Hello my friends and family from afar~
Today is a whole new wonderful day. Why, you ask? We on on the path to financial freedom! I won't share nitty gritty fine details, but let me give you a little background. When we moved here to Oregon it cost us nearly thirty thousand dollars to do so - between taxes, selling/closing costs, real estate fees, moving expenses, etc. We paid off most of the debt with equity from our other house, but carried some debt into living here in Oregon. Since then, I have always felt that we are a day late and a dollar short. Not really, but I can't seem to stash away cash like I used to and I see holes in our budget daily. It frustrated me to the point where I think it really contributed to my stress and anxiety. Plus, my motto has always been this analogy I heard from a famous economist so bear with me while I retell it - Back in "The Day" you started with the Oldsmobile - solid, no frills, gets you from point A to point B. Then, when you had a little more money in the bank you grew into the Buick - a little nicer, more room. And when you retired - you got the Cadillac. Trouble is - with folks these days - we think we need to start with the Cadillac. So I've always said - I'm not in the "Cadillac" stage of my life - we're still in Buick and we'll be here for a while.
I wanted to break the cycle! Phase one - We began cutting out unnecessary things like Internet on our cell phones, premium cable packages, my house cleaners (I miss that one), and my weekly nanny. We lived for a few months to get adjusted to the luxuries being gone, but still not a lot of food was added to food storage, and we certainly were not able to build up three months of income for our emergency fund. Phase two - we cut up every last line of credit we use - didn't close the accounts because that would be harmful to our credit score, but we immediately stopped using credit to "fill in the gaps" - even if the deal was too good to be true like 0% financing or pay in 6 months! I know that often we even spend on our credit card to get the "airline miles". Well, sorry, we've spent way more in interest payments than a free airline ticket would have cost.
We then refinanced everything we could - house, car, loans, whatever we were paying in installments to get better rates because they are out there - we saved probably $400/month alone in refinancing.
Next we created a budget that was simple and honest and true to what we NEED - not want. Unfortunately - cable TV was on the WANT list, not the NEED list - so my beloved DVR and TLC, HGTV, and ESPN was sent back to Comcast and we are on the budget $8.90/month local channels only. Jackson was particularly upset by this tragic event (No more ON DEMAND??) - but he recovered by the next day.
Dear friends - can I tell you how much better and richer our life is now that cable is gone?? I had no idea how much TV we watched until it was unavailable. I've read FOUR books in the past two weeks - Jackson has composed TWO musical pieces on the piano - all three of my children have been OUTSIDE from the moment they wake up and/or get home from school. My kids don't watch cartoon network and Nickelodeon with all the evil commercials - if they want kid shows it's PBS or to the library for DVDs.
We also cut out Blockbuster online, online video game, and even buying two flats of water bottles every two weeks at Costco -all those little things that totally and completely add up. Would you believe by rearranging our priorities that I found close to $600 extra this past month alone??
So why not tackle the big mountain? Why not try to completely live our lives debt free? And I mean - house, car, student loans, everything.... So Jer and I went to the ENVELOPE system. That's right - the old budget friendly favorite - but IT WORKS! On payday, I know my set amount - get the cash in 20's, 10's, and 5's and I stick all the amounts in the envelope. I thought we would smother and die and not have enough, but guess what, we had plenty. In fact, I am so much more conscious of what I am putting in the cart because I know that whatever I bring to checkout I have to have enough cash in my wallet to cover it! How many times do you go to the store (Costco, Target, the nursery) and go over what you had decided to spend in your head and you go ahead and buy it anyway? With cash - you have no options - it has to equal up! With our plans and careful investing - I project that we will be DEBT FREE in five years - and I mean DEBT FREE.
My blog friend Marie just wrote a post on the same thing and I am here to say - wow - once you simplify everything and rearrange WANT vs. NEED - life becomes much more rich - pardon the pun.
I challenge you to begin this journey as well - why not?? There is nothing to lose and everything to gain. Try cutting out extras this month. Instead of putting something on a credit card to fill in the gaps, use cash and stick to it. Try to increase your savings a little bit. Cut out something that hinders your development as a person.