious game-changer for us, not only in the way we viewed our finances, but it helped to strengthen and encourage us in various areas of our marriage.  
The way FPU is set up, you attend the class (usually held at a church or community center...but look here for a class near you!) for nine weeks.  Each week there's a different topic: 

1. Super Saving.  This outlines why it's important to save and what happens when you do.  
2. Relating with Money.  This week's lesson talks about how you relate to money independently and, in your marriage, as a team.  I'm the nerd...Neal's the free-spirit.
3. Cash Flow Planning.  Here you'll discuss the importance of a budget.  Seriously enlightening, y'all!
4. Dumping Debt.  Lesson four shares LOTS of information about why debt is so burdensome and gives you tips on how to get rid of it.  It IS within your reach, I swear!
5. Buyer Beware.  This talks about how advertising sucks us in and also talks about how to break our bad buying habits.  We defined what a "major purchase" is and committed never to buy any major purchases without each other's approval.
6. The Role of Insurance.  During this week Dave outlines seven types of insurance you need and how to steer clear of insurance traps.  We're definitely still working on this. 
7. Retirement and College Planning.  This week's lesson gives you an overview of all of the 401k, IRA, 403b stuff.  This is still way over my head and Neal pretty much deals with this department.  It all confuses my social worker brain, but his engineer brain just seems to get it.  
8.  Real Estate and Mortgages.  Here you'll discuss effective tips for buying and selling real estate and talk about the best time, financially, for you to purchase a home.  This was really helpful! Definitely a huge reminder to just be patient. 
9. The Great Misunderstanding.  Lesson nine shares information about misinterpretations as well as the blessings regarding generous giving. Huge lesson: You cannot gain with a clenched fist.

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Each of these nine lessons tie back into the Seven Baby Steps that Dave Ramsey has established.  Here are the baby case clicking on the link is too distracting ;)

1. Put $1,000 in an Emergency Fund. The key word is emergency. This is not an "I want a vacation or a fancy dinner or new outfit fund.  Be clear about what an emergency is.
2. Pay off all debt using the Debt Snowball.  List your debts, excluding your mortgage if you have one, in order, smallest to largest.  The smallest balance should be your number one priority. Don’t worry about interest rates unless two debts have similar payoffs. If that’s the case, then list the debt with the higher interest rate first.  Pay the minimum on all but the smallest debt.  Put your money toward the smallest debt first.  Any extra income should go here also.  Once that debt is paid off, take what you were paying on that and put it toward the next smallest debt.  Continue to do this (i.e. build the snowball) until you pay off ALL of your debt. You CAN do it!
3. Save 3 to 6 months of expenses in savings. This is your full emergency fund.  It's important.  Don't skip this step!
***If you haven't bought a house, this would be where you would be in the position to do that.  But put at least 10% down and get a 15 year mortgage with a fixed APR.  Here's some more information regarding purchasing a house. 
4. Invest 15% of your household income into Roth IRA's and pre-tax retirement. When you reach this step, you’ll have no payments—except the house—and a fully funded emergency fund. Now it’s time to get serious about building wealth.
5. Saving for college for your children.  By this point, you should have already started Baby Step 4—investing 15% of your income—before saving for college. Whether you are saving for you or your child to go to college, you need to start now.  Be deliberate about this.  Set a goal of how much you want saved and explore the best way to save that by the time your child(ren) go to college.
6.  Work toward paying off your house EARLY.  Begin chunking all of your extra money toward your mortgage. You are getting closer to realizing the dream of a life with NO HOUSE PAYMENTS!
7. The final of the baby steps, build wealth and give!  It’s time to build wealth and give like never before. Leave an inheritance for future generations, and bless others now with your excess.

In each week's lesson you watch a video and you have a workbook in which you fill in information as you watch the video.  We both felt that the class did a great job of using a variety of teaching regardless of your learning style, the information will stick.  So you watch the video, fill in some information in your workbook, then you do an activity.  Each activity pertains to the lesson.   For example, in week four we filled out the debt snowball worksheet.  We would also break into small groups and engage in discussion (this was awesome!) and we also engaged in discussions as an entire class (about 20 of us).  Then each week there was "homework" to complete.

