Prosperity, as defined by Merriam-Webster, is the state of being successful, usually by making a lot of money. The key word here is usually. One of the biggest problems in relationships these days is money. Money causes fights, breaks up would otherwise be loving couples, and causes a lot of stress.
I’ve struggled with money over the last five years. I misplaced a lot of trust in a lot of different people, and it has caused me to lose a lot of time working and reworking my finances to figure out how I can make the debt go away as soon as possible, and then it seems as though I do one thing, and suddenly there is a something that happens that costs a lot of money (like my car breaking down, or our ferret getting cancer, or Erin needing another oral surgery).
We’ve come to realize that this is all just a part of life. There will always be unforeseen expenses that will catch you off guard, and you just do what you can and keep moving forward. When it gets to be around “big pay day,” which is the two pay weeks every month where Erin and I both get pay checks, it use to be that would literally stress myself into a complete and total meltdown. I could cry myself to sleep. I would wonder how I was going to put food on the table (because Erin had her own bills, and while she contributes as much as she can, the majority of the groceries are, right now, my responsibility. This will more than likely change once she’s out of graduate school and making more money than I do.)
Growing up, I never wanted for anything. My parents made/make good money, and they made sure that my first priority was always my education. They took care of everything else so that all I had to do was focus on school. They didn’t want me to have to get a job because they didn’t want anything that might get in the way of my educational success. They paid for car, insurance, cell phone, college and graduate school tuition, rent while in college, and gas money, extra expensives, and gave me an allowance to go out and have fun with on occasion. If I ever needed extra money, they would always help me out (within reason).
When I decided to get off my parents’ cell phone plan and car insurance plan and buy the car from them, my dad asked me multiple times if I was absolutely sure this was what I wanted to do. I said yes. It was time.
And I made a lot of mistakes before then, like I said. I take responsibility for the debt I find myself in. I’m a lot more financially conscious now than I was when I was still on my parents’ payroll.
Now, if you’re reading this… maybe you just find my life interesting or maybe you don’t like me and enjoy reading about my struggle with money or maybe you’re financially struggling two and looking for some sort of hope. I found an article about a man who paid off $20,000+ in student debt in a year, and when I read the article, I realized one really important factor: He made $120,000 a year.
Well, of course he could pay it off in a year… that still leaves him with a lot of money. That’s not at all a shocker to me!
I make $42,000 a year (before taxes), and Erin makes around $30,000 a year before taxes. That gives us around $73,000 a year in combined income before taxes. If we didn’t have the debt that we have, we would be insanely comfortable, but we don’t. Instead, we do a lot of money saving through bulk purchases at a wholesaler and we buy veggies at a vegetable stand by our church. We only shop the outside of the grocery store, so we make a lot of our own things and freeze them.
I’m completely open about my financial situation. Not because I’m trying to garnish some sort of attention for myself, but because I want others who may be in a similar situation or not either get out of it or avoid getting into it all together.
With that said, we spend $1,959.43 every month in debt payments alone. This does NOT include our power bill, water bill, netflix account, car insurance, cell phone, hulu account, internet bill, HOA fee, gym fees, and gas bill. That number does not include putting food on our table or in our animals’ bowls. That doesn’t include gas in our two cars. It doesn’t include any emergency expenses. It doesn’t include the amount we try to put into savings each month. It doesn’t include things I can’t remember right now but know I am forgetting.
I spent a lot of time despairing over money. My parents offered to help me pay the debt off, but this isn’t their problem. I couldn’t ask them to do that after everything else they’ve done (like paying for our wedding and our honeymoon as gifts to us). Now, you may think that I did a really stupid thing by telling them no, but that’s my choice and that’s that.
I will get out of this debt.
And you may be wondering what that debt looks like… It’s $180,765.49. This includes Erin’s braces payment, the best buy credit card, the Kay Jewelers credit card, Erin’s Discover card, my three visa credit cards, Erin’s two school loans, Erin’s car loan, and the mortgage (which is honestly most of the money in that number).
We do not plan on paying off all of the debt before we sell our home and move. We probably won’t pay off the student loans and car before we sell our home and move. So the real question is, what is the “real” debt number (the amount that we are really desperately trying to pay off as quickly as possible)?
The above number is Erin’s braces and our credit cards.
Okay, this is great and all…. but what are you doing to make that number go down?
