Our Debt Snowball – August

8 months = $18,412.37 in debt paid off

In January of this year we started our Debt Snowball, partially following Dave Ramsey’s method.  To see the beginning of our journey click here.  This was the year that we hoped to find our home, so by paying down our existing debt we knew we would be able to afford more house.

We are still on Step 2, which can last for months, even years.  During this step,  you make a list of all of your debts from smallest to largest.  You don’t pay attention to interest rates or anything other than total pay off amount.  Then, you tackle the smallest debt first.  You make the minimum payment on everything except for that smallest debt.  On the smallest debt you scrounge around and scrub your budget, every extra dollar gets put onto that debt, until it is paid off in full.  Once you have tackled one, then you move on to the second smallest debt.

In these past 8 months we have been able to pay off 2 student loans, 2 credit cards and a car loan.  Let’s just reflect on that for a minute…5 monthly payments eliminated!  Some months we are able to contribute more, other months are tight and we contribute very little.  But every small bit adds up, so it still feels good.

This month we contributed $1,855 to the debt snowball and then added an additional $2,000 from savings.  Normally we don’t tap into our savings since that is our house down payment, but this month was a little different.

Since it has been 8 months, and we are starting to get serious about starting our house search again, it was time to re-evaluate our current monthly payments.  After checking in with our balances, I realized that what we were currently putting the “snowball” towards was not the smallest balance.  We had a student loan, which had a monthly payment of $262, with only a $2,753 balance left.  By taking the money out of savings, we were able to eliminate that loan completely, meaning that monthly we are now adding $262 into our snowball.

Now that we have re-evaluated what the balances of our remaining debts are, we have a new game plan of what to attack first.  But again, let’s reflect.  We have eliminated 5 debts!  We have paid off $18,412 in debt!  It’s amazing and rewarding to see it working.  Each month we see that amount grow and grow and it becomes that much more motivating.

September will be a tricky one for us.  My husband returns to work after labor day, with a 3 week unpaid hiatus.   He is also returning to a job that does not pay as much as his previous monthly income.  But we are rolling with it, and reminding ourselves that even if we only contribute a little bit each month, it is getting us that much closer to financial freedom.  At least until we sign that mortgage!

Some tips we like to remember when times are tight:

  1. Eat at home instead of in restaurants
  2. Make meal plans so we are spending less and using all of the food we purchase
  3. Pack our lunches for work
  4. After receiving a paycheck pay all the bills upfront that are due before the next pay period to avoid annoying late fees or over draft fees
  5. Only use our bank ATM’s to avoid transaction fees
  6. Eliminate credit card charges, use only cash on hand.  If we don’t have it, then we can’t afford it!
  7. Maintain our $1,000 emergency fund for true emergencies
  8. Make a budget and stick to it!

8 months = $18,412.37 in debt paid off

Our Debt Snowball – July

7 months = $14,557.22 in debt paid off

We began this debt snowball in January, so it has just been 7 months.  Basically it has evened out to us paying off just about $2,000 a month. Some months we have had extra to contribute, other months we are barely able to set aside anything extra.  But we have kept up a fairly steady pace, and it is so nice to see that snowball just grow and grow.

July was not the most fruitful month for our debt snowball, but we still made a little dent.  We are continuing to pay down the unexpected $1200 dentist bill and dog training from last month, so that has set us back a bit.  But, ever little bit of extra cash we have goes towards the debt.

If you have seen my most recent posts you will see that we are also completing the Whole30 program.  You can read about week 1, week 2, and week 3.  With this program came a couple of different financial situations. The first week we spent much more than usual at the grocery store since we needed to stock up on Whole30 approved basics.  Each week our grocery bill has continued to be higher than usual since we are having to buy all kinds of organic fruits and vegetables, grass fed and cage free meats, and many additional organic or natural products.  However, we have basically completely cut down on going out to eat, and I don’t ever stop for coffee (oh how I miss my cream and sugar!).  Even though a cup of coffee is only a few bucks, it starts to add up pretty quickly!  So, we have felt like even though our grocery bill has increased, we are spending less on the take out, restaurants, and small wasted money here an there.  I suppose it has pretty much evened out.

