Budgeting and Financial Independence

Photo by Karolina Grabowska on Pexels.com

My husband and I are well on our way to financial independence. In the last year, we’ve paid off 3 credit cards, a bank loan, and a car loan. We’ve been very lucky that my husband maintained his regular income even during the COVID lockdown and with a bit of discipline (and some unexpected windfalls) we made real progress on our goals.

One of the first things I did was to set up a budget planner for myself. In it, I track all of our expenses and income. It’s really helpful just to see where all your money goes during the month. Before the pandemic hit, we ate out quite a bit – so cutting down that expense (especially since lots of places weren’t open) was helpful. We also made a concerted effort to cut down on our Amazon spending. It’s so easy to just go to Amazon, pick out what we want, and then two days later it’s on our doorstep.

However, we were buying things we didn’t really need, so we cut that spending down. I also tackled our smallest debt first, which at the time was the balance of a car loan. It felt amazing to walk into the bank and plonk down the cash to pay it off! After that, we had some store credit cards we’d used to purchase some appliances, so I focused on those next. We continued to pay on our other bills as well, of course. Once the store credit cards were paid off, we focused on the bank loan.

At the beginning of this year, we were down to just one credit card, a car loan, and our mortgage. We refinanced our mortgage two years ago in preparation for my youngest entering college. We were able to get some equity out of our house and into our bank account as well as lowering our mortgage payment due to the super low interest rates at the time.

Our remaining credit card has been a source of frustration for me, because we have had it paid off before, but whenever we travel to Canada to visit my husband’s family, the balance creeps right back up. This year, since we haven’t been able to travel, we’ve had more time to get it paid off, as well as getting some help in the form of our tax refund and our stimulus money.

But – a win is a win, and I’ll take it! The last credit card is paid off – though I do have some small monthly subs that will get charged and then paid off immediately. Because of course, if you don’t use your credit cards, your credit score goes down. How and why everything is tied to your credit score is a source of constant frustration and irritation to me, but that’s a whole ‘nother post! 😛

So, we have one car loan and our mortgage left. And we will be using a chunk of our stimulus money to pay down the balance on the car loan significantly. All this means that we can (finally!) start putting money that was used to pay debts to work for us – in savings, in investments, in retirement accounts. We’ve been able to purchase additional large ticket items – like a new smartphone and a new dishwasher – in cash, rather than putting them on a credit card. Yes, it means a little delayed gratification sometimes while we wait to have the cash in hand, but the feeling of paying for each item in full at purchase has been more than worth the wait.

I’m still using my budget planner every month (with my cute stickers that I made!) to track all our purchases. Our Amazon spending has crept back up, so we need to be more careful with that, but otherwise we’ve pretty much stuck to the plan and are saving and investing as much as we can each month. Now we’re able to talk about what we want our lives to look like when we do finally move. We’d both like to work less and have more time to spend with each other and our family. More time to do those things that we want – like traveling, or just spending leisure time at home and with each other. My husband works long hours and it sometimes feels like we barely see each other – like we spend all of our time working to afford this house that we’re barely in except to sleep.

Looking back on all we’ve accomplished in the last year or so feels really good. We’ve got decent savings in the event of an emergency, we’re saving up to pay tuition, we pay our regular bills, and we still have money to set aside for investments for the future. I can’t wait to see what else we can achieve this year!

Financial Freedom!

Photo by Karolina Grabowska on Pexels.com

I’ve written before about my progress towards financial independence. We have been lucky enough to remain employed during the craziness of the last year, and so we continued to chip away at our mountain of debt.

Yesterday I paid off one of our last remaining debts. When I first decided to work towards being debt-free, it seemed like an insurmountable hill. I did a bit of research and found Dave Ramsey and his snowball method. I figured I’d try it. Even though the method doesn’t make the most financial sense, it made psychological sense. So I aimed at our smallest debt first, even though it didn’t have the highest interest rate.

After paying off our smallest credit card bill successfully, I moved on to one of our car payments. After 6 months, that car loan was paid off. We kept plugging away, throwing any extra money we made towards a debt.

