The Things I Wish I'd Learned BEFORE College

Seeing the balance on my student loans always makes me cringe. I have been in and out of college for 13 years and have yet to complete a degree. I just can't seem to decide what I want to be when I grow up. Making that decision even more difficult is the fact that I have a job that I love that pays well in a business where I have worked my way up from the bottom. With the job market as it is, though, I realize that my job may not always be here and, should it disappear tomorrow, I would be hard-pressed to find another position earning what I do based solely on my work experience. A majority of those in my department have degrees in something ranging from biology to theater, but they have degrees and that counts for something regardless of the fact that the required classes to earn these degrees do not apply to this position. As much as it irritates those of us who have not earned degrees, this is the world that we live in so we need to keep up or assume the risks.

I am crossing my fingers that work will slow down just enough that I can start taking classes again at the beginning of the coming year. I won't be taking out a single loan to make this happen, however. I will never sign another student loan document with the exception of a check to pay off each one. I currently pay them via online bill pay, but I want the satisfaction of hand-writing those final payments. Below are some of the things that I wish I had thought about prior to signing up for student loan debt starting at the tender age of barely-18.


1. Student loans must be repaid and will affect your lifestyle for years or even decades after you graduate (or drop out).

Student loan payments can drastically affect your lifestyle. It's frustrating making hundreds of dollars worth of payments every month when all you have to show for it is a prestigious piece of paper, much less if you never earned said piece of paper. There are very few ways to get out of repaying your student loans. They're not bankruptable. You can't return or eBay your education to recoup some of your money. You are stuck with the debt that you signed up for, so...


2. Read the fine print. Just because it's a student loan doesn't mean it's a low interest rate.

Until I had to start making payments on my student loans, I had no idea that I had signed up to make payments at 18% interest for 15 years. 15 years!!! Had a loan officer said to me at 18-years-old, "You will begin making payments on this loan at age 22 and your loan will be paid off right around the time you turn 37." there is no way I would've signed that piece of paper without at least thinking about it for a while.


3. You don't have to spend every last penny that is handed to you.

Spending student loan overages on things other than school necessities only extends and increases the payments you'll have to make in the end. I'm making payments on pizza, shoes, and a $500 car that I drove for less than a year more than ten years after all of these things are long gone. Just because the money is handed to you doesn't mean you can't spend what you need and give the rest back. Carefully consider what is truly a need and what is a want.


4. If you don't have a major, don't attend a private college.

Yes, there is some prestige that comes with the names of some universities, but not if you can't afford to stay long enough to graduate. I spent $27,000 to for three semesters of general courses that I would've had to take at any school. Here is a tip: To say that you graduated from Harvard (for example), you only have to complete your degree at Harvard. You could spend three and a half years as a full-time student at UMass for about $41,000. One semester at Harvard costs over $19,000. So, to graduate from Harvard, you can spend four years there and spend well over $150k, or you can spend $60,000 (or even less if you attend a school other than UMass - I just choose a state school in Massachusetts for this comparison). Both students get a degree declaring their graduation from Harvard.


5. Student loans aren't a necessity.

Future students and parents: Plan ahead for college. This is a foreseeable major expense. You can save for it. You can work hard in school. You can apply for a million grants and scholarships. You can shop around and find a great school that is within your budget.


6. Financial aid can be negotiated.

Government grants may not be negotiable, but assistance from your school may be. Talk to a financial aid counselor and find out what kind of assistance is available. You may qualify for grants and scholarships for students in need or reduced tuition. When it comes to money, treat the school as a business and think of yourself, the student, as a customer. You have the option to obtain your education and spend your money (including grants and scholarships) elsewhere. It may be in their best interest to work with you.


7. Where there is a will, there is a way.

American culture pushes doing everything the easy way. Technology has advanced in ways that allow us to do more work with less effort. Much of the media promotes instant gratification and constant entertainment. I know parents have been using the phrase, "When I was a kid..." for generations and no teenager really wants to hear it, but there are some real lessons that can be learned not only from prior generations, but from those in the younger generations who have embraced hard work. If there is a gap between what your grants and scholarships cover and what college is going to cost, find ways to reduce that cost or pay for the difference. Consider living at home rather than on-campus or reducing your course load. Work during college. Sacrifices may need to be made. These may be your first real grown-up decisions if you've just graduated high school and they won't be easy, but they are important.


Please leave a comment with your own lessons learned regarding student loan debt.

Now We're Hittin' The Big Time!!

We have cleared the $10,000 hurdle!!!! That means we are more than two-thirds of the way to our goal and the one-year deadline is still four months away! Wooooohoooooo!!!!  A frugal holiday season and plenty of overtime are upon us, so I intend to keep the momentum going!

It's about time I take another one down!!

It has been a while since I was last able to make one of these posts!! I sent off the final payment for Store Card 2 this morning! Goodbye, 29% interest rate!!

