Tag Archives: dave ramsey

June by the Numbers

This was an interesting (and slightly unexpected) month.

To start with, while the numbers at the end of this post might seem to show otherwise – we have definitely hit the slow portion of the year.  The very first few days of the month, my husband had a slew of freelance jobs pay – resulting in, for all intents and purposes, no outstanding invoices. Meaning – no checks waiting to come in until work picks back up, and more invoices go out. And even when more invoices start going out – it can be a couple of months on average for checks to start coming in.

It was also an odd month in that the way I get paid, is every two weeks.  This means two months out of the year, I get three paychecks in the calendar month. This happens to be one of those months.

To top off the “this is not a normal month” list, we’ve had family in town for a week and a half helping us with a remodel of the garage. Normally, a project of this magnitude would wait until someone is out of Baby Step 2. However, in this case, the HOA is painting all garages this summer and they were going to “just fix” any with rotten wood and charge us.  We thought it would be better to fix it ourselves so that it was done right, and done without having a huge gaping question mark to our home maintenance budget.

Fortunately, we were able to cash flow this project with the unexpected checks that came in at the beginning of the month.  We estimated  high on what the renovation budget would need to be – and ultimately, it didn’t directly affect our normal monthly budget, but it did take way from what we could have paid off.

And so, the numbers:

Extra income: none

Cash flowed to Garage Reno: $2,000

Extra Debt paid: $4,185

Total Debt paid in June: $4,431*

Since 1/1/2012 – Total Debt Paid off: $25,930*

One Major item to note – With this month’s extra debt paid – we are now over the 1/2 mark. Which is terrific since June is the 1/2 point in the year.  It’s so hopeful seeing focus and determination pay off. We might actually make our 2012 goal! We will have to wait and see how the next quarter goes – we’ll certainly get behind on the pace we need to finish – but there is always hope that the 4th quarter will be outstanding and catch us back up.

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

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May by the Numbers

This month was pretty spectacular.  We are so thankful that we got one more amazing month before the actual slowdown hits.

We had very little ‘extra’ income this month.  No Craigslist sales.

This month’s budgeting was a little tight as the way refueling fell in the calendar – we both needed gas for our vehicles on the 29th, pushing us over that line item.  We had out-of-town company for a handful of days – but were pretty pleased that we were able to save on the other weeks so as to eat out with our company and not go over on the food budget.  We were under by an entire $7. 🙂

As far as progress – like I mentioned, the slowdown hasn’t hit yet so when some large jobs finished up (having already prepared for the next few slow months) we were able to make the FIRST EVER above minimum on our last remaining Major Debt – my grad school student loan.

Without further ado – the numbers:

Extra income:

We won a $100 Amex gift card

Extra Debt paid: $3,794

Total Debt paid in May: $4,040*

Since 1/1/2012 – Total Debt Paid off: $21,499*

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

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Come on – you knew it would happen at some point…

Can I experiencing anything in life and not draw parallels from Lord of the Rings? Probably not.

I was thinking about going with a Mt. Rainier climbing expedition as my example, but before prattling on about different base-camps, distances, and such, I would have needed to do research.  For me – no additional research needed for LOTR.

So, lets face it, the first 4 months were phenomenal.  In January, we had some 2011 carryover money that produced momentum. February through April, we had extra funds come in from big jobs, we had off the charts Craigslist sales, and we scratched out what felt like a multitude of small little orcs that were nipping at our heals. After that we had a hefty HVAC that took longer than we expected, but still – somewhat manageable on momentum and hope alone.

NOW, we get to the difficult part.  Similar to Frodo and the Fellowship which soon became just Frodo and Sam – it was a difficult journey, but doable.  With friendship and supplies, energy and hope, they managed.  But at some point, they got through the walls of Mordor and stared out at the wasteland in front of them, and up at the looming Mt. Doom.

It’s at this point in the story that I feel we find ourselves.  We are staring out at the wasteland called “My Graduate School Loan.”  It’s the biggest amount we owe.  It has the highest interest rate.  When we pay – it feels like most money goes toward interest, and just a little leftover drivel hits the principle.

Added to this we are in May, 30 days from June. From past history, this is the ‘slow time of year’ for my husband.

What will be our lembus bread and memories of the taste of strawberries?  What will keep us going? Probably the Dave Ramsey Show, seeing the eventual tipping of the scales on principle to interest, as well as encouraging words from friends.

This little hobbit is ready to be off riding on the back of an Eagle, seeing Mt. Doom fade in the distance.  But that my friends is still months off.

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Filed under debt, grad school, lord of the rings, tolkien

Paying Double

One of the fundamental parts of our Debt Free in 2012 goal is making and sticking to a firm budget.  As Dave Ramsey says “Spend every dollar on paper before the month begins.”

As we’ve been doing this for three months now, we found that we have more money that we realized.  Instead of a few dollars here, a few dollars there, slipping through the cracks, every dollar has an assignment.  Once the essentials are assigned, we have more than we would have first imagined to work with on everything else.

In some ways our budget drives me CRAZY!  Take this line item for example: Tax Preparation (not even the actual taxes, but fees for someone to help us prepare our taxes).  I HATE this one.  Why? Because every month, we set a side money for Tax Preparation 2013.  AND on top of that – we had to set aside a large, lump sum in March for Tax Preparation 2012.