After over a year of being mindful of our spending and concentrating on paying down our debt, we are (essentially) debt free! Now, a bit of explanation here, because we do still have two debts – our mortgage and one car loan. However, using the snowball method, we have paid off a car loan, a bank loan, and 4 credit cards! That means that all the money we had been throwing towards debt can now start going into savings and other investments.

We are likely going to move, so paying off our mortgage isn’t a huge goal for us. Our mortgage payment is small and it’s only a 15-year loan. When we do move, the equity in this house should pay for our next house outright, as we are planning on downsizing quite a bit. So for us, the mortgage debt, while still there, is not a huge concern.

The remaining car loan is for my husband’s car, which he is currently not driving, since he has a company truck. It isn’t getting used for daily driving, which means he isn’t putting any real mileage on it. We will still be paying on that loan, of course, and I will pay extra, as always, but that car will likely be traded in as well when we move, so again, it’s not a huge concern to us right now.

The mortgage and the car loan both have low interest rates, so it was more important to us to wipe out the credit card debt first anyway. We were able to pay off the last remaining card with our tax refund this year, and paying off that balance felt so amazing! I can’t wait to get the next statement with that $0.00 balance on it. 😀

With our debt paid off and my oldest graduating with no student debt, we feel like we have achieved some amazing goals. We still have tuition for my youngest and those last two bills, but we will be able to put away a significant portion of our income each month, even after accounting for those.

When I first started this journey, it felt like we would never make it. Every time I turned around it felt like we had another bill to pay, so to have made it to this point is a huge weight lifted off our shoulders. I’m not abandoning my spreadsheets or budgeting planner, but instead of groaning every time I see a balance, now I can smile as I see our savings grow. My husband and I are excited to make plans now that we have achieved our goals – the future is definitely looking bright.

Hectic, But Good

Photo by Karolina Grabowska on Pexels.com

It’s been a hectic week for me. Work has been crazy because we had Parent-Teacher conferences this week. Which means I have to work several evenings, so my schedule gets thrown out of whack.

But it’s all good, and now it’s over. 😀 I’m still trying to make various changes in my life, including getting healthier and working on other projects. I did farm out my quilt/blanket projects to someone else, which lifted a huge weight off of me. The pieces for those projects have been languishing around my house forever, so getting them on track to be finished feels amazing, even if there is some slight guilt for not doing it myself. :/

Since I am having someone else complete those projects for me, I can focus on other things – like my baby YouTube channel where I draw mandalas real time on screen. Click the link and see what you think – maybe like and subscribe while you’re there? 🙂

There was also some good news this week. After completing our 2020 taxes, we are getting a refund. One that will allow us to finally pay off the last of our remaining credit card debt! Once that is done, our only remaining debt will be our mortgage and one car loan. It feels like it took forever to get here, but I am so excited to finally see that last credit card bill!

That means we can start taking the money that would have been applied to that debt every month and start doing other things with it – like investing and/or saving it. It’s taken years, but it definitely feels like we have rounded a corner with our debt. My oldest graduates college in May, so that is another huge load off of us. I’m extremely proud that there will be no student debt on her shoulders when she graduates.

I posted before about paying yourself first and since the beginning of 2021, I have been doing that. Once we get paid, I immediately take 10-15% of our pay and put it in savings. I get to feel better about watching that savings balance grow, and we are still able to pay all of our bills (including extra on debts). And since that money is gone immediately, we don’t miss it – which means we have been spending more than we should anyway.

It has also been really great to buy things and pay cash for them. A few months ago we were able to purchase a new smartphone for my husband and pay for it in full without having to do a payment plan with our phone provider. And when our dishwasher finally became so loud you couldn’t hear the TV over it, we were able to go to the store and pick out a newer, quieter model. (Confession – it did get put on the store credit card, but we have the cash and will be paying it off in full when I receive the bill – we saved 15% on the price by doing it that way.)

I’m excited about all of the changes in my life so far. I can’t wait to see what is waiting for me next!

