I’m not sure at what point I broke down and almost cried over the debt that lingered over me, but I’m fairly certain it occurred in the six months between when I graduated and my grace period ended. My husband and I (then boyfriend) had recently purchased a beautiful historic home, and we were ready to start building the “happily ever after”. What we quickly discovered was that between the mortgage, student loan repayment, and basic needs, there wasn’t a lot extra to go around.
While I’ve always been meticulous when it came to money management, I slowly grew to count each dollar and micro-manage every cent. While our joint income grew when I graduated, my husband chose to pursue a nursing degree that required a lot of dedication, and I refused to tack on more loans on top of what we already had. That increase was short lived.
I won’t lie and say it wasn’t stressful. We got engaged and then married (carnival wedding) as frugally as possible with the emphasis on:
- We end up married.
- We have a lot of fun.
Other than a heat index of approximately 150 million degrees, we both had a blast, and at the end of the day, we were married with no wedding debt.
Shortly after, we found out we were pregnant with our first baby, and my financial nerves stressed out more. We both worked, and Steve’s schedule was chaotic. What would we do about daycare? This was no minuscule decision. Even though Ohio has a low cost of living, most daycare centers in the area were a mortgage payment and neither of us would be staying home full time. Thankfully my mom was able to fill the gaps in our schedules and delay formal daycare until later (although there were stresses that came with this, that’s another day and another story), and for that, we’re extremely thankful.
As we grew from two to three, my husband and I evaluated our life goals and what we’d like to do. We agreed we wanted to pay off debt and live debt free, but we also realized that our current home didn’t afford us the opportunities we really wanted. We wanted to have land to be able to grow our own food (or at least a portion) and have chickens and other animals. We both agreed we wanted to entertain more, and if at all possible, we wanted to be surrounded by nature. So while we consciously made the decision to pay off debt quickly, we unconsciously sabotaged this while we looked for a new home with land.
Within a year we found our dream home and signed the paperwork, and we became the proud owners of “Our Forever Farm”. All the while, our previous home continued to sit on the market, and a few months later, my husband entered the beginning stages of the nursing program which meant schooling full-time and working less and less.
While writing this I recognize these glaringly obvious issues, and it’s easier to say now we should have waited on purchasing our new home until our previous home had sold. However, we felt it would sell quickly, and we made the mistake of falling in love with the property and emotionally purchasing it. We have paid for these poor decisions to this day figuratively and literally. After several years, we still own both homes and have had several tenants (more on that to come).
What you don’t see in the condensed version of our financial history, is the incessant stress of crunching the numbers for the budget every month. The penny pinching we (mostly I, as Steve was spending spare minutes studying) went through from month to month. Most of the “Ten Ways to Cut Spending” and other articles you find on Pinterest were unhelpful to me as I had already streamlined almost everything from our budget. We didn’t go on vacations, and we didn’t eat out. However, we would make large purchases (a second house) quickly that would (in my mind) nullify what we’d work hard to pay off.
My husband has finally graduated, and I recognize the error of our ways. Our debts include two mortgages, a car, and after five years, we still have those dreaded student loans. We put “every dollar on paper on purpose and with a name,” but before it’d cause me to question every single purchase. That isn’t a bad thing, but for me (and maybe you?) it was beyond normal limits. We were (and to be honest still are) fans of Dave Ramsey, but the issue with that method is that it leaves little room for living. His philosophy (and others) discuss that real living is after you pay off debt, and you should scrape every single penny and pay down debt in order to conquer it. While I don’t disagree with this fact or that you can live on little money, I needed to change the way we focused on debt in order to live and enjoy our lives.
These are the things we’ve learned and are actively applying to our current debt payoff plan in addition to the Snowball Payoff:
Don’t accumulate more debt
Now, we focus on not accumulating any MORE debt, and that’s our priority before paying debt we currently have. In our travels to get where we are, we had to pick up a car loan, because we only had the $1,000 in savings (which we’d recently tapped into to pay something else). While we could have bought a used car for this, we’d been in the business of buying cheap, used cars, and we were ready for something that didn’t need a fix ever few months. We still bought used, but we bought a nicer used vehicle that will last us many years. Now if we need a car, we need to figure out the cash in order to purchase it. To be a honest, a used $5k vehicle is different than a used $1k vehicle, and we might have avoided the larger car loan had we had more in savings.
The other problem? We had a rental (that sadly wasn’t paid for), so we should have had more than the $1000.
Budget for extra debt payments
Before, we’d tally up our incomes, and then we’d fill out these budget sheets (here) with our expenses. Then whatever was “leftover” went to debt payoff. The problem with this is that little Johnny’s birthday would pop up, and we’d go back and forth on what to spend on a birthday gift because that would take away from what was going to debt payoff. This removed all of the joy from giving.
Now we budget in the extra debt payments for a specific amount, and we make sure to leave a pot of money for “miscellaneous”. We still try to catch everything in our initial budget screening, but now we know we’re paying X amount extra and can use the remaining money to enjoy life. If we end up with anything more leftover in the miscellaneous pile, that goes into savings.
Pay debts from savings
In order to fulfill number 1, we’ve beefed up our savings. However, that doesn’t mean we can’t pay debts from that savings, but we do leave the $1k more “liquid” and the rest more difficult to access. No, we’re not accumulating a large amount of interest on that savings, and yes, we’re still paying interest on our debts. This is a choice we made in order to maintain our goal of not adding any additional debts.
Meal Planning makes a difference
This may not be for everyone, but for us it’s made a huge difference. One, it helps us to keep reasonable grocery budgets. Two, it helps us to make meals at home versus eating out. This works to improve the quality of food we eat as well as our budget in check. It has also helped us to maintain sanity in order to be able to cook at home. Because let’s face it, making well balanced meals when both parents work is hard. I’ll discuss more of what we do in the future, but it works mostly on autopilot now which is key for me. If it requires too much effort, than the system is not working for us.
A budget is a plan, and we whole heatedly agree with having a budget. It opens up the conversation on where we want our money to go, and it helps to reduce those impulse buys. This is also super helpful for a joint budget in maintaining a united front on where you both want your money to be spent. For those that split things between your accounts, it’s helpful to keep the other person informed of where the money is going from each account, so that they can make decisions that impact your life in a positive way.
His/Her Spending Money
This was a recent addition, and honestly, we didn’t have the extra money until recently to add this. However, I think it’s fantastic. Like I said, we’d nickel and dime everything to death on a budget form, and then when one of us would drive through and grab something it would throw everything off. This alleviated this, and it allows us freedom to do as we want with our money.
We are in no way experts on money, but we are focused on remaining married (let’s face it, money problems are not easy on a marriage) and getting to a point where we can call ourselves debt free. We’d like to hear what has worked for you as we grow and evolve our financial planning.
Have you tried and felt like you failed on paying off debt? Do you have any tips on how you’ve succeeded?