Direct Deposit Advance - $0/$550
Store Card 1 - $0/$323
Credit Card 1 - $0/$400
Line of Credit - $0/$510
Credit Card 2 - $0/$685
Store Card 2 - $0/$2,798 - PAID!!
Credit Card 4 - $4,098/$5,150
Credit Card 3 - $4,064/$4,577
Auto Loan - $3,195/$4,140
Student Loan 1 - $1,876/$1951
Student Loan 2 - $2,650/$3,148
Student Loan 3 - $5,407/$5,614
Student Loan 4 - $5,748/$6,048

Total paid to date (including interest): $9,283.15

Next on the chopping block is another credit card. After I paid off all of my smaller balances (those under $1,000), I decided to stray from the Dave Ramsey plan a bit. My momentum and my financial discipline are pretty well established at this point, so I'm comfortable tweaking my plan.to pay off the higher interest rates first. September should bump me over the $10k mark! Woohoo!!

In apartment-deck-gardening news, we picked over two pints of cherry tomatoes yesterday. They're growing faster than the girls can eat them now, so there are finally enough for me and some to share! The green peppers are getting big and I can't wait to chomp into those. A squirrel has taken a liking to our peas (and nothing else), so we haven't gotten any of those yet. There's still time before the end of the season. I hope s/he's enjoying having some fresh produce. Especially since I usually only feed the wildlife moldy bread. Mmmmmm.... Spores...

Half-Way Goal Met!!

We've met our half-way goal of $7,500 paid off at the six-month mark!  To be more specific, In the last six months, I have paid off...

$7,753.61

I've pretty well settled into my budget now and it's not much of a struggle to stick to it.  An interesting thing has begun to happen since I have started to really think about my purchases; I have a newfound desire to purge the junk from my apartment.  There is just so much stuff everywhere.  I have had a few friends hold garage sales over the last month and I have donated some items and sold a few things.  It has been nice to make a little bit of money, but even better to just have literally truckloads of things removed from my living space.  I'm hoping for a few more garage sale opportunities throughout the summer.

I sold most of the CDs and DVDs that I didn't want anymore to SecondSpin a few years ago.  I like that they tell me exactly what they'll give me for each disc so I can decide if it's worth shipping to them or not.

I've taken tons of kids' stuff to Once Upon a Child once the girls have outgrown them.  They can be a little picky about brands and how worn things can be because they want to be a retail store, not a thrift store.  Check out what they're currently accepting on their website.

My local Once Upon a Child is next to Half-Price Books, so I drop off a load of books to sell and browse while I'm waiting to hear about the kids' stuff.  Half-Price will recycle books if you are looking to get rid of them and they choose not to buy them, but more often, I'll take whatever doesn't sell along with the items that Once Upon a Child doesn't want and swing by Goodwill on my way home.  I love that the store near my place does drive-thru donations.  I just pop the trunk and it all disappears.  I don't even have to get out of the car!

These little snowflakes add up fast and have kept the debt snowball rolling along at a pretty good pace.  I'm on track to pay off another credit card in August!  Woohoo!

KID PIC: Here's a picture of me riding a motorcycle inside a whale.  Kids think their parents can do anything. :)

Aiming for $7,500 by the end of July!

I took my first step in this journey on February 5th of this year when I put $1,000 in an Emergency Fund and made my first big payments toward my debt. It is now almost five months later and I have paid off a grand total of...

$6,279.94

Wooohooo!!! I broke $6k!! I'm going to aim for $7,500 to be paid off by the end of July. It is an aggressive goal for the next month, but I want to be half-way to my $15,000 goal by the end of my first six months of really working at this. I haven't been working as hard as I could have been at times, but I need to keep my nose to the proverbial grindstone.

Speaking of challenges, have you read the most recent report on the cost of raising a child? The average American family spends $222,360 to raise a child from birth to age 18. My cherubs being born a mere two minutes apart means that I have the divine privilege of spending somewhere in the vicinity of $444,720 before I give them the boot. I'm pretty sure they're mostly going to eat nine of the next fourteen years of my income with the way they go through pints of berries and cherry tomatoes. We're going to have to find a way to expand our farm off of this little apartment deck.

Don't get me wrong. They're worth every penny, but the girls were born as a two-for-one deal and I'm going to do everything I can to keep those deals going. Either I'm going to have to be diligent about my frugality or they're going to have to find a way to break into showbiz. Maybe we should try a two-fold approach. That's it. We're starting a band. Please leave your band name suggestions in the comments below.

Growing some green.

Just look at all that green!  Do you think that's going to grow into a twenty- or a fifty-dollar bill?

The peas are budding.  The tomatoes smell amazing.  The petunias appear to be a richer shade of purple every time a new one blooms.  The girls are loving our little garden in the sky.  It was a little difficult to convince them that we didn't need to water all the plants last week when we had a lot of rain, but they'll be happy when the sun is out again and we can get back to spending more time outside.

I'm so close to the $6k mark.  I hate being this close without quite making it and having to wait two more weeks!  It does, however, give me some motivation to work a little harder and earn a little more for the next paycheck.

