Wednesday, July 14, 2010
Remember When Wednesdays: The Debt Story Pt 5
As a segue into the next chapter of our journey to debt freedom I wanted to post an email that I sent to Dawn, the woman who helped us start our path to debt freedom, at the beginning of April 2008. It is difficult for me to remember the order of events accurately for the first four months of that year with the pregnancy and a whirlwind of other things going on in our life. I thought I would share the email to give you a quick glimpse into what we had accomplished to that point. Next week I will begin to share about the major turning point in our journey. Thanks for reading! - Gen)
I wanted to update you on how Mike and I have been doing financially since we sat down with you in October.
Our first success came when we needed to buy new tires for our car. Since we'd been putting Mike's extra into our savings account we actually had the cash to pay for them. It was the first time that I could remember paying cash for a big purchase like that. It nearly cleared out the savings we had, but it felt really good to get our credit card statement and see the balance was actually going down still. At Christmas we followed the "plan" and used all of Mike's overtime and holiday pay to pay for gifts. We still probably overspent but everything was done in cash, and once again, when Januray came around it just felt so great that we didn't add to our debt.
At the beginning of Januray, Mike got a cost of living raise and we were able to start having some flexibility in our budget and we were no longer dependent upon him receiving overtime to meet our budget. We decided with whatever extra he earned over our minimum we would take 10% of that and tithe it, and the rest would go towards our credit card. It feels funny sometimes to make a tithe of less than $10, but it has been so wonderful to see how God has blessed and honored us because we chose to obey Him in getting our finances under control.
With our tax return in February we finished filling our savings to $1000, put $500 towards a clothing budget, took our mini-vacation (We were going to stay in a hotel in Seattle, and decided instead to stay at home w/o the kids for a couple nights and then spend less money and take the kids to Leavenworth to play in the snow. It made for some good memories. Although Mexico would have been nice we had such a relaxing time and the kids still talk about how much fun they had) We were able to pay cash for every little bit of it, and we were able to put some money on the card to lower the balance.
This month, Mike got his step raise at work, and this coming Monday we close on our refinance, our first EVER with NO CASH BACK!. Mike's income has increased by over $300 a month and our mortgage payment is dropping by nearly $200 a month. With his raise we were able to add money into our grocery, spending money, and credit card payment so my stress load has highly decreased. With our new mortgage payment we will be able to add nearly $200 extra a month to our credit card payment. It has been so incredible for me to watch the minimum payment due decrease every month and knowing that we are paying MORE than they expect and are actually lowering what we owe.
In January we found out we are expecting again (in August) and I told Mike I'm so amazed that we will have 4 children and one income, and we will be doing better financially than when we had no kids and a dual income (In fact, this year Mike will probably make what we did on a dual income, but he hasn't quite yet. It's amazing to see how much we wasted) I'm hopeful that with our stimulus and our month without a mortgage payment we can throw a good chunk against the credit card and also be able to buy the things we are going to need for baby. Our insurance also doesn't cover well child check-ups or physicals so we are planning on setting some money into an account so we will always be able to pay cash for our doctor visits. We've talked a lot about what we will do with the money we get (laptop, treadmill, new lawn mower, etc.) and for the first time I can think of we decided we have credit card debt because we were impatient in getting things and weren't willing to wait for them - and that we need to pay for THOSE things before we buy new things. It's been a total change in mindset and it feels good!
Anyhow, I just wanted to thank you again for teaching that class. We needed it so much and like I said before, God has blessed us beyond what we thought simply because we chose to obey. It has been a wonderful experience and I look forward to continue living this way. I have had a few people, who don't even go to our church, ask me to keep them posted on when you do the class again. In fact, one of my cousins visited with me and told me later she went home and actually set out their budget. She was so excited about it! Kind of like me.
Thanks again Dawn. You have been a huge blessing our family.
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