Monday, February 2, 2009

A little back story...

To begin, I think I should start from square one.

Most of our debt is student loans. Phil has two that he got his freshman year. His parents paid for the rest of his school. For me, I got a couple freshman year at SLU and then the majority of them came my junior and senior years at Rolla. Junior year I had gotten married and the plan was to take the loans because they had 0 interest until I got out of school, then pay them back right away because we had the money... and let it grow during that time. As we all know, that didn't work out, so I got stuck with a lot of student loans from that year. My senior year, I got a lot of grants and some loans too, since my estimated family contribution was so low.

And of course we have the credit card. It wasn't too bad until I couldn't pay for all of my school stuff, so I had to put some on there. And then moving down here, we put a lot on because we just didn't have the means to save while in Rolla, so we lived about a month or two mostly on the credit card (not rent), so the credit card is not a pretty sight right now.

The last debt that we have is the hospital bill from Charlotte's birth. Its just over $3100 and we're on a payment plan with the hospital right now, with no interest. It'll be nice to pay that one off, then I'll feel like we can think about another baby!

I've always been interested in money and have hated the idea of debt/loans/etc. I never really had a plan to pay it all off though. After talking to my dad a lot, he recommended Dave Ramsey. He then gave us a copy of Dave's The Total Money Makeover, and we read it very quickly, and became motivated, we finally had a plan!! After Charlotte was born, we signed up and have since graduated from Financial Peace University. I highly recommend it for anyone who is on the fence about attending. It is a time commitment, but very helpful and motivating.

Since discovering Dave, we have developed a plan for our finances and paying off our debt. We are following his baby steps and are currently on baby step 2. (We added in baby step 1b... pay for a wedding with cash). It is very comforting to finally have a plan. We also have a monthly budget that we stick too. It took a few months to get one that worked, but now that it does, I wouldn't do it any other way. We use the envelope system, where you put cash in envelopes for different categories. That too is very helpful, because when we're out of money, we're out of money. There have been a few months where we have to scrounge around and eat peanut butter and jelly sandwiches for lunch and whatever we can find for dinner (no we don't starve, we just discover what is deep in the freezer and should be eaten anyways!). I'm also trying to "penny pinch" wherever possible. I do most of our grocery shopping at Aldi's (just started this past month) and that saves A LOT of money. We also buy all of our clothes on sale or at stores like Ross's, TJ Maxx, or the like. That saves a lot of money too. We also have a deep freeze now, so that if I find something on a super sale, I buy a lot. For example, I haven't had to buy chicken in a very long time :).

Hopefully in the next few days I will get up our totals and write out the debt snowball and such. I hope I can find a free calculator online so we can see our "date of freedom" if we just pay the minimums... of course it'll need updated when we pay extra on them.

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