Speaking of motivators, I've been listening to Rebound.  Rebound is a podcast by a couple who is working to pay off their debt.  It's always fun to hear what kinds of inexpensive fun they've come up with lately and hear what challenges and successes they've encountered in their journey.  They're doing a giveaway of some Dave Ramsey schwag right now.

Kid quote of the week:  (In response to my suggestion that my daughter drop her attitude.)  I DO NOT.  HAVE.  A.  BANANATUDE!!!

With a pair of bottomless pits to feed, what is a single mom on a budget to do?? Welcome to FarmVille.

My kids are weird. Yes, it's true that the fruit doesn't fall far from the tree, but even so, there are things about the girls that baffle me. For instance, they love vegetables. They only want the spinach from their spinach and cheese quesadillas. They bypass cookies and crackers in favor of carrots and cherry tomatoes. Weird, right?

I came across a New York Times article that cited a study that found "energy-dense munchies cost on average $1.76 per 1,000 calories, compared with $18.16 per 1,000 calories for low-energy but nutritious foods." (Parker-Pope) The article is from 2007, so you can probably imagine what has happened to those prices since then with the increase in fuel prices. The whole article is a pretty interesting read.

Because produce and other healthy foods can be so expensive, I have been brainstorming some ways to make a healthy diet more affordable for my family. Our first step has been to start a garden on our apartment deck. We're growing blueberries, strawberries, cherry tomatoes, peas, cucumbers, and a variety of bell peppers. There may be more later in the season. We'll be trading any extras with friends that are growing abundant gardens. I'll add some pictures of our garden as soon as it's all planted and off my kitchen table.

I thought about purchasing a share in a local CSA Farm (Community Supported Agriculture) in exchange for weekly or bi-weekly produce delivery, but they all delivered a lot more than I would know what to do with in that amount of time. Rather than risk anything going to waste, we'll be making regular trips to the local farmers markets this summer to pick out fresh, local produce to supplement our garden spoils. We've always come home with a lot of amazing fruits and vegetables and found really great deals.

• Click here to find your local Farmers Markets
• Click here to find a CSA Farm near you

Do you make and can your own pasta sauce? Do you swap unused pantry items with friends? Do you have a dairy cow for a pet? If there are things that you are doing to help keep your food budget under control, I'd love to hear it!

Food Budget Tip for New Parents: Make your own baby food!! It's cheap, it's healthy, and you know exactly what's in it. Super Baby Food was an awesome resource when the girls were teensy. It lets you know at what age you can introduce just about anything and tells you how to prepare it. All it takes is a food processor and some ice cube trays and you're set. Prepare your produce (wash, cook/mash, etc.), throw it in the food processor, then pour it into ice cube trays and freeze. Once it's frozen, pop out the cubes and put them into zip-loc bags and keep them in the freezer until you need them. Then you just have to grab a cube or two and reheat. I made a big batch of a different flavor every weekend so I always had a variety of flavors on hand and only had to do about 30 minutes of work per week.

Planning ahead for spontaneity (but only a little)

One envelope that I have found to be essential to my budget is my Use-It-For-Anything-I-Darn-Well-Please Envelope (Dave Ramsey refers to this as "Blow Money"). In my first few bi-weekly budgets, this envelope served as Mistake Money. If one of my envelopes for essentials like groceries or gas was short, I had a little extra to supplement those needs. It also allowed me a little bit of wiggle room as I was learning to cut back on non-essentials like dining out and impulse purchases at my budget's retail nemesis: Target.

Over the past few months, I've gotten better at sticking to my budget and can now easily manage with a quarter of the Blow Money that I used to budget. Fairly often, I have money leftover at the end of the budget period that I carry over into the next period.

Why is it important to have a little money without a specific destination? For me, if I don't plan for a little fun, the this-debt-is-impossible-and-I'm-never-going-to-beat-it anxiety and depression can begin to take hold. Having even a small amount of cash that can be used for anything allows a small amount of freedom and flexibility within an otherwise strict budget.

How is your budget? The link below will take you to a simplified version of DR's budgeting software. It gives recommended percentages for spending each category that were really helpful when I first started budgeting. It made it obvious to me where I needed to make major adjustments.

We've crossed another threshold!

Total paid since starting this project on February 5th, 2010: $5,068!!

and my $1,000 Emergency Fund is still actively preventing emergencies from occuring. It's amazing how few emergencies happen when you're prepared.

I'm one-third of the way to my 2010 goal. I am right on track to pay off $15k this year! Maybe I can achieve a -0- net worth by the end of the year. I could be worthless! : )


Thank you so much for the comments and kudos! I think I'm a pretty average American debt story. All I've done differently is choose to talk about the financial mess I've created and the hard work and sacrifices that it is now taking to make a better life for myself and my girls. Having the support of regular readers and those just passing through keeps helps to keep me motivated, so thank you, thank you, thank you!!