Overall, this month we were able to contribute $877.06 to our debt snowball.  This month I also took a little extra money and put it into our house savings account.  Even though that has stayed pretty steady I don’t want to entirely forget about it.  Paying down our existing debt is our priority, but seeing our savings increase, even by a little, is a good morale boost!

To date, we have paid off just over $14,500 in debt!  I don’t know why but I think seeing it rise to $15,000 will feel like a big accomplishment…I’m determined to make that happen next month!

Our $5 vacation fund

This year as we have set out to save save save, we still wanted to be able to create a rainy day fund without feeling guilty.  We knew our vacation week would be coming up in April, since we weren’t going anywhere we wanted to be able to make it a fun stay-cation.  What better way to enjoy a week than by being able to splurge on fun things without having to worry about the extra money we were spending?

Earlier this year we decided to start a vacation fund….with $5.  How does that work?  Easy!  Here’s how…

Neither my husband or I tend to carry very much cash on us, and when we do it almost already feels like it’s spent.  The balance is already reflected in our bank account, so any cash happening to be hanging out in our wallets feels like bonus money.  We agreed that anytime one of us had a 5 dollar bill, we would put it into the change jar/vacation fund.

Honestly, we didn’t really think it would amount to much, and we were really good about keeping each other honest.  Even if it meant that we had a $20 bill, purchased something small, and received $15 back in change…all in $5’s…straight into the jar it went!  It was hard to part with at times, but it started to feel like a game.

I received a $20 bill in a christmas card, into the jar it went.  Couple extra $1’s hanging out, toss ’em in the jar.  The hardest part was not constantly counting how much money we were gathering!  It was fun to see the jar start to fill up.

Well, last week was finally vacation week, time to break into the vacation fund!

5 Dollar Saving plan!
Our pile of $5’s!

Over the last few months we had managed to collect over $230 in 5’s!  (And a $20 and a few $1’s).  Woohoo!

Some of our vacation splurges included taking our nephew to a museum and out to lunch, nice meals out for us, a night away, a Brewery visit and a stop at our favorite bakery.

Harpoon Brewery
Fleet of beers and the best pretzels ever!
Cupcake Mojo
Yum!

I definitely think it was worth it, and we are debating whether or not to start it right back up again.  How do you create a rainy day fund?

Our Debt Snowball – January

This is the year that we, fingers crossed, find the right place and purchase a home.  Since it’s taking us a lot of time looking we decided that we really needed to start this year off by tackling some of the debt that we already have before we take on an immense amount with a mortgage.  We have a down payment saved, and want to continue to grow that, but we have student loans, two car payments and some credit card debt already racked up.

I borrowed a copy of Dave Ramsey’s The Total Money Makeover from my sister and started doing some research.

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The Total Money Makeover

Dave breaks his process down into “baby steps” which makes them easier to attain.  As you get the sense of accomplishment from each step, you are more likely to build your momentum and keep going.

We are not following his method to the T, but are using many of his suggestions.  The first “Baby step” is to put aside an emergency fund of $1,000.  Fortunately this was something we had already completed, so we were able to move on to step 2.

Step 2 can last for months, even years.  This is where the debt snowball comes into play.  You make a list of all of your debts from smallest to largest.  Don’t pay attention to interest rates or anything other than total pay off amount.  Then, you tackle the smallest debt first.  You make the minimum payment on everything except for that smallest debt.  On the smallest debt you scrounge around and scrub your budget, every extra dollar gets put onto that debt, until it is paid off in full.  Once you have tackled one, then you move on to the second smallest debt.

