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 🙂

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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

Eleven Miles!

Hi Friends!

Meet Peter Sam: (again)

He loved modeling all of those hats – he didn’t squirm at all — it probably helped that he had just woken up from a nap!  🙂  And I love that with the first hat he is Uncle (Peter) Sam!

 

I even wore my UMD (Univ of MN-Duluth) sweater! Our mascot is the Bulldog! How perfect is that?

Jason totally laughed at me when I pulled this sweater out – he said “we’ve been together for 4 years and I have NEVER seen that sweater before!” True – I never wear it, but I just love it so much. My dad found it for me at Goodwill (or another thrift store, I can’t remember) before I started college.

Peter Sam is such a sweetheart!!! Sometimes I wish Jason and I had a dog, but Jason is allergic (and to be honest I don’t know how to take care of a dog!)

Rewind to Saturday morning –

I ran 11 miles.

I ran 11 miles in under 2 hours (my goal!)

My knee didn’t hurt. At. All.

I think the biggest difference has been my trusty foam-roller. In case you don’t know what one is, click here and you can see a picture of one and someone showing a few common stretches using it. Like I said earlier last week, this thing is worth its weight in gold. I really think daily foam-rolling is something I need to keep up with (and I intend to!)

And a few days ago I mentioned that reading about bloggers who run 7-8 min/miles – I didn’t mean to sound like I was complaining. I get caught in the comparison trap and I shouldn’t let those thoughts creep in. Running AT ALL is something I should be happy about – thanks to all of you who pointed that out in the comments or through emails.

Plans for the day:

-More work on the new blog (hopefully to be unveiled in a week or two…
-Grocery store
-Meal planning for the week (any suggestions on recipes to try?)
-Laundry (!!!)
-Yoga
-Read
-Relax!

Enjoy your day!

~Holly

Beans, Beans the Magical Fruit

Hi Friends!

It is finally the weekend!!! Woohoo! In a few hours I will be introduced to Peter Sam:

I have only seen pictures but I finally get to see him in real life! My sister Myra and her husband Tyler are both teachers and are on spring break – they drove all the way from Houston last night!

Last night I made some of The Non-Dairy Queen’s Red Quinoa Burgers:

Sarena once again your recipe didn’t let me down! The only change I made was using all red beans, no mung beans and I left them a little chunky! We had them with some mixed veggies – a lovely dinner! Jason LOVED these — he had quite a few!

Afterward we headed to the mall and to Target. I wanted to pick up a few gifts for some friends – I am blessed to know some very special people and I wanted to show my thanks! They read the blog so I don’t want to share what I got – they know who they are!

I could spend hours in the Yankee Candle store (and I actually worked there for a few months in high school when it was still Wicks N Sticks!). I love smelling all of the jars. Jason and I picked up two for ourselves too. The Macintosh flavor is by far my favorite Yankee candle, but who could resist Vanilla Cupcake?

The boxes are all packed up and ready to ship tomorrow (it feels good to get stuff ready, all I have to do tomorrow is take them to the UPS store and pay an arm and leg ship them!)

 A few weeks ago I showed you the Kombucha I was brewing (thanks to Averie for sending me the starter scoby!) The homemade Kombucha tastes a million times better than the store bought stuff. Here is our stocked up fridge:

Really, there is no comparison in my mind – the taste is unbelievable!

Kombucha is a detoxifying, probiotic drink that is rich in antioxidants. Too bad the bottles in the store cost $3-5 a piece. Homemade tastes better and is way cheap. You can purchase supplies at Happyherbalist.com!

*What is going on this weekend that has you excited? I seriously cannot wait to meet Peter Sam! Oh and I have 11 miles to run today. Should be fun!

Homemade Blueberry Pop-Tarts

Hi Friends!

I think next week will be Paying off Debt/Budgeting week – I’ve been working on a few posts but I keep adding more info, so maybe on Monday I’ll finally have one of those posts up. Believe me I love talking about budgeting, I just want to make sure I’m explaining everything in the best way. If you have any questions that you want covered, you can email me at couchpotatoathlete (at) gmail (dot) com or leave a question in the comment section below. 🙂

I ran 3 miles yesterday and it felt good – my knees are feeling good and the 30 minutes or so flew by pretty quickly. Maybe it was because I was going to go home and make homemade pop-tarts!

 I’ve been slacking with my March goals – one of them being “try 2 new recipes per week”. I just couldn’t decide on what to make! A few days ago I got an email from Jason while I was at work – it was about making homemade pop-tarts.

Let me explain. Jason loves pop-tarts. I’m sure at his office he has 2-3 boxes of pop-tarts. I love them too – but I don’t eat them anymore. They don’t fill me up and the ingredient list is ridiculous.

The website made it sound so simple: make a pie crust, divide it up and roll into squares, place filling on top, place another square of dough on top of that, bake and enjoy.

I used Martha’s recipe for pie crust (who better than the master?) and made ½ batch (enough for 1 pie crust) and I used whole wheat flour. The dough was a little tough to work with, but it ended up alright. For the filling, I used 1 cup frozen blueberries and 2 TBSP brown sugar – I microwaved that in a bowl for about 1-2 minutes stirring every now and then. You could also heat them on the stovetop. The funnest part was putting them together and crimping the edges together (to make them more authentic, dontcha think?). They are so cute!

 

I’m sure you could just call these mini blueberry pocket pies, but I’m sticking with calling them pop-tarts. I think if I had used all-purpose flour they would have turned out a little better – not so thick perhaps. Either way they tasted amazing. I wouldn’t put one in the toaster though – I’d end up with blueberry goo all over my poor toaster.

These tasted so good and seriously — Martha’s recipe for pie crust is so delicious. There is a ton of butter in there so obviously it tastes good 🙂

*What are your plans for the weekend?

*What is your favorite flavor of pop-tarts? And if you don’t like pop-tarts, what is your favorite pie flavor? and if you don’t like pie, what do you like?!?!

Reunited with the Gym

Hi Friends!

Last night I finally went to the gym! I had not gone since last Wednesday. I skipped Thursday since we were out of town and on Saturday I was just too pooped to even think about going. And then we had Jason’s birthday on Tuesday and I skipped that day too.

But I went and it felt really good. Not at first of course – I hated every second of the first few miles. Instead of focusing on anything positive, I chose to FOCUS ON THE TIMER ON THE TREADMILL.

I do not recommend that if you want to enjoy your workout! After I was able to quit staring at the timer, I realized how GOOD I felt while I ran. The treadmills stop at 60 minutes and although I could have pushed it and ran 6 in 60 minutes, I decided to just keep it steady in case my knee decided to hurt again (it didn’t!)

Sometimes when I read other runner blogs and see that they run 7-8 min miles I start to feel bad. Like maybe I’m a slow runner? To be honest I don’t really care, but I think about it from time to time. Hell I should be PROUD that I even finished my run!  🙂

Afterward I set my timer for 10 minutes and stretched and foam-rolled. This thing is worth its weight in gold!!! It definitely helps my legs feel looser. And following up with a Hugh Jass Taco Salad was a good idea too, no?

spinach, romaine, bell pepper, onion, refried beans, browned ground beef, salsa, black olives, mashed avocado

I took the night off of reading since I’ve been reading the Hunger Games series nonstop for the past week – plus Top Chef was on!

*Did you give up something for Lent?