Huge Speed Bump in our Makeover

If you have been following our blog you know that we have been working hard to use every extra penny we have to pay off our debt as we'd like to be debt free as soon as possible! Well, we hit a few large speed bumps over the last several months. It started with Jason loosing his job in March and being out of work for three weeks. We had to put Baby Step 2 on hold and even use our Emergency Fund to pay bills until Jason found work.

Thankfully Jason did find work however we hit a second speed bump when our tenants put in their 60 day notice at our house in Farmington, NM. They gave notice in April and moved out mid May. My mom so graciously offered to list and show our house for sale or rent during those sixty days and the days following. We had several serious inquiries however they have all fallen through along the way. This now puts us in the even more stressful situation of trying to carry two homes (rent/mortgage & utility bills for both homes). After months of stress about this house my sister contacted us about renting it when they move back home this fall. We couldn't be happier that they are wanting/willing to rent from us and we are relieved because we know they will take good care of our house.

Our last speed bump hit throughout this summer. Although Jason had found a job back in April it didn't pay nearly as much as his previous job had and to be honest the paychecks were barely enough to cover our bills but not our living expenses. My mom had offered to pay to me babysit my littlest brother this summer while we were in town visiting...it just turns out that we extended that stay to a two month trip (to enjoy camping, family, friends, a wedding, swim lessons, and more). This was a saving grace for us because it offered us the money we needed for living expenses and carried us through the end of July when we returned home. Jason stayed back in Texas (other than a week at the end of June and a week at the end of July) to work during these two months time.

This speed bump also includes the unexpected costs of having to replace the rotors, brakes, tires, and windshield on our mini van while visiting in New Mexico this summer. We had planned to take our van in to be serviced while visiting but in no way were we prepared for all those expenses. Plus we had a loan that we had forget a payment on and they took the remaining balance out of our checking account to pay off the loan while we were out of town, which was a huge unexpected expense.

Now with all this being said things are looking up...Jason was offered his job back with the company that fired him several months ago. With much hesitation we made the difficult decision to have him return to that company as it offers us adequate money to support our growing family as well as pay off our debt. With lots of help from our families to get caught up/current with our bills we are back on track with our money. Sadly we have acquired more debt since Jason lost his job but we will be working very hard over the next several months to pay our family members back as well as put our Emergency Fund back in savings and pay on our other debts.

This has been a huge learning experience for Jason and I, one that I hope we never have to repeat. Struggling to feed our family, pay bills, and get the necessities for our children is not a place that I'd like to ever see us in again. I hope to see us use all that we learned this year, move forward as quickly as possible and get to a place where we never have to worry/stress about these things again. On the plus side Jason and I are communicating much better these days.

We truly appreciate all the help that we have received! We never could have made it out of the huge hole we were in without our family providing for us in so many different ways. Thank you!!

For those of you that are working to become debt free remember we are all human, we will make mistakes, we will fall, but we can get back up, dust ourselves off and move forward!!

I hope to be able to update you all very soon with our progress on our baby steps!

Baby Step 2: Second Update

As we start another month I wanted to give an update on our how we are doing so far on Baby Step 2. You can read about our Baby Step 2: The Debt Snowball and Baby Step 2:Update on these links.

This month we received our tax return. (Woo Hoo!) We decided to use most of it to pay on debt and a small amount on purchasing new mattresses and bed (our old ones were Jason’s grandparents…springs popping through and all, lol). We also happen to come across a great new rental at the beginning of the month that we were able to get into the 1st of March so we used a portion of our tax return to pay for the deposit, get utilities turned on, and renting a Uhaul.

This brings us to the debt we paid in February, using some of our tax return along with our regular monthly budget we were able to pay off our Mercy Medical bill and pay my parents.  Here is an updated list of our debts....