As I'd mentioned before, up until this point, I was in control of the finances and while I tried to keep Neal up-to-date, he really didn't care.  He knew the bills were paid and we'd saved a little money and he was good with that.  The homework each week forced us to sit down once a week, together, and discuss our finances.  This did awesome things for building that "team" and "togetherness" in our marriage.  That's important whether you've been married 2 months or 50 years.  

At this point (November 2013) we were back to a two-income household but we were used to living strictly on Neal's income.  This meant we had a lot of extra income that we could put towards things like paying off my second student loan and our auto loan.  As we learned new things each week, we realized that we really did have control over our money after all and it was SO incredibly empowering.  For the remainder of 2013 we continued to pay the same amounts on our student and auto loans but we were saving a lot more money.

We finished FPU in December 2013. The excitement during this time was unreal! And honestly, it still is. 

So where did we stand with the Baby Steps?  We completed Baby Step 1 (thankfully we already had the $1000 in savings) right out of the gate.  Then in January 2014 we took the extra money we had in savings (leaving just $1000 behind) and put it all toward my second student loan.  (Thanks to technology it went like this: sitting in my parents' living room, looking at our bank account on my phone before leaving for a hockey game while in VA for the holidays, I said, "Hey we have enough money in savings to keep our $1000 emergency fund and pay off my student loan. Wanna do it?" Neal: "Sure."  Annie: click, click, click. "Okay. It's paid in full."  Hahaaa. Oh, technology.) So that meant our auto loan was the only debt we had left. Woop woop!
We still had $17,604.90 left to pay on our truck (again, not including the interest being tacked on daily).  We then resolved that we were GOING to pay it off within one year from the time we paid off my student loan (i.e. our goal was to be 100% debt free by January 2015).  Once we paid off my student loan (now looking at my records I see we were paying $175 a month toward my student loan) we took that extra $175 and started putting it toward the truck payment.  So in January 2014 we increased our payments from $400 a month to $575 a month.  We were making that debt snowball work for us!

Meanwhile, we were meeting each month, more often if needed, to discuss our budget.  I'll share more about our budget in the next post.  But let's just say we were living very frugally at this point.  

We continued the momentum throughout 2014.  As long as Neal's company is profitable (they've had a really awesome few years, praise Jesus!), employees receive an annual bonus.  We receive his bonus and our tax return around the same time each year. So between March and April 2014 we threw an extra $7300 at our auto loan in addition to the $575 we were paying a month. This made a huge difference in how long it would take us to pay off that debt. 

We moved back to Virginia in March 2014 and we were fortunate to stay with my parents (and Neal's company paid to keep our belongings in storage) for a few months which saved us a lot as it meant we had hardly any bills to pay.  On the flip side, we didn't have a gas card from Neal's company anymore and he was driving our truck (we finally got smart and switched vehicles)  almost 100 miles every single day, so our gas bill sky-rocketed.  I also got my old job back  as soon as we returned to Virginia (another blessing!) so we maintained two-incomes. 

Side note: For full transparency I should mention, we  made money on our cross-country trip (a trip of a lifetime, by the way!).  Neal's company reimbursed us for all of our expenses (food, gas, lodging...the fun stuff was on us).  That meant we got paid like $.050 a mile or whatever the IRS says to pay.  Well, we got like 18 miles to the gallon on average or something.  And if gas is only like $3 a gallon, then when it was all said and done we ended up making money.  Be wise, folks.

Our bills increased moving back to Virginia (Hampton Roads is an expensive place to live!) and while we were both working, our incomes decreased slightly.  We continued to make a monthly budget and track every expense.  We also continued to increase our auto loan payments as we were really committed to paying off that stupid loan.  In June 2014 we began paying $750 a month instead of the previous $575.  So at this point we were basically doubling up on payments.  In October 2014 we increased our payments again to $1000 a month.  We were coming down to the wire and getting really  serious about being 100% debt free. 

I know this is an abrupt stopping point, but there's so much information here already and I have so much more to share.  In the next post I'll discuss our tithing (AWESOME things happened) and how we set up our budget.  Stay tuned!

