Proverbs 22:7

The rich rule over the poor, and the borrower is slave to the lender.

Sunday, February 21, 2010

1 year later....a reflection,

February 22, 2009 we took the first step to taking control of our finances. We started off with 6 credit cards, 2 Car loans, and a consolidation loan, over $42,000 in debt, and a whole messload of bad habits. Here is a reflection of things we've changed as a result:

  • In the past year, we paid off 6 credit cards, and a car. All we have left is the consolidation loan, and the second car. Total debt paid: $22,290.06
  • We no longer use credit cards.
  • We have a written budget... and we actually stick to it. If it's not budgetted, we dont buy it, unless it's an emergency....
  • ...which brings me to my next point. We have an emergency fund. Luckily, we haven't had to use it except for a couple of vet related expenses. Once we use it, we halt the debt snowball until the emergency fund has been replenished, and we continue with the snowball.
  • I don't go shopping out of boredom or "I Wants" anymore. If I find something I want, I save up blow money if I can justify having it. Many times, I do without. Sometimes Jonny has to tell me that my want is actually a NEED...such as clothing....when you go 6 months without buying clothes, it becomes a need to add a few new pieces to the wardrobe. However, I used to buy clothes ALL the time, and I knew this was a weakness for me. Therefore, I still try to avoid clothing stores while I'm still in this pursuit to get out of debt.
  • Because of our written budget, we do not eat out to the tune of over $800 a month in FOOD. Good grief I was depressed when I first realized how much money we were wasting by eating out. Our eating out and grocery budget is now less than half that (due in part to coupons).
  • I've become a better cook, and I brownbag more lunches for work, rather than swinging by the drive through.
  • We saved up, and paid for a trip to California right after Christmas (to see family) entirely in cash. Flight, rental car, hotel, food, and activities while we were there, etc. The trip did not follow us home in the form of a credit card bill. Woo!
  • We pay for things like auto, life and renters insurance in cash now. Rather than swiping a credit card when the bill comes due, I save up an appropriate amount every month in a savings account deemed as sinking funds for these expenses, and then when the bill comes in, I transfer the money and pay it off, rather than charging it.
  • As far as entertainment goes - we've gotten creative. Date nights at home with a good movie and dinner, or movies nights at the dollar theater. Camping at the local state park is CHEAP for a weekend. As soon as tax season is over and I have my husband back, we'll be going camping this spring. Yay!

Goals for the upcoming year:

  • To better manage our budget by using cash envelopes for our non-bill related expenses. Now that all the credit cards are paid off, our monthly cash flow with regards to the paychecks are going to be easier to manage because. 
  • Find more snowflakes (unexpected income, or "found" money) that can be applied to the debt snowball.
  • Pay off Consolidation and Car Loans by Christmas.
Hope you all have a great week!

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