You may have noticed the lack of projects on my part lately. Well that's because I'm trying to refocus my energies on paying off debt. I know I'm not alone in this either as so many people are struggling with feeling like we're living paycheck to paycheck and do you know why that is? DEBT!
How did the debt start for me?
My debt started 10 years ago! When I went to college I took out student loans I probably didn't really need but I was a kid, I didn't know any better I just thought that was the way things were done. I didn't want to put too much pressure on myself to work and go to school in my first year so I took out the loans. It was future Laura's problem to pay that back after I finished college right? Thanks A LOT past Laura! It's not fun!
Adding to that problem I applied for a credit card in hopes of building my credit and working on my credit score. Again I thought that was just how the world worked. That credit card only had a $250 limit, I couldn't get in too much trouble with that right? Wrong! Of course as the years went on I paid minimum payments all on time, they slowly upped my limit and did I take advantage of that? I wish I could say no, but I sure did! I had the best intentions when I started.
"I'll just use it for gas and pay off the balance every month" ---didn't happen
"Ok once I get to a balance of $200 I'll stop using it and just pay minimums until its gone" ---wrongo
"I'll cut up the card if it gets out of hand" ---ya right.
I told myself just about every lie in the book. But that card wasn't the only problem. Need a new car? Better get a car loan. Buying a house? Finance it all. Want a new couch? The store probably has a financing option. Sounds like something all of you have thought before right? I'll just make payments was always the answer, because it's "easier" that way. Well it may be easier to get what you want and immediate gratification but the long term consequences are not worth it!
How did I realize I needed to do something?
My get out of debt plan started so many times it wasn't even funny. The feeling of living paycheck to paycheck was never a good one. Payments were always made on time but then there was no leftover money for anything more than minimums and it feels like you're barely getting by. Then you do the taxes at the end of the year and report your yearly income and you think, "I made THAT much!? Where the h*** did it all go???"
So the plan was to try to be frugal and not spend more than was needed. But then things came up that just "needed" to be purchased. Some legit but others not. Car repairs - legit. Dr visits - legit. Vet bills - legit. But then there was going to a movie because we deserve it - not legit. fast food even though there's food at home - not legit. New TV - not legit. New couch - not legit. You get the idea.
I really got serious about it in 2017. Sometimes things happen that force you to review your finances and re-evaluate if you can keep living the way you're living. I wrote out all the monthly payments that were being made and really saw how much was going to minimum payments with little to no change on the balance of said debt. That feeling was like walking up the steps on an escalator that's going down. You're climbing and climbing and working so hard to do it but not really getting anywhere. Also totaling up those payments I was making on just debt and seeing the number that I could have to spend on other things if I didn't have the debt. Something needed to change! Could I survive doing what I was doing? Yes, but that's all it would be, just surviving. That's not good enough no matter how you try to justify it.
Where do you start? It seems overwhelming!
That's not a lie, it is overwhelming! But my first step to any project is Pinterest so that's where I started this time. I saw Dave Ramsey's total money makeover all over the place! I bought his book through my Amazon kindle app and this was a couple years ago (one of the many times I started and then started again). He puts getting out of debt into "baby steps" which really helps simplify one goal to strive for at a time.
I would highly recommend reading his book. Although at the time I read it, it all made sense and looked like it could really work but it wasn't the right time to change my lifestyle. Do I wish now I had started then? Abso-freaking-lutely. But I didn't and you can't change that. You can only deal with what is right now. So beginning of last year, my lifestyle was already going to change so why not start this financial makeover too!
Currently in this program I'm at baby step 2 Debt snowball! Step one saving up a $1000 emergency fund as quickly as possible is where I started. I used tactics I still use in step 2 to save it up. If I got birthday money, it went to savings, Christmas money all got stashed there too, bonuses from work - into savings, get a raise at work - the extra on top of what I made last year - into savings. ANY extra money laying around gets stashed there. I was lucky enough not to need to sell anything to save that thousand up but I do have things lying around I can sell (more on that in a minute). I was worried that if I saw that cool Grand sitting in my bank account that I'd be tempted to spend it, but really it hasn't been that way. I know it's earmarked for emergencies and only true emergencies like car repairs, or fixing the furnace, or roof leaks or whatever could go wrong around the house. I don't rent so it's up to me to cover those costs. Emergencies are not new clothes, or furniture, or fast food. I just put my blinders on when I look at my savings account and actually it makes me really happy to see that money sitting there in case I need it. :)
So if you are just starting this journey or if you have started it so many times it's ridiculous like it was for me, start with an emergency fund. Having the money around if needed helps so you don't have to use credit cards to pay for emergencies and get trapped or deeper in the trap of credit card interest rates and monthly payments that could be spent on other way more fun things.
I'll talk more in another post about my journey in baby step 2 but until then, is anyone else tired of being in debt and making payments not getting anywhere? Who else has heard of Dave Ramsey or tried his Total Money Makeover?
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