Time for a Giveaway!

 Thanks again for the nice comments about my debt posts – although I wish that no one else had debt like we did, it is somewhat comforting to know that we weren’t alone in those struggles.
 
What helped us was getting this book:
 

 
So I’m giving away 3 copies to 3 different winners!
 
I’m also going to throw in some good foodie stuff as well – bars, tea, nut butter, chocolate, etc. Once I choose the winners I’ll ask them for some ideas on what they like!

There are 2 ways to enter (do one or both!)

1. Leave me a comment with what your next financial goal is. It could be to pay off a credit card, to save more, start a retirement account, etc.

2. Blog about this giveaway/link back to this post and let me know you did so.
 
This giveaway ends at 10:00PM CST on Sunday March 20, 2011. I will announce the winner on March 21st!

You do not have to have a blog to enter/win. However, this giveaway is open to US residents only.
 
~Holly

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Living Debt Free Wrap-Up

Hi Friends!

I hope you have enjoyed my posts from the past few days — it is an overwhelming amount of information, but I hope you learned something!

I have wanted to write about this topic for months now, but I never knew how to fit it in with the rest of my blog. I usually write about my marathon training, or trying new recipes, or books I have read, etc. But I think part of healthy living is taking care of stress, and guess what — when we had tons of debt we were STRESSED OUT!

We can relax more, now that the credit card debt is gone. We aren’t debt-free now, but we have a plan and we are on our way — and that relieves most of my stress.

In case you missed one, or if you want to look back on them, here they are:

Monday: Steps to Financial Freedom

Tuesday: Budgeting and Paying off Debt

Wednesday: Getting your Debt Snowball Rolling

Other good resources to check out:

Dave Ramsey’s Website

Baby Steps to Financial Freedom

Mint.com

Cathy brought up a good point yesterday, which was about using CASH.

I totally forgot to mention cash when I explained the budgeting process. Jason and I use cash for  most purchases. We also use cash for our “fun money” — we take it out either at the beginning of the month or on payday — and that way, when the money is GONE it is GONE and that means no more spending. We use the same method for food: I take out the budgeted amount per week (let’s say we budget $400 for food/toiletries each month, so about $100 per week) — and that gives me 1-2 shopping trips and then we make due until the following week. Some weeks we have money leftover and we go out for dinner. Otherwise we only use our check card — that way it comes directly out of our account, but we have the convenience of plastic (used mostly for pumping gas!)

*

Back to somewhat regularly scheduled programming 🙂

I have been running and I’ve been feeling GREAT — Tuesday I had a short 3 mile run and I finished in about 28 minutes. I played with the speed on the treadmill and that made the time go by so quickly. I want to start switching up the incline, but I’m worried that my knee will start hurting again, so I’m going to continue to run on flat surfaces this week. Next week I should be able to run outside (hopefully!!!) or I’ll start upping the incline.

On Wednesday I ran 6 miles:

And after some foam-rolling and stretching I was good to go! I made some “Shamrock Shakes” after our run:

Ingredients:

1 scoop vanilla protein powder
2/3 cup unsweetened vanilla almond milk
handful of spinach (for color and nutrients!)
1/4 tsp peppermint extract — I will use 1/8 tsp next time since this one was really minty!
1/4 tsp guar gum (to thicken it up – could omit)
5-6 ice cubes

We also got to babysit this beast all night:

He loved watching Top Chef with us!

*What are you doing for St. Patty’s Day? Today is actually the anniversary of our first date — 4 years ago! I’m still not sure what our plans are.

~Holly

Getting Your Debt Snowball Rolling!

Hi Friends!

I hope you have enjoyed “Debt Free Week” here on the blog — there is so much information to share and it has been tough to get it all out there!

Monday: Steps to Financial Freedom

Tuesday: Budgeting and Paying off Debt

On Tuesday I explained how to set up your budget (Matt commented to me yesterday that mint.com is a great resource — and it is! Jason and I recently started using that program — check it out!) With your budget, you are able to see how much money you can throw at your debt snowball. Today I want to share some other ideas on how to scrape up some money to throw at your debt, or to put into savings!

I’m going to do my best to include all that we did, but bear with me since we did most of this almost 2 years ago. I’m including some options that we thought about, but ultimately didn’t do. Maybe they will work for your situation. Also, all of our debt was credit card debt. But I think the same advice would apply if you have student loan debt, car loans, etc.