Pay Yourself First

Photo by Karolina Grabowska on Pexels.com

I’ve written before about my financial goals and my journey to be debt-free. It’s still slow going, but any progress is good, especially when it comes to debt.

Lately it has felt a bit like we were stuck – not making any big purchases to add to debt, but not making any huge payments to make a dent in the debt, either. As we headed into 2021, we sat down and had a discussion about what our financial goals were.

I don’t think either of us had ever actually sat down and had a discussion about what financial goals were important to us. It was extremely helpful – both for us to see what goals were most important to the other person, as well as to discuss whether we agreed with those goals and then how to reach them.

With two kids in college, tuition is a big goal. I want both my kids to graduate debt-free, as I did. My oldest should graduate in May, and I just made the last tuition payment for her. So yay! That goal is met for her, now I just have to concentrate on my youngest. I’m so glad that we only had one year of paying tuition for both of them – I have no idea how people do it.

Of course, we’re continuing with our previous goals – to pay off as much debt as possible. We’re down to one car payment, our mortgage, and one credit card. The mortgage will be gone when we move, so for now I’m ignoring it, though we do pay extra every month to get it paid off faster. The less we owe, the more we’ll have in equity when we do move.

The car payment also gets a bit extra added to it every month, but for now I am focusing on the credit card and trying to get it paid off. My husband was in agreement with all those goals, but also wanted to start saving for a vacation – something we haven’t had in a while (and we wouldn’t have been able to travel, even if we’d had the money, with the current state of affairs). As we talked, something I’d heard somewhere stuck with me – ‘Pay yourself first.’

I don’t remember where I heard it, but the gist was to make sure that you were paying yourself – by saving some money each paycheck, even if it was a small amount. After all, you work hard for your money, so you should get to enjoy it too, right?

So we decided that we would put a small amount aside each paycheck for a vacation fund. It’s not a ton of money, but if we put money in it consistently, it won’t take long to build up. I’ve been doing it since the first of the year, and honestly, it’s felt really good to see the balance growing.

I know that most financial advisors would tell us to use that money to pay off debt faster, and I get that. But psychologically, watching that small bit of money grow each month is more motivating to me than using it on our debt. It’s small enough that it wouldn’t make much of difference to the debt, and it’s worth more to me for the motivation factor in the vacation fund.

Who knows, we might decide at the end of the year to use the money for debt rather than a vacation, but until then, watching it grow is financially motivating. In the meantime, we’ll keep plugging along, working day jobs and trying to grow side hustles (like Etsy and YouTube). Maybe one day we’ll get lucky and one of those lottery tickets my husband buys every week will pay out. Okay, probably not, but we can dream, right? 😀

Gifts and Reflections

Photo by Giftpundits.com on Pexels.com

The year is almost over and it feels like a time for reflection.

My first reflection is – this year sucked balls. And not in the good way. :/

My youngest was cheated out of his final year of competing in track and had his graduation repeatedly postponed. My oldest and I were out of work when schools closed. The pandemic has hit hard and everything has changed.

But not every change was bad.

Yes, my youngest missed competing. I think that bothered me more than it did him. His graduation was postponed several times, but it did eventually happen. Though my oldest and I were out of work, we were lucky that my husband is an essential worker and we avoided much of the financial hardship that many others experienced (and may still be experiencing).

Personally, though the reason was terrible, the ability to slow down and spend more time with my family was a gift. We spend so much time rushing here, there, and everywhere that often what is really important gets shoved to the back burner. This year I have spent more time than ever with my children – and it has been wonderful. No games to rush off to, no practices, nothing to distract us from each other. We have always eaten dinner together, but when the whole world slowed down, it seemed like we suddenly had time (and permission) to slow down and just take a breath.

That was another gift for me this year – I have seen how different my life can be when I am not constantly rushing around, worrying about ‘living my best life’ and trying to be ‘successful.’ I was free to just enjoy whatever made me happy – doing jigsaws, painting minis, and spending time with my loved ones. I imagine it’s somewhat how retirement feels – knowing that you can live without having to kill yourself working.