Dear Target, It's not you, it's me. Well, mostly it's you...

This is how trips to Target nearly always go for me: With kids in tow, grab a cart and aim for the things on my list.  On the way to those things, I remember (or am distracted by) other things that I want to look for/at.  Gradually, my cart fills with things that aren't on my list. By the time I've located and picked up everything on my list, I've at least doubled the number of items I intended to purchase.  It is laid out so the necessities that are frequently on your list (toilet paper, milk, pet food, etc.) are in areas that require that you to walk through the entire store to get them.  I hate to admit it, but it works.

Because I always get a cart at these stores I don't see the number of items that are piling up because they're several feet away from me behind children and a pile of grocery totes and a giant bag of who-knows-what-the-girls-put-in-my-purse-this-time.  I've discovered that when I carry a basket, not only do the girls get more exercise and burn a little more of their preschooler energy, but I also see the items piling up and I feel the physical burden of the items I'm about to purchase.

However (and perhaps this goes without saying), the best solution for me has been to avoid Target as much as possible.  I buy groceries at the grocery store.  I buy toiletries at Costco if I can since they last forever.  If I do "need" to go to a department store, I make a list and do my best to stick to it. I take very little cash along to nix the impulse buys and get out of there as fast as I can.  I treat Target like a bad part of town where I could get mugged if I turn down the wrong aisle.  If I can stick to my list, I leave the store without feeling beat up or losing my money.

If we someday adopt the metric system, will I have to call these kilometerstones?

As of this morning, I've made two big accomplishments.

1. I paid off another credit card!  This is the last card from my college credit card debt and I am so happy to finally be rid of it.
2. With the payments made today, I've crossed the next big marker on my debt-o-meter.  I have now crossed the $4k threshold for debt paid off.  That means I've paid off more than 11% of my debt in under three months!

So, here's the update in numbers:

Direct Deposit Advance - $0/$550
Store Card 1 - $0/$323
Credit Card 1 - $0/$400
Line of Credit - $0/$510
Credit Card 2 - $0/$685 - PAID!!
Student Loan 1 - $1950/$1951
Store Card 2 - $2,638/$2,800
Student Loan 2 - $2,765/$3,148
Auto Loan - $3,735/$4,140
Credit Card 3 - $4,376/$4,577
Credit Card 4 - $4,910/$5,150
Student Loan 3 - $5,610/$5,614
Student Loan 4 - $5,904/$6,048

Total paid to date:  $4,131.05

(plus I have my $1,000 Emergency Fund in the bank, which didn't exist before this process started)

All of those little balances are out of the way.  The remaining larger balances look a little daunting, but I'm determined to keep the momentum going.  I'm going to skip over Student Loan 1 for now and knock out Store Card 2.  Student Loan 1 has a whopping $6 monthly payment which must be spread over about 72 years or so, but it has an incredibly low 3.25% interest rate.  Store Card 2, meanwhile, sports a 25.24% interest rate and a $80 minimum payment, $56+ of which goes to interest every month.  I'm looking forward to the day that I never again have to look at a statement with a double-digit APR.  In fact, when I'm through paying off this debt, the only interest rate I ever intend to see again might be for a mortgage.  Maybe, but we'll see.  Maybe I'll just save up for a house and pay cash.  Or maybe I'll build one a little at a time as I can afford whatever Lincoln Logs are needed to build a real-people house.

If I can keep going at this rate, I can be debt free in less than two years.  That would be amazing.  Most or all of this debt is going to be gone before the girls start kindergarten.  That means that I'll be in savings mode throughout most of their school years.  I can't believe that as a single mother raising twins I'm going to be able to pay for both of them to go to college by myself!  Paid-for college is going to be a reality!

I'll do a really bad robot dance for $150 if you want to pretend this is Chuck E. Cheese.

The chicklets turned four at the beginning of April and we celebrated with a dinosaur-themed party at our apartment with a bunch of good friends.  I'm not much one to spoil my kids, generally, but it's really hard not to get them a ton of presents and throw big party.  I find myself thinking, "but there are two of them and they have to share a birthday..."  In the end, though, I know that I really want to do those things for me, not for them.  I want to buy them lots of things because I usually don't.  I want to throw a big party because most of our fun is just the three of us.  But, seriously, they were turning FOUR.  Would the girls (and the guests, for that matter) really have that much more fun if I spent $200 for bad pizza and jerky animatronic entertainment at Chuck E. Cheese rather than spending less than $50 for surprisingly delicious Costco pizza and cupcakes at our place?  $150 cheaper and far more interaction between people.  Granted, there was no giant dancing mouse, but I'm pretty sure that would've resulted in at least one terrified child anyway.