1. We stopped using credit cards. We took them out of our wallets and cut them up.

2. Demand lower interest rates on your credit cards.

Jason called the credit card companies and got them to lower our interest rates. He had to talk to about 5-6 different people, but he kept at it. He called the 1-800 number on the cards and kept saying “I want a lower interest rate. If you can’t help me, get me someone who can”. He wasn’t rude about it, just firm and to the point. He explained that we want to pay our bills, but the interest is too much and our payments aren’t making a dent in the balance. He alluded to the fact that we might not pay them at all since the interest was so high. Two of our credit cards were with Bank of America – they lowered the interest from 18% to 4% on both of the cards. In doing so, our payments went from $900/month (for 2 cards) to $450/month. I’m not kidding. (we stopped using the credit cards anyway, but that was part of the “deal” — that we could no longer use the credit cards and our payments had to be taken directly from our checking account)

3. We started using a zero-based budget (see this post)

Also look at what you are spending most of your money on. We were spending too much on restaurant meals, so that was an area where we could definitely cut back on. The other big money pit for us were our car payments. Last year we traded in Jason’s truck for a smaller car. Our payment for the truck was almost $500/month, and the car payment is under $300 — so that saved us some money. Plus the gas mileage is waaaaay better than what the truck got. We were able to shave hundreds (yes, hundreds!) off of our gas budget from doing this. Obviously this may not work for everyone, but it was a smart decision for us.

4. Garage sale. Sell stuff!!!

We had a huge garage sale and made over $1000 from doing the sale on 2 weekends. This was a lot of work but it was so worth it. We basically went room to room and looked at what we absolutely NEEDED. Anything else got thrown in the garage. I advertised on Craigslist and made really nice bright pink signs that I put all over our part of town. It was a big success. We have also sold a ton of stuff on Craigslist – it takes time to put up the posts, call/email people back, etc, but it worked great for us. We sold furniture, computer equipment, old cell phones, dishes, etc.

5. Switch from Whole Life Insurance to Term Life Insurance.

I don’t feel qualified to explain why you would want to do this, but we read about it in TTM and talked to our insurance agent. In doing this, we lowered our insurance payment by a good amount, and we were able to cash out the $3000 we had in Jason’s Whole Life Insurance policy. Again, talk to your insurance agent if this is a good choice for you. We were able to take that $3000 and make a big payment on the credit cards.

6. Look at your bills!!!

We switched to a different cell phone plan and saved some money. We looked into ways of cutting our electricity bills, cable bills (get rid of it!), internet bills, etc. Do you get magazine subscriptions? Cancel them. Do you belong to a gym? Can you switch to a cheaper one? We switched from a $70/month gym to a $25/month gym – sure it isn’t open 24 hours but we don’t need that. Plus I get $20 reimbursed through my health insurance if I go 8 times per month. Hello we pay $5 for our gym membership! This part takes time — but look at your bills and look at your subscriptions — what do you truly NEED and what can you get rid of/cut back on?

7. Stop spending.

Seriously.  This irritated me to even think about — I didn’t think we spent a lot on “stuff” —  but look at your bank statements, don’t get defensive and look at what you can cut back on. A friend of mine has told me that she didn’t think she was spending tons of money each month — but when she looked at her banks statements, she realized that she bought a $4 coffee 3x per week, ate out for lunch at least 2x per week and bought new clothes for work because she “needed” them. There is nothing wrong with buying clothes — but think about what you need. Once the debt is paid off you can spend more on clothes, but for now, make the sacrifice and pay off your debts. Jason and I didn’t have a lot of “stuff” that we had bought — it was lots of restaurant meals, food, booze, movies, etc.

8. Get a second job/donate plasma/etc.

We didn’t do these things. We focused mainly on selling stuff and not spending as much.

9. Give money.

It sounds counterproductive, but it was good for us to do. Dave recommends it – he doesn’t say who to give the money to, and it doesn’t have to be a church if that isn’t your thing. But give some of your money away. You set the amount. We started with $100 per month. It sometimes SUCKED to give that away, but it felt good. We donated it to different places: churches, Shriners hospital, a memorial for a local fallen police officer, etc. It felt good to have money set aside (sometimes we’d just stash that money away for a while) – for example, it felt good to give a few hundred dollars to the police officer’s memorial. If we hadn’t set that money aside we probably would not have been able to do that.

10. Save a little bit each month.

Again, we chose $100/month. That way, we could save for something “big” – a new TV, a new laptop, car expenses, clothes, etc. And you already have the $1000 emergency fund for things like car repairs, etc. But we wanted to save a little extra.

11. Any “extra” money?

Put it towards the debt: tax refunds, extra paychecks (some months we have 3 paychecks based on how the days fall), work bonuses, money gifts, etc.

12. Look for deals, sales, etc.

If you absolutely need something, shop around — read reviews online, ask your friends, and ask yourself if you truly “need” that item. Sorry if this sounds really silly, but this helped me tons!

Reading some of these suggestions in books and online made me honestly very upset — it was hard to look at what we were doing because I didn’t realize how we were KEEPING ourselves in debt. Remember, the suggestions above are for people who want to scrape up more money to pay off debt or put into savings — this is not a list of things that everyone should do because we did it. You need to do what is best for you — everyone has a different situation. I just wanted to share what worked for us!