After this year, my views on how I want to live my life have changed. I have wanted to downsize and minimize for years. But now I have seen how much better my life could be if we weren’t spending all of our time working to afford the house we are rarely in, driving cars we have to work to afford, etc. If having less ‘stuff’ means I can relax and focus on things that mean something to me, that’s what I want to do.

It has given me even greater incentive to become debt-free. My husband and I sat down last night and discussed our financial goals for the new year. Paying off our last few debts is top of the list, of course. We also discussed smaller goals – like saving up for things. We both want new phones – his has a broken screen and mine is his hand-me-down from 4 phones ago. I have been putting money aside for just such things and we are able to outright purchase the phone he wants. That felt really good – being able to say, yes, okay, get the thing – and to pay for it in cash, with no payment plan and all the bs that goes along with them.

So I have set some goals for myself, both long and short term. I am not someone who makes New Year’s Resolutions, but I do have specific goals that I want to achieve in the coming year.

Here’s hoping that 2021 is waaaaaaaay better than 2020. 😀

Money is a Tool

When I started my journey towards being debt free, it was because I realized that I am tired of working for ‘things’ that I often don’t enjoy and/or have the time to enjoy.

My husband works 10 hour days and many times it feels like we are passing ships, greeting each other as we go about our daily routines. We’ve had many conversations about what we want our life to look like, and none of them include killing ourselves working to be able to afford the latest new gadget or the biggest house. I like our current house, but it was never intended to be our ‘forever’ house.

I want to downsize our next house. I want to be able to pay less in bills so we can spend more on things we want – whether that is a vacation, books, a new hobby – whatever.

Our current house is a good fit for our life right now, because my children are still living at home. But once they move out, we will be getting a smaller house. My car is over 10 years old, but it is paid off, and that makes it worth more to me than a newer car with a payment. Would I prefer to drive a newer car? Sure, but I don’t want the ridiculous payment that would go with it.

I was watching a financial YouTuber and she made a comment that has stuck with me. “Money is a tool – not a measure of your self-worth.” I think I’ve gotten so used to thinking about what we’re “worth” that I forget money isn’t everything.

Don’t get me wrong, I know money is important. But it is important because having it enables me to do what I want. Experiences are always going to be more important to me than material things. Do you know what is important to you? Or are you killing yourself trying to keep up with the Joneses?

I wonder sometimes if the ‘instant gratification’ culture of today is why so many people are in debt. No one wants to spend time saving up for a purchase, they just want it right now. So what if they have to pay 25% interest on the credit card to buy it?

I’ve tried to instill in my kids the need to budget and save and to consider the future. For example, my oldest wants a new pet desperately. So I’ve had several conversations with her about how expensive pets can be. Our last pet needed back surgery ($3K) as well as the routine costs for things like shots and grooming. Even though it was HER dog, WE paid the bills. (She got him as a gift when she was little.)

While it would be nice to have a pet, I’m not ready to get another one right now. And since she still lives with me, she isn’t getting one either. Although she isn’t happy, she understands the reasoning. Her money right now is better spent saving up for when she is ready to move out and live on her own once she is done with college.

I think people would be happier if they thought of money as a tool to help them achieve their goals and desires, rather than money being a goal itself. After all, you can’t take it with you. 🙂

Tired of Drowning in Debt?

hand-792920_1920
Credit: Pixabay

When I jumped into the planner world online, I discovered lots of Etsy shop owners and YouTubers talking about the Dave Ramsey method of budgeting.  I haven’t read everything by Dave Ramsey, but since I’ve always struggled with budgeting, I decided to see what he had to say.

**NOTE: I am not a financial planner or advisor, I am simply sharing a method that has worked for me.**

Everyone dreams of being debt-free, right?  But how do you actually get there?  There are a million financial advisors who can tell you what to do to become debt-free.  It’s simple – pay off your debts and avoid buying things on credit.  But simple is rarely easy.

