Thursday, October 24, 2013

Journey to Debt-Free! -- Intro

Ok so I'm thinking of doing a new blog "series" just documenting our family's journey to becoming debt free and learning to really manage our money.  I'm not sure if I'm going to vlog any of it on my YouTube channel or not... I'll  have to give that some further thought.

Anyway, so this post is just an introduction to our journey and how we got ourselves in this sticky situation in the first place!

First of all, neither of our parents ever really TAUGHT us how to manage money.  Not because they didn't want to-- but because they probably had (have?) no clue themselves.  Both of our parents still carry several debts and the like.  I'm not criticizing their money management though because at the moment they both are paying their bills and have enough left to help us out (a lot).  But my point is that growing up we never really learned the importance of saving, and we learned several myths out there (that you HAVE to have credit, etc.).  When Brew & I got married we had both been working for some time.  I had worked in child care and then at the YMCA (both minimum wage jobs) but then upon graduating college I had worked a year as a substitute teacher while still living at home.  My husband was a part time college student and worked full time at first a tractor trailer manufacturing plant and then an auto parts store (more than min wage but not much more).  We both still lived at home, and we each had a small auto loan and credit card.  So most of the money we made we spent (albeit not always frivolously- I and the Promise Scholarship funded my entire college education for one).  I did have a modest savings account (a few thousand dollars), but my husband had ZERO savings.  We got married in 2010 and we were doing pretty good.  We used a portion of my savings to pay for our wedding (what my parents didn't help with) and honeymoon.  We were living rent-free (basically) and my husband had just gotten his better paying job at the medical supply company where he works now and I was subbing allll the time.  Brew was working LOTS of overtime and like I said I was working a lot too, usually 3-5 days a week and I had several long terms the first couple years of our marriage.  But we were stupid.  We made enough to pay our bills, eat, and have a little fun with-- so we did.  We went to 1-2 WVU games a year, we ate out allll the time, we bought an 18,000 Jeep, etc.  But dumb us didn't save much if any.  We did save a little and then we decided to buy a house and used the reminder of our savings for closing costs.

After we bought our house we were still doing ok with the new mortgage payment.  We had a little less play money but we made it work, we even had enough to purchase cable/DVR.  Still we spent (or gave) all of what we made though, and had little to no savings.

Then in 2012 I (finally) got pregnant!  We knew that after I had the baby I wouldn't get paid for my maternity leave so we did start saving some then.  At the time all of our bills were paid completely by Brew's paychecks and my paychecks were our fun money.  (yeah, that was the extent of the "budget"), so I started saving a portion of my paychecks throughout my pregnancy and figured if we had enough for two months of what I normally got paid that we would be fine.

Well in late summer of 2012 things changed a bit.  First of all, my husbands company hired a fourth driver AND cut OT almost simultaneously.  That meant that he was bringing home about $200-300 less each paycheck (around $500/month less!!!).  Ouch.  And then I had Jackson and obviously couldn't work for eight weeks (I was 6 weeks postpartum the week of Christmas so there was no school anyway).  Needless to say we blew through what we had saved in no time because we had to use our savings to pay bills AND buy gas, groceries, and any sort of fun thing we might do.  So since we went through all our savings we then had to start using credit cards to pay for groceries, gas, etc. AND even bills a few times.  So as you can imagine-- we racked up the credit card debt pretty darned fast.  To top it off- we now had lots of medical bills too (what the insurance didn't cover of Brew's sleep study he had done around the time we got pregnant, and then of course all the costs of labor/delivery, prenatal care, and our hospital stay).  So we went from having lots of "extra" money to play with to literally living paycheck to paycheck, never having any "fun money", barely buying groceries, and trying to figure out who didn't get paid this month cause it just wasn't there.

My cousins introduced us to Dave Ramsay's Financial Peace program.  We watched the DVDs and felt like THIS was what we needed.  This was our only way out that we could see.

The first thing we had to do was quit "living in the red" (meaning negative numbers!  we were spending more than we were bringing in!).  We stopped eating out almost entirely.  We cut our cable.  We sold my husbands drum set and used our tax return to pay off some of the smaller medical bills we had.  And most importantly we learned how to budget (well we are still learning), and started using his envelope system.  (Future blog post on budgeting and how we do it coming soon!). 

Now we have our budget figured out somewhat-- we are no longer spending more than we make-- but we don't have enough to save to start the Baby Steps.  So we have to do something "drastic".  We are trying now to sell our Jeep.  My parents gave us a... well "fixer uper" puts it nicely... anyway so my parents gave us that so my husband can drive it to work and then we also have the car that we already own to use as our main vehicle.  Once we can get the Jeep sold I'm confident we can get moving on this...

So come along with us for the ride!  I'm definitely going to share it all-- in hopes that maybe I can help someone else out there in the same situation!

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