Monday, January 7, 2013

the debt reduction diaries: rollin' rollin' rollin'

remember when I started the diet coke diaries????  it was so helpful for me to have a little outlet like a blog to document my "recovery" from a diet coke addiction.  so I'm starting a new series this year called the debt reduction diaries.  It'll be really personal.  so if you don't want to know about our spending and financial issues, go ahead and pass on by. :)  I don't blame ya.  these posts won't be funny, they won't have pictures.  Just my thoughts on trying to get ahead in this paycheck to paycheck life.  so without further ado....the debt reduction diaries:

I have a love-hate relationship with my college degrees.

College for me didn't quite seem as great as it did for everyone else in the world.  I didn't have a roommate my freshman year which was sad.  I did actually love my sophomore year.  It was the year my cousin was my RA, I had a roommate who did dorky stuff with me, and a couple other great friendships that really just made me who I am today.  and by the end of that year I was engaged, and that was good, bc I love that man. :)  my junior year was weird bc I was supposed to be studying abroad before I got married, but my mom was diagnosed with cancer so I just didn't want to leave her to plan my whole wedding while getting chemo and radiation and all that.  so I stayed and lived at home for a semester.

and then I got married, so it didn't really seem like college anymore, which was fine by me. :)  But because I was married and still hadn't done my study abroad semester, I had to find somewhere that allowed Steve to come with me.  i found Spain. :) While in Spain, I finished my Spanish degree, found out we were pregnant (!!!!!), and missed my college graduation.  weird.

we moved back from Spain with no home, no jobs, a semester of student teaching left for me, and a baby on the way.

NIIIIIICE "planning," Hydeens. :)

now, I had tons of opportunities that I never would have had without college.  And I know lots of stuff about kids and learning which is important for a parent, and I love that.  and I met some wonderful people during my years at NWC, for which I am grateful.  but there should really be a course in high school that teaches you about money, and debt, and real life.  because there's a chance I would have done things a little differently if I had just THOUGHT about my future a little more.  like, realistically.

but this is how it all started:  When I was in high school, I decided to go to Northwestern College.  It was a good college, in my hometown, and I wanted to be a teacher.  so that's what I did!  made sense to me!  My parents had finally gotten to the place where they both had good jobs, so my financial aid package sucked, but I had good scholarships, and got loans for the rest, because I'd be working as a teacher for the next "many" years anyway, so I could just pay it off then, right?  (anyone else think it's really weird that your parents' income determines your financial aid?  what about those of us who pay for our own college?  did you look at MY income??) anyway, I basically just did what I thought everyone had to do, and went to college on loans.  LOTS of them.  and extra for Steve to come to Spain with me.

so now here I am about ten years later, having worked a whoppin' NINE MONTHS of my life where I needed my degrees.  Yep, taught for a year, and hated it (it was the year that my husband was home with my baby, my mom was dying of cancer, and I was neither of the two places I wanted to be most.  so I'm sure if I ever taught again, I might just love it, but I didn't love that year, that's for sure).  but for those 9 months of employment I'll be paying for like 30 years.  makes me sick.

Steve's been working his butt off for the last many years, doing things very much NOT theater related, because it's hard to provide for a family in the "arts world." But it's also hard to get a high paying job when you're not working in your area of expertise, so he's always just had decently paying jobs that he works ridiculously hard for.  I've done daycare in our home for the last 4 years, and also started the pinkadink, but it sure takes a long time to get a decent profit when you start a business yourself.  so our income has always been on the low to medium side of things.

we got kicked off all the government assistance programs we were on like WIC and Mediciad, so now we probably bring in LESS money than we did with those benefits because we have to pay for all our insurance and food and medical bills and all that.  it's sort of a screwy system when you're right on the cutoff line like we are.  but that's beside the point.  I do think that it's important for those programs to be temporary, but when you finally earn enough to get kicked off and end up bringing home less money, it really sucks.  but that's another story...

After the last school year, I decided to quit doing daycare in my home so that I could focus more on my business.  and I LOVE having that opportunity, but let me just say that it's WAY more work and stress to earn that money without daycare.  With no guaranteed income for me anymore, it's made our financial situation a bit more hectic. But I do have the ability to make more money with the pinkadink than I did with daycare, but it will probably take some time.  But we really felt like that was the path God was leading us down and we still feel like we did the right thing, even though I have to work my butt off all day every day now. :)

But now even with busting my butt, it's just so hard because the money is not guaranteed!  I can make as much stuff as I want to, but if it doesn't sell then it doesn't bring in any money!  so this past year I just got really SICK OF IT!  I'm sick of stressing out about the pinkadink because if I don't sell my stuff then we can't pay our bills!  I'm sick of paying late fees because we had to wait til the next paycheck to pay the bill.

now, don't get me wrong.  We're doing okay.  we're just a typical paycheck to paycheck family, trying to figure out how to just get a step ahead of the bills.  But God has met our every need and then some.  We have people (aka grandparents) in our life that make sure our kids are dressed with cute clothes that fit them and healthy food to eat.  We have friends that we can trade babysitting with so we don't have that extra expense when we have to get something done or go somewhere without the kids.  We have people in our lives (some who we know about, and some who we still have no idea) who have followed the Holy Spirit's nudging, and sent us money in the mail, or in our church mailbox, or paid our rent, or who knows what else, when there's NO WAY they wouldn't have known what our needs were.  People do that, they listen to God.  and our needs are always met.  God is so so so good to us.