One of my birthday gifts to the girlies is a membership to the Minnesota Children's Museum.  I contacted their membership coordinator and finagled a modified membership.  Many museums, zoos, etc., provide family memberships for married couples with children or two cohabitating adults with children, but I've never seen any membership specifically for a single-parent household.  Since I usually bring a second adult with me but don't feel that a museum membership is justification for asking someone to move in with us, I asked if I could get a family membership without naming the second adult.  I figured it was worth a shot.  The membership coordinator contacted me yesterday and she's going to make it happen!  We're going to try to go this weekend to see the dinosaurs (this is R and K's current obsession).  This birthday present is going to get us out of the house and keep us entertained all year, so I have no doubt that it's worth it.

I also got some great deals on some new Leapster games for R and K by using Diapers.com's price-matching service and the referral credits I haven't needed to use for diapers/pull-ups (yay!).  After all was said and done, I ended up with $50 worth of games for $6.  Bargain shopping WIN!!  I've been using this site since the girls were teensy.  I've always been able to get good deals but, honestly, my favorite thing was that I didn't have to carry cases of diapers up to my third floor apartment when I was also juggling a pair of squirmers and umpteen million other things.  The UPS guy got to haul them up the stairs for me.  Some days, I probably would've rather he carried the kids and I took the diapers, but c'est la vie...

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I forgot to post the best birthday present ever!  My mom and I made dino-hoodies for the girls and they turned out awesome!

metamorphosis of a blog

This started a bit over two months ago as a kind of diary just for myself.  It was private, unreadable, and could not be found by any search engine.  After deciding that there may be benefit not only for myself but also others who read it, I chose to share it with those who knew about battles with debt throughout the years; my immediate family.  Then it was discovered by a reporter from The New York Times.  It was at that point that I realized that I'm not shy about talking about these things and with the state of our nation's economy and our spendthrift culture fixated on instant gratification, chances are that many share my plight either currently or have at some time in the past.  I suspect that I know a lot more people in debt than not.

This blog started as personal accountability, but it has become motivation.  I have no idea how many people are reading, but I know there are a few.  I don't even know who they are, but someone has been looking at these pages.  Knowing that someone is taking an interest in what I'm trying to do makes me want to work harder to pay off my debt so I can post another big accomplishment.  YOU, dear mystery readers, have become a piece of my motivation.  I hope that I can inspire you, too!

lesson learned.

The envelope system only works if I put money in the envelopes!

I've mentioned all the overtime I've been working lately and how much it's helped me jump-start my debt snowball.  Unfortunately, I didn't make time to do my budget.  I was reading The Total Money Makeover: A Proven Plan for Financial Fitness last night and was scolded by Dave Ramsey himself with something I've heard him say so many times.  He essentially says that we don't have time not to do a budget.  Erg... There he goes being right again.

So I ended up stupidly using my debit card, then backtracking and figuring out from my reciepts which envelopes that money would have come out of, then figuring out how much cash I needed to pull out of my account and place in each envelope.  Basically, I created a lot more work for myself by not doing my budget and getting cash.

It was a good slap on the wrist.  I don't think I'll be making that mistake again.  It was a pain...

i might have to review my goal...

They way things have been going, I might have to take a hard look at my $15,000 goal mid-year.  I think I can do better.  And quite honestly, I would rather have a goal that I have to stretch for than a goal that I know I can easily meet.  I'm pretty sure that $15k is a goal that I can easily meet.  Look at what I've done since I started!  Now the question is whether I should bump it to $20,000 or $25,000.  Hmmmm... How far can I take this in the span of one year...

Just a quick note: the girls and I are walking in the March for Babies again this year.  R and K were born seven weeks premature and spent their first weeks in the hospital being cared for by doctors and nurses with some of the biggest hearts I've ever had the pleasure of meeting.  The mission of March of Dimes is to prevent prematurity and infant mortality and to promote healthy pregnancy and healthy kids!  We're hoping a few of our readers will donate $5 or $10 to our walk (it's not per mile) to help the cause.  Thank you so much!

Three paychecks in April!  We're going to knock out another debt, so keep coming back!

another one? REALLY?!?

Who's a winner?  ME!  I'm a winner.  Check this out!

Direct Deposit Advance - $550
Store Card 1 - $323
Credit Card 1 - $400
Line of Credit - $510 !!!!!!
Credit Card 2 - $685
Student Loan 1 - $1,951
Store Card 2 - $2,800
Student Loan 2 - $3,148
Auto Loan - $4,140
Credit Card 3 - $4,577
Credit Card 4 - $5,150
Student Loan 3 - $5,614
Student Loan 4 - $6,048

BAM!  There goes another one!  I got a bonus at work that knocked out my Line of Credit and put a small dent in Credit Card 2.  I'm also looking ahead to next month when I'll get three paychecks, one of which will not have deductions for benefits.

I've been at this for about six weeks now and have paid off...

Drum roll, please!...

$2,984.52

It's amazing what can be accomplished when you really work at it!

