a little history

After posting a few times already, I decided you guys really should have a little back story on our family. Just so everyone can see where we have been, where we went wrong and what we've done right, and be able to follow us better going forward. We have had quite a challenging last year that set the ground work for where we are today.

Dan and I both worked a lot through high school and college. Along the way, though, we both opened credit cards thinking they were such a great thing to have. Buy now and pay later. COOL!! By the time we were married, we both had a few thousand dollars worth of CC debt and then we added at least $13,000 to that with our wedding and honeymoon. Add on 2 very poor decisions to buy timeshares and we had a good deal of debt started. (never attend one of those seminars where you get a free night stay at a resort in exchange for your time......you all know what I am talking about) Dan was making decent size payments on his $38,000 college loan and we both had car payments. All of a sudden, we had lots of things to pay for.

We married 7 years ago and have been blessed with 3 wonderfully sweet and funny kids. We both always knew it was our family plan for me to stay home and raise our kids. That is one decision we will never regret. I love spending my days laughing and playing with them. I could not imagine life any other way.

I worked a few part time jobs throughout our marriage and have done childcare on and off, which always helped financially, but the main source of our income came from Dan's full time job as a Construction Project Manager working for general contractor. Shortly after we were married, we moved to a town where Dan's company transferred him to work on a jail project for 2.5 years. When the project was over, we decided to stay where we were instead of moving back to where his company was located. He started working for a new company and within about 3 month we decided we needed to buy a house. We were sick of renting and "wasting our money". We purchased our first home (a condo) with NO MONEY DOWN and stretched ourselves to the max to make everything work. What a dumb idea!

Two years after moving into our condo, the bills were getting to be too much. We were still trying to pay off the hospital bills from the last baby and with our money being so tight, we were having a hard time not using our CCs. Our CC debt was so overwhelming. We would make our payments each month, but the interest rates were really getting out of hand. They would raise our rates at a moments notice. Lots of people told us to stop paying to see if they would start to work with us, but Dan and I both knew that the right Christian attitude was to keep making payments. We were responsible for our debt, nobody else. We knew we needed to do something, so we started talking about who would work more. I worked a lot of weekends already and was taking care of 3 little ones during the day and Dan worked 10 hour days during the week. It just so happened that Dan picked up a newspaper and there was an add for a newspaper carrier and the pay was great. This was a long driving route, but after paying for gas and taking into consideration oil changes and taxes, it was still about $900 a month. This meant Dan got up everyday at 4:30am, Monday -Saturday, and 2:30am on Sunday to do the route. It was a 7 day a week route and took him 2-4 hours. It was a big commitment, but we needed the money. We felt thankful!!

We also put our house on the market. We wanted nothing more than to get out of the payments, but we never even got a bite.

The paper route seemed to be a good solution, but we still had a problem. We had no plan. We had no budget and we never paid bills together. In fact, if someone asked me, I would not have been able to tell them what bills we had or even what Dan's paychecks were each week. All I really knew was the approximate amount that we were in debt. He took care of all the financial stuff and I took care of the kids and the house. We did not work together and we fought about this a lot. He liked being in control, but I was left in the dark. He was stressed out every time he paid bills. I think he just really wanted to take care of it, but it was not working for us. Our bills never went down. Even with the paper route, we just managed to get by a little easier.

We went along like this for another year. Every once in a while, we would say to each other that we would end up bankrupt if he ever lost his job. We had no savings, we contributed very little to his 401K and the minimum payments and necessities of life took all our money each month. There was not a lot left for anything. It was very scary and stressful. Dan was very depressed. He worked very hard everyday with the same end result of feeling trapped and hopeless. I felt very frustrated not being a part of financial side of things. This alone cause a great deal of stress on our marriage.

Then, one year ago this month, Dan came home in the middle of the day. Something that he never did. All I had to do was look at him and I knew. He had lost his job. His company was feeling the effects of the bad economy and needed to downsize. I started to cry. I literally thought we were done for. What in the world were we going to do?

Within a couple days, word that Dan was looking for a job reached his former employer. They called right away and told Dan they wanted him back. It was a comforting feeling but would require us to sell our house and move 4 hours away. We were fine with the moving part, but had no idea how we would sell our house. The value had dropped so much since we had bought it that we would need about $40,000 at closing. We just did not think we could make that scenario work.

