Commit. Plan. Take action.
The concern that I hear the most from people who are trying to pay off debt is how to recover from a setback.
Maybe it’s happened to you.
You get all fired up about paying off debt, take the time to create your debt freedom plan, figure out which debt you’re going to pay off first, create a budget, and start to throw every available dollar toward your debt.
This works fine for a month or two, or maybe just a week or two, but then something comes up to throw your plan off course.
Around the new year people tend to set financial resolutions and plans for the next 12 months. The beginning of the year is also a good time to get a decent price on a used car. As you know, our little family grew by one last year with the addition of our daughter, Dahlia. Before now, we’ve driven a 2015 Volkswagen Golf GTI. However, fitting the car seat in the backseat isn’t the easiest thing to get done. So, we have been going through the pros and cons to try to decide whether or not we want to trade in our vehicle.
My husband absolutely loves cars. It is something he’s always been passionate about. One of his lifelong goals was to become an automotive journalism, which he accomplished last year. That being said, there is a little nostalgia attached to the cars we’ve had together.
Before we transitioned into being a one-car family, my husband drove around in a tiny 1999 Mazda Miata. We took a lot of adventures in that car. Eventually, Drew wanted to take it to race at the track. Unfortunately, that never ended up happening. We sold the Miata during the pandemic and still miss it dearly. It was such a fun car with so many memories attached to it.
The Golf is no different. For one, it is the first thing Drew and I truly purchased together. We named the car Gerry and we’ve used it as our primary driver now for three years. There have been road trips, it was the car we brought our daughter home in, the car we packed up and moved states away in. So, even though it is a pain to get the car seat into, part of me wants to hold on to Gerry just a little longer.
While we were initially mulling around the idea of trading in our car for something that would lower our monthly payment, we probably won’t be making a trade in unless we find a crazy good deal. The car seat dilemma is a temporary one. When we go on road trips, we can purchase a roof rack instead of buying another car. Ideally, we will pay the Golf off over the next two years or so and then pay for the next car in cash, keeping the Golf as a beater until it dies.
The only way a trade in would make sense for our family right now is if we found something that would give us lower payments with more space. With cars and real estate, that perfect mix of cheap but spacious is hard to find. Will family road trips in our little Golf be difficult? Yes. Will I also probably bump my head every time I put the car seat in the back? Also yes. At the end of the day, we have to keep our eyes set on what will be best for our family financially.
Each month I bring you a recap of the previous month’s progress on paying off our debt. This serves two purposes — to keep my husband Mike and me accountable to our financial goals and to give you a look behind the scenes of our strategy for paying off our debt.
Do you feel like you’ll never get out from under your pile of debt?
If so, you need to read this inspiring story from the Miller family.
As their family grew from five mouths to feed to seven and with a wage of no more than $14.50 per hour, Ella and Lavern Miller paid off $137,000 of debt in four years!
Read on to hear from Ella Miller herself how they paid off so much debt in such a relatively short time.
It’s that time of year again when people vow to be better than they were throughout the previous year. I, for one, am a fan of New Year’s resolutions for a number of reasons. The main reason I love the idea of resolving to do better is it gives everyone a fresh, positive outlook. As I’ve mentioned in the past, remaining positive has brought me a long way.
However, many people set goals and make resolutions that are simply not reasonable. For instance, if you have a lot of debt and little-to-no savings, it is unlikely that you will (or should) own a house by the end of the year. So, how do you go about creating reasonable resolutions?
As you can see above, most of my resolutions have nothing to do with our finances (and that’s okay). Cutting our debt in half this year would be a HUGE deal for us and it is totally obtainable.
The other resolutions I’ve listed here are small but extremely important for me to maintain balance. First, my goal of “hustling more” will help us achieve our debt payoff goals. The more money we bring in this year, the more debts we can pay off. Next, self-care and health goals are always on my list. If you don’t invest in yourself (time or money), you won’t have anything to offer anyone else. This includes writing and reading more (for fun). Lastly, my husband and I have been slowly but surely learning German. I’d like to be fluent by the end of the year.
