Reflection

These past few weeks have been a whirlwind of new jobs, new financial situations, and a newfound respect for all the saving we've been doing these last 17 months. You see, in December 2012 I had a 2 month old baby, a dwindling bank account, and severe anxiety for the future. Somehow, I found a book called Pocket Your Dollars, and even though I barely had $20 in the bank, I bought the book for $11.99 because I just had this gut feeling that I needed to read it.

I've said this before and I'll say it again. Read. This. Book. It's so eye opening and it will teach you so much about money and your relationship with it. I can honestly say I have no idea what my financial life might look like today had I not found this book.

Anyways, fast forward to today. I have recently left my full time job to become a part time (three days a week) Dental Assistant. Jeff is back to working full time at Kingdom Trails after working part time all winter. In the middle of all this happening, we needed to pay $640 for some car maintenance, $690 for two plane tickets, and $317 for an emergency situation with our dog Ellie. So in total that is $1,647 in a matter of one month. And you know what? We paid for it all IN CASH. I know that to some people that is pocket change, but for me and Jeff, I cannot even tell you just how great it felt to write out checks and not bat an eye. Our whole relationship we always thought we lived within our means, but in reality we weren't. We were watching our grocery budget and limited our fun money, but we were rarely thinking about what might be coming up ahead. 

I'm happy to report that we now make deposits to our emergency fund, our house down payment fund, our retirement fund, and our son's college fund every month, while still paying down our debt and having a tiny bit of fun all in the middle of that. Our financial future has never looked brighter and I owe so much to this book! 

Just thought I'd take a second and reflect on how far we've come. Although I strongly dislike taking money out of savings, at least it was there in the first place. I suppose that's another lesson for another day :)

Power Moves!

So awhile ago, I applied for a 0% credit card so we could start tackling some of our debt and really get on top of things. I hadn't heard from the company in three weeks, so this past Friday I decided to take advantage of one of Parker's naps and get on the phone with Customer Service. It turned out that the zip code for Newark appeared on their end as the zip code for West Burke, and since nothing in my records indicated that I had ever lived in West Burke (because I haven't), my application was in limbo, and they sent a letter to an address that doesn't exist so I was never made aware! A quick fix to the application and boom, in 5 seconds I was approved for an introductory rate of 0% for 18 months with a limit of $7,400. After my introductory rate is over, my rate will be 12.99% (much better than Capital One's 15.65% that I'm paying). And it needs to be noted that I called Capital One MULTIPLE TIMES trying to get them to lower my rate because I have excellent credit and I've been a customer of theirs for 8 years, but they would never waiver. Too bad for them, they just lost out on a lot of interest payments from me.

So my card is in the mail and the balance transfer won't be far behind! Getting rid of that debt will be so much easier without that horrible rate. According to my calculations, the hospital debt will be paid off this August (maybe sooner, I haven't decided), and then I will apply that $100/mo to the credit card and get that paid off in October 2015 (before my 18 months is up!!!), and then those payments will go towards the car and in only four more months after that in February 2016, the car will be paid off! To a number-junkie like me, those are amazing statistics. We will then put all that money towards our student loans and get those paid off in another 18-24 months. I just want to tackle that debt and get rid of everything!

On Friday, I also opened up a money market account at Ally Bank for our emergency fund (I'm going to transfer our savings over there) as well as another money market for Parker. I'm ashamed that I hadn't done that previously, but I hadn't decided if I wanted a "college fund" or an educational IRA or whatever else there is for him. I finally decided that if he wanted to go to college, that money will get him through college. If he wants trade school, we'll help him through that. If he has a great business idea and he needs money for the start up costs, he can use the money for that instead. This is years away, but I have a feeling Jeff and I aren't going to push him one way or another (maybe slightly suggest - but I want him to feel free to make a decision that is right for him). After spending all these years trying to pay off my student loans (and not using my degree whatsoever), I have a different perspective of 4 year colleges.

So, in my financial life, I made power moves this weekend! The last few steps for me are: to finally open up a Roth IRA for our retirement, but I need to decide which firm to use. It's a scary concept, so I'm hesitating quite a bit. But my goal is by the end of next week to have it open! And also to open up another online account for our "house account". We need to save ourselves from ourselves and stop trying to build a nest egg in an account that is so easily accessible. IT DOESN'T WORK! If we ever want a house of our own, we need to start seriously saving today. So those are my goals!

I'm feeling a million times better about our financial future :) And happy mother's day to all the momma's out there!

Automatic!

This weekend, Jeff went on a 3 day hike in Franconia with my brother-in-law. So it was just me and the little munchkin this weekend (and Ellie, but she's so easy I just about forget about her!). Friday night I put Parker to bed and then suddenly felt inspired to read a book the I had gotten weeks ago - The Automatic Millionaire. I started reading at 8pm thinking I'd just read a few chapters and then hit the hay, get a great nights' sleep in and be refreshed in the morning. I should have known better.

I was fascinated by this book! I stayed up until 11:30pm (very late for me) reading and rereading, taking notes, researching interest rates, etc. I have a whole new perspective about money now.