Any other questions? Email me! couchpotatoathlete (at) gmail (dot) com.

Tomorrow I’ll wrap all of this info up and Friday I’m having a giveaway 🙂

Budgeting & Paying off Debt

Hi Friends!

Thanks for the nice feedback on my post yesterday – and I’ve gotten a few emails from fellow Dave Ramsey fans – how nice! His Baby Steps have really helped Jason and me (and others too!)

Today I want to try to explain how we set up our budgets – this was key in helping us pay off our debt fast. Before I get into this, I want to briefly explain how Jason and I have our bank accounts set up. Depending on your situation, you may need to adjust how you do your budget.

Jason and I have 2 accounts: checking and savings. We do not have separate accounts, we do not each pay a percentage of the bills, etc. We each deposit our paychecks into the checking account and pay bills from there. We have always done it this way. To be honest I don’t think I could (or would want to) keep track of more accounts than this.

To get started, we did the following:

1. Print off your bank statements from the past few months.

2. List your income amounts

3. List off your necessary expenses

  • Mortgage/Rent payment
  • Insurance
  • Gas/Electricity
  • Phone/Internet
  • Water
  • Car loans, credit card debts, etc.

 4. Add up/estimate the amount of money you use on certain categories:

  • Groceries (you could make a separate category for toilet paper, toiletries, etc)
  • Gas/car repairs/bus or train passes/etc
  • Other (clothing, restaurant meals, booze, etc)

Things like groceries and gas can be different amounts each month. One month you could spend close to $400 on food, some months less, some months more. Be honest with yourself though — can you really live off of those amounts? For example, I would never budget our food (which includes toiletries and any restaurant meals) below $300. I’ve tried and I couldn’t do it. The goal is not to live miserably.

Here is an example  — please note that these numbers are all made up – and please know that you may not need all of these categories, or you might need more – daycare, prescriptions, health insurance (we both pay for health insurance through work), etc.

 March Budget

(Fun money is “extra” money – can be for going out to eat, birthday gifts, etc)

 So look at the totals:

  • Monthly income            $4500/month
  • Monthly expenses         $3840/month

 That is a difference of $660/month – that money would then get paid towards your smallest debt (and start your snowball) or it would start your $1000 emergency fund.

Maybe you are thinking “there is no way I have any extra money each month” — I dare you to type it all out and see for yourself. If anything, you’ll see where your money is going! We were amazed at how much money we actually had — we were just spending it on nothing.

 Now lets go back to the Debt Snowball example from yesterday:

If Bob/Jane had $0 in their emergency fund, the $660 could get used towards that. Maybe they could sell a few things and get to their $1000 emergency fund in another month or two. After that, they can attack the debt. With an additional $660 each month, their first card (Macy’s) could be paid off in a little over 2 months:

  • 100 Macy’s payment + $660 “extra” each month = $760 monthly payment to Macy’s. $2000 (balance of card) /$760 = 2.63 months

After the Macy’s card is paid off, they would start attacking the Visa card (but still making minimum payments on the car loan and student loans). Their Visa payment should be $910.

  • 150 Visa payment + $760 “extra” ($660 “extra” money + 100 Macy’s)

Now — just because that month Bob and Jane have $660 extra, does that mean they have that every month? No – it could be more or less. Jason and I have some bills that are due every 3 months — so when those bills are due, we have less “extra” money.

But if Bob and Jane manage to continue the $910 payments on the Visa — it would take them less than 6 months to pay off that card! In this example, Bob and Jane could be paying off their Macy’s and Visa card within 8 months or so. Then they could start attacking the car loan — making payments of about $1310!

But do you see how quickly it can move if you work at it?

The first few months of budgeting really sucked. We made mistakes and had to scramble a bit, but after a while, it becomes second nature. And just because you have $400 set aside for food, doesn’t mean you have to use it. You could have $50 leftover, which you could add to your debt payments, or you could use it on yourself – we usually went out for a celebratory dinner at the end of the month – we’d use up our food money. That didn’t happen every month because there wasn’t always extra.

The idea is to budget what you need money for. You know when your Mom’s birthday is, so if you want to get her a gift, budget in $20 or $50 or whatever you normally spend on her. There are months when we get “extra” paychecks — meaning there are 3 payday Fridays in a month. That really got our Debt Snowball rolling.

Like I said yesterday, I am not a financial counselor. This is all what I learned from TMM and this is how Jason and I did things. We were drowning in the debt payments, but we were never behind on payments. Dave gives some advice on what to do in those situations. I remember him explaining that even if you are behind on your credit cards/student loans, you need to take care of yourself. That includes: food, shelter, clothing.

 Again, I hope this isn’t an overwhelming post. Budgeting seemed out of control at first, but after a while we got a better handle on it – and as you do it, you’ll get better and better at it. Tomorrow I’ll share with you some more ideas on what we did to pay down on our debt — but honestly, budgeting was key — and STICKING to the budget was super important.

