Money Matters // An Update

>> Thursday, January 18, 2018

I can't remember where I left off with our debt and repayment + debt-free goals. I made those goals last January and declared we could be debt-free in just 15 months. We were doing OK with our plan of attack for a while, but then summer hit (vacation we shouldn't have gone on, etc.) . . . and then we had thousands of dollars of repairs needed for various things in the fall. And then we planned to be frugal at Christmas, but ended up spending more than we intended.

Yadda, yadda, yadda. Major setback is what I'm saying.

I am sharing this post to hopefully keep myself accountable. Stephen and I sat down yesterday and looked at our whole financial picture. That savings we had in the bank has dwindled to just two months of expenses. We needed that money for a lot of stuff, so I get it. And I'm glad we didn't go into debt paying for the repairs we needed for our home and our car. But still! It stings.

Anyway, enough of you (and my friends) have said to look at Dave Ramsey. We were loosely following those goals last year when we started. Mostly, I am afraid to drop our emergency fund to just $1,000 because history has shown that we regularly need more than that in emergencies. I think a cushion of more like $3K would work for us. But -- for those of you who have done this -- is that all the money you have in your bank account? That makes me nervous.

But then I realized we've done so much of this money thing backwards. We actually had like nine months of living expenses in the bank when I left my full-time job to stay home/work from home. We retained that cushion for a very long time because I was afraid of losing work and needing that cash. All the while, if we needed a car or a major something (furnace, for example), we'd finance. Adding to our debt. In a way, we had a very false sense of security, right?

We are now thinking of going through the Ramsey steps. We already have a very good budget that we just need to follow again. It's realistic. It's tight. But it's very doable. We can pitch some of our money in the bank to pay off a few debts from the get-go, freeing up money in the monthly budget to start the whole snowball thing again. And we can kick a lot of our debts out by the summer this way.

Milestone: Stephen and I each now have less than $5K left in student loans. This is HUGE, as we both started with more than $30K.

But our total debt right now is sitting at just about $25K. That's an improvement from last year's $34K, but we did add to our debt by incurring credit card debt on vacation and buying a washer + dryer set via a Home Depot card. It's 0% for that last debt, but it's still just sitting there. We should have purchased them with the money we had in the bank.

OK. I hope to update you more as we go through the steps. I know many of you have gone on your own debt-free adventures. Are we on the right track? Is it just a matter of moving forward? I don't know how we fell so far off from our goals. Any suggestions on that? And is anyone else starting this journey . . . or starting it again, like us?

The idea of being debt-free is so liberating. I know it will happen eventually, but we definitely have some savings goals in mind and would love to lighten up a bit. You know, take a big trip or do something FUN with our money again. I can't wait to get there!

I'm off to my Excel budget spreadsheet! You can read more of my debt-related posts here.

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