Dan had signed up for unemployment the same day he was laid off. Unfortunately, we did not qualify for much because of the income we had from the paper route. I picked up any and all hours I could at the part time job I already had and picked up another job in retail. Thank goodness for the holiday season!! Dan got busy right away sending out resume after resume. He was given 3 weeks of severance pay which we stretched as far as we could. We called all our CCs and banks to see if we could stop payments for a month or two due to hardship. Luckily, our banks were willing to work with us. Between that, Dan earning some Christmas tips doing the route and having a few generous family members gift us a little extra for Christmas, we were getting by, but not without the use of those dreaded CCs. As the weeks continued on, with no interviews or job offers in the area, we started to get really worried.

We started considering taking the job with his former employer. We prayed about it a lot and talked it over for a few weeks. Although we had no idea how, we both started to feel like this was what we were supposed to do. So we called up is former employer and set up a meeting. It was a bitter sweet day. Dan was offered a great job, but we had no idea how to sell our house or make it work.

His new job was about an hour a half from my home town and where our church was located. We had no church or church school for our kids in the same town as his job. We knew that Dan would have to commute everyday back and forth to work. The company generously gave him a company car and would take care of all gas. That was a life saver. They also agreed to give us a monthly subsistence check for one year to take care of rent while we tried to sell our house. This was only a loan though, and we would need to pay it back. The drive home from our meeting was a long one knowing how much we would have to figure out in just a few short months. We decided that God was guiding us and helping us make the right decision and He would continue to stay with us (as He always does) until we figured everything out.

Once we moved, I would no longer have my two jobs, we would lose the money from the paper route, and although the salary from Dan's new job was about the same as his old one, the overall income would be much less. For the first time ever, we sat down, together, and had to figure out how to make a budget work. We needed to find a way to make our outgoing payments less so we could keep up with all the bills. After a few phone calls, one being to our pastor to ask for advice, we were able to find a bank who would consolidate 3 of our CCs for us. We lowered our monthly payments and locked in to a great interest rate. I can't tell you what a relief it was to know the CC companies would not be able to raise out rates again. We still had a ton of other CCs and loans, but this would make it work so we could pay them all each month.

Dan started his new job the following Monday. He stayed with my sister and her family and drove back and forth for work. I stayed back with the kids and packed the whole house. The kids and I moved a month later. We spent the next 2 months driving 4 hrs back and forth from our new town to where the condo was to get it ready for the market again. We fixed it all up, painted everything and replaced a few things. The challenge with selling was that ours was one of 4 identical condos for sale on our same block. We priced ours within the range that the rest were, but soon realized that we were ALL overpriced. This really did not surprise us. Nothing was selling and the market kept dropping every month. We had many people advise us to try a short sale. That meant we would have to intentionally stop making payments for a few months so our bank might agree to accept a lower offer. Again, that was just not something we could do. The bank did not get us here, we did. We were determined to find a way to make it work without intentionally defaulting on any payments. I guess it would have been a different story if we were unable to make them, but somehow we were still current on everything and we wanted to keep it that way.

We finally decided we would rent out our house. We were blessed to find a wonderful couple who signed a 3 year contract with us. We figured it would take at least that long until the market went up enough for us to sell and break even. And, we wouldn't have to worry about losing any rent money if our tenants decide to move out after a year. Our mortgage and condo dues were $1500 a month and what we would receive in rent was only $900, so we would still lose $600 a month. Now that we wouldn't be selling our house, we needed to look at other living options for ourselves knowing the subsitence money would not be there forever. By chance, I found an ad for a mobile home that had just gone down in price. It was only 9 years old and had 3 bedrooms and 2 full bathrooms. I think Dan thought I was kidding when I called him and told him I though we should go look at it. Once he realized I was serious, we went and looked at it and decided to put in an offer. We ended up paying $16,500 for it and spent about $5000 remodeling which we paid for on a CC. We figured it would take us about 2 years to pay off that loan and that payment would be cheaper than rent. As soon as we had that loan paid off, we would live for only $280 a month (lot rent and taxes) for as long as we wanted. After spending a few weeks to fix the trailer up (and getting no sleep) were pretty excited about it. We needed to downsize more, so we had a few more rummage sales and then rented an off site storage unit to fit everything else. I never thought I would live in a trailer, but I was so happy I did. It made me very proud of my family to know we did not end up in bankruptcy. We did not choose to stop payments on the house to do a short sale and we never once stopped paying on our bills. With some very generous help along the way, we were making it work. Our little trailer means the world to me!!