P.S. Again, If you're even thinking about taking FPU.  Stop thinking.  GO SIGN UP!

Friday, January 9, 2015

Financial Freedom: The First Step

If you're just tuning in, you can check out the first two posts about our financial history and how we acquired $34,000 worth of debt

Welcome back!  When we left off last time we were talking about how we'd racked up roughly $34,000 in debt.  A lot of money.  Like I said before, this was (within a couple hundred dollars) the equivalent of the salary of my first real job.  So, yeah, that was (and is) what I consider to be quite a bit of debt.

Despite being in a chunk of debt already, I'm very glad to be able to say that Neal and I still made some wise decisions regarding that debt.  First of all, I really only "allowed" debt because I thought we needed it.  But from the get-go, I was determined to pay our debt off early.  Neal on the other hand, could care less whether we paid 100 times what was due or whether we paid the minimum.  Can you tell who the free-spirit is?

Because of my determination to pay off debt early, I always paid $50 to $100 (the actual number eludes me but I know I'm close here) more than my actual student loan bill each month....from day one.  Also, to give you a true reference, my student loan bill was only like 90 something dollars each month.  So I was essentially doubling up on payments. 

After we got married in August 2012 I didn't work from August 2012 until November 2012...and even then it was minimal, part time work until February 2013.  We lived pretty comfortably on one income.  We continued to only use our credit cards to pay for gas, and we continued to pay them off each and every month.  We started to save some money each month (10% give or take) but we were only tithing intermittently.  I was doing a monthly budget, but Neal didn't really care to be included in that, and I was pretty good at managing things so we both just left the day-to-day money-matters up to me.  We stuck tight to our budget for a couple of reasons, but mostly because we had to. 

In February 2013 I went back to work full-time and Neal and I were both working 10-12+ hour days every day.  We really fell off the budget bandwagon from about February til April.  We ate out almost every single night (we seriously only cooked at home like one, maybe two nights a week).  Not only that, but I frequently ate both lunch and breakfast out and Neal spent a lot of money on gas station food.  It was bad....for our wallets and our waistlines.  There was one great thing we did during this time; we spent a big chunk of Neal's bonus in March 2013 to pay off my first student loan ($3000).  We then continued to pay the same amount on my remaining student loan. 

Up until this point we had been paying the minimum on our auto loan ($385.18) but once we paid off my first student loan, we increased that amount to $400 a month.  Yep, you read that right, we increased our payment by a whopping FIFTEEN DOLLARS a month.   Haha. I seriously can't help but laugh at that now because I remember, at the time, thinking it was kind of a big deal.  Honestly, the only reason we increased our payment, was because it was easier to keep track of in our check register.  If we were already paying $385, it just made sense to round it up to an even $400.

In April-ish 2013 we got our budget fairly back under control and started cooking and eating more meals at home.  (Side note: If you ever need a reality check, write down all of your expenses for the month.  We were appalled by how much money we were spending at restaurants in a single week, let alone an entire month!)  In May 2013, we made the decision for me to quit my job.  Our household and marriage were not being cared for as they should have been and we agreed that in order for those to be a priority, I couldn't continue working 12 hour days every day. At the time, with my job, not working 10-12 hour days was not an option.  We knew this was a sacrifice financially, but agreed it was 100% worth it for the well-being of our marriage.  I stayed home from about halfway through May 2013 until November 2013.  During this time we, once again, stuck especially close to our budget and we started making some bigger financial cuts.  We got rid of cable, cut back our food bill, ate out significantly less, shopped less, got rid of Neal's smartphone (he's never looked back, by the way. Have I mentioned how awesome he is?!) and enjoyed cheaper date nights (hellllloooo, Redbox!). These changes alone saved us a few hundred dollars each month. 

In October 2013, we joined a small group through our church.  At one of our first meetings, we started talking about Financial Peace University.  Half of our group had already gone through the class earlier in the year, half of us hadn't.  The first class had been held like the day before, so those of us who hadn't gone through it yet, agreed we were going to commit and take the 9-week class. 