Speaking of working at things, one of my other goals is to take at least enough classes this year to use up my tuition reimbursement from work.  I've been doing some research and completing some applications and have discovered that I may be able to take more classes than I had initially thought.  I already get $2,500 from work (it would be $5,000 if I went into a pharmacy program, but I don't have any desire to be a drug dealer).  According to my FAFSA results, I also qualify for a Pell Grant of up to $4,500.  Because I qualify for a Pell Grant, I also qualify for a scholarship from the University of Minnesota that will cover 100% of my remaining tuition and fees.  I need to read the fine print, of course, but this sounds to me like I can probably take as many classes as I have time for.

Creating more time in the day is another matter altogether.

the baby steps

I've mentioned that I'm following the incredibly simple debt-reduction plan taught by Dave Ramsey.  To give you an idea of what exactly that plan is, here is a list of the seven "baby steps" he teaches as a means to get out of debt and build wealth.


Baby Step 1
$1,000 to start an Emergency Fund
Dave frequently refers to this Emergency Fund to as "Murphy Repellent," meaning that Murphy's Law ("Anything that can go wrong will go wrong.") seems to apply far less to those who are prepared to deal with the unexpected.  It is crucial to keep perspective on what is truly an emergency when considering using this money.  Is it really an emergency?  Could I save money to cover this expense rather than pulling money from my Emergency Fund?


Baby Step 2

Pay off all debt using the Debt Snowball

The Debt Snowball pays off all debts except a first mortgage.  Dave suggests paying off the lowest balances first.  Pay the minimum on everything except the lowest balance and put everything you can toward that creditor until it is paid off.  Then take the amount you were putting toward that balance and attack the next lowerst balance.  As each balance is paid off, the snowball grows and more money is available to pay toward the lowest balance each month.  Learning to live on a budget and within your means (living on less than you make) is the only way to get out of debt and stay out.

Baby Step 3

3 to 6 months of expenses in savings

After the debt is taken care of, it's time to beef up the Emergency Fund.  More savings means you're better prepared for bigger emergencies should the arise.

The next several steps overlap or occur simultaneously. With the first three steps, you are digging out of a hole and ensuring that you are prepared to handle emergencies without incurring debt. The remaining steps are about building wealth.


Baby Step 4

Invest 15% of household income into Roth IRAs and pre-tax retirement

This is just the start of retirement preparation unless you're already on the verge of retirement.  Once the rest of the Baby Steps are complete, more may be invested.  My company matches 401(k) contributions, doubling the first 1% and matching the next 3%.  That means that if I put in 4% they will put in 5%.  That's free money!

Baby Step 5

College funding for children

R and K will be starting college at the same time, so this step is a little intimidating.  R declared the other day that she wants to be a doctor.  Later the same day, we were driving past the private college that I attended briefly and she told me that was where she wanted to go to school.  Granted, she is not even four years old yet, but I want to support her big dreams.  After all, I want to be in a nice nursing home someday!

Baby Step 6

Pay off home early

Home mortgages are the only type of debt that Dave Ramsey understands as a necessity for most people.  He would prefer that everyone pay cash but that's not an option for most people.  He provides some guidelines for those looking to buy a home:

1. Utilize only 15-year, fixed-rate mortgages.
2. Your monthly payment should be no more than 25% of your take-home pay.

Using these guidelines helps you to keep the cost of your home within your means and if your payments are reducing your mortgage balance at a faster rate, equity in your home is built more quickly.

Baby Step 7
Build wealth and give!

With the first six steps out of the way, you can invest more in your retirement if you'd like.  You can give more to the philanthropic organizations that are important to you.  You can even add more cash to the fun envelopes!  A fortune cookie I got recently said it best: 

"If you continually give you will continually have."

So those are the Baby Steps!  That's not so hard, is it? :)

This blog is now open to the public.  Feel free to pass it along to anyone you think may enjoy or benefit from it.  The links over there ---> might help me pay my debt down faster if I find myself with some followers who click on them now and again.

I'm adding labels to my posts so specific topics can easily be found.  I've also added a net worth tracker.  It's not much to look at right now, but it'll be fun to watch it change.  I'm a nerd for math, graphs, and spreadsheets so all of this is kind of fun for me.  I like paying bills.  How weird is that?

Please leave your answer in the comments below. :)

another one bites the dust!

I had my eye exam on Friday and discovered that I don't need new glasses. The glasses that I have are my current prescription.  It hasn't changed in seven years!  New glasses have now become a want rather than a need, so they're going to wait.  The money I had set aside to pay for my glasses has now been applied to my debt!  I have paid off three creditors this month and have $1,000 in the bank for emergencies!

Store Card 1 - $323
Direct Deposit Advance - $220
Credit Card 1 - $350
Line of Credit - $465
Credit Card 2 - $685
Student Loan 1 - $1,640
Store Card 2 - $2,800
Student Loan 2 - $3,145
Auto Loan - $4,005
Credit Card 3 - $4,470
Credit Card 4 - $4,910
Student Loan 3 - $5,615
Student Loan 4 - $6,025
 
According to the Debt Snowball Tracker that is part of my budgeting software, I have paid off $1,303.15 of my debt since I committed to this journey.  This includes both the larger payments I've made to pay off creditors as well as my regular payments to those still in progress.  I still have a long way to go, but this is an amazing start.  Next up is my Line of Credit.
 
