One Down...Two to Go!

Chris and I celebrated a milestone this past week, we paid off one of our student loans. We have slowly knocked off debt after debt to get us to this point. We have followed the snowball principle and only paid minumum payments to all of our debts except the smallest one on the list. We attack the smallest loan and then roll on to the next one. Because we have lined-up our debts in order of amount, naturally these last two are going to take awhile to finish off, they are our largest amounts. We will be even more happy to pay them off since they have been along for the ride these last few years.

With all of the talk about student loan forgiveness going on right now, it makes me want to take care of my own mess even more, I don't want tax payers to pay for my loans. Chris and I signed paperwork declaring that we understood that the money we use for college we will pay back. It's hard to hear all of the college grads who think because college was expensive they shouldn't have to pay for it. I agree, college is expensive, but I chose to go and now I pay for that choice. I also learned along the way that I hate debt and because I learned that lesson the hard way, I don't plan on getting any more student loans to finish my masters degree. 

Total debt pay-off: $27,847.52
YTD debt pay-off: $3,847.52

There's an App for that!

We opened another envelope this week! Yay for another thousand bucks paid off!! The card inside this envelope told us to go on a well deserved date night! So we decided to head to the plaza and enjoy some KC BBQ and eat dinner at Jack Stack. The weather was so amazing that we ate on the patio...in MARCH!! After dinner we had cheesecake at THE Cheesecake Factory. It was fun to spend some time just the two of us and celebrate our hard work. We are only a few hundred dollars away from paying off our smallest student loan!! Can't wait to only make 2 debt payments a month!

A teacher at school told me about the perfect iphone app for tracking our progress. It's called Debt Payoff (right next to my NCAA app!!). When I got the app it was free, but it's $0.99 now! Sorry! On this app I can see the interest we are saving by paying hundreds off each month rather than just paying minimum payments. Here's some scary info- if we only make minimum payments from this day forward we will be debt-free in 20 years and 6 months and pay $23,000 in interest! Yikes!

Other features: I can make a pay-off plan (lowest balance first is the same thing as our snowball idea), calculate what our payments will be someday when we get a house, and there are pie charts!!! It's nice to see the interest we pay each month go down because we are knocking the principal down so much.

Envelope #4: $935.92 left to pay-off

Batter Up!!!

We knocked another envelope out of the park this week. Our tax refund helped and we are happy to say that we've paid off $2,000 in debt this year we have $33,000 left to pay off. The card on the inside gave us a little spending money to go buy some spring clothes. It was nice to pick up a few things that we've been wanting/needing.

Our apartment lease is up in May and we had to make a decision to stay here or move somewhere cheaper to keep this debt-free game from going into extra innings. So we recently decided to turn in our 60 days notice and we're preparing to move out. We started looking for apartments but every place we called about is ready now...we're not. So we are learning to step out in faith. Yikes! I was using craigslist to soothe my fear of homelessness, but it was only making me more insecure. Chris and I decided that we aren't actually practicing faith...just fear and self-reliance. So craigslist is going to wait until we get closer to the move-out date and we are going to treat our fear of homelessness with a huge dose of prayer.

Envelope #3: $747.09 left to pay off

The Envelope Please!

It's been a long time coming, but we managed to finish off our first of 35 envelopes this week. We decided to sell our dust-collecting Wii on craigslist and got $150 out of it.

On the inside of the envelope the card read,

"$1,000 paid off $34,000 to go! We have a long road ahead of us but I know we'll make it!! ROADTRIP- QuikTrip drinks to celebrate the first of many steps!"

We always get a quiktrip drink on our way out of town to visit family or go on a long trip, so it is fitting for us to start this long journey with a QT drink! The neat part about paying off this past $1,000 is that it marks $25,000 of debt gone since we started this 3 years ago. I have a feeling if we wouldn't have put it toward debt, we would have nothing to show for it now. So glad we chose the road less taken, it feels so good!

Envelope #2 has $891.49 left to pay off. Good news though...our tax refund is pending in our checking account right as we speak. After a friendly car repair, we have a big chunk going to debt. I have a feeling envelope #2 isn't going to get settled in on our fridge!! YES!