Unfortunately, most people stop trying to obtain their goals by the end of February (if they last that long). That’s usually because they’ve established these huge goals that are overwhelming, instead of breaking it down into smaller, easier tasks.
So, how do you go about creating reasonable resolutions and goals for yourself? Well, first you should read up about SMART goal setting. This method of writing down and setting goals for yourself helps you create smaller tasks and organized your path to success. Here’s a quick breakdown of the process…
You should also realize that, sometimes, life gets in the way of things. Don’t be too hard on yourself! If you run into problems when you’re attempting to reach your goals, take a step back and assess whether or not you have been specific enough in naming what you want to achieve.
It has become popular for people to choose words to describe their goals for the year. This year, my word is going to be “intentional.” I want to be more intentional about how I spend my time and what I focus on, shifting towards things that bring me joy and make me more available to my daughter.
According to Merriam-Webster, intentional is defined as “done by intention or design.” Some common synonyms for the word include conscious, deliberate, purposeful, and willful. So, instead of doing things on a whim or without planning, I’ll take my time and be intentional with how I move forward.
It’s more than that though. Since giving birth to my daughter I have avoided things that feel like a waste of time. My time is valuable. I could be spending it with my daughter, watching her continue to grow. So, when I’m not doing that, I want to be using my time to the fullest. This means being more intentional about how I spend my time. For instance, I need to make certain things higher priority during her resting hours instead of scrolling endlessly on social media. That way, when she wakes up from her nap or simply wants to spend time with me, I’m there to do it.
I’m also going to be intentional in other ways. We are working to be more intentional with our money and how we spend it. There are things we are doing (like cleaning out closets and minimizing expenses) that are helping us be more intentional about how we spend. For example, we definitely didn’t need a dozen streaming subscription services. Trimming some of those down can help us save for more important things.
Another way we hope to be more intentional in 2022 is with our health. Towards the end of my pregnancy and since my daughter’s birth we’ve spent so much money on eating out. Instead of spending money on fast food or eating out daily, we are going to put money towards our health and wellness. For me, this will take the form of private yoga sessions once a week. My husband is going to look into martial arts classes. Rather than throwing it away on junk food, we will be more intentional with our money and put it towards improving our body and mind.
When it is all said and done, financial resolutions and your “word of the year” only work if you have a plan to put behind them. To be more intentional this year, I am journaling daily, I’ve deleted many social media apps off my phone, and I’ve added more books to my TBR list. We are surrounding ourselves with people and things who are positive, intentionally working to create a happy, healthy life for our family.
Get ready to be inspired!
Every other week or so I bring you an interview about a journey out of debt for motivation that it is possible to live debt free.
Recently, I have shared Dontae and Laura’s debt free journey and Amy’s journey to financial freedom.
Today’s interview is one of my favorites!
Miriam Lilly is a 29-year-old young woman who paid off all of her debt so that she could stop saying “no” to opportunities and start saying “yes” to life.
Everyone has a way they like to organize their financial plan. For some, it is easier to log everything into a spreadsheet. Others have started using apps to manage their cash. In our family, we use a budget calendar to stay on top of our finances.
While writing everything down on a calendar may seem a bit old-fashioned, it can work really well, especially if you do better with writing things down. I personally still keep a physical calendar for everything, so adding our budget into it made complete sense. Here’s what ours looks like…
As you can see above, I have color-coded what money we have going in and what we have going out every week. Our paydays are written in red and all of the money going out is written in blue. This includes all of our bills, groceries, and my hubby’s vape fluid for the month. As you can see, there is also a note to have money budgeted for Valentine’s Day as well as $500 into savings.
If you’d like to create your own budget calendar, it is really easy. All you need is a monthly calendar layout (you can even do this on your computer if you prefer). Once you have your bills and earnings written out on the calendar, you can decide how much money you can budget towards entertainment and additional debt payments.
