Fall is in the Air

As summer comes to a close, I have a few things to be thankful for. The most of these is the fact that the girls have been well for about five months! This has been a huge relief to us emotionally as well as financially. Recently, they did have a cold but they were able to kick the fever in four days which is unheard of around here.

So, what have we been up to this Summer? Well, more of the same it seems :). We have been able to pay everything down across the board. No new things have been paid off, but the entire mess is lower. One good thing is that we have been able to keep Terra's check out of our budget so it is truly extra income when it comes in -- which rocks. We also have our emergency fund almost completely built back up :)

Speaking of the emergency fund, there was one thing with Ramsey's plan I didn't think I needed to do, and that was the envelope system. It's a simple enough concept -- you make a budget, then withdraw the money you need for each category and put it in separate envelopes. Then, when you need money for something in that category, you just take it from that envelope until it is gone. I thought to myself "hey, I have Quicken, I don't need this, I can keep track of it." The problem was my rational brain was making that decision, not the irrational, hungry, I want side of my brain that apparently can't estimate well :).

So, after stumbling with a few problem areas in the budget, I pulled those out into the envelope system to better mange things. In particular, the Food (out to eat), Fun, and Clothing categories where the problem children. We would always go WAY over in these areas by underestimating how much we had spent earlier in the month. By pulling the money out ahead of time, it's something you just don't have to think about. If there's money there, awesome. If not, you're brown bagging it. I personally like not having to deal with those receipts as well. I've got one transaction in Quicken instead of 14.

Because of this, we now have a bunch of extra money in the Fun envelope (who says you HAVE to spend it, right?). As that money piles up, we are planning on a cool trip later to take the girls out and pay cash for the whole thing. Amazing what you can do when you plan for stuff :)

I've got three bills in the snowball lined up for the next 6 months depending on how things go, but I think 6 months is a reasonable goal. One of the items in there is my car, so that's got me pretty excited :).

Help Comes From The Heart

First off, I just wanted to say a huge THANK YOU to everyone who donated to our campaign. I feel very humbled by the fact that we were able to raise $5450, which had a massive impact on our financial situation.

The last few months have been busy with our noses to the grindstone. We were able to pay off Terra's van as planned, and made small strides despite some dental needs that came up. But, that all changes with the campaign :)

Now for the fun bits:

We were able to pay off three major medical debts and a few minor bills. In all, these bills represent $450/month of expense that is GONE. This gives us a HUGE amount of breathing room, and allowed me to pull Terra's check out of the budget so that it is finally extra money. This extra can go for extra snowball money or fun money without impacting the established get-out-of debt plan -- which makes me very happy :). Words cannot describe the relief I'm feeling at this point.

However, this isn't the best part. I recently discovered that Aetna is reprocessing all of our Vivaglobin claims as a pharmacy benefit instead of a major medical benefit. Translation? That means that instead of each dose costing $800 per kid per month (then subject to deductibles and 80/20), each dose is $65 flat. $65!! Since Aetna's pharmacy was one of the three major debts we paid off with the campaign, we will be getting approximately $1200-$1500 back from Aetna. THIS IS HUGE :)

I'll use this to pay off the remaining balances on some of the smaller bills and use the rest to continue walking up our debt snowball. Sure, our deductible will be replaced, but we are in a pretty good place now and that's ok :).

THANK YOU again to everyone who has donated and who has been praying for our family. You can still donate at From The Heart by specifying our family in the notes, OR you could go see what other great families are being sponsored and help meet their needs :).

Busy six months

It has been a busy six months in our household. I had canceled our credit cards and we were going without, we had a cash only Christmas, AND I was able to pay off two large debts. Lots of sacrifices were made to make this happen, bit it was all worth it. We sold a car and replaced it with a cheap cash-only alternative, canceled all extra utilities, didn't go out, didn't eat out, worked extra jobs and finally pulled through a big win. Granted, we still have a ways to go, but are in a much better position than we were six months ago.

The biggest lesson learned - FILE YOUR HOMESTEAD TAX EXEMPTION! I waited too long to do this and got burned by my mortgage payment for the last year. That, however, has changed and our new payment is $300 less than it was before, freeing up that much more in the budget for the debt snowball. It is probably good timing because of the ongoing medical treatments the girls will need, but with insurance hopefully covering everything, we should be in good shape.

The next thing on the radar is a couple small medical debts and the Van being paid off. I'll be sure to update this more frequently as we knock down more debts. It CAN be done people.. you just have to have discipline.

Murphy's at the Door

Just when you start heading down a good path, something has got to get in your way. That's where we are right now. I've completely fallen back to baby step 1 (getting $1000 in the bank) due to another round of medical expenses.

The good news is I did get a raise this year. I haven't gotten my first check with it on there so we can redo our budget, but the budget needs some serious work anyway. Aside from the new found problems, the budget was there to just cover all the bases, not to help us get ahead. The new challenge is to 1) fix the budget with new bills and new income and 2) build in extra to the budget to help pay things down.

I was really in a bad place last weekend just trying to figure out what the heck I was going to do to get out of this mess. I have a lot of things coming due all at once, and had drained the emergency fund due to other unforeseen medical expenses. I'm actually looking forward to doing my taxes because I'm going to be able to write off medical expenses this year. We had nearly $10,000 in medical expenses (most paid, some on credit cards, and some in loans). Subtract the $2000 flex spending account, and I'm still left with a healthy chunk to work with. Granted, you can only write off what is after 7% of your income, but that still leaves me with a few grand to write off :).

I'll probably sit down this weekend to redo my budget with the new numbers (I'll get my first check with the raise on the 15th), so I'll put an update here after I'm done. I know I'm going to have to cut things this time around, just not sure what is left to cut :(

Our Debt Journy Begins Today

Debt is the anchor that holds down our society. It is cast out and allowed to lengthen the chain until it catches and stops us dead in the water. Today, I proclaim "Anchors away!"

I decided to start this blog as a way to keep myself in check when it comes to getting out of debt. It is good to have a plan, but if no one is keeping you accountable, then what good IS a plan anyhow?

Our story stars off a few years ago when my wife and I first got married. We were young and thought very optimistically about everything. To that regard, we got into a bad business deal I cut off after two years. In that time, we were spending money based on what MIGHT come in, rather than waiting to see what actually came in. Sure, we had a few really good months, but most of them were dismal at best.

Fast forward a few more years and a few cars, two kids, and various medical bills, we had accumulated around $50k in consumer debt. In this time, I've managed to pay off and close a couple credit cards. Despite having a horrendous debt-to-income ratio, through clever budgeting we still have been able to give to our church AND pay extra on debt to help get things paid off.

A couple years ago, I started listening to Dave Ramsey who has been a Godsend. Without sticking to his principles (which are pretty common sense stuff if you REALLY think about it), I would be in a far worse position. We have been saving up cash to buy things we want now, instead of using credit and using any surplus to pay down debt to eliminate it. According to his baby steps, we are currently on step 2 "paying off all debt using the debt snowball." For those of you not familiar with Dave, this is basically paying off all consumer debt except for your house, starting with the smallest debt and rolling that payment into the next smallest debt when it is paid off.

Things are progressing, albeit slow, but things are progressing. I've included a Paypal donation button on the site for anyhow who would like to help out :). As with the rest of our income, I will take 10% off of anything donated and give to our Church. If God decides to use you to bless me, the least I can do is give back :).

I hope to try to post money saving tricks and other things that have proven useful as I continue to dig out of debt along with updates on how we are doing. My goal (other than get out of debt) is to show others who may be struggling with debt that you CAN do it. I want to be the example people look to when they decide to stop living on credit and get control of their finances.