After our honeymoon, we came back and got settled into the routines of married life. We looked at our bills. We had a couple of unexpected expenses when we got back from our two week long vacation: an increase in one of our credit card bills due to spending during the honeymoon, a $250 house sitter payment, a higher-than-normal power bill, and finally, we have next to no food in the fridge, so our grocery bill was increased.
Needless to say, the rest of July and the first of August were spent playing catch-up.
Rule #1: Protect Your Credit Score
My credit score is 658. It’s considered “fair.” I won’t be able to borrow at a good interest rate, but I will generally not be refused a line of credit. I started using a website called CreditKarma.Com about two days ago. They are a TrustE sight, completely free, and will give you your credit score, for free, without actually affecting your credit score.
The biggest thing affecting my score is the fact that the amount of credit I have is being utilized (meaning that my credit cards have high balances). However, all of them are in good standing.
When you look at the Credit Karma website, which is really fascinating, and I suggest you make an account and check it out if you don’t have one already, it will tell you what is affecting your score. There are three major things that carry a lot of weight: the amount of credit being utilized, payment history and derogatory marks (such as things going to collections and bankruptcies and other things along those lines).
This is the easiest way to protect your credit score: don’t miss any payments on any type of bill. I’ve heard, “Oh, well, medical bills don’t affect your credit score.” They do if they aren’t paid. They can and will be sent to collections, and it will go against your score. Even if you pay them off, they will sit there negatively for seven years. If you don’t pay them off, they will continue to reappear on your credit report every seven years as it gets sent by the medical professionals from one collections company to the next.
So what can you do if you have medical bills like that? Talk to the doctor’s office or hospital and try to work out a payment plan before the bill goes to collections. Most times, they will be willing to work with you (unless you give them a reason not to). If they don’t work with you and it goes to collections, at least you tried. It still doesn’t mean you should not pay the bill. Continue to pay what you can until it is paid off and then contact the collections agency and ask for them to remove the negative mark from your report or mark it as paid in full. It will look better than it not being paid at all.
And something is better than nothing. Even if you’re only paying $5 a month on it… at least that number is going down.
Rule #2: Set Aside and Snowball
Prior to getting married, Erin was paying her bills and I was paying mine. She made money and I made money, and she paid her bills, and I paid my bills, but now we’re married, and it’s not just her and me… it’s us.
When that happened, we decided to work on this together as a team (but if you aren’t able to do that, you can still do the following by yourself). We created a joint checking account. All of our paycheck money is funneled into that account minus the minimum amount required to be directly deposited into our individual accounts. The joint account is used to pay all of the bills in the family, regardless of what that bill is. This includes the money that we use for gas and groceries.
Between Erin and I, we have two savings accounts and three checking accounts. This weekend, we are going to look into transferring her savings into my savings account, adding her as an authorized user on my savings and then linking her individual checking account to my savings for her keep the change and overdraft protections. This would give us a single savings account to focus on so that we can work on building up our savings while paying down our debt.
We’ve decided to set aside $100 a month into the savings account for emergency purposes. Now, maybe you can do more than $100 or maybe you can’t do $100 and need to do less. The idea is that you are taking some amount of money that you can live without, no matter how great or small, and setting it aside into a savings account that you only use in the event of an emergency. If you don’t have a bank account, this can be a jar or a box or something… and it can even just be your lose change. The idea is that you are just doing something greater than nothing.
The next thing that we did was open an Excel spreadsheet and write down every single bill that we had that was considered a debt (things like the power bill, which fluctuate on a month by month basis, don’t count). After that, we ordered all the bills from the smallest bill to the largest bill, wrote down the minimum payment and how much we were paying on it.
Then came the hard part: we decided to focus completely on the smallest bill first, which was Erin’s braces. To do that, we dropped all of our other bills down to their minimum payment and all the extra money we were paying towards other bills (which in our case came out to $120) went towards her braces payment.
I hate paying the minimum balance on a debt payment, so this part has been exceptionally difficult for me, but because of it, we will have Erin’s braces paid off in the next ten days.
Finally, the cool part. Dave Ramsey, who I’m not a huge fan of for his heteronormative beliefs and anti-homosexuality actions, calls it “snowballing.” I call it logical.
The money you are paying towards your debt is money you don’t really miss already because you’re paying it out. So after you get the smallest bill paid off, the money going towards that gets added to the minimum balance on the next bill, accelerating that pay off. Then it all gets added to the next one and then the next one and the next one until all the debt is gone, however long that takes.