FPU was a game-changer for Neal and I.  It did a great job of giving information in a variety of ways which helped Neal and I get on the same page and for the first time in our relationship, we were both excited about our financial goals and our family's financial future.  For the first time in our marriage, we were both 100% invested in our finances.  We had a focus and clear [and agreed on] goals.

Stay tuned for the next post as I walk you through our FPU journey and how that class rocked our world!

P.S. If you're even thinking about taking FPU.  Stop thinking.  GO SIGN UP!

Thursday, January 8, 2015

Financial Freedom: Our Debt

Like most 18 to 20-something year olds, Neal and I believed a few myths about money.  We even had a plan based on those myths.  We were going to graduate from college, get married, save up for about a year, buy a house, fix it up, and then start a family.

Side note: Things have not gone as our 21-year-old selves thought they would.  Instead things went like this: graduate from college, get engaged, buy a dog, suddenly decide to move 3000 miles away to the west coast, get married, move, take Financial Peace University, move back to the east coast, buy another dog, we are now considering relocating again (I swear it won't be 3000 miles again!). 

But I digress.  Those myths (we needed credit cards, student loans were the only way to get through school, we had to buy a house soon, we'd only have decent cars if we financed them, etc.) weren't crazy (everyone we knew believed them too!) but they were just that, myths!  I want to address each of these myths and how believing them got us to where this journey began.

**Please note that these posts only include our opinions and what we feel is right for our specific situation.  What is right for us may not be right for you.  Please do not take offense if you have done any of the things that we may avoid or regret.

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First, credit cards.  We 100% believed we needed credit cards as we had ZERO credit.  We thought we needed to get credit cards and start building credit so that down the road we could buy the car(s) and house that we wanted.  So in 2011 we each got a measly little $500 limit credit card from our bank.  Thankfully (seriously) we were both wise enough to pay off our credit card each month.  With mine I only bought gas.  And I paid the bill in full each month when it came.  Neal would buy gas and groceries and some other necessities with his.  But again, he paid his credit card off every month.  Thankfully we didn't rack up a boat load of debt in the credit card department. 
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Second, student loans.  This is a tricky one for me.  Let me start by saying that Neal was blessed enough to graduate with his bachelor's degree with ZERO debt. Woop woop!  And really, my student loan debt was minimal compared to "the norm."  Now, I say this is tricky, because in my specific situation, I don't necessarily regret pulling out student loans.  Do I wish there was another way I could have paid for school without working and still graduated in four years? Absolutely.  I still managed to avoid loans in a multitude of ways.  I lived at home all four years of school, rent free, and my tuition and fees were paid for in full thanks to my parents' wise investing (thanks Mom and Dad!).  So my financial responsibilities were limited to books each semester, school supplies, my parking permit for school each year, gas for my car, and any personal expenses (fun stuff, eating out, clothes, beauty products, etc.).  I worked part time (20-30 hours/week) in my first two years of school and I worked a full time job every summer through my four years of college and a part time job for two summers in addition to that; I saved as much money as possible from those jobs to put toward school supplies.  The difficult part was when I got sick in my sophomore year of school (had mono but didn't know which resulted in a downward spiral with my health) and decided my overall health and well-being needed to be a priority.  My parents wouldn't put any more money into my college education (for that I very thankful! Besides, they'd already paid for all of my tuition and fees...they'd done more than enough) so it was up to me to figure out a way to fund the rest.  So after many tears, a lot of anxiety, countless prayers, and multiple conversations with my parents, I decided that the only way to keep my health a priority but still finish school in four years was to pull out student loans for my last two years.  That way I wouldn't have to work a steady job (I still did odd jobs and made money where I could) and go to school full time.  For me, I felt student loans were the right choice.  And, thank the Lord, they didn't turn into a huge financial burden for us.  When all was said and done, I graduated with my bachelor's degree and $10,500 in student loan debt (with a 6.55% interest rate) hanging over my head.  Again, if I could go back and work it out so I graduated in four years with no student loans then I would have.  There are definitely ways I could have cut back on my spending more.  Hindsight is 20-20, right?
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Third, a mortgage.  I don't know if anyone else feels this way, but Neal and I definitely felt (and desired) that our life would go: get married, buy a house, have babies.  We saw countless other couples do it.  Our parents did it.  Our siblings did it.  Our friends were doing it.  It just seemed like after getting married, buying a house was the right thing to do.  This was where moving to Washington was more of a blessing than we ever could have known.  Had we not moved to Washington, we definitely would have bought a house with nothing down and we would've financed it with a 30 year mortgage.  Now we see things completely differently.  And, honestly, we have no plans in the near future to buy a house because, even being debt free, we're just not financially ready yet.
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Fourth, financing vehicles.  Neal has gone through a few cars in his day.  Four cars in nine years to be exact.  I know people who have gone through more, but that's almost a "new" car every two years. Yeah, I've had two.  Thankfully we made it through six vehicles without ever paying a payment.  BUT...that changed with lucky number seven.  When we got engaged I was driving the car we still own (2004 Toyota Camry...a hand-me-down from my Dad. Thanks, Dad!)  and Neal was driving a 2002 Toyota Tacoma (a hand-me-down from his Dad).  The Tacoma had almost 225,000 miles on it and was starting to show some signs it was going to need some serious repairs soon.  We decided that once we had a family, we'd need a bigger truck anyways (seriously y'all, my Camry was bigger than the Tacoma. That truck was tiny!). April 2012 we found the "perfect" truck.  We purchased (aka FINANCED) our 2009 Chevy Silverado.  That loan was for $23,500 and some change....and it was financed with a 72-month, SIX year loan (with a 5.45% interest rate!). Yikes. 

