Both in my work as an advocate and when I listen to friends, family, and the Dave Ramsey show I see/hear a lot of people getting in their own way when it comes to success. They may have the solution handed to them on a silver platter, but they are saying that it's not good enough for them and immediately point out the faults in the plan.
This is not to say that the way that I'm choosing to do things is THE way and if you have problems with it that you're running yourself into the ground. But some parts of what I'm saying are pretty simple and universal. People tell me they have trouble having enough money to pay their bills each month, to which I clearly respond "well, have you made a budget?" and their like "Well it's hard because I have so little money" which it may be emotionally difficult but it's even more important because there's little to no cushion to make a mistake.
Whatever your goal is, it's probably not easy. If running a marathon were easy, everyone would do it. If being debt free were easy, then the idea of bankruptcy would not exist. For each goal you have lookup what people are doing succeed at that goal and pick the path that works best for you. For example, I want to do a triathlon next fall. I know one weak spot is going to be running. So I'm running a little bit more than my average run in Nike+ every day so that my run is just a little bit longer every day. When I reach a 5k then I'll run a little bit faster pace than my average pace everyday. This way works for me because I tend to talk myself out of running for much longer so going out and saying "I'm going to run 3.2 miles every day" is not going to happen. You may have to work a crummy job, you may have to work 100 hours a week (not suggested), you may have to avoid eating out, or cancel your cable to meet your financial goals, but it's all worth it in the end when you can go from month to month without the stress of "am I going to be able to pay all my bills?" However, you have to get the reasons why you can't do something out of your head and try something new. What you've always done isn't working, so how do you know that something else won't work?
Iowa is apparently the most debt free state in America. (see!) With only an average credit card balance of $2,904 per person. Maybe because I am knee-deep in Financial Peace University but that still seems like a lot. However, keep up the good work, Iowans!
Thanks for the awesome support that I got from a lot of you today... er yesterday, overnights are messing with my concept of time. I had a quite upsetting moment when Eric and I had an unexpected bill on our credit report. However, we cleared it up and are working to stop future problems through a couple of different things.
Number one lesson from this. Check your credit report. You can check from all three crediting bureaus once a year at this link here. Do it, and then mark on your calendar when to redo it. Even if you're not using debt or credit cards anymore it affects your renting ability, your insurance premiums (having too many accounts open raises your premium) and your security clearance if you're in the military or work some other government job. All of the things on your credit report stay on there for 7 years after the last activity, i.e. whenever you close the account.
Ladies and gentlemen... -drumroll- I cut up my cards!
Sorry to disappoint, but I didn't do anything funny or awesome, just cut them up and put them in the trash.
However, this is a very important and very hard step in the debt-free process. You have to:
1) have your emergency fund of $1000 so you don't need the credit card for emergencies.
2) Believe in your emergency fund
3) Remember that normal is broke. So you'll probably see comments on this post saying that I should keep one card open so that I can buy a house with a mortgage or I'll need a credit score to get a job, but really, you need a credit score if you want to keep using credit. The use of credit is your choice, but if you're not wanting to use credit anymore your FICO doesn't matter. Eric and I even intend to pay cash for a house, so, bye bye FICO.
If you want to have some fun cutting up cards, go for it! Have a get together where everyone cuts up their cards, run them over with your car, shoot them, blow them up, the sky's the limit. An important key to getting out of debt is to stop using debt as quickly as you can. I know everyone has their own personal situation and there's a HUGE paradigm shift you have to go through to be able to take that step to say you'll never use debt again.
I've never been that big of a fan of hotdogs (pork, beef, or turkey), but I will eat them. However, I find boiling hotdogs to be rather gross and it makes it all that much worse to eat. I did a Google search to try and find a different method of cooking hotdogs. Low and behold, I found a method which I've tried and I like a lot. You can find the method here.
Basically, you just cook the hotdogs in a little layer of water in a frying pan until the waters boils off. I used a little too much water the first time and cooked the hotdogs until I thought they had plumped to a good point. Then you add a tablespoon of butter to the pan for each hotdog. This seemed like quite a bit of butter, so I did half a tablespoon and you cook them, turning them.
I'm not sure about Bevin, but I like the hotdogs cooked this way a lot better than just boiling them.
Also, feel free to check out another blog I will be posting in. It's the musings of what I have to say about situations in life, or to talk about things I run across on the internet. You can read my blog over here. There is only my beginning post currently, but it talks about the philosophy behind the blog.
I've had some requests to talk about how Eric and I save money at the grocery store so I've compiled some tips.
1) Sign up for discount cards
Sign up for the discount cards available at the places you shop. Target has a debit card that saves you 5% and goes to an existing bank account, Hy-vee has a fuel saver card where the groceries you buy save you cents off per gallon of gas. Fair warning: don't buy something you don't need because there's a coupon for it or because you'll get something on your discount card.