We truly accomplished more in the last year than I think either one of us have in our life. It's been an exhausting (both physically and mentally) year, but one of the best ones we have gone through. It has made us really ready to work together to deal with all the debt for the first time in our life. God knew we needed to do this too, so He put us in a position where we had to. If Dan would not have lost his job, we would be in the same sinking boat that we were in a year ago. God loves us and is blessing us through all of this and we praise Him for that!!
love
love

the deposit

Provided you are current on all your payments, the very first baby step in Dave Ramsey's plan is to save $1000 as your emergency fund. We have never fallen behind on any payments, so this was step #1 for us.

In addition to selling the grand prix for $700, we were able to sell the second washer and dryer and dishwasher for a total of $190. Adding all that to the $40 from selling the camera a few weeks ago, we had $930. I decided to add some gifts of birthday money that our parents very generously still give us each year to that total.

Thank you parents!! Your gift went to the very best place it possible could have this year. If you ever read this, please don't be upset that I did not go out and buy something nice for myself. Knowing we are changing our life for good is the best thing I could "buy" and your gift helped do that!

So, Saturday morning, I made a $1013 deposit. It's really not a big dollar amount, but what it represents to our family is HUGE. It felt really good, and we will never miss any of the "things" that we had to sell in order to make the money. For the first time, in a very long time, I feel like we are in control of our money.

Tell your money where to go instead of wondering where it went. - Dave Ramsey
love
love

what a difference

3 weeks ago, we were planning to buy a new computer. Ours is about 7 years old and runs really slow. It is such a pain to work on. It did not take long into reading "The Total Money Makeover" to decide against buying a new computer and start to see where we have been going wrong. Yeah, the computer is annoying, but it still works. So, here is what we decided to do instead.

We have a loan that has 2 cars (1998 grand prix and 2000 alero) and our van attached to it as collateral. We used the $900 we were planning to buy the new computer with to pay down the loan enough to have the title released to the grand prix. I posted that car for sale on craigslist and it was sold within 24 hrs for $700. That $700 is going into the bank to build our first $1000 emergency fund.

Next, I started returning things. I can't believe how much "stuff" I have returned over the last few weeks. It was an easy thing to do and gave me a ton of motivation. I started going through the entire house looking for anything with tags still on. (clothes, toys etc.) Once I started returning, that was all I wanted to do. I ended up taking back a little over $500 worth. It was so nice to walk out of a store without a pit in the bottom of my stomach from spending money I did not have. Oh, I do not miss that pit!!

The next thing I did was started listing things on craigslist. I have already sold a digital camera that we don't use anymore and we have a couple coming to look at a second washing machine of ours tonight. I have many more things to list and sell. I am hoping to list a few new things each week. I will keep you updated on what sells.

The next "revelation" (I guess you could call it that) was to decided we did NOT really need the second car, the alero. We have a van and Dan has been generously been given a company car to drive. So really, why are we keeping the second car? We kept thinking that we should hang on to it "just in case". What if he gets his company car taken away? What if the van dies? And how would we get around needing that car as collateral to our loan? We decided to leave all that wondering and worrying to God and see if there was any way we could get that car sold. The money from that car would really help with a chunk of one of our credit cards. I called the bank, to see if they would accept our mobile home title and release both the car and van. Because this is an out of state bank, that was not something they could do. Okay.

We took the kids in to our local bank 2 weekends ago to open up their savings accounts. (we have them on board with saving too!!) I didn't think it would hurt to ask if they could help at all with our situation. Once they pulled our credit report, they wanted to know why were were not asking for more? WHAT? I did not understand what the lady was talking about. She thought that they not only could take over the loan from the other bank, freeing up both vehicle titles, but would also lend us enough to pay off a credit card with a high balance and super high interest rate. I almost started to cry. We have lots of debt, but we also have excellent credit. All we needed was an appraisal on our mobile home and they could get the paperwork started.

This is what we were able to accomplish with the two banks.