-Reliance Urgent Care: $151.34 PAID OFF 1/1/2011
-Sam's Club Credit Card: $309.44 PAID OFF 1/15/2011
-Mercy Medical: $934.90 PAID OFF 2/28/2011
-My Parents: $2725.00 PAID OFF 2/28/2011
1-American General: $4058.36
2-Wells Fargo Credit: $4800.00
3-Chrysler Financial: $25,328.09

As you can see we are going to focus on paying our American General loan now. If all goes as planned we should pay that loan off in May. I will post another update when we have paid off more debt!!

Baby Step 2: Update

We are at the end of month one of working on Baby Step 2: The Debt Snowball and so far we are well on our way to paying off our debt. We were able to pay off our Reliance Urgent Care bill and Sam's Club Credit Card in January. This now moves Mercy Medical to number one, My Parents to number two and so on. I've also updated the totals to reflect what is due as of 2/1 for the remaining debt. Here is an updated list of our debts....

-Reliance Urgent Care: $151.34 PAID OFF 1/1/2011
-Sam's Club Credit Card: $309.44 PAID OFF 1/15/2011
1-Mercy Medical: $934.90
2-My Parents: $2725.00
3-American General: $4216.67
4-Wells Fargo Credit: $4900.00
5-Chrysler Financial: $25,859.83

We did have a minor set back this month when we had to purchase a used refrigerator for our house in Farmington for our renters because the old one went out. We dipped into budgeted money for debt instead of touching our savings because we didn't want to stop our debt snowball to get our Baby Step One: $1000 Emergency Savings back to where it should be. This worked out well overall!!

Quick update on our monthly budget:

We sold our gas dryer for $75 that had been sitting in storage since moving to Texas. We used that money to buy a $50 electric dryer from our neighbor/Jason's co-worker. This dryer has already paid for it's self with the the $10 a week we are saving from not paying to dry our clothes at the apartment laundry mat. =)

Money Saving Tips...

In an effort to become debt free I am always gathering ideas from friends and family to help save us money anyway I can.

This will be an ongoing post because I will add to it as we find new ways to cut down our monthly spending expenses and overall budget. Please feel free to post ideas below on how you save money each month!

Money Saving Tips:

1) Buy a pair of clippers to cut your husband and children's' hair. I bought a pair of clippers when we moved to Texas prior to that I had been borrowing clippers from my parents for several months. This has saved us a total of about $250 this past year. Just remember that practice makes perfect!!

2) Couponing!! This is a big one as it takes a little time and effort the first several months to learn to coupon. However we have went from spending $1200 a month in groceries to $300 this month on groceries and eating out!! That is a savings of $900! I started couponing a year and a half ago, since then I've kept a list of how much we've spent each month on food, diapers, and other household items. In one year we saved just under $7000.00 on groceries!!

3) Find a produce co-op in your area! We've just started participating in Bountiful Baskets here. This is a produce co-op that offers high quality produce for a fraction of the price. We buy one basket every two weeks for $16.50. We have priced the produce we receive at the store to see how much, if at all, we are saving. At the grocery store (with some produce on sale) the same basket of produce would cost us about $45!! So not only are we getting local grown produce that is fresh but we are paying much less than if we were to purchase it at the store! You can also go to your local farmers market or search google for a CSA in your area with a local farmer/rancher.

4) Locate an Angelfood Ministries in your town/city! They offer meal packages for families that will help save you money on your groceries. Their Bountiful Blessing Box will feed a family of 4 or 5, 10 dinners plus it has some breakfast and lunch items included as well, all for $41! Which works out to be about $3.50 for each dinner...can't beat that!! Use this with your produce from your co-op or farmers market and you will be serving hearty healthy meals to your family every night!

If you have questions about any of these tips please feel free to post them below or email me!

Monthly Spending Expenses

I wanted to follow our Monthly Budget with a breakdown of our monthly cash expenses.