In 1 Month...

It's been a month since we had to buy Chris a new car. Since then we have been putting all our extra money to build our $1,000 emergency savings back up. In the last month we only made the minimum payment to each of our 3 student loans. As of yesterday, we now have a fully funded emergency fund (yay!!) and we are ready to start paying off debt again. We call this snowballing.

Dave Ramsey's strategy for efficient debt pay-off is to put your debts in order from the smallest amount owed to the largest amount owed. Start working on the smallest one first, making only minimum payments to the rest. As soon as the smallest debt is paid off take all of that money and put it toward debt number 2. It's a snowball effect. When we started paying off debt we didn't have much of a snowball because all of our money was spread out over several debts. Now that we are only down to 3 debts our snowball is huge compared to what we used to snowball!!

The encouragement in the beginning was to be able to pay off small debts quickly and be done with them. Now since we are at our largest debts, they don't go away as quickly, but we see this huge chunk of money that someday will be ours to choose where it goes! We could literally send someone from our church to the Philippines every 2 months with our snowball right now. We can chose to do that someday when our money is ours again!

Oh and that $1,000 envelope hanging on our fridge- it only needs $50.79 to open it. Read about our envelope motivation system to finish our last $35,000 of debt in one of my older posts.

All in one Accord!

Since my husband's older car died (RIP) over a week ago we had to do a little adjusting to our normal life and financial routine and buy a different car. We decided on an amount and we weren't going to spend a dollar more. We looked at so many cars, I didn't think we were going to find the one! I realized that this is why people don't by cheap cars...it's hard to find a good one. We had to put in a lot of time and effort to finally arrive at the car we ended up buying. We found an ad on craigslist for a '97 Honda Accord and were really impressed with it's condition and it was mechanically sound. We offered $500 under his asking price and he tried to get more from us, but the beauty of not bringing any more money than what we wanted to spend was that we REALLY couldn't spend anymore! The guy took it and we were set!

We are now putting all our extra cash back into our emergency savings account to build it up to $1000 again. This is the first time in 3 years that we've had to completely drain our emergency savings. We used to have a credit card "for emergencies", but we found ourselves using it for wants most of the time. When we decided to stop using credit cards and put $1000 in the bank it was like walking on a tightrope without a net. I was really afraid something major was going to happen and we were going to wish we still had a credit card. But as things came up (and they did) we used our savings or we had excess in our budget to cover it. Part of the adjustment was that we had to define what a true emergency was. With our credit card, when we were out of money and I was hungry and didn't want to cook- eating out was an emergency! When our favorite band came to town when we were living paycheck to paycheck with no excess- our credit card funded that emergency! Now, we actually have the money but we don't choose to spend it on those things very often.

Bump in the Road

We just started our big debt-free push on January 1st. It only took 17 days for our first major kink in the plan to happen! That has to be a record! Yesterday at 7:25am Chris called me and told me his car broke down on the side of the road on his way to work. Ethan and I jumped in the car to go get him, fortunately it was a day off of work for me. After towing the car, looking into the problem, and the huge expense to fix it (which was our first choice), we had to say our goodbyes and are now looking for another cheap car to replace it.

Dave's baby step 1 is to have $1000 in savings for emergencies. We just made a $400 online payment to our smallest student loan, it was still pending and we decided to pull that money from the land of pending and put it in our savings account. I get paid in a few days and we can scrape up another $600. It actually worked.!!We aren't financing the car, we are really excited to buy a car that we came up with the money in less than a week. Our biggest inconvenience is having both of us work and getting Ethan to daycare with one car the rest of this week.

Our plan now...buy a car and the money we don't use on the car we will put back into savings. Our extra money, intended for debt, will build our savings back to $1000 for any other emergencies that might appear in the next 17 days. When our savings account is funded we get back on the debt-free train! Choo-Choo!

We are praising God for providing. We are thankful that we didn't have to go into crisis-mode, we just made some adjustments and made it work.

Envelope 1: Still have $492 left to pay before we can open it! We'll get there...tortoise style!