2) Plan what you will buy before you buy it
Looking at your pantry and refrigerator and see what you NEED for the next week, 2 weeks or whatever about of time. Have a list, and buy from that list. Stores are set up to get you to buy more stuff, don't do it.
3) Use coupons
After making your list, look at the coupons that are available to you. Look on manufacturer's websites, store ads, and the Sunday paper. Keep in mind that coupons are good for longer than a week.
4) If able to in your state, RETURN YOUR CANS
In Iowa, any time you buy soda or alcohol you pay 5 cents per container. A lot of people pay this and then just throw away the cans and bottles. While it is a disgustingly arduous task to return your cans, if you are gazelle intense about getting out of debt and saving money, this is where that intensity comes in.
5) Sign up for Upromise and Savingstar.com
If student loan debt is one of your debts, or you have children who you want to start a college fund for I encourage you to sign up for Upromise.com. They have a lot of popular retailers that if you go through the Upromise website to the retailer's website you get 5% back and sometimes there's a deal on top of that.
If you buy some name brand stuff, Savingstar.com is a great website. You register a store card that you already signed up for in step 1 and then look at their site for coupons that you can download to the card. I generally download them all and then if I use them, I use them. Then when you use the coupons you get so many cents back that you can then just load into your bank account. So your price will be the same at the register however, you can use these in addition to other coupons.
6) Avoid name brands
This is a huge one for us. This does limit the amount of coupons we use, but our overall price is often way cheaper. For example this week I had to buy some bread Sara Lee bread was 2.69 for a loaf of bread, Hy-vee was about 1.58 and Midwest Country Fare was 99 cents. To me, the bread is the same, I don't get anything more out of Sara Lee bread than Midwest Country Fare so there's no reason to pay over twice as much.
7) If it's something you use a lot, buy it in bulk
We have a Sam's club near us, so we go there (but we're switching to Costco at the end of the year because it's cheaper for membership) If you have a Sam's club or Costco near you I would encourage you to buy items there when you can. For example, we eat a pasta dish about 3 or 4 times a week, so we get mac and cheese and hamburger helper there. Sometimes those places have awesome deals on random things. For example, we got 8 energy saver light bulbs for about $5. However, the stock on these things changes from month to month so I would check the saver ads they send out as part of a membership before making a trip over.
So if you've started the process of working towards financial freedom, you probably know that it's really hard and it takes a long time. So here are some ways to keep it up.
1) Surround yourself with people who are on board with you.
Whether you have someone who is getting out of debt with you or you know someone who loves to find deals, find people who you can share your joy and hard work with. For married couples, this is where you have an advantage. I remember being really tired after working all day and my husband texted me "but think about how awesome this will be when we have no debt" Along with this, I have several friends that are asking me for tips and help doing this as well, which definitely boosts my self-esteem and my confidence about being on the right track. I've also started a Facebook group to do this.
2) Remind yourself that there aren't any quick fixes
It took you a while to accumulate the mess you're in, so it will take you a while to get out of it. For me, it took about 4 years to accumulate the debt we have and it's going to take us 2-2.5 years to pay it off, so really for us we'll take shorter amount of time to pay it off than we received the things we're in debt for. That really gets me through each week.
3) Do something relaxing
Even if you work 100 hours a week (I don't recommend it) do something to unwind from work. My husband and I play video games to unwind from work. Some people run, some people do yoga. Take some time to take care of yourself
4) Have a goal
Whether it's paying cash for a home or going back to school debt-free, have a goal in mind that you will achieve after paying off your debts. This will keep you gazelle intense.
DON'T FORGET ABOUT YOUR FICO SCORE!
5) Watch Debt-Free screams
When you hear about person after person talking about their story, how long it took them, and how much they've paid off, you know that there's no reason you can't become debt-free too
6) Write a blog
Writing a blog about your journey makes it easier to keep going. It also motivates me to think of different ways that I can save money (and you can make a little bit of money doing it too).
So most of you probably know that making a budget is a good idea, but may be unsure of how you should go about it.
Since I have a somewhat unpredictable income, I like to redo my budget each month at the start of the month. What is important to do is a zero-based budget, or have a plan for every dollar. Whether that is saving, spending or giving. Here's a budget form.
You'll have to look at your own values to decide if there are things that you can do without, or if you can downsize on some things. For example, Eric and I mostly watch things on Netflix and didn't use our cable, so we didn't get cable in our new place. Obviously some things can't change, like rent, utilities or minimum payments on debts.