But we're ready to be done needing other people's money.  We want to be the ones who get to listen to God and bless people the way we've been blessed.  We want to think about family vacations, or our kids' college, or an anniversary trip.  so we've decided that 2013 is going to be the year of debt reduction.

I read The Total Money Makeover on January 1st.  I read all the way up to the investment part, because, well, we're not quite there yet. :)  and I got really excited.  I had a little extra pinkadink money from my rockin' Christmas season, and we were so excited to figure out how to use it.  so we did it.  we created an emergency fund, got all paid up from our late bills, lined up our debt, and paid our first chunk off.  We're going with the "debt snowball" method, and if you aren't familiar with it, go ahead and google Dave Ramsey.  there will be plenty of info there for ya. :)  but basically, you pay off your lowest debts first, and then when each one is done, you apply that payment toward the next debt, and your "snowball" keeps getting bigger your payments get bigger.  plus you have to commit to putting all your "extra" money toward debt payoff as well. so we paid off one medical bill from my ER trip last year, and now will apply that monthly amount toward our next biggest debt.

but here's the thing...THIS IS GOING TO BE HARD!!!  We are not the type of people who can make very many changes to our lifestyle in order to cut costs.  We already don't fix the broken things in our house, we don't buy our kids or each other gifts, we RARELY go out to eat, we drive used cars, we've gotten almost all our furniture either free or from garage sales or craigslist.  we already eat LOTS of rice and beans.  WE'RE CHEAP.  that's what I'm getting at. :)  so it's not like we even HAVE many areas to "trim" so to speak.  Our debt consists of student loans (major), one vehicle loan (a minivan that I NEED for the pinkadink, but it's a high mile, used van, that was what we need, but had to finance it), a bunch of medical bills, and a little credit card debt from things like car repairs and other emergencies that couldn't be paid off with cash.  it adds up, big time, but it's not like we just go around spending unnecessary money.  so it's going to be hard.

but our plan is to work harder.  sew more.  sell more.  figure out how to get more money.  and just pay off our debt one thing at a time.  It's really scary to do this when my income is so varied.  but we gotta have goals, right?  (I hate goals. I'm a go with the flow type.)  so that's our goal for 2013.  REDUCE OUR DEBT by as much as we possibly can.

now, one more thing.  I've been a bit leery of this Dave Ramsey character for a few years.  I know that when people get on board with him they don't seem to do anything fun, EVER.  and I've got issues with that.  I think it's because my mom died so young.  I have a bit more of the "life is short" mentality than most.  So I think Steve and I are going to make some adjustments to Dave's plan (and don't tell him, please, bc he's kinda cranky when people do things he doesn't approve of). :)

we think we're going to try to put little incentives into our debt reduction plan.  like, after we pay off these two loans, we're allowed to go on an overnight date (something we used to do a couple times a year and I think is sooo good for our marriage).  and after a certain point we're allowed to create a "ten year anniversary trip" fund bc we had to spend ALL the money we had saved to replace our shower which was literally falling apart.  :(  so that's why our goal isn't even to be debt free for RIGHT NOW.  of course that's the long term goal, but for now we just want to bust our butts so that we can sleep better at night, and pay our bills on time, and knock out some of that debt so we can reduce the crazy amount of money we pay toward debt each month.

eek! I'm so excited! and I'm so scared!  and I'm feeling a little obsessed.  so here's to trusting God (still),  working hard(er), and paying off (more)!!!!  Feel free to 1) pray for us, for good communication and teamwork, and for a little project that Steve is hoping to start up, 2) ask us how it's going!  accountability is a good thing!  :)  and 3) tell everyone you know about the pinkadink!!! :)


Anonymous said...

Think like a gazelle!
Total Money Makeover was the reason we were able to get out of debt. It IS hard but soooo worth it. And DO break Dave's no fun til your done rule, at least once in a while. I think celebrating successes is a great idea.

Nate Kroesche

Ragnhild said...

Good luck Andrea! I am trying to spend less this year too, and its a lot of work. I love your honesty, it is very inspiring.


Jaden Allred said...

I think the idea of adding incentives to your debt reduction plan would make this whole journey more bearable. This way, you wouldn’t feel like all you did was work and give out money. A little reward makes everything last. However, set a budget limit for whatever reward you’d like to have. ;]