Our Debt Free Journey
We were the typical American couple, no budget, consuming all of our income each month, and using credit cards to buy and pay for the things we didn't save up for. We weren't frivolous, didn't finance new cars, didn't buy fancy electronics, didn't spend a lot on clothes or go on European vacations. What we did was charge small things, going out to nice dinners because 'we deserved it', gifts at Christmas and birthdays, and the inevitable yearly expenses that somehow managed to sneak up on us every year, like property taxes and car repairs. We also added two children to our family, which upped our expenses even more. I started a small jewelry business so I could work from home, and ended up charging lots of supplies. Whenever I made some sales, the income would dissappear into the hole we had dug, instead of paying off the debts. We limped along like this, never completely falling, never making any progress for over 10 years.
Things began falling apart in 2006, when my husband lost the job we thought would be forever stable. Thankfully he was able to get quick work from my brother for a few months, while he looked for a full time job. He found one, but the pay was dependent on how many 'billable hours' he could cram in. According to his new boss, they were so swamped with work that it would be easy to meet his previous income. Well, that just wasn't true, they didn't have enough work to keep him busy with 'billable hours', and his pay ended up being about half his previous salary.
When my husband's income plummetted, we fell back on the HELOC we had opened years before for home improvements, and were still charging. We never were late on paying bills because we would just write ourselves a check from the HELOC to cover the shortage, and our debt climbed monthly.
That year I found the Dave Ramsey book The Total Money Makeover and managed to get a copy from our local library. I devoured it, and finally had a clear picture of how stupid we had been with our money. On the forum http://www.llnoe.com/ (a group following the Dave Ramsey program) I found lots of people liking a new budgeting program called YNAB, You Need A Budget, and found it fit my needs exactly, we finally made a budget, committed to never carrying credit card balances again, and began saving for our Baby Emergency Fund.
About this time, my husband found a much better job, bringing his salary back up to just above what he was making before, we were in $28,000 of credit card debt and had an additional $8,000 on our HELOC. Ugh.
In the last three years, with much scrimping and cutting back, couponing and selling stuff, we have paid down the credit cards by just over half. We have not had a very big snowball, and it has taken a long time to get this far, but I am proud to say we know where our money goes, we save up for those large expenses that come around regularly, and we do finally have Financial Peace.
(Since I originally wrote this in 2010, we are now debt free except for our house, have sinking funds for Property Taxes, car repairs, car replacement, vacations, and a hefty emergency fund. We still carry no credit card balances, and there is no better feeling than knowing that your finances are secure.)
I began making these charts for myself, and shared a few on LLNOE. I then found myself making charts for others there, according to their needs. I decided that I needed to share the charts with more than just the crowd at LLNOE, and put them up on this blog. I struggled a bit with whether or not to charge for the downloads. After all, I am trying to get some extra income coming in, and $1-$2 per chart download I hoped would add a nice bit to our snowball each month. In the end, I decided to continue to offer the charts for free, just as I had on the LLNOE forum. I know many are on the same path as we are, and I didn't want anyone who needed the charts to feel they could not affort to spend even a few dollars of their snowball on them.
However, if you would like to contribute a dollar or two from your snowball for each chart you download, it will go directly to my snowball, and I would thank you from the bottom of my heart.
If you can't donate, believe me, I totally understand. Please use the charts as often as you need, and feel free to print extras and share them with your friends or in your Financial Peace University class. There are also a sharing buttons at the bottom of each post if you would like to share the charts via social media.