I am using an envelope system for categories in which I tend to overspend the most or spend without thinking.  I have envelopes for groceries, restaurants, clothing and entertainment as well as one for fun money.  I have two checking accounts.  One of these is now being used solely for gas.  The reason for the gas account is that it makes it much easier to get gas when I don't have to take a pair of three-year-olds out of their car seats and into a store full of candy to pay for it.  That account is, essentially, my gas envelope.  The other checking account is being used to pay bills.

I'm still tweaking my budget with every paycheck.  I have discovered that I spend less on gas than I thought I did.  It's getting easier to admit that I don't have the money to do some things.  It's also very exciting to have money set aside to have some fun.  The girls and I are getting back into the habit of going to the library on our weekends together.  They love it and it provides entertainment for several weeks in the form of books and movies.  Gabe and I often cook as a form of entertainment and just generally enjoy each others' company.  I have maintained my Netflix account as an inexpensive form of entertainment as well.  We only get one DVD at a time and unlimited streaming movies online, so there is always something to watch if we're lacking things to do.  When we do go out, it's far less expensive with Gabe than most of my social life had been prior because there is no drinking on his part and very little on mine.  I used to buy friends drinks if I was getting myself one so the expense of one drink often doubled or tripled.  They're not cheap to begin with, so this is probably saving me more money than I even realize.

Things are great. My valentine's weekend was low-key and wonderful.  The girls and I are taking a road trip tomorrow to see Grandma Char and Grandpa Doug.  It'll be fun to spend some time with them and the girls always have a great time.  See you soon, mom and dad!

i've hit the gas pedal!

I'm happy to announce that I have already paid off my first two debts! Store Card 1 and my Direct Deposit Advance were both paid off this week, never to be seen again.  This is where I'm at (yes, these balances are the same as the last post as these posts are being made on the same day).

Direct Deposit Advance - $550

Store Card 1 - $323
Credit Card 1 - $400
Line of Credit - $510
Credit Card 2 - $685
Student Loan 1 - $1,951
Store Card 2 - $2,800
Student Loan 2 - $3,148
Auto Loan - $4,140
Credit Card 3 - $4,577
Credit Card 4 - $5,150
Student Loan 3 - $5,614
Student Loan 4 - $6,048


I have also ordered new tires for my car and have an appointment to get new glasses and will be paying cash for both of those expenses. Whatever is left of my tax return after I get my glasses is going to be put toward my next debt. I'm incredibly proud of myself for accomplishing so much in the last few weeks.  I debated buying a Wii with a piece of my tax return, but have come to the conclusion that maybe that would be a good reward when I get everything paid off.  It's too much money to put toward something that will only make me want to spend more money.  Come to think of it, maybe it would be a bad idea to ever get a Wii. :)

full disclosure

I have expressed my desire to pay off at least $15,000 of debt in 2010.  In total, I have $35,000 in debt.  About $16,500 of that debt is student loans.  Somehow I feel like student loans are an acceptable form of debt so I need to explain that.  The rest is consumer debt in one form or another.  Here's the lowdown of every debt I'm making payments on.

Direct Deposit Advance - $550

Store Card 1 - $323
Credit Card 1 - $400
Line of Credit - $510
Credit Card 2 - $685
Student Loan 1 - $1,951
Store Card 2 - $2,800
Student Loan 2 - $3,148
Auto Loan - $4,140
Credit Card 3 - $4,577
Credit Card 4 - $5,150
Student Loan 3 - $5,614
Student Loan 4 - $6,048


There you go.  Every bit of it.  I'm working the Dave Ramsey plan.  That means that I'll be paying these debts according to the balance, lowest to highest.  This may seem counterintuitive to some who are of the pay-less-interest school.  Numerically, that makes a lot of sense, but the reasoning for paying them according to the balance is to get the momentum going.  If I paid these according to the interest rate, it would probably still result in paying some of the lower balances first (store credit cards are notorious for ridiculous interest rates), but sticking strictly to the lower balances first is going to increase the amount of money that I'll be able to commit to paying the next debt faster.

Ready... Set... GO!

baby step 1: COMPLETE!

I got a big fat paycheck (lots of overtime) and my federal tax return today.  My baby emergency fund ($1,000 in the bank) is now fully funded!  Yay!  I also paid off half of a low-balance credit card.  When my state return comes in, it will buy tires and glasses and the rest will go to debt payments.  What a great start!  I'm going to do my best to keep the momentum going.  Woooooohoo!

stoked!

Looking at my budget for February, I think I'll have my baby emergency fund fully funded plus pay off two credit cards and make a pretty good dent in a third by the end of the month!!  Wooooohoo!  What an awesome start!