You see, I've been so focused on getting rid of our debt - which is in the long run, a very short term problem. I haven't even though about a retirement fund for us, I kept thinking we'd start that when we have more money. The book opened my eyes to the harsh reality that time is money. And - it made me realize that I need to save myself from myself.

So - Parker got me up bright and early (4:30AM!!!) Saturday morning, which worked out ok, because I was totally jazzed about fixing up our finances. First thing, I got on the phone with Capital One (my credit card) and tried to negotiate a better interest rate. I spoke with a few different people but none could help me lower it. However, the last one agreed to take off my recent $70 finance fee, which I was very grateful for. Then, I went online and redeemed my 15,000 rewards points I had sitting there for a $74 credit to my account. So all in all, I knocked my balance down $144. Then, I grabbed the card, put it in a plastic freezer bag, filled it up with water, and tossed it in the freezer. One more step to saving myself from myself.

The whole point of the book was to make everything you possibly can automatic. Good intentions of paying down debt, saving an emergency fund, saving for retirement, etc, never get you to your goal. If you really want financial freedom, it HAS to be done automatically.

So, I spend the rest of the day making as many payments as possible automatic, including the credit card, which was always a case my case basis. Then, I spend a solid 4 hours (excessive I know, welcome to my obsessive nature) researching what company I want to open up a Roth IRA with. I want the ability to go for some aggressive stocks, some bonds, and some interest earning low risk accounts all blended. I'm still trying to get through the nitty gritty of the commission, the fees, etc, so I haven't made my final decision, but I have it down to two - I'll let you know who I went through on my next blog post!

I have a dedicated credit card payment, a dedicated savings transfer, and (I will have) a dedicated retirement fund contribution every month. In short, the book scared the living daylights out of me. 28 might seem like a great age to start saving for retirement (and it is!) but the perfectionist side of me can't help but be mad at myself for wasting precious early years of savings.

One thing is for sure, we'll be a heck of a lot closer to our goals now that it will all be set up and AUTOMATIC! I've never been so excited for the future - and I HIGHLY recommend this book!

Debt Freedom is a Long Road...or is it?

For as long as I can remember, I have always wanted to avoid debt. I remember getting a total of $38 in birthday money when I was younger. The next day, I had my mom bring me to the bank and helped me open up a savings account. I couldn't wait to add to it; watching that balance grow was like crack to me!

When I originally went to college I decided to major in Accounting and Finance. I remember learning about costs of credit vs. earning interest on savings. They made it clear that the difference was between instant gratification and delayed gratification. I could never understand why anyone would be so irresponsible with credit. Or with money, for that matter. Couldn't they see what kind of future they were giving up for getting what they wanted right now?

Then life hit.

We've gotten ourselves in debt, climbed back out, and now we have found ourselves right back in it again. We had a baby in October 2012 and that reality REALLY hit. Diapers are how much? Formula is HOW MUCH?! Daycare costs that much every MONTH?!?!

Slowly but surely, we are right back where we started. It would appear, that everyone finds themselves in this category at one time or another. Living in debt is so normal nowadays, it's no wonder we're almost immune to it.

However - the more I analyzed our situation the more I became disgusted with it.  And you know what? It takes disgust to make a change. If we are forever complacent, than where we are today is where we will be 5 years from now.

So the time to make a big, scary, first step is right now.

Today - I took a financial snapshot of where we are. If you've never done that, the time is now. It's not pleasant for most people, but to me the anxiety comes from being out of control, not from being in denial.  So taking a long hard look at the financial reality is the first logical step.

Here's the brutal, honest truth, right from the get-go - together, Jeff and I have medical, car, student loan and credit card debt totaling $32,797. That number makes me cringe, but I have faith that we can tackle it.

I have read and reread "Pocket Your Dollars", which I HIGHLY recommend to anyone who wants to make changes in their financial lives. In doing so, I understand the psychology behind, and my relationship with, money and credit.

Now I am currently following Dave Ramsey's advice (although we saved much more than $1000 in our emergency fund before tackling our debt, just to play it uber-safe):

The next step was to create a debt snowball, plus we added what I like to call "momentum money".  A debt snowball, although I'm sure most of you know this already, is where you pay the minimums on every balance, and start targeting one balance at a time (usually the loan with the smallest to pay off), putting every extra cent you have at that one debt. Once that debt is paid off, you take the minimum balance you were paying on that loan and apply it to the next loan, again adding every extra cent you can to those payments until that one is paid off, then apply those two minimum payments to the next one, etc. Before you know it you're making $700 payments on your larger loans and melting them away quickly.

Including all our minimum payments, I decided that we could afford to pay $900 towards debt repayment every month, which means we will be debt free in just over 3 years - July 2017, which also happens to be the month in which our 6th anniversary falls. What a sweet gift to each other.

So today - I'm chosing not to be "normal".  3 years of putting our heads down and getting to work on this mess that we've made, in exchange for a lifetime of true financial independence seems like a very small price to pay. The hope is that in allowing you into my journey, I will stay the course, reap the rewards, and maybe even inspire some of you along the way.

Here goes everything :)