How Did You Do That?

This morning I said, “Hey it’s our debt-free anniversary!” It’s a good thing I have the blog because that’s how I keep track of how many years it has been. Eight! When we paid off our house DD was in kindergarten and now high school is on the horizon.

She said, “How did you guys DO that?”

Short answer… when we were first married and had less income we paid off all of our credit cards, then our car. We hated interest! After that, we only bought what we could pay in full for (except the house). Then we went after the mortgage.

I shared that most people use credit/debt to pay for trips, clothes, cars.

I never envisioned how quickly our decision to be debt free would become a touchstone for talking about college costs. Many people would say, “Eighth grade is WAY too early to think about college!” I disagree! Three years from now she will be narrowing down choices for college, which is a $100,000 + financial decision. One day you’re deciding how much babysitting money to put on your Starbucks card and the next day you’re taking out a $7,000 unsubsidized loan (interest accrues right away). The steps she takes in high school can directly correlate into money and more choices for college, if she wants them. We have found that when you stop borrowing money you need to think 2-3 years out for major expenses.

If you’re at the beginning of a journey to pay off credit cards or school loans, keep going! It’s a huge undertaking in our culture of readily available credit, but if you are successful you will give yourself and your children an amazing head start at building wealth and freedom.

Dave-A-Versary

Memorial Day Weekend 2007 was our first exposure to Dave Ramsey.   CNBC was running his “Dave Ramsey Roadshow” — most likely to fill time during a holiday weekend.  I don’t recall how I landed on the channel, but I know my husband was working on the computer at the dining room table and able to hear what I was watching.

We had been doing many good things with our money – investing, saving for our 2 year old’s college tuition, paying bills on time.  We were also spending a ton of money — on daycare ($10,000/year), on loan interest, and on take-out meals from California Pizza Kitchen because I was working full-time.  We were starting to hate the day care lifestyle.

Seeing the show (YouTube version above) gave us the VISION for what we could be doing with our money.  To read about the full plan of action we took, go here.  

Ten years have passed since that life-changing Memorial Day.  Some of the foundational elements of our current family life, such as having me home when our daughter is not in school, would not be possible if we hadn’t seen this program and acted on it.  If you could use a change in lifestyle and want more freedom, it would be amazing if I could pass this gift on to you.

 

 

 

 

Close Call on Debt Free Anniversary

Love those cute readers

Well, it seemed like a definite possibility that I was going to lose my job today on the ol’ debt-free anniversary.  Sobering!

Yesterday I got an email inviting the 4 people in the the school district that have my position to a meeting with the HR director and Finance director.  Never good.  Especially a meeting with no agenda.  We suspected there was a 70% chance they would reduce the hours (again) and 30% chance I would be gone altogether in the next school year.

It turned out that they are going to reclassify the position which will take away vacation pay and some of the holiday pay.  I can live with that.  I am relieved because I love my library job and the kids.  My husband is relieved because he is really eyeing up retirement at 57, and a comparable job would be hard to find for me in the current education climate.  I am not ready to give up summers off because of DD’s age.

So, debt-free day will close with massive gratitude and relief.  Underlying these feelings is motivation to “make hay while the sun shines” and keep saving for both a UK vacation and retirement to make my husband’s early retirement a reality (he has over 10 years to go).

Have you had an employment wake-up call like this?  In education it’s become dicey every single year.

 

 

 

Debt Free Anniversary

Stopping to smell the roses….

We were relaxing on the couch last night and I remembered that this Thursday is our debt-free anniversary.  My husband and I had to think back to how many years have elapsed since we paid off our house.  Six!  Every year I have to count back to figure it out.  DD was in kindergarten when we sent that last check off to Wells Fargo, and now she is in middle school.

It takes hard work to pay off your house and credit cards, but it is just as big of a challenge to stay out of debt afterwards because there is no “end” goal to count down to.  It’s just — stay out of debt and keep staying out of debt.

