Category Archives: debt

Thread on our Lower-Middle Class Family

It’s been a while. We added a new child to the family in October so I’ve haven’t had much time to blog. The following is actually a series of tweets from yesterday. I did make a few small grammatical/clarifying/organizational edits, but it’s basically a series of 15 tweets:

Looking at our income and all these tax numbers…

We are basically lower-middle class. A one income family with 3 kids.

From all the talk, one would think we are dirt poor and cannot survive. Yet we do. Pretty comfortably, I might add. Here are a few thought as to why.

  1. The only thing we owe on is our house.
    1. It’s descent size but not massive. Two kids will share a room until one of the 3 move out. *gasp* And we prefer it that way, shocking I know.
    2. We only have a house because my husband (as a single man) purchased a town home way below his means. And we lived in that “semi-inconvenient” town home until we had 2 kids and the profit of a sale would cover a house down payment.
    3. We also don’t owe on school loans because we bought nothing but needs for several years. (All extra money went to pay them all off.) Not having those helps tremendously.
    4. We drive 2007 & 2008 vehicles. No loans on those. One was bought used, with cash (other is a hold over from single days)
    5. While we use credit cards for convenience, we never carry a balance.
    6. Having little to no debt (just the house remember) frees up a lot of money every month. Less locked in payments and less waste to interest
  2. Having only one income provides opportunity for saving money
    1. I cook most of our food (healthier and cheaper). I have the time to clip coupons, find the best sales, and make meals from scratch. It’s a lot more difficult to do this when time is limited
    2. Our monthly budget for gas and clothing is lower than most. Not only do we drive less, we don’t need work clothes (helps that our one income earner also works from home)
    3. We don’t pay for any child care (except an occasional date night)
  3. Probably the most significant, we define “comfortable living” very different than most
    1. All of our needs are met (first!) Food, clothing, shelter, water, power, transportation, these items are always covered. We recognize this and are extremely grateful that our income covers the basics. Some are not as fortunate.
    2. We have such great peace of mind that the basics are covered, we get to really enjoy when there is extra to cover the fun stuff.
    3. We value getting a deal. We truly enjoy finding deals and bargains. We love shopping thrift stores. We love store brands. It doesn’t make us feel “less than” because we don’t value the pride attached to brand-name or new. The reverse is actually true. It makes us feel like we are smarter than others wasting money.
    4. We get to live our value of people & quality time over stuff. We trade money and a second income (which buys nicer stuff) for what we really want – joy, peace, love, less stress.
    5. Our idea of fun is different. We do lots of free activities with the kids. We drive for vacation and have adventures on our journey (see things you miss on a plane)
  4. For me, growing up as a preacher’s kid has impacted my world view in regards to money
    1. I trust God will provide for my needs. First and foremost, spiritual needs, but also physical needs.
    2. We (similar to my upbringing) have a wonderful community and support system. Should something terrible happen financially – we know our God provided support system would step up. And we do the same for others.
    3. Not having much money as a kid, I saw my parents work to cover needs and then some. We were loved and didn’t feel like we missed out.

In summary, our world view regarding money is very different than most.

Because of that, we can live comfortably with less. Practically speaking, we work hard to live this way. (Physically, emotionally, and intellectually)

The resulting freedom: Absolutely Worth it.

/End of Tweets

***Long time readers will know this, but I’ve blogged extensively on how we got out of debt. Starting in Jan 2012. We paid off 46K in 22 months. If you want to read about that, look for the “by the number’s” posts. To be fair, we were dual income for most of that time, pre-kids.

*PS: In the blog post editing page, I got the code to do a nice ordered alphabet list nested in an ordered numbered list. (Point 1. A, B, C, Point 2. A, B, C etc.) It’s driving me crazy that the actual post isn’t reading the code correctly but I don’t have time to fix it. Sorry. “Hashtag Three Kids” ;-p

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GULP

Has it been over a year since I last blogged!?! We’ve been in the trenches, grinding out baby step 3.

A summary of 2015:

Chasing a toddler around while trying to survive the Texas heat, while pregnant. That’s right! We added on! In August we met our second little boy.

And seriously – paying medical bills, being pregnant, keeping the toddler alive, meeting the new baby, dipping in and out of the emergency fund because of slow work & medical expenses sums up all of 2015.

SO…. I picked the blog back up as things start to settle down.

AND because we have a new update!!!

Quick summary from when we started this journey in January of 2012 until now (4 years):

*Paid off 46K in debt in 22 months (Read our “by the numbers” posts starting in January 2012 to see how we did that.)

*Paid for items without going into more debt: A minivan, foundation repair, new hot water heater, a couple of mattresses, a washer, as well as a garage renovation

*We welcomed 2 children into the family (which resulted in maxing out our deductibles 2 of the last 4 years. 6K and 12K!)