We had a loan through an out of state bank for $13,400 at 8.1% apr. We were using both vehicles as collateral. We also had a credit card bill of $11,000 at 24% apr. (I know, makes my stomach hurt too)

We now have a loan at our local bank for $18,000 at 8.3% apr. We are using our mobile home as collateral. And a second loan of just under $7,000 at 6.89% and using the van as collateral.

We lowered our monthly payments by $85, lowered the overall interest rate by a ton and we now have the title to the alero. We are hoping to get around $3000 for the alero which we will apply to the first credit card we are going to tackle.

I am so excited to know we are starting to turn things around, but honestly, I am more excited to know we have had a change in the way we think about our financial situation. We have a goal that we are working on together and that feels SO GOOD. The house has been a happier more upbeat place to hang out these days and I can already tell our marriage is begining to strengthen.
ove
love

we're on a mission

I picked up the book "The Total Money Makeover" by Dave Ramsey about a month ago, but did not start reading it until just last night. If any of you have heard of Dave Ramsey, you will know he does not mess around. I read over half the book and can't wait to read the rest tonight.

His plan is about as simple as it gets, but requires a ton of determination and sacrifice. He believes, that by following his plan to a T, even people in our situation can be debt free in only a few years and be well on our way to building our financial future. Just hearing that gives us hope that we thought was gone and I can't tell you how excited we are to take his challenge head on.

Here is the outline to his baby steps.

1. $1,000 to start an Emergency Fund
2. Pay off all debt using the debt snowball, starting with smallest debt first
3. 3-6 months of expenses in savings
4. Invest 15% of household income into Roth IRA's and pre-tax retirement
5. College funding for your children
6. Pay off home early
7. Build wealth and give

In order to accomplish these steps, there are a number of things he suggests you do.

First - Get rid of as many expenses and payments as you can.

Second - Sell everything you can do without.

Third - Cut the credit cards. Don't buy anything unless you have cash.

Fourth - Make a realistic budget and stick to it.

Fifth - Bring in extra income.

Sixth - Make a list of true needs vs. wants. We really don't need much to live.

In his book, he is very clear with details on how to do everything listed above. He also drills home the idea that those who are more motivated will accomplish much more much faster. He uses the term "gazel crazy". I won't spoil the story behind the term. You'll have to read the book. ;)

Live like no one else so you can live like no one else. - Dave Ramsey
love
love

the truth

There is only one way to do this, so I am just going to jump right in and be honest.

Here goes.....

We are $116,000 in debt.

I can't believe I just admitted that and yes, it really is true. That does not include our mortgage, which is another $153,000.

We are an honest, hardworking family with a decent income. We are very modest. We do not eat out, we do not take vacations, drive expensive cars or have lots of nice things. So, how in the world did we get here?

I could spend all day writing you a novel of reasons. Plenty of things that might seem to justify our current situation. Plenty of things that might even make you feel sorry for us, but that would not help anything.

The bottom line.....we have planned poorly (or not at all) and spent beyond our means. That is the real reason why ANYONE is in debt. It's not unfortunate life circumstances, it's people who are not willing to take responsibility for why they are in the position they are in. And as long as you are in denial, your debt will keep growing until you simply can't make your payments anymore.

Living paycheck to paycheck with nothing left over at the end of the month has become our life. It's stressful, frustrating and scary. There is no fun in life when you live this way.

We don't want to live this way anymore!!!!

Both my husband (Dan) and I have known for a long time that we desperately needed to make a change. We knew our way was not working, but we were just not ready to deal with it yet. Well, we are ready now.

Starting today, life around our house is about to get really "interesting". I am prepared for it to be one of the hardest things we will ever do, and I am sure it will be, so that's why I decided to start this blog. I want to make sure it's all written down, so some day, when we look back at all we have accomplished, we can remember what it took to get there.

Dan and I want to keep this blog updated as often as we can. We will share will you the intimate details of our financial situation and our life. We really are a very average American family that I would imagine a lot of people can relate to. I hope this blog is a way for us to stay accountable and I hope it will help others who are struggling the same way we are. I don't want to sugarcoat anything...I want it to be real. I want to share all the real life things we will go through to accomplish getting out of debt.

I am sure we are going to learn a lot along the way and I KNOW that financial freedom will only be the beginning to what we will gain.

I hope you check in often to see what we are up to.
love
love