I'm so happy I decided to get working on this just as I was getting my 2009 taxes ready.  My tax returns will play a major role in the jump start I'm getting.

Working overtime is also playing a pretty big role.  I've missed having time and energy for the girls over the last few weeks, but my manager is looking into getting access to allow me to work from home.  That will be a big help and allow me to spend more time with the girlies rather than having to shuffle them to their dad or to babysitters when I need to work.  I really hope that works out as there looks to be quite a few more opportunities to work OT in the near future and OT is far easier to work out than trying to find a part-time job to supplement my income while I'm on this journey.

I had a bit of a reality check the other day.  I was talking to Gabe about the possibility of taking another east coast vacation this year.  We had talked about (and Gabe's aunt Sue had insisted) taking the girls with this time.  I thought it sounded like a great idea and was thinking my tax return would allow us to do that, but upon reflection I realized that taking our vacation last year landed me further in the hole and if I want to pay this debt off, I need to be making smart decisions about money all the time, not just when it feels good.  I called Gabe back and suggested that we consider going camping someplace relatively nearby instead.  He thought that sounded like a decent plan.  As much as I would love to take the girls to the beach this year, I know that they won't care if we wait a few years and they'll probably appreciate it more and have loads more fun when they're a little older.

Gabe is one reason that I've decided that now is the time to get rid of this debt.  We've been together for 10+ months, but we're both divorced and in no hurry to tie the knot again.  In the meantime, I want to put myself in a position to be be less of a financial burden if/when the time comes.  I already come with two extra mouths to feed so upkeep on this package deal isn't cheap.  I'd love to be in a position where I'm living, not just getting by.  My goal is $15k this year, but I would love to surpass that goal.  I'm making an effort to make sacrifices now so I can live better later.  My income would allow for a comfortable life if a third of it wasn't going toward debt payments.  I'm going to get there!

the approach

How do I keep it going?
I'm taking a few approaches to keep myself excited about paying off debt.  I want to stay focused so I'm trying to spend some time every day working on my finances in one way or another.  I look at my budget every time I recieve a bill to determine when it will be paid.  Because I'm in my first few months of using a budget, it is going to require some regular tweaking before I get it just right.  I am also listening to financially-focused podcasts on a daily basis to learn more and hear about the experiences that others are having paying off their debt.  Right now, I listen to The Dave Ramsey Show and Rebound.  I have also subscribed to MyTotalMoneyMakeover.com and am using the money tools there to help me in this process.  I'll blog more about that soon.

Why do I want to pay off my debt?
At this point, I spend about a third of my take-home pay on debt repayment.  That's ridiculous!  If I was able to save that money every month, I'd have the girls' college funds fully funded well before they were in high school.  I could afford to have them in preschool.  I could spend money on piano lessons.  And for me, I could contribute to a retirement fund and purchase stock at the company I work for.  I could buy new clothes when I lose weight.  I wouldn't be stressed out about how I'm going to pay for car repairs when they're needed.  And there is the fact that I hated going into my first marriage with debt.  I do intend to marry again someday and I don't want to bring financial baggage into the relationship.  I am currently dating an absolutely amazing man that has the desire and ability to be an entrepreneur.  Business ventures require capital.  I'd love to be a help rather than a hinderence in those ventures if we should end up marrying someday (and I hope we do <3).

Never Better

I'm totally winning at life.  I'm heading in the right direction for what feels like the first time ever. My kids are amazing. My boyfriend is incredible. My friends are fantastic. My job is challenging (in a good way). My family is great.  Things are good.

So these are my goals for this year:

1.  Make a $15k dent in my debt.

I've adopted an envelope system and am working with only cash. The only reason my check card will be out will be for buying gas (it's just WAY easier than taking the girls out of the car to go inside and pay then having to get them back in the car).  I'm working on ideas for supplementing my income to pay down my debt faster. My income would allow the girls and I do have lots of fun if so much of it wasn't being used to pay off things I did years ago.  And if/when I get remarried, I don't want to go into it with debt. This is a burden that I don't want anyone else to have to deal with.


2.  Take at least enough classes to use up my tuition reimbursement from work.

My job provides $2,500 per year in tuition reimbursement. I need to take advantage of that to inch my way toward a degree without ending up with more student loans (see goal #1). I'll be aiming for online classes still since I sitll need my time with the girlies. Being a bit of a nerd, online classes work pretty well for me.

3.  Work through the Gotham Writers' Workshop book with dad.

My dad gave me Gotham Writers' Workshop's Writing Fiction: The Practical Guide from New York's Acclaimed Creative Writing School for Christmas. As much as I love to write, I haven't been particularly disciplined at making time for it. I want to work through this book and get back to writing. It might even help me get into the right mindset for taking classes. Part of the reason for this blog is to get me into the habit of writing something... anything.

So those are my goals. I'm not going to call them resolutions. I'm not even going to say that these are goals for 2010. They're things that I want to do. At this point, this is a private journal. I may open it up later if I feel like it's going somewhere.

So there.