Friday, May 23, 2014

Sing it, Alice!

I wanted SO badly to pump Alice Cooper's famous "School's Out For Summer" over the intercom today, I've been singing it all day long.

Earlier this year I played conga music over the intercom while the entire school did the conga line through the hallways, I'm not kidding, except this time I imagine the teachers and staff would have out-conga'd the kids hands down.

For those of you who have crossed the proverbial finish line that is the last day of school, CONGRATS!  Take a breather, grab your drink of choice, and relax.

And to those who still have a bit left, "Stay strong and fight the good fight".

Happy Summer, Everyone!

Wednesday, May 14, 2014

Now That's A Makeover of A Different Color!

As you know, we've been making over our house.  Duh.  You wouldn't be here if we weren't.  But while we've been making over our house, we have been going through a makeover of a different sort as well...a financial one.

This is not a "Get-Rich-Quick" article.  I have no super secret clue that will fill your bank accounts with loads of green paper tomorrow, no matter how nice that would be.  All I'm going to share with you is how we have taken control of our finances.  We are living like many won't so that one day we can live like many can't.

If you have gone to college and were not part of the lucky crowd whose parents paid the enormous tab you racked up while staying up late (studying of course), skipping class (for educational excursions), and making too many dumb decisions to count that will forever be some of your favorite memories, you know the debt it has put you in.

Between the hubster and I, we have 11 years of schooling collectively, and no, neither one of us has  "Dr." before our name.  Through transferring colleges Joe lost some credits, adding a little extra time to his sentence.  I on the other hand drifted through, and while I really enjoyed college and did well, I was one of those kids that never could nail down what they wanted to be when they grew up.  I dipped my toes in the water of at least 6 different majors coming out with a Sales, Marketing, and Management degree and a partial Physical and Health Education degree under my belt and Joe earned a double major in Education and Early Childhood Development.

Joe and I were both blessed enough to have had part of our schooling paid for with athletic and academic scholarships, but we still amassed over $80,000 in school loan debt.  Add that to a car payment, a house payment, insurance, a credit card, cell phones, daily expenses to live....OOF-DA.

We finally decided that enough was enough.  I was tired of swiping my card at the store and not really knowing what was in the account.  We were tired of forking over so much money each month to pay off debt when there were so many other fun things we wanted to use the money for.  (If it was up to me we would travel to exotic beaches in-between tiling the kitchen and picking out new flooring, but that wasn't in the cards for us.)  That's when Joe discovered Dave Ramsey and his Total Money Makeover.

To sum up just a few of his points:
  • Quit trying to keep up with the Jones
    • They may have all the newest toys and the big house but the thing is they're probably up to their eyeballs in debt, scraping by to make the payments for their toys that they can't fully enjoy them.
  • Spend your account down to ZERO
    • After you've set aside some money in an emergency fund, budget your money so that every last penny is accounted for and "spent" each month.  If you've built a safety net, any money that is left after paying necessary expenses should be thrown at your debt.
  • Pay off all debt using the Snowball Method
    • Dave says: "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."  So after you've paid off your smallest debt, you take that amount and add it to the next smallest debt's payment, when that ones paid off, you take that amount and pay it onto the next smallest debt- so on and so forth, creating what is known as the "Snowball Method".

  • Debt is DUMB
    • Myth: Debt is a tool and should be used to help create prosperity.
    • Truth: Debt isn't used by wealthy people nearly as much as we are led to believe.
    • Debt is dumb. Most normal people are just plain broke because they are in debt up to their eyeballs with no hope of help. If you're in debt, then you're a slave because you do not have the freedom to use your money to help change your family tree.

In order to spend our account down to zero, we sat down and laid out a budget.  We wrote out exactly what our bills were each month for student loans, house payment, cell phones, electric, city...everything that we received an actual bill for.

Then we came up with amounts we were comfortable setting aside for the following categories:
  • Food/Everyday necessities 
  • Entertainment
  • House 
  • Gas
  • Joe's fun money
  • Amanda'a fun money
1.  Food- this money is to be used for groceries or things that are needed for everyday life like toilet paper, shampoo, soap, etc.

2.  Entertainment- this money is only used for going out.  Examples being going out for dinner, Happy Hour, a movie, concert tickets.

3. House-  this house category is different than our mortgage payment.  This money is used for anything we do to the house so paint, tile, carpet, curtains, baseboards, crown molding would all come out of this category.

4. Gas- pretty self explanatory.  But this helps us decide how many trips we can make to Fargo, or if we need to save up so we can visit Joe's family in Minneapolis.

5. Joe and Amanda's fun money- we each get the same amount of money each month and we have ZERO say in how the other uses it.  

So if Joe wants to go to a football game with his buddies, any cost that he would incur because of that would come out of his fun money.  Same if he decides he just HAS TO HAVE the latest greatest softball bat, no matter how frivolous I may think that is, as long as he pays for it with his fun money, I can't say 'boo' about it.
Or if I want to go to dinner with some girlfriends, or if I just have to have a new pair of shoes, even though Joe thinks I have enough of them, he can't say anything about it if I use my own fun money.

In order to keep track of how much has been spent from each category we use the envelope budgeting system.  Joe withdraws cash for each category at the beginning of the month and each amount is put into a section of a coupon organizer I picked up in the dollar aisle at Target.

We are on our 3rd month of this system and it has been great.  I was really nervous before we started that I wouldn't be able to stick to it.  I was so used to just swiping a card to pay for everything that I had become terrible at knowing how much money was left in my account, if there would be enough for rent, enough for the loan payment, enough to have a social life.  

When you can physically see how much money you have to spend for the month, you become so much aware of what you're spending your money on.  I go to the grocery store with a list of what we need and do not deviate from it.  We know that if there is a big birthday dinner for a friend coming up later in the month that we can't hit up Happy Hour as often no matter how naughty the students have been.  

To give you some perspective, in just the 2 1/2 months we have been on this system we have completely paid off our credit card, and are 1 payment away from paying off a $2500 student loan.  Before this, we would have been simply paying the minimums and would have been paying on them for over a year!

Although it has been great so far, it has not come without hard decisions.  Deciding if a shopping spree for a new wardrobe is really the best way to use your money, or if a weekend trip is feasible with a big night out on the town coming up for a birthday.  It takes discipline, it takes a lot of sacrifice, it takes some tough discussions and compromising between you and your spouse when one REALLY wants to do something but the other sees the practical side of things.  But we are living by the mantra of "We will live now like many won't, so that one day we can live like many can't".

We are on track to have ALL of our debt paid off (besides our house) in four years!  And then to be able to put all that money towards the house?!  I can't tell you how excited that makes me!!

If we can do it on a teacher's and a school secretary's salary...seriously, you can TOTALLY do this too.

So basically, if you are wanting to see us, you are going to have to do it in the next 4 years.

After that I plan to spend all my free time on a beach....Pablo, another Pina Colada, please.