Listed in our Monthly Budget is our living expenses (*), we pull cash out every week and keep it in an envelope size accordion file. Each main category listed here is one envelope that holds that weeks cash for that expense. We then pay cash for ALL of our day to day things. The only time we don't use cash is when we pay bills, which we either pay online or by check.

This is a great tool to keeping us on track with our money makeover because it makes us more aware of exactly how much we spend on items throughout the month. We also do not carry our debit cards/checks/credit cards because it becomes all to easy to just use your card when your purchase runs over the cash you have on hand or you want to “splurge” on a larger item.

Below is an idea of how we budget our living expenses each week. (Keep in mind that we make changes as needed depending on the events of the month but we try to keep it as close to this as possible.)

Monthly Spending Expense Breakdown:

Grocery:	$100.00
Produce	-$10.00
Dairy	-$10.00
Meat/Poultry	-$15.00
7 Dinners	-$35.00
7 Lunches	-$10.00
7 Breakfasts	-$5.00
Toiletries	-$10.00
Snacks	-$5.00
END TOTAL	$0.00
(Roll remaining…)
Restaurants:	$20.00
(Roll remaining…)
Gas:	$20.00
(Roll remaining…)
Medicines:	$10.00
(Roll remaining…)
Clothing:	$10.00
Kids Clothing	-$5.00
Adult Clothing	-$5.00
(Roll remaining…)
Laundry:	$10.00
Dryer Quarters	-$10.00
(Never have any left.)
Baby Care:	$10.00
Diapers/Wipes	-$10.00
(Roll remaining…)
Cosmetics/Ect.:	$10.00
Hair Care	-$5.00
Personal Items	-$5.00
END TOTAL	$0.00
(Roll remaining...)
Jason's Work Food/Drink:	$12.50
(He gets reimbursed when he purchases food & drinks at work but we budget it in at the beginning of the month.)
Entertainment:	$10.00
Netflix	-$10.00
(Netflix is a once a month fee. On the other weeks we keep it simple or roll the money to the following week so we can use a bigger amount for entertainment.)

We have a couple expenses (**Oil & Repairs & **Dr. Visits)  in our Monthly Budget that we do not pull cash out for but rather we put it straight into savings, this way we have it ready for when one of these needs arise.

Full Monthly Budget

I was recently asked to give a breakdown of our budget. Like I mentioned in a previous post, Jason and I sit down together to hand write our budget every month. We allocate our money to each category. It is a freeing feeling to “tell” our money where it is going to go each month, rather than it "telling" us.

We use the worksheets copied from the back of Dave Ramsey's book, "The Total Money Makeover". Below I have made a chart that is based around the worksheets from the book. I began by listing our pay periods, then our income, followed by all of our outgoing bills, debts and living expenses. You will notice that each column's balance is zero...that is part of telling our money where it will go/belongs. (Side note: I’ve compiled our debts into two small categories rather than listing them all separately.)

Pay Period:	1st	10th	15th	20th
Income:	$2,736.31	$875.00	$2,736.31	$1,122.94
Housing:
Rent	$1,300.00
Mortgage	$342.25	$875.00
Utilities:
Utility			$160.00
Cell Phone			$200.00
Internet/Cable			$100.00
Food:
*Grocery	$200.00		$200.00
*Restaurant	$40.00		$40.00
Transportation:
*Gas	$40.00		$40.00
**Oil & Repairs	$20.00		$20.00
Car Insurance	$113.16
Clothing/Laundry:
*Kids/Adults	$10.00		$10.00
*Laundry	$20.00		$20.00
Medical:
*Medicines	$10.00		$10.00
**Dr. Visits	$10.00		$10.00
Personal:
*Baby Items	$20.00		$20.00
*Cosmetics/Ect	$20.00		$20.00
*Jason Work F/D	$25.00		$25.00
Recreation:
*Entertainment	$20.00		$20.00
Debt:
Credit Cards & Loans	$545.90		$1,029.44	$175.00
Car Payment & Medical Bills			$811.87	$947.94
Final Balance:	$0.00	$0.00	$0.00	$0.00

*I’ll follow this post with a breakdown of our monthly cash expenses.