Of course, everyone’s budget calendar is going to be different. If you have a larger family, you’ll spend more on food. People who have more debt may also have more monthly payments to consider on their personal calendars. As you begin to pay things off, you can always change your budget because you’ll be jotting down your expenses and earnings every month as it changes.
Also, it is a good idea to set aside a day every month to review your budget and see what the month ahead will bring for you financially. Be sure to also note any large, one-time expenses that may occur, like paying taxes or renewing your car’s registration.
Readers, do you use a budget calendar? If not, what kind of budgeting method do you use?
Any time there are big changes in our lives, the financial planning aspect of things gives me a bit of anxiety. I begin to think about every penny we will need to make the new shift in our lives go off without a hitch and, guess what? Things almost never go to plan. Not exactly anyway. So, we have had to put some thought into how to prepare for big life changes headed our way.
In a few weeks’ time, I hope to be able to share some positive news with you all on the blog. There are some HUGE changes coming our way. They are also changes that will involve some financial planning and saving on our part. As you know, we recently moved into a new home. On top of that, we’ve been going through even more changes that will impact our family in a big way.
Thankfully, my husband recently got a new job. He is able to work from home with me now and his income will greatly assist with these changes. We are aiming to get a substantial amount of money saved and then looking to double up on our debt payments. Hopefully, within the year, we will have our car 100% paid for (that is the goal anyway).
Since we have started planning for this big change coming up in our lives, it got me thinking about how others prepare for big life changes. Of course, there is nothing that works for everyone but there are several common ideas and things most people do when they are prepping for something big.
Depending on what kind of change you are preparing for, the steps to get there will look different. If you are preparing to buy your first home, you will be making some financial sacrifices and also spending a great deal to get ready for that. If the changes you are making are more personal in nature, like quitting cigarettes or getting sober, your steps will look different. However, each of these tips seems to be applicable across the board.
When it comes to how to prepare for big life changes there is no “how-to” guide. You need to find what works best for you mentally, emotionally, physically, and go with that. It may not look the same as what worked for your friends or family, but if it works for you, that is all that matters.
Readers, how have you gone about preparing for big life changes? What was key for you?
With recent career changes and a few months without a second income, we have been looking at ways to improve our finances. Like many other people during the pandemic, we experienced job loss and decreased wages last year. The loss in work pushed us to move sooner and make changes. One thing we settled on doing to help improve our situation was selling back debt that is no longer serving us. Here’s how we are doing it.
You may be thinking to yourself, “There is no debt that serves you.” However, when it comes to the debt we have had to take out to further our careers, it was serving us in a way. You may remember my husband’s tool debt from his time in the shop as a mechanic. When the pandemic hit, the shop he was working for downsized, and he was one of the newest employees, so he was cut.
This put us in a position where we had to continue paying for tools that weren’t being used as well as a storage unit to keep them in. It was a major drag on our finances overall. Eventually, because we no longer had that second income, it became impossible to keep up with the monthly payments. So, we started looking at our options.
At first, we looked at selling the toolbox and some of the tools to help pay off the debt. Once again, the pandemic made this pretty impossible. No one was looking to spend thousands of dollars on a toolbox when a lot of other people were out of work too. Eventually, the account went into collections early this year as we continued to look at our options.
After discussing the issue with the company we are indebted to, they said they would be willing to buy back some of the items he had purchased and subtract the total from the amount owed. While this didn’t completely get rid of the debt we have, it did get the storage bill off our backs. It also decreased the amount we owed by $7,500 when all was said and done.
We didn’t get rid of everything either. They wouldn’t buy back used tools. So, my husband still has everything he needs in the event he wants to return to working in a shop or wants to do some side work as a mechanic. So, the security of having the tools for the job is still there.
For now, it also gets the monthly bill off our plate. Obviously, the amount in collections will still need to be paid off, but the $400+ monthly bill is not weighing on us at this very moment. We can shift our focus to paying off some other items, getting things caught up, and then settling with the collections agency later on in the year. For us, that is a win.
Readers, have you ever sold back debt like we did?