Here is where the snowball starts to grow.  Now on your second debt you are paying what you normally would, plus what you would have been paying monthly on the debt that you just paid off, as well as any extra left over in the budget.  As each debt is paid down, you combine what you would have been paying onto the next loan.

One suggestion Dave does make, which we are not using, is to take all of your savings, minus the $1,000 emergency fund, and apply it to debt.  Since we have been saving for a house, and are actively on the hunt, we will not be doing that part.  But each month we are scrubbing our budget and applying all of the extra to our smallest debt.  I can already see it working!

As of January 1st, the debt we started with was a student loan with a balance of $2,993.52  The monthly payments are $127.28.  This month we were able to pay a total of $1,520 bringing the balance down to $1,485.16 (this included the interest that was accrued).  We tackled more than half of it in one month!  I can’t believe it.  Nothing has changed with our income, so this is all money that was there, we just had to find it.  Here are some of the tips that we found worked.

  1.  List all reoccurring monthly payments, by the date they are due.
  2. After receiving each paycheck, use the list of payments and pay every bill, upfront, that will be due before the next check comes in.  This avoids all late fees, and over spending.
  3. Really use a budget, account for every dollar!
  4. Make a weekly meal plan and stick to it!
  5. Limit the need for “Take out” or restaurant meals
  6. Pack lunches.
  7. Limit “extras” (coffee stops, etc.) for the use of gift cards only!
  8. Eliminate credit card charges
  9. Only use our bank ATM’s, eliminating service charges.

By following these few steps were were able to come up with a ton of extra $$ to really get our debt snowball rolling.  I can’t guarantee that it will always be that much each month, but the satisfaction is already there as I see our debt lower.  I can’t wait to cross this first one off the list!

Having the emergency fund is also important.  This month we did end up with an unexpected $275 vet charge, but it wasn’t too stressed since I knew the $1,000 was there.  Now we will replenish that fund prior to adding extra into the snowball.

We definitely won’t be able to pay our debt off prior to settling on a house, but I think we are off to a great start and I’m excited to see where it takes us.  I’ll keep you all updated at the end of each month!

1 month = $1,520 in debt paid off

Bill Payment Checklist and Budgeting

After my husband and I decided this was really the year to buckle down and start saving for a down payment on a house, we knew that we had to really get a handle on our budget.  We’ve always been a little loosey goosey, generally knowing how much we spend, generally knowing how much we can afford, generally knowing when bills were due, but no solid set in stone plan to follow.
Between the two of us we have too many student loans, car payments, insurance payment, and regular bills to keep track of in my head.  Every few days I would check in to see what bills were due, did I forget anything, over look a due date?  Some bills come out through automatic withdrawal, but I don’t like to do that with everything.  When we became serious about saving I knew that I needed a better system.
I looked around to see what options are out there.  There are all kinds off Bill Pay Checklists, most of them are free.  I found two that I prefer.  One come from A Mom’s Take.  

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Free Printable Bill Pay Checklist from A Mom’s Take

It is a free printable, for the whole year, and is nice and colorful.  This is my monthly go-to guide.  I write down all of our bills in order they are due, how much the bill is for, and I check it off each month once paid.  I’ve said it before, I’m a list person.  Having this physical piece of paper as a list is hugely helpful to me.
Another one that I like is from My Frugal Home.  This one is very similar, still a free printable, but it’s also editable on the computer.

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Printable and Editable Bill Pay Checklist – From My Frugal Home

I like that this one is editable on the computer.  Each month I just need to open the pdf and electronically check off each bill as I pay it.
Something else that we have found extremely helpful for budgeting, is to pay all bills that are due within a time period right as we get paid.  So even if we are paying the bill before it is due, we pay everything that we know will be due before the next income check, right up front.  That way we know how much we have to push into savings, and don’t over spend on the little things.
Keeping track of what we have in savings, and watching it slowly increase has also been rewarding in and of itself.  What are your tips for keeping track of expenses and bills?  How do you budget throughout the month?