GRRRRR! Feels like we are paying Double!  What do you mean we have to pay for something this year AND plan for next year!?!  What do you mean we can’t take that monthly amount for 2013 and put it toward something more fun (like movies!) or more ‘important’ like the Debt Snowball!?!

Well… that would be nice – (especially while we are full throttle debt paying machines, I’d love to put it toward debt!) – BUT next year. When March/April comes around. There will be no lump sum line item in the budget for 2013.  There will be a lump sum extraction from our savings – and direct payment toward Tax Preparation.  AND then, I’ll be a happy camper.

Which is just one small example of why planning now, working hard and paying off debt now, will pay off. 

I’m not even sure how to dream with what we can do with the former “Set aside from the March Income a Large Tax Prep fee” money that we will no longer need to set aside…. And if all goes well – we won’t need any dollar of that to put toward debt since by March of 2013, we’ll be debt free.

Hummm…. Imagine that.  Dreaming, Hoping, and Planning to make it happen.

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Tools We Use

Ok – a week or so in, if you don’t know we use material from Dave Ramsey, then you haven’t been reading. 😉

In addition to Dave Ramsey, I love a well done spreadsheet.

I get tired of doing all the writing, and my math skills are often lacking.  Plus, it’s easier to make a line item adjustment, and have it automatically update all the totals rather than redoing bits of the budget.

In addition, a spreadsheet makes it easier to compare budgeted to actual.  It also presents an opportunity to link files month to month, or year to year for additional comparison.

Finally – (and I take zero credit for this) it allows for easier reporting.  I am not an excel wizard, but thanks to Vertex42 – I don’t have to be.  If you need some budgeting spreadsheets – check out some free budgetting resources here.

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Hello 2012. Goodbye Debt.

Yes – it’s been a while. We’ve been busy in part, starting in on the entire point of this post.

For 2012 – we are getting out of debt.  Everything but the house. How are we going to do this?

1. Go through Dave Ramsey’s Financial Peace University — I made a request late last year via facebook if anyone had an unused kit they could lend us. Turns out a very kind friend gave us their old textbook & cds. The kit was practically brand new – several pieces still wrapped in plastic.  Yesterday, we started out strong, listening to the first 3 lessons, so we are in the middle of putting together our monthly budget

2. Make a budget and stick to it — (something we are learning from FPU) We’ve always been good about not spending money we don’t have on a regular basis (our debt is typical student loans, along with medical bills and one HVAC system), but we don’t have a written monthly plan. This step is tricky since the one member of the household is self-employed. It’s tough to try and write down hard numbers (which are still kind of based on estimates). The goal, plan for lower than expected. If we continue to live below our means, see it spelled out as such on paper, we’ll have a much easier time directing everything above the expected amount as available to use in our debt snowball.

4. Use the debt snowball — We are planning to pay off several smaller items right away, leaving one Large Student loan. Because the other debts will be gone, what we would have used for those monthly payments can now all be used against the one remaining loan.  Can you imagine paying 3 times the monthly minimum on something?  Just think – the extra amount (equal to 2 addition monthly minimums) will all go DIRECTLY TO PRINCIPLE.  Sweet! This is the key.  By knocking out chunks of the principle, the payments pick up speed each month, with less and less going to interest, and more and more going to principle. Ultimately knocking out the debt much quicker and saving us thousands in what would have been interest through the years if we just stuck to the minimum.

5. Continue to sell unneeded / unused possessions on Craigslist — The last portion of 2011 saw us raising around $430 from selling items on craigslist.  The plan is to use this extra money to toss into the debt snowball – for even more principle deduction.  (as part of this same plan – really any extra, unexpected money will be used the same – even some of our cash Christmas presents. It may be “boring” but ultimately, it’s a fantastic Christmas present. Think of all the future stress that will be eliminated.  Thanks to all of our loved ones who inadvertently helped us with this cause!)

6. Food, Envelops, and Emeals — We are going to continue using emeals (Highly Recommend them! Save money & time planning out your meals – Check it out Here).  Even when we are busy, three planned meals a week saves us time and money. Plus, we are going to work on using a cash / envelop system to buy all groceries and when we eat out (or order in).  It’s a proven method to make you keenly aware of how much you spend on food – which in turn will help us make wiser choices.  Keeping in mind, every dollar we can cut from the food bill moves over in the budget to chip way at debt.

So there you go. That’s the plan.  By the way, it’s not a resolution, it’s a goal. Something we started working on ending off 2011 and we are making great strides as we start out 2012.

And you know what – I’ll allow for a bit of realism to creep in that says “you never know what unexpected events are going to happen in 2012.  Some of that “extra debt snowball” might realistically be needed to pay for other items in order to prevent accruing new debt. So – don’t be too disappointed if some of your debt carries over to 2013.”

Yep – I know.  But even if that ends up being the case:

1. We didn’t go into new debt to pay for unexpected events & 2. We still made SIGNIFICANT forward movement. That momentum will be so empowering and encouraging.

I’ll keep you posted on how it’s going.

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