For us, this means that after this month, our next debt will be paid off in October (only because Erin’s car taxes are due and some of our extra money in September has to go towards that instead). Unless, of course, we get some divine intervention and end up with an extra chunk of change, which I honestly wouldn’t be surprised about.
Rule #3: Separate Your Needs from Your Wants
Erin and I have three separate checking accounts. We have our join account and our individual or personal accounts. The joint account is the needs account. Out of this account comes all of the money for our bills, our debt, our groceries, our gas, and any other expenses which enable us to live our lives. Our personal accounts are for things that we want. If we want to buy lunch out, we have to have the money in our personal accounts. If we want to go out wherever (movie, Dave and Busters, etc), we have to have the money in our personal accounts. If we want to buy a present or gifts for someone, we have to have the money in our personal accounts.
Where does that money come from, you ask? It is set aside from the joint account in our personal accounts. We transfer the money either in or out so that we have a balance of $100 added to our personal accounts every month. Now, $100 may not seem like a lot for a month, but don’t forget: this is our fun money. This isn’t money for things that we need. It is money for things that we want.
If we decide to spend or not spend that money, we will get another $100 the next month. We can save it up for Christmas (where we’ll probably give ourselves a little bit more of an allowance), or we can spend it or whatever. When my needs are being met, there isn’t much that I want for… I’m fairly content to hang out with my wife at home and watch Netflix or go on a hike somewhere for free. We’re both fairly simple people.
It will also make us conserve more money and hopefully help us get a little bit more into our savings by the end of it. We’re saving up for a down payment on a new home, even though that’s a few years down the road.
Rule #4: Have Faith
Regardless of whether or not you believe in a higher power, you can have faith. Having faith is believing that something will happen, even if you don’t really have any proof that it will. If you believe in a higher power, know this: That higher power is an all-loving and all-knowing entity that flows through all things. That power wants what is good and best for you, and being financially secure is a part of that. If you make choices that will help get you to that goal, then that higher power will see you through to the end of it.
If you don’t believe in a higher power, then know that the choices you are making now will have a wonderful and positive impact on your life in the future. Never forget it!
Erin and I are religious and spiritual people. We believe in a higher power that is all loving and that wants what is best for us in our lives. We believe that the thoughts of our financial security and freedom were divinely inspired and placed in our brains by that higher power, which means they are divinely inspired and must come true. Our motto from day one is “We will get through (insert whatever situation here) together.” We will constantly remind each other that the Gods are on our side and will provide for us as long as we have faith.
And I’m not lying when I tell you this: We get random checks in the mail for small amounts of money. We have gotten a lot of blessings in the form of cash as well. For example: we had a registry through Bed, Bath, & Beyond that we posted online and all over everywhere. Many people bought us gifts off that registry, or gave us gift cards, but an oddly high number of people simply gave us cash for our wedding.
We put every penny of it (minus the small amount that we took with us on the honeymoon) towards the debt.
At one point, I offhandedly opened a letter from Lenscrafters. Usually, I would throw letters like this away, but we opened it for whatever reason, and inside was a check for a refund from an appointment I had two years ago. We put that towards the debt as well.
Erin got a letter in the mail one day that randomly had a dollar bill in it with the promise to send her five more dollars if she filled out a short survey about her television or entertainment habits. She filled it out, not thinking much about it but doing a “what the hell, let’s see what happens” and they sent her back $5. Now, we get surveys in the mail asking us to track our TV habits for a week and they’ll pay us $35. Since we don’t watch much TV because all we have is Netflix and Hulu, then it’s really easy, and we’re making quick and easy cash that we either put towards bills or we save for our “Next Generation Unity” meet up where we get together with all the other people at church our age and go play games at a local bar.
And that’s that. Those are the four rules we’re following to get out of debt as quickly as possible. We are trying exceptionally hard pay the credit cards off in the next two years so that we can hop back on the baby making train (or adoption train, whichever we end up doing). It will all depend on my fertility, which, as always, is a fun game (not).
Posted on August 15, 2015, in Life, Uncategorized and tagged bills, dave, dave ramsey, debt, faith, Fertility, finances, get it done!, Love, money, payment, plan, plans, prosperity, ramsey. Bookmark the permalink. Leave a comment.