Over the past 6 years we managed to re-side our house, buy a new car, and added  a bathroom to the basement without going into debt.  To accomplish these required a lot of saving and budget meetings week in and week out.  It’s possible to pay cash for these expenses though when you aren’t making payments.  Our next major expense is hopefully a trip to the UK in 2017.  To accomplish this… saving, budget meetings every Saturday night, and using my part-time employment to put towards the vacation budget line.

If you are currently in the debt payoff process, keep at it with that gazelle-like intensity.  Efforts like clipping coupons and having no spend days are fine, but none of these things can rival the amount of money you save when you aren’t paying interest on car, home, college and credit cards.

Thursday we will probably celebrate by getting take-out dinner of some sort, and perhaps a family activity this weekend like going for ice cream. . .  or Chik Fil A 🙂

 

 

It Started Frugal . . .

The week started out frugal.  I had a “Secret Valentine” at work (like Secret Santa) and I made her Cupid Crunch (popcorn and pretzels coated in Wilton confectionary coating with added pink M n M’s and sprinkles for bling).  I also gave her stargazer lilies in a vase from Goodwill which I swear was leaded crystal.  I got it for .49 during a “yellow ticket happy hour” of sorts.

We also had a breakfast social at work and I made my Irish soda bread, which is delicious and uses ingredients I have on hand.

We ate at home and used a lot of pantry items.

How was your Valentine’s Day?  I made “black magic” cupcakes, which is one of those famous recipes that I believe originated with Hershey’s cocoa.  My husband picked up our traditional heart-shaped pizza from a local restaurant.

Each week we have a set amount of money we can spend, and when we don’t spend it all, we like to allocate it to savings or other budget areas we are focusing on.  Today we went to Target.  Need I say more?  I think we had 10.00 left at the end of the week.  Much of what we purchased at Target was organic frozen meals which Mr. Saver takes for lunch.  Fortunately, we don’t get to Target very often which minimizes the damage.

At this time we are pretty set budget-wise for kid summer activities.  Our main budget focus is saving for family vacation and overall savings.

 

 

Living Baby Step 7: The House

Would you believe this month will be our anniversary of 5 years debt-free? You can read about our final mortgage payoff here.  Dave Ramsey’s final baby step is to “build wealth and give like no one else” and I thought over the coming weeks I would examine what Baby Step 7 looks like for us.

While it would be fun to tell you about a yacht or a luxury berth on the QE2, as the kind of practical people that follow Dave Ramsey, those are not choices we have made.  A major amount of the money that would normally be spent on a mortgage payment has been directed towards saving for largish home renovations and repairs.  A siding project that also required masonry work… flooring… painting that required patching… floor refinishing…and currently we are saving to add a bathroom in the basement.

When you have committed to being debt free and never paying interest, you have to save a lot to be able to pay for home renovations and repairs without financing. Sure we have 100% equity in our house, but we don’t view our home equity as a bank account to tap into.

Other Dave/Mr Money Mustache fans might choose to do some of this work themselves, and more power to you if that sounds like you.  For us, a choice we can make being debt-free is to have someone else do the work and hire people whom we believe to be trustworthy and conscientious.

If you are following Dave, what are your priorities for Baby Step 7?

I’ll have some additional thoughts on living step 7 throughout the month.

Did You Give Your Inner Child a Credit Card?

Many things about being an adult come as a rude awakening:

• I thought I would never go to the dentist when I grew up.  Now I go twice a year and make my kid go too!
• I thought I would grow up and be able to eat Cheetos whenever I wanted, every day if possible!  My grown-up self fears the effects of that kind of eating.
• If I had known our income today I would have thought it would be enough to live like the Drummonds in “Diff’rent Strokes”.  Reality is decidedly non-Park Avenue.

One other “unfair” part of being a grown-up is that while we are fortunate to be able to afford many things, we have to save our own money for them! Seriously disappointing!  Even being debt-free has not made a money tree grow in our backyard.  If we say we want something – be it Starbucks, or taking a special vacation – we have to come clean with ourselves and allocate money towards what we value.