Baby Step 2: The Debt Snowball

Moving into the new year brings a new baby step for us! We've put our $1000 into savings...it took longer than we had anticipated but we are ready to move forward now!

For those of you that haven't read Dave Ramsey's books (which I highly recommend!), this second step is all about paying off debt. You write down all of your debt, excluding your house, in order...smallest balance should be your number one priority. You don’t worry about interest rates unless two debts have similar payoffs. (If that’s the case, then list the higher interest rate debt first.)

"The point of the debt snowball is simply this: You need some quick wins in order to stay pumped up about getting out of debt! Paying off debt is not always about math. It’s about motivation. Personal finance is 20% head knowledge and 80% behavior. When you start knocking off the easier debts, you will see results and you will stay motivated to dump your debt." Dave Ramsey

We've listed our debt in order from smallest to largest. Here is how it breaks down...

1-Reliance Urgent Care: $151.34
2-Sam's Club Credit Card: $309.44
3-Mercy Medical: $1,052.90
4-My Parents: $3225.00
5-American General: $4518.46
6-Wells Fargo Credit: $5000.00
7-Chrysler Financial: $26,371.32

(This does not include our house. We do hope to sell our house but if not we'll have a step for paying it off later on down our Total Money Makeover road.)

Now starting this month we will be putting as much as we can towards paying off the smallest debt, while paying the minimum on all of our other debt. Jason and I have already made our budget for the month which includes paying off our first two debts! Yep you read right...we will be writing a check to Reliance and Sam's Club Credit for the full balance we owe!! Then we get to close our Sam's Club Credit account and put that debt behind us!!

In February we get to roll the minimum payments we were paying on those first two debts to the third debt, my parents, along with the payment we've been paying them monthly. That should triple the payment we have been paying, which puts us paying the third debt off completely in April!!

See the snow ball effect working here?!? I do!! **Note the squeal here!** I've been waiting for this step and now that it is here I can already see the difference it is going to make in our lives!

I will give updates as we pay off debt during this second Baby Step.

Update for the New Year!!

It has been several months since I have written an update for our Total Money Makeover Challenge, sorry! Life has been busy since Ryan started school and I have been working to get a MOMS Club chapter started in Midland. With today being the first day of 2011, I figured there was no better time to fill you in on the last few months...

...We have been sticking to our monthly budget and we pay cash for everything but our bills!! We sit down on the first of every month, write it all out, allocate our money to each category, and then put our plan into action. Now of course we've had a few unexpected things come up that we hadn't budgeted for...we've had a few doctor visits, extra things needed for Ryan at school, etc. However after tweaking our budget a little we've been able to make it all work without putting ourselves into more debt. (Which I must say isn't easy when you know how easily you could just get a loan or borrow money.)

...We've put $1000 into savings which means we have officially completed Baby Step One! (See my earlier post for more info on how we got this started.)

...We are now working on Baby Step Two! (I'll have a post about this next!)

So we are still on track with our Total Money Makeover!! Actually Jason and I ran some numbers yesterday and realized we could be debt free (except for our house in Farmington but we hope to sell it this spring) by January 2013!!

Now some may think that date seems really far off, for us that means we have two years to pay off all of the debt we've accumulated in 7 1/2 years. We realized that if we meet our goal of Jan. 2013, at that time we will have been in debt for 10 years!! That is 10 years too long!!

Seeing this goal date to being debt free has made us really "gazelle intense" about saving every dollar we can to put towards being debt free! Our goal is to meet that January 2013 debt free date but we are really challenging ourselves to push that date up as much as we can!! This has given me some personal challenges...I am going to start selling our left over yard sale items on craigslist/local baby sale/as well as holding another yard sale AND pushing myself to save more on groceries using coupons w/sales.

Now it's time to put our plan and goal into action!