The Day We’ve Been Waiting For

As of 10 a.m. this morning the “Make-Do” Family has ZERO consumer debt.

After collecting the hubby and the baby around the computer I clicked that final button and paid off our car and 6 six days shy of our 2 year mark we are (consumer) debt free. 

In those two years we’ve:

• Had a promotion (the reason we could start the goal in earnest)
• Had an off-season (3 months of no work)
• Celebrated birthdays and holidays
• Explored the West Coast
• Found out we were having a baby
• Moved cross-country
• Took a minimum wage job – Me
• Bought a second used car
• Changed jobs (and took a pay cut to do so) – Him
• Got the interview that turned into a real job a few days before Christmas
• Went on 3 months of maternity leave
• Got job offer
• Had baby
• Turned 28 (both of us)
• started new job – entry-level but still mor per year than I was making before
• Got a small raise, got past 6 months probation period and got another raise
• Had expenses, bought clothes, tires, maintenance, fun things, saw movies, ate out, visited family, etc.
• Paid of over $11,000 of debt – approx. $7500 car, $2300 loan, $1200 credit card
• Have saved equal amount in preparation for home buying/savings/day to day expenses

I wasn’t sure if I wanted to share the total amount on-line, but decided I wanted to do so to show those who want to do something similar that it is possible even when faced with those day to struggles and ups and downs.  You make sacrifices along the way, but it’s amazing how quickly you learn to stick to your guns when you see that number start to get smaller.  It’s even possible with small budget and paychecks.

How we did it –

• Careful budgeting – figured out the needs and always saw that those were met each time they arose.
• Planned known expenses in advance – Getting a flat tire can’t be planned, but other things can.  You know when birthdays and holidays are coming up and can plan accordingly.
• Pay with cash – Okay I’ll admit the envelope system doesn’t work for me, but paired up with my budgeting and planning it was easy to look a week or two in the future and see the expenses I knew would arise and do a little quick math to see what was left over in the account after those expenses were taken care of.  If I had extra, I could spend it; If we were barely squeaking by until the next paycheck that thing could usually wait.
• Knowing that Money = Life – yeah that sounds a little weird, but if you work for a living and receiving a paycheck it’s easy to figure out just how much of your life you’ll be at work to afford that brand new car versus a used one.  Heck, an Ipod on an entry-level  salary will cost you over 20 hours of your life.  An Ipad, over 50 hours – that’s 50 hours of your life working just to have a gadget you might not need, which will have to be replaced eventually anyways and if you’re obsessed with owning the latest and greatest, the amount of time spent earning those items adds up; put it on a credit card and you can tack on another couple of hours filling TPS reports and being asked if you got that Memo.  (Apply this logic to cable TV, I dare you.  It’ll make your head hurt.)

Things we’ve learned in the last two years:

• It’s not hard to say no – when you start asking yourself if something is a want or a need, it becomes easier to say “I don’t really need that now”.
• Find the budget that’s right for you – Everyone is different and everyone will find their own bookkeeping methods – mine was a Word program calendar file that allowed me to track exactly how much we needed in our account each week to take care of our needs (bills, food, gas) which made it easy to see the $500 extra in the checking account was not up for grabs.
• Set budgets, but don’t beat yourself up – it’s okay if you set a budget for eating out or gifts and have 3 long-lost friends drop into town, a wedding and a 1st birthday all in the same months.  It’s life, you only get one, so enjoy it when it happens and adjust the next month accordingly.
• Saving is addicting – While I hope not to become a Scrooge coveting my saved dollars, saving money can become addicting and you start to mourn times when you can’t save as much as you’d like. Part of this is the feeling of security you get knowing that if the month (mentioned above) also happens when the kid outgrows all his clothes, you get two flat tires and the toilet backs up you’ll be okay.
• You’ll amazed out how little you need to really live well.

Now the plan is to bulk up the savings even more in preparation for the house buying by putting what we were spending on the car directly into savings and keep plugging away at those student loans, which we should have paid off with in 7 years, but I plan of figuring out a way to pay them off in 5 or the by the 10th anniversary of graduation.  I plan on trying to make a bulk payment to them in a month or two to pay off any outstanding compounding interest left over from my less financially savvy years.

Today is a good day.