And when you have a mountain of debt, even when you’re throwing every extra penny at it, it can feel like you’re not even making a dent.  What I learned from Dave Ramsey was to approach my debts in a different way.

What makes the most financial sense is to start paying off whatever debt you have with the highest interest rate first – that way you save the most interest and reduce your debt faster.  However, when your highest interest rate debt is also your largest debt, even when you’re paying extra, it often doesn’t seem like you’re making any progress.  So people become discouraged and quit making the effort.

Enter psychology.

People need to feel like they’re making progress in order to motivate them to continue their behavior.  So instead of paying off the highest interest rate debt first, Ramsey’s advice is to concentrate on the smallest debt first.  Yes, it doesn’t make the most financial sense to do it this way, because your large debt will still be accruing interest while you pay off the small one.  But – you will see progress quickly, and that will motivate you to continue doing what you’re doing.

Once you have one debt paid off, put that same payment amount towards the next biggest balance until it’s paid off, then repeat.  So, for example, when you pay off your car loan and your payment was $200, then you take that $200, plus whatever minimum you were paying on the next biggest debt, add those together, and make that the new payment amount for that debt.

Following this idea, rather than concentrating on my large credit card balance, I focused on the small balance remaining on a car loan.  Within 6 months, the car loan was paid off.  And the feeling of walking into the bank and paying it off was amazing! To help me keep track of what I’m paying, I created this Debt Snowball Tracker for myself (there are a million versions of these out there, so feel free to grab this one or make one for yourself):

IH Debt Snowball Tracker PNG

I currently have four credit cards, a car loan, a bank loan, and a mortgage.  I’m ignoring our mortgage for this purpose, because we will likely move and sell the house before we pay it off anyway.  We did just refinance our mortgage and were able to get a better interest rate and lower our payment, so that will help.

Simply having a visual tracker like this helps so much when you are budgeting and paying bills.  You can see how much the amounts are reduced in a single glance, and when you see that you are getting close to paying off the balance, it helps give you that extra push to get it done.

Once I paid off the first car loan, I have been adding that payment into the bank loan (our smallest remaining debt balance), and in just a few short months, it will be paid off as well.  After that is paid off, I’ll be able to attack our credit card debt and work my way through them as well.  And while I know that this approach doesn’t make the most financial sense, it has allowed me to be successful in making progress, and that’s what matters to me.

Productive and Present

stopwatch-2061848_1920
Credit: Pixabay

I can’t believe it’s already halfway through January of 2020.  2019 flew by and there are some big things on the horizon for me in 2020.  I don’t want to miss anything, so I’m making an effort this year to be more present in the moment.  My mortality has definitely been on my mind more lately and I have things I want to do/accomplish before I shuffle of this mortal coil.

I am working hard on stickers for my sticker business.  I wanted to have 10 products ready when it launched and I’m happy to say that I have over 10 done!  Now, I have to take photographs and get them ready to list and sell.

I’ve also made more headway in paring down the number of planners I’m using.  I’m now down to only 3 – a budget planner and 2 daily planners.  I really need to just jettison my cheap daily planner and use the Happy Planner but I’m resisting that.  Sunk cost theory and all that.  I’ve given myself until next month to get rid of it as I slowly transition everything over to the Happy Planner.  I have the classic size, but I may try out the larger size next time to see if that works better for me.

I have to say, I’m actually loving the budget planner.  I feel like it’s helping me keep better control of our spending.  I’ve also been following some of the Dave Ramsey method to try and pay off our debts.  I would love to be debt free (except for our mortgage) in the next 4 years.  I created some inserts for my Happy Planner – a debt snowball tracker, a savings tracker, and a sinking funds tracker.  So far we’ve managed to pay off one car loan and we’re close to paying off the second.

I created some daily to-do lists for myself and I love how productive I’ve been lately.  I get a little thrill every time I get to check something off my list as done.  And now that I’ve got my under-desk elliptical, I’m getting way more steps in every day.  I feel like I’m off to a good start in 2020.  Now all I have to do is stay consistent.