So by May 2012, I had only been paying on my student loans for six months so I'd barely made a dent in them, and between my student loans and the auto loan, we shared roughly $34,000 in debt (not including the interest which was literally being tacked on daily).  Now, I realize this is minimal compared to the financial state of many households, and for that we are so very very thankful, but that debt was the equivalent of my salary straight out of college.  No, thank you.

$34,000 later, we decided to do something about it.  Stay tuned for the next post to see what that something was!

Wednesday, January 7, 2015

Financial Freedom: Our History

Neal and I recently shared on Facebook that we are officially debt free.  Woop woop!  It is such a feeling of joy and FREEDOM to not owe anyone ANYTHING. Ahhhhh. Debt freedom has opened up doors for us to be able to give as we see fit and plan for our family's future in ways we otherwise would not have been able to.  

We were sent a lot of messages and received a lot of questions asking "How'd you do it?!" so we agreed, it was time to tell our story.  We haven't shared a ton of details about our journey to debt freedom thus far, but we've agreed that we want to help as many people as possible reach their financial and personal goals, so we plan to share our story here to hopefully just show you our journey, give you LOTS of encouragement, and share some tips we learned along the way.  We are going to try to be pretty transparent about our journey thus far but if we leave something out that you'd like to know, don't hesitate to ask.  If we aren't comfortable sharing, we'll just say so.

First things first, here's a bit of our financial background.  We both grew up in households where our parents managed finances well.  My parents were extremely open about money management and while Neal's parents weren't quite as open as my parents, they definitely taught him to be wise with his money. 

As long as I can remember, I've been a saver.  Neal's much more impulsive with his money.  I was always afraid I was going to spend my money and then find something I liked way better and regret spending it on the first thing.  Neal? Not so much.  Haha.  These traits definitely stuck with us into adulthood. 

Once we began working full-time, after college, I was pretty good about sticking to a strict budget.  Neal also set a budget but was a little way more lenient in his spending than I was.  He's naturally more spontaneous, and that was evident in his spending.  I'm naturally a planner and far less flexible than he is, and that was evident in my spending.  These patterns continued as we began our marriage and our life together.  Honestly, it was a little difficult at first.  We're very opposite when it comes to spending and saving.  But recognizing these traits, and owning them, was key to creating systems that actually work for us in regards to our financial goals.  We try really hard not to criticize each other's traits, but instead use them as strengths in working toward our goals (we're not perfect, but we try!).  Sometimes that's really hard, but, to us, it's key to financial success and a happy marriage!

Our very last payment!
This is just a bit of our background and personality.  In the next post we'll get into where our debt came from, how much debt we were in, and then we'll get into the how of we paid it all off!
Thanks for being a part of our journey!