Give it a try!

Steps to Financial Freedom

Hi Friends!

Yesterday seemed like such a short day – Daylight Savings Time seems to just throw me off, even though it is only one hour difference. I was tired all day and felt like I was rushing around and not doing much. Oh well – hopefully today I will feel better!

This week I want to focus more on paying off debt/budgeting/etc, so today I thought I’d share with you the “Baby Steps” to getting out of debt and living in financial freedom. These steps are all from Dave Ramsey’s book The Total Money Makeover. I’ll also explain how Jason and I followed the steps and where we are today. You can also read more about them on his website.

***I’m not sure if this needs to be said, but I am not a financial counselor — Jason and I read Dave Ramsey’s book and followed the guidelines he suggests. I only speak from personal experience. ***

Step 1: Baby Emergency Fund of $1000

Save up $1000 as quickly as you can. This should be money you can access if need be – this is not money tied up in CDs or other investments. Jason and I had a few hundred dollars that was a great start to our Baby Emergency Fund (BEF) – as for the rest of the money? We had a garage sale and made almost $1000 dollars. We were able to finish off our BEF and we had money leftover to pay on one of our credit cards.

Step 2: Pay off debt using Debt Snowball

I’ll explain more of this tomorrow, since it will take me a while to explain. But basically, it is a way of listing out your debts: credit cards, student loans, car loans, personal loans, store credit cards, etc. List them in order from smallest balance to largest balance – do not include your mortgage, but you could include things like a second mortgage, Home Equity Loans, etc. (Some other debt payoff ideas have you look at interest rates and pay them off according to the highest rates, but Dave’s plan has you list them according to balance amount only – this is how we did it as well). Here is an example:

Debt Name Balance Due Minimum Payment
Macy’s Card $2000 $100
Visa Card $5000 $150
Car Loan $25000 $400
Student Loans $50000 $200

Briefly, this is how it works: Since Macy’s is the lowest balance card, any extra money you have each month would go towards paying the Macy’s card. If you sell something on Craigslist – use that money to make an extra payment on your Macy’s card. Attack the debt. Get rid of it. I’ll share more of the methods we used to earn extra money – that post should be up on Wednesday. The Debt Snowball will make more sense after I explain how we budget our money (Tuesday’s post).

The idea is, once the Macy’s card is paid off, you would then start paying $250 as your minimum payment on the Visa ($100 Macy’s payment that no longer exists + $150 Visa minimum payment) – that is the “snowball” effect — you are building and building. After the Macy’s, Visa and Car loans are all paid, you will be paying AT LEAST $850 per month on your student loans (plus any “extra” money you find when you make your monthly budget). If you are confused about where to find this “extra” money – I will be explaining how we set up our budget tomorrow which should answer many of those questions.

Jason and I have paid off our credit card debt ($35,000) but we still have our car loans – which we are attacking like we attacked the credit card debt.

Step 3: Finish off your Emergency Fund

Now that all of your debt is paid off (Dave says this could take a few years depending on your situation) – now is the time to finish off your Emergency Fund. Your goal is to have 3 to 6 months of expenses in savings. Follow the same method as the Debt Snowball, but instead of paying bills you will be putting that money into savings.

Jason and I technically are done with this step – we paid off our credit cards and then switched to Step #3 – we did this because there was a chance that Jason’s job was going to be moved to a different city which would require us to move. We wanted to have more money in savings in case we needed to move/rent an apartment in the new job’s location, etc. Now that we have our Emergency Fund stocked, we are back to paying extra money on the car loans (step #2)

Step 4: Invest 15% household income into Roth IRAs and other pre-tax retirement options

We are not at this step but we look forward to it. I’ll be honest and say I don’t have anything to say about this step – the book explains it, and I need to reread those chapters when we get closer to Step #4.

Step 5: College funding for children

Now that you are investing money into your retirement, you can start investing in your children’s future education. The Total Money Makeover book gives details about this step.

Step 6: Pay off the mortgage!

By this point you will be debt free (except for your house), your retirement accounts will be filling, any college funding will be put into place, and now you can focus on paying off your mortgage. I cannot wait until we have no mortgage payment!

Step 7: Build wealth and give!

This is an exciting step – being able to give money, donate to people/organizations/churches who need it. How awesome would it be to be able to give money to a children’s hospital, to help your church build a new building, to donate money to the Red Cross, or the Salvation Army, or to any other organization that you are passionate about.

*

I know this post may seem a bit overwhelming, but I hope it gives you a good overview of what the book details, as well as what you can do to get yourself to Financial Freedom.

Any questions – please feel free to email me at couchpotatoathlete (at) gmail (dot) com.

Enjoy your day!

~Holly