*Experienced 1 layoff – and from that point on have only had one income

*Experienced a couple of slow work cycles

This last year (2015), similar to when we were paying off debt in 2013 and our first son was born, we were really cautious. We also had to pre-pay my OB early in the year. After the deductibles were reached, and we got our pre-pay money back, we were able to put a little bit more toward the emergency fund. My husband had a couple of large projects come up in the fall, right as we were calculating medical expenses.

Overall, we ended 2015 being a little discouraged. In rough estimates, 2015 resulted in 25% drop in income.

One super positive note from this stat is our extreme gratitude that God continues to provide for our needs. We have the four walls (food, transportation, shelter/utilities, clothing) covered no problem. We are so thankful for starting this journey 4 years ago, it gave us the tools and skills to keep a close eye on every dollar in, every dollar out. A 25% drop in income is very likely to cause disaster. For us, it did not.

The year ended and we were relieved to see it and it’s expenses go away.

And then, something unexpected happened.

January 2016. A couple of big, outstanding checks arrived. We never know when checks will come in – and honestly, we almost have to live as if they won’t. Having a client owe money is very different, and less secure, than having your employer owe you a paycheck.

When the checks arrived, we were amazed. It was what we needed to FINISH OUR 6 MONTH EMERGENCY FUND.

That’s right— we are FINALLY DONE with baby step 3!

*Phew* big sigh of relief.

We can now move on.  It’s possible we will have to dip into the fund again, and finish it, and use it, finish it, etc. – but we are choosing to mentally move on. We won’t abandon the fund and be without a safety net, but we also need to start focusing on some other items.

Our specific plan is a little in the air.  It will be some type of step forward, perhaps baby step 3b, or baby step 4 (or a combination of the two).

Baby step 3B is a down payment.  We would like a slightly different living situation. While we do “own” our home, the equity if sold today, will not be enough for a 20% down payment for the type of home we are looking for in our area.

Baby step 4 is investing 15% of  income to retirement, making use of all tax-free options as best as possible.  We have invested in the past, and have made small contributions in the last 4 years, but we would like to get that up and rolling to the full 15%.

And with that – while we are not done with the baby steps – I’m probably done blogging about our baby steps journey. The first three steps are the hardest, but they are also the most measurable. For more info on the baby steps – and to see how you can get started, visit Dave Ramsey’s website.

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Good Bye Friend

Said good-bye to a friend of 9.5 years. I knew it was coming, but it’s still an adjustment.

My dear Jetta, seen here freshly washed, at my grandparents house in the middle of North Dakota.

My dear Jetta, seen here freshly washed, at my grandparents house in the middle of North Dakota.

I purchased my Jetta in August of 2004. It was 4 years old and such a huge, grown up moment in my life. In the handful of years of having a license, it was the car I ‘dreamed of’. I saved up my money, had a pretty big down payment (prior to my Dave Ramsey days) and worked hard for the next 2 and a half years to pay it off. I even deferred my move to Chicago for grad school so that I could finish paying and officially become the owner.

I only put 60,000 miles on it, but in that time, it took me from Washington State, to Chicago, to Dallas. It even pulled a uhaul on one of those trips. (Ha!)

It played an important role in one particular event concerning the “boy next door” who eventually became a pretty important person in my life (my husband).

It has several issues ranging from a CD player’s broken fuse that continued to drain the battery until removed; a self dimming rear-view mirror, that broke and leaked gunk all over; cup holders that had nifty, spring/size adjusting arms that were amazing – until the springs and arms broke (it never held cups sturdy, with out potential sloshing again).

There were a few bumps and bruises along the way, from the time I backed crooked out of the driveway and sideswiped my roommate’s car; the time I ran into our garage; the time I locked the keys in and my boss used some wood and a hammer to pry open the door; the time the bumper fell off, hanging within an inch or two off the ground and I didn’t know (I proceeded to drive at highway speeds for 20 miles); the time the belt broke and I lost all power steering in the middle of a busy road.

One time, it over heated and – now on my own in Texas – I had to find someone to look at it – figure out toeing and get it fixed.  The shop I ended up taking it to – wow… not in a good part of town. The tow truck got lost trying to take it there. Going to pick it up, one of my girlfriends from work drove me down and I’m pretty sure when I got out to go pay and pick it up – she was getting nervous that I might have been abducted or killed. 🙂 Rough part of town – but at least it was the middle of the day! And they gave me a great deal and did a terrific job fixing it.

Anyway – it was an adventure filled nine and a half years.  We all move on in life. Even with all of the issues, we were still able to trade it in for a decent 1,500 dollars toward our new “I’m officially an old grownup” minivan.  Got to stay practical right?

Good bye friend. I’m so glad we had almost 10 years together and I have two sets of plates (WA & TX) that I will hold on to – and remember you by.

