Black Friday...

What a month! This isn't the recap, more my thoughts on this silly shopping tradition we have. I've participated in Black Friday shopping craziness in the past, but the last 2 years I've realized that most of these door-busters and deals aren't really that great - or at least the ones they want you to spend the big bucks on aren't that great of a deal. This year, Tony got up and got a great deal on batteries and poinsettias and one or two great gifts. He spent less than $100, didn't wait in any lines (Home Depot and Fred Meyers) and came home feeling good about what he got. This month was a very tight month for us anyway, but at the end of that day we were on our last $20.

Honestly I don't see what all the hype is. People get trampled, you're low on sleep, tempers are running high and often lost, and its FREEZING! Is it worth it? I totally understand getting a deal on a few select gifts for family or friends, but for decor or things for yourself - there are WAY better deals on the days after Christmas sales.

It was a great Friday for me, I spent the day getting all of my fall/thanksgiving decor down and setting up for Christmas! I enjoyed eating leftovers and plenty of pumpkin pie. But mostly I enjoyed sleeping in and saving money (by not spending it).

Again I just want to say how THANKFUL I am for budgets and tracking spending! I can only imagine the damage we could have done if we weren't being consciously aware of our finances.

Sobering

So for fun tonight, since my son is deciding not to sleep anyway, I searched on Google trying to see if I could find our blog. Sadly no. A huge waste of time. I did find a lot of other bloggers, doing exactly what we are doing. I looked for fun to see what other people were doing and how much debt they had. At first I was a little impressed with us, the next lowest number I saw was over $10,000 more than we had. Then I looked at their breakdowns, about $15,000 of it was in car loans. Unfortunately for us, all of our debt is in plastic. We don't have hardly anything to show for it (like a vehicle). It was a very sobering night. Glad we're doing something about it though and not just wishing and hoping.

October Recap

This month was a curve ball (as noted in our last post). We only worked about once a week. Thankfully, because of our budget we were able to stay within our means and didn't overdraw or default on any bills. And spectacularly we are back in business! The last few days of last month, our boss informed us that we have enough projects to last through the year. Plus, Tony got another job at a jewelry store in the mall - doing sales, which he loves and is so great at (I wish I had half of his skills).

Because of the skimpy month ahead (based on our hours worked last month), we didn't pay anything other than the minimum due on our credit cards. We actually even closed another credit card so that the minimum payments and interest would be lower. This also helps to prevent us from putting more on that.

When we started this 2 1/2 months ago, I had a dream to finish paying off our debt within 2 years. That was a very lofty goal considering almost all of our income would be going to bills and debt, and thus far I'm seeing that at our current status, this goal cannot be reached that soon. More like 3 years. Still a great accomplishment if we can achieve it.

It's been a great month though, still spent a little more on eating out than we should and "unnecessary expenses", etc. The great feeling of staying within our means in irreplaceable!

A Twist of Fate? Or Bad Luck.

Amber: it's funny how things happen in life. Is it luck or fate or the Universe laughing at us? For the last 3 years, my husband has been working as an apprentice to an appraiser, getting enough hours and experience and taking classes so he can get his license. For the last 2 years I've been working with him as the Office Manager. We have never had a lull in business, if there was a panic it was because there was too much to do and we were coming up on deadlines. Apparently the joke has been on us, though. Four weeks ago our boss went on vacation for 2 weeks to Hawaii, we made sure that all of the projects were completed by then so that she could relax and not worry about work. We have NEVER had an empty project list. We were excited for the break as well. Then our boss came home from vacation... still no projects. Here we are two weeks later and have only worked 5 days in the past 30. We are feeling a little anxious. Based on just these earnings, our income is going to be less that 50% of what it is now. We're not worried about paying $1000 on our debt now, we're worried about surviving. Tony has been looking for another job, something flexible that will allow him to go back to appraising when needed. I have been putting more efforts in my direct selling business, Discovery Toys. We haven't really felt the panic yet because we're riding the paycheck from last month. But in a week or so, we'll feel it. The funny thing is, when we were talking with our boss, she said this is usually how the appraisal business is, busy in the summer and slow in the winter, we've just never experienced this and so she's never brought it up. If only we'd known, maybe we would've saved more for the winter... or maybe not. Hindsight is always 20/20.

Perspective

Amber: It's interesting how $1000 in credit card debt can seem so much more monumental when it's on my bill than when