The Full Monty

The Full Monty

As you know, if you read my last post, I am a master at living in denial. As promised, this is the post where I share my big, scary, debt number with you. I WILL get there, but first I want to continue where I left off. (If this is your first visit to my blog, you can catch up on the story here).

Rewinding . . .The moment I pulled out all of our finances and poured over them was the moment I decided I was done living like this – paycheck to paycheck, no budget, head math. NO MORE!

However, as everyone knows habits are not developed overnight. I had been living this way for so long that I didn’t even know where to start.

Discussing Finances as a Family

Growing up, (Oh dear, it looks like I’m still rewinding.) my parents never talked to us about money and how to handle it. I had no clue there was even such a thing as a budget.We never had a family meeting to discuss our budget. We were never warned about the dangers of credit cards and student loans. None of those discussions ever took place during my childhood. To be clear, I am in no way blaming my parents for my financial situation. That one is ALL ON ME. But, because they never talked about money, I was left to figure this stuff out on my own, which (obviously) I didn’t. I see now that it will be very important for me and my husband to talk to our children about finances, and have regular family council to discuss the budget. 

When I got my first job at age 15, there was never a discussion on what to do with my paycheck. I just cashed it and went on my way. And when I say “went on my way”, I mean on my way to the mall. No saving. No tithing. No investing. Nothing. Nada. Needless to say, my paychecks back in those days went directly to clothes, shoes, jewelry, and the occasional food court meal (Ahh…the days before I had a house payment. It was a simpler time.).

Developing Good Habits

Anyway, back to developing habits. As good as my intentions and plan were, my bad habits did not change overnight. In fact, many months later, I am still working on developing good financial habits.

One of the very first things I knew I had to do was make a budget. BUDGET. The word used to

 send a chill down my spine. All this word meant to me was no more fun (sad face). As it turns out, it’s really not that bad. I started using a zero dollar based budget. This means that every dollar that we make in income is assigned a category in the budget until your balance is zero. I figured I would be a pro at this since I’m really good at getting our account to zero. Ha!

Note: I will go more into detail about all of the techniques I talk about in this blog. They will all get their own posts so I can give you all the details you need. 

Cash is King

Another decision I made was to decrease my usage of our debit card. I LOVE my debit card, but it is WAY too easy to swipe and not think. For me, cash is where it’s at. I came across people who were using an envelope cash system. I decided that using cash would be a great way for me to actually connect with my money. In order for me to develop good habits, spending money had to become personal and emotional. Something weird happens when I use cash. It creates a mild anxiety in my stomach whenever I hand it over to the cashier. It literally creates a visceral reaction in my body! That is powerful stuff! So, it’s all about the cash with the things I overspend on (groceries, clothing, eating out, etc.). I literally CAN’T overspend when I use cash. Once it’s gone, it’s gone.

Snowballing It

The second thing I did was start to formulate a plan to tackle our debt. Remember, I thought we had around $3000 in debt before I took off my salmon specs? Easy, peasy, right? Well, it turns out I wasn’t really counting our car, and student loans into that total (serious head slap right here. TOTAL DENIAL). Taking these two huge debts into account, our total debt ballooned to … DRUM ROLL PLEASE . . . $106,311.07!!!

Whoomp! There it is! $106,311.07. . .

Holy Crap! $106,311.07!

For the record, we don’t make that much money in a year, and that realization scares me to my very core.

Debt Snowball

One of the other things I came across in my research was the concept of the debt snowball. If you are like me, and you’ve never heard of this, here is how it works:

• List out all of your debts, smallest balance to largest balance.
• Pay minimum payments on every debt except the smallest. Throw all extra money toward this debt until it is paid off.
• Once this debt is paid off, apply all funds you were paying toward the that debt to the next highest debt.
• This allows you to eventually start paying very large chunks of money toward those higher debts, which will get them paid off faster. It helps you to speed up your payoff process.

This method is great for me since I am a very visual person. I made up some nifty little snowball worksheets to help me keep track of all our debt, and most importantly, our progress. You can get a free copy of my Snowball Worksheet for your own use by subscribing to my newsletter. I love this worksheet because it allows me to see at a quick glance exactly where we are at in the process. Once a card is paid off, I write a huge “PAID OFF” on the worksheet, and move it to the back of the binder. I LOVE moving the papers to the back of the binder! It’s better than a Target run! No, seriously! 

Originally, I only printed off 5 of these worksheets thinking that would be enough (this was when I was still in denial about our actual debt number), but I also overlooked a few other debts such as my son’s braces, various medical bills, and some family pictures we are paying on. If you’re starting this process, don’t forget about all the little odds and ends debts you have floating around! They can be easy to overlook. 

So there it is! I have now shared my massive debt number with you. It is definitely scary, but guess what . . . I have a PLAN! I can’t wait to share it with you!

Do you have a debt story of your own you’d like to share? I’d love to hear your story! Just send me a message, and you could be featured on the blog.

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