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Emergency fund… slow going

So, we are now at about 53%* of our emergency fund goal.

While we have only saved 3% since becoming Debt Free in October, we are actually encouraged that we were even able to save that much. While money going out to pay for debt does not happen anymore, we have had significant increases in other bills.

We’ve had a few situations create bills we didn’t plan on. Diapers, along with the price of fresh organic produce for baby food (I’m making Z’s food), have been creating some instability in our budget. I’m still breastfeeding the kiddo and believe it or not, this means I eat way more food than I ever did while pregnant.

However, the biggest item that is currently holding us back is our medical insurance premiums. We estimate that for the three of us, our monthly premiums are just shy of DOUBLE our home mortgage. Yes, you read that right. Granted, our mortgage is not massive (we’ve been wisely living in a home that my hubby purchased 9 years ago and he did not bite off more than he could chew), but still… this is an increase of 1160% since January 2013. (gulp!) Yes, again, you read that correctly.

Some of this increase is quite understandable, I went from being fully covered, to having a very small amount taken out of my check, to being laid off. Tack on an additional family member and we were bound to see increases. We get that. However, this is an absurdly high amount. It did not help that during this time of life change for us, the insurance market went into total meltdown/chaos. Our insurance broker even told us “Sorry – I can’t help you. I have no idea how to answer your questions at this point and I might not even be in business in a few months.”

That being said, we are working on a couple of options and hope to see our monthly premiums decrease significantly in the next couple months as we work to make changes. AND we are so thankful to be out of debt. Again, the margin created by not having debt and not throwing money away on interest, has allowed us to weather this medical insurance storm.

*100% will be 6 months of expenses as suggested by Dave Ramsey’s Baby Step 3. We saving 6 months over because we are a small business family where income is not always the same every month.

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Major Announcement (AKA October by the Numbers)

Proverbs 22:7 says “The rich rules over the poor,
And the borrower becomes the lender’s slave.” (NASB)

We have a major announcement.

We’re done.

That’s right… 22 months after we started, we are out of debt!

Seriously.  It hasn’t quite sunk in for us either.

DONE!

Feels a little anti climatic, right? 🙂

In Dave Ramsey style….. FREEEEEEEEDOOOOOM!

For a final ‘by the numbers’ here is how the numbers break down:
Extra Debt paid: $5,116

Total Debt paid in October: $5,362

Since 1/1/2012 – Total Debt Paid off: $46,453*

*For the purpose of Baby step 2 we are not factoring in our home mortgage

There you go.

A few more numbers to consider while letting that number, $46,453, sink in.

•22 months
•1 layoff
•6 months on only 1 income
•6 months of steep COBRA medical premiums
•4 months of slow small business income
•1 HVAC system
•3 Student loans
•2 Medical bills
•5 consignment sales
•1 garage renovation
•1 baby born

One item that has been an uncountable blessing, is the support of our family and friends. From gracious understanding on the numerous times we declined going out to eat to the boxes of hand-me-down clothing and piles of gifts for our little boy. We truly could not have done this without the support of loved ones.

Thank you LORD for providing for us.  Thank you for entrusting us with funds and teaching us to be good stewards. Thank you for giving us strength and endurance to do what is right with your money, even when we didn’t feel like it. With the wisdom of Proverbs 22:7 in mind, we choose to not become the lender’s slave.

In closing, while the monthly “by the numbers” posts are done, we will be chronicling our next steps. Dave Ramsey’s baby step 3 is an emergency fund to cover 3-6 months of expenses. Feel free to drop by and see our progress as we move forward, aiming for step 3.

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September by the Numbers

September was terrific!

As I’ve mentioned before, the small business has picked up considerably the last few months. Because the baby was on the way, and we had gone such a long period with the business being slow, we chose to be extremely cautious. Even with understanding the debt snowball was on hold and we were functioning with the ‘crisis fund’ plan, we still decided to limit how much we drew monthly from the business.

All of this to say, we have decided it is now ok to free up additional funds. That’s where our extra money for debt comes from this month.

We are getting so close! It is realistic to believe that we will be Debt Free by the end of the year.

Without further adieu, here are the numbers:

Extra Debt paid: $5,000

Total Debt paid in September: $5,246

Since 1/1/2012 – Total Debt Paid off: $41, 019*

*For the purpose of Baby step 2 we are not factoring in our home mortgage

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August by the Numbers (part 2)

Just a quick update.  The medical numbers did finish coming in and my previous post was correct.  We were able to use the crisis fund we’ve built up since November to pay all 5,714.40. This amount covers both Z & my deductibles and copays.

And then beyond that, we were able to make a lump sum extra payment toward debt of $2,591.

Which means… my student loan is So Close to being under 10K. I thought it would be years before I saw that.

Thank you Lord for providing the funds to do this as well as helping us be disciplined and focus to follow through and be good stewards of what you provide.

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