Item Suggested % of Budget % of our budget
Giving 10-15% 0%
(we give our time)
Saving 5-10% 0%
Housing 25%-35% 17%
Utilities 5-10% 5%
Transportation 10-15% 10%
Clothing 2-7% 0%
Medical/Health 5-10% This comes out
take home pay
Personal (including food) 5-10% 10.01%
Recreation 5-10% 0%
Debts 5-10% ~58%
We did our percentages based on our situation, for one I have a lot of clothes, so I definitely don't need to buy more and we have an emergency fund and have quite a bit of debt so the money is better invested in paying off a debt with a 15% interest rate to have money sitting in an account with a .3% interest rate.
Since it's been asked for several times, Here it goes... My laundry soap recipe (I'll post pictures with the recipe when we make another batch)
I do a liquid soap that costs about 50 cents to a dollar per gallon depending on what type of soap you use.
First, grate a bar of soap and put that and 4 cups of hot water in a saucepan over medium-low heat and stir until the soap dissolves completely.
Next, fill a 5-gallon bucket about half full of hot water, then add your melted soap, 1 cup of borax and 1/2 cup of washing soda. Stir until everything is dissolved. Fill the bucket the rest of the way with hot water. cover over night so that the mixture thickens
then take empty and clean laundry detergent bottles and fill half with soap and half with water. you can keep your base in the 5 gallon bucket if you only have a few laundry detergent bottles, just make sure you stir the base before pouring into the bottle.
For each load you use 5/8 of a cup if you have a top loading washer (180 loads) and 1/4 of a cup if you have a front loading washer (640 loads) You can also add 10 drops of essential oil per 2 gallons, but your soap should be fragrant enough.
So our next baby step for the Dave Ramsey Plan is to pay off all of our debts and obviously a huge part of that is to get rid of our credit cards by closing the accounts and cutting up the cards. However, if you know anything about Eric and I, we can't just cut up the cards we have to do something creative! Some people have done it with Lawnmowers, some have grilled their cards and one person even ran over them! However, since all of those have been done, we don't want to do those. What do you think we should do? Leave your idea in the comments.
So, baby step one in Dave Ramsey's Total Money Makeover is to get a $1000 emergency fund set up. After two weeks, Eric and I did it! We did have some unexpected funds via a deposit refund for our previous apartment and some leftover funds from last month. However, we wrote a budget out (including putting $1000 into the emergency fund) and worked really hard to stay under that budget.
Our main expenses are food and rent, since we can't change rent we focus on keeping our food costs VERY low. We plan out some meals ahead and between Hy-vee, Walmart, Walgreen's and Sam's club try to figure out where we're going to get the most bang for our buck. We check the coupons each week and like I said in a previous post we make a lot of our own things to save costs. We also NEVER buy brand name unless there's some ridiculous coupon/sale.
Everyone has their own areas where they can cut things out and areas where they can't make a cut whatsoever. For us, cable and food where areas where we could downgrade. Especially since we have Netflix and Hulu subscriptions. We stopped going out to eat all of the time, and when we do go out we have a coupon or there's a special at the restaurant. Eric used to buy a 99 cent tea almost every day and I found the same tea 15 cans for 12 dollars at Sam's club (also, Arizona Tea is 2 for a dollar this week at Walgreen's so I will be making a stop there to go stock up!).
I believe that most people can scrape together some money to more quickly eliminate the debts that they've accumulated. You just have to make some cuts and downgrade a little bit for a while, but if you're willing to live like no one else, later you can live like no one else! I'll keep you guys updated and let me know if you'd like to see any recipes I use or if you'd like some help with a Total Money Makeover to eliminate your debts and build wealth.
If you couldn't have figured out from my Facebook statuses, Eric and I are starting a total money makeover (http://www.daveramsey.com/new/baby-steps/) We've made a budget and we're working on getting our $1000 emergency fund and paying off our debts. It's going to take a lot of work, but our goal is to be in a paid for house by the time I'm 30. Mind you there's some pit stops along the way like I'd like to get my master's and a new car (both debt-free) We're on track to have our current student loans forgiven so that's a HUGE help.
We set up google documents to have "cash envelopes" for food and gas right now. I'm hoping to add some for spending money for me and for gifts but since I spent my spending money for the month on a trip to target the first day and our gifts budget is currently $0 they're not really necessary right now.
The main way we're saving money is by making a lot of household items ourselves. We currently make our own liquid soap, laundry detergent, and fabric softener. We tried making our own shampoo and that was a DISASTER but I think I figured out what the problem was and I am going to make another attempt at it. We also make our own dryer sheets (to make the clothes smell fresh). Let me know in the comments if you want to see some of my recipes for things. Anything I can't make I try to get at the cheapest price possible. So far, that's been Sam's Club, though in January we're going to switch to Costco because the membership a little bit cheaper and a lot better for our conscience.
We're both really pumped right now, and it'll be great to not have all of these payments each month. Eric's already planning out his debt free scream. I'm guessing it will take us about a year to clear out everything Eric thinks it will take 2 or 3 years. I'll keep you updated as we go along.