Back in the beginning of October, I wrote a post about the sacrifice and change that has been going on in our family. It has been almost 5 months since I wrote that post, and I wanted to do an update about how things are headed in our life.
Here's the original post, edited with updates!
This week has been full of changes. More mental than physical. This is the week that I have decided to make some major changes in our life. This is the week that I have finally stopped making excuses and have decided to get on the path to becoming debt free.
I want to add a little disclaimer: All of this is OUR CHOICE. You will probably read some of the steps we are taking and think that our family has gone crazy. Do we have to do this to survive? No. Are we making it financially the way we are living right now? Yes. But we don't want to. We are making sacrifices today for a better tomorrow.
We have been slowly following this path for about a year. It has been a slow ride. But that is in the past, and now is all about the future. After sitting down and analyzing my budget for 3 straight hours last week, I decided that we need to make some major financial sacrifices to reach our goal. It will be tough, long, and difficult. But I know it will be worth it in the end.
ENVELOPE SYSTEM
I created a new budget with new envelopes. For those who don't know, we are doing the cash envelope system. I take out a set amount of cash for each of my expenses. Those expenses are put into envelopes. When the cash is gone from the envelope, that is it until pay day. I cannot spend any more in that area. We've been following the cash envelope system for a while now. But this week I created more envelopes and lowered my budget in each one of them. I am now doing cash for everything except utilities and debt. I have an envelope for car plates and insurance, another for medical co pays, another for home maintenance, one for home repair, and list goes on and on. I have 16 categories total. Some of the envelopes are really small. For example: I'm only putting in $5 into the clothing category every month. But that's $5 I do not have to worry about if Steve needs new pants for work or if the boys need underwear.
Update: This truly has made dramatic changes to our budget! It has been long, hard, and tough. There are days where I want to cry, and some days I do. Forcing myself to be on such a tight budget while the rest of the world goes on spending money is one of the hardest things I have done in my adult life. But I know that it is for the best, and we are doing what is best for our family.
MAJOR CUTS
As of this week, we are getting rid of DirecTv. We are hooking up the converter box. We had originally budgeted $80 a month for 6 months out of last year's tax return. That money is no longer coming in because 6 months are up. So bye bye TV. We are moving back into the living room again this winter to save on heating bills. The master bedroom will be closed up and our bed will be in the living room. *sigh* I'm not looking forward to this AT ALL! But it saved us at least $100-200 each month last year. And that's money that we can use elsewhere. I am only allowing our family to have $25 worth of fun money a month. Really, if you think about it, that's not a whole lot. That's only $6.25 a week. Fun money is just like it sounds. Fun. Going out to eat, new toys, a book to read, a trip to dairy queen, only $6.25 a week. I'm lowering my grocery budget too. (as if I thought it could get any lower) I still allow myself $50 a week, but I'm attempting to only spend between $30-40. That extra money is getting put back to pay off debt. I have quite a few more that I'll add later in tonight in a new post when I get a chance.
Update: Moving into the living room lasted until the middle of January. We saved about $300-400 all together this winter. It's hard to say for sure how much we saved, but it did save some. However, being stuck in this tiny house in the middle of winter with 2 toddlers got the best of me and we moved back early. Directv? I don't miss it. I'm watching all my shows on the internet. Steve and I have pulled out some old DVDs and the boys love their disney films. It all works out. As for the entertainment budget/grocery budget...still going strong!
DEBT SNOWBALL
So what am I doing with all that extra cash? I'm doing what Dave Ramsey calls a Debt Snowball. All the extra money at the end of the month gets put towards your smallest debt. Everything else you pay minimum payments. When you pay off the smallest debt, you take that minimum payment plus all the extra cash each month and put it towards your next debt. You keep snowballing till everything is paid off. Over the past year we have cut a huge chunk of our debt. We only have a little bit to go.
Update: We have paid off over $2000 in debt since I made this post 5 months ago. All that debt has went straight toward my car payment. As soon as I get our tax return back, some of it will be going toward the car and that payment will be G-O-N-E! The only thing left for us is one, lonely, little credit card. Which actually isn't so little, but it sure does seem tiny after the huge obstacle we have overcome these past few months.
So where are we going now? That will be discussed at another time. For now, let's just say the future is positive for us. We are headed in the right direction. As long as we have each other, we can conquer anything.
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