That “coming clean” part of budgeting can be a little mentally painful, because my human nature wants all the pleasure with no pain.   This isn’t a pity party, but I want to capture the thoughts that go through my mind every week on Saturday when we update our weekly budget.   We confront our financial choices twice in our house – once when we enter the purchase into Quicken, and the next time when we close out our budget at the end of the week and see what we spent.  This “reality check” is what keeps our inner child from running away with our bank account.  Pout.

If you find expenses like lattes, drinks after work, eating out, or new clothes are busting your budget – or that you can’t commit to a budget – could it be that the kid part of your personality isn’t on board with the reality of adulthood – a reality where the consequences are all ours to enjoy?

 

 

 

Debt Free Anniversary – 4 years

Four years ago our daughter was in kindergarten and I took a part-time bakery job to get a little more income rolling in (my take on Dave Ramsey’s ‘get a job delivering pizzas’).  We were watching our grocery expenses (beans and rice, as Dave says) and throwing everything we had at the mortgage which was ticking down into the $20-30,000 range.

We got to the point where we were looking at our emergency fund and savings and said to ourselves: “What return are we getting on the savings vs. what is the interest costing us on our mortgage?”  When we were below $20,000, we decided to take a chunk of savings and pay our mortgage off (of course we left enough to cover home ownership-type emergency expenses).

Getting it actually paid off was interesting!  We had to call the mortgage company and get a final payoff amount. We had a limited number of hours to get a cashier’s check from the local bank and get the whole thing sent via express service to the mortgage company.  They wanted every last dime of interest, you can be sure!  Our local banking staff were excited for us, and they waived the fees for the cashier’s check.

The next day we went right back to rebuilding our savings, and we haven’t paid interest ever since!  Staying out of debt has had a huge effect on our family’s financial future.  Our accomplishment is something we share readily with our daughter, and we hope it will be an experience she can look back on when she makes her own financial decisions for college and beyond.  We will celebrate as a family today with breakfast out (we are off work and school by chance today), a special dinner, and family time.

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It’s Great to be Two

Healthfulsaver is 2 years old!  Did anyone bring cake?  Day-old doesn’t bother me 😉

I initially started the blog because my daughter (2nd grade at the time) had one, and she was having so much fun I wanted to blog too!  During the two years I have been writing Healthfulsaver we have been debt free, but having that financial freedom has only led us to become even more budget focused so that we never have to borrow money again.

Some of my most visited posts in the past two years are:

• Getting Out of Debt: Part 1- The Zero Net Worth
• Getting Out of Debt: Part 2 – Goodbye Credit Card Debt
• So You’re Debt Free… Where are the Granite Countertops?

Thanks to readers and blogging friends for all of the support and thoughtful discussion over the past two years!

Building Net Worth $6.00 at a Time

Our daughter (soon to be 10) has the opportunity to earn up to $ 6.00 per week in allowance.  She is paid every Saturday night, which is when my husband and I “close out our budget week.”  We pay her the same way we get paid — electronically.  We tell her how much she earned and she can add it into her own personal budget spreadsheet on the computer.

Currently she is “funding” the following savings categories that she created:

• Charity (this usually means buying items for Operation Christmas Child)
• Church (she makes her own offerings as she sees fit)
• American Girl
• Animal Jam (online game – she has to pay for her membership or ask for it as a gift)
• Clothes (for non-essentials, like earrings from Claire’s)

There is also a column for “Debt.”  She has been in debt to us before (for an Animal Jam membership promotion).  Dad does not accept only $1.00 in repayment either.  Debt is a bummer! This debt experience sent her looking for “extra” work around the house so she could have her allowance and have money to repay debt. This is what Dave Ramsey calls “getting yourself a second job delivering pizzas.”

Finally, there is a column for her savings account.

(Money allocated in budget + savings) – Debt = Net Worth, calculated right in the spreadsheet.

In nine more years she will be eligible for student loans, credit cards, and car loans! I truly hope her experiences now are giving her a foundation for making financial decisions down the road. My feeling is that the college years take you from making very few decisions about money to making money decisions that affect your financial health for a good part of adulthood… and THAT is a whole other post!