As with many things in life, we didn’t make 1 giant mistake with our finances all at once to get ourselves into this mess. We made 100s of small mistakes here and there, and slowly enough that we didn’t really notice what a bad spot we were getting into.
Starting Debt (01.01.19): $126,310.77
Current Debt: $109,299.87
Total Paid Off: $17,010.90
Income Going to Savings: 2%
So I’ve written a lot about how we got to where we are financially, and now I’d like to talk to you a bit about what we’re doing to correct our situation. This is 100% our story, so please be mindful that the approach we took may not be the best approach for you and your situation. I’m hoping to share just so that you can pick up a few tips along the way.
I had these co-workers once who thought it would be really funny to take my adjustable desk and rotate it down a quarter of a turn every single day. Each morning before I got in, they would ratchet it down by a small fraction of a turn so that it effectively got just slightly lower every day. The problem was that they did it so slowly, I never noticed. I just slowly adapted with my desk.
The co-workers finally got so frustrated by my lack of response that they came clean and yelled, “WE HAVE BEEN DOING IT EVERY DAY, HOW DID YOU NOT NOTICE?!?!?!”
Only then did I realize that I was sitting in a really awkward position with my legs at an odd angle to fit under my desk that was now lower than my knees in my normal seated position. Think of the position a woman in a dress would take to ride side saddle on a bicycle.
As with many things in life, we didn’t make 1 giant mistake with our finances all at once to get ourselves into this mess. We made 100s of small mistakes here and there, and slowly enough that we didn’t really notice what a bad spot we were getting into. Our financial desk was being ratcheted down daily and we just grew to accept how much it was crushing us beneath.
When we were finally let in on the prank, we started trying to figure out how to crank our desk back to a comfortable position. Here are some of the adjustments we made:
– We Got Educated: Not in the form of school or classes (yet), but in the form of books from well respected financial authors. Our two favorites without question are David Bach and Dave Ramsey. While they have some differing philosophies around a few things such which order to pay cards off in, overall they share enough commonalities that you’re in good hands with either. Highly recommended reading.
– We Started Tracking: My wife used a paper ledger system for most of her tracking. Once we decided to get our finances in order, I took everything digital, and now track every single penny on a rad spreadsheet that I built. I’ll share that sucker in a future post. We now know where every single penny we make goes.
– We Cancelled Premium TV: One of the first things we did was take a good long look at what we were paying and where, and one thing that stuck out for us was our satellite TV bill. I’m not going to name the company we were using, but we were very pleased with the service. We just decided that it’s much more affordable to use a couple of services like Hulu and Amazon for our TV watching. We haven’t missed the other service one bit, and it saved us well over $150 bucks a month!
– We Switched Cell Carriers: Again, I don’t need to go into who we had before, but we have T-Mobile now. Not only did it save us well over $100 per month, but we now get unlimited data and a 3rd line for free. We are extremely happy with our switch!
– We Paid Some Things Off: We paid off a couple of our smaller cards and closed them out.
– We Closed A Lot of Things: Speaking of closing things, we immediately closed any open account we had. You can’t rack up more debt if the account is closed!
– We Looked At Every Monthly Bill: I put this one in the “bad” category because we feel like total idiots for not catching it sooner. Our internet plan had a data cap that we were blowing through every month, taking our bill from around $70 bucks to around $150 every month. I called and found out that for just $10 bucks more a month, I could get unlimited data! Our bill is now $77 a month, every month.
– We Shut Lights Off: Again, this one is in the “bad” because we were morons for letting it go on as long as we did. In the past months we have made a very focused effort to shut off every single light when we leave a room, shut off computers and gaming consoles when not in use, crack windows to cool the house instead of using the heat pump, and just in general focus on our electricity consumption. The result? We have shaved around $150 off of our electricity bill every month. I guess my Dad was right about shutting off the lights when you leave a room. Also… I’m officially old now.
– We Refinanced a Car: Not great because it meant we are going to pay more in interest in the long run, but we needed cash flow to pay the bills. Now that we have a solid plan for digging out in place, we will eventually get to the point where we can double up car payments and pay it off without taking too much of a hit.
– I Started Brown Bagging It: No more eating out at lunch for me at work. I miss my pizzas, but I sure don’t miss dropping 10 bucks a day on food. (This one stays in the “bad” on account of that whole pizza thing.)
– We Paused Our 401k/Roth IRA/Savings: This one stung. I had been putting around 10-12% into my 401k and Roth IRA every month, and my company was matching up to a certain amount. We had to pull the reigns in on this temporarily, even going down to 0% for a few months, which means we’re throwing free money away. Paying bills was more important, so we had to take a pause. We are now back to 1% and will continue to increase with our goal to be around 6% by end of 2019, 15% by end of 2020, and 20% by the end of 2021 in total income going to savings of some sort.
There was more that we did, but those were some of the bigger ticket items. Some of them hurt, and some of them felt really good, but in either case they were necessary for us to survive!
Even if you are in a better financial situation than we are right now, take a look through every bill you have. See if there are things you could maybe reduce the interest rate on, check to see if you can get a reduced payment on things (such as premium channels), or cancel things you don’t really need altogether. Call every company you pay money to and ask. The worst they can do is say no. I would have been pumped to have done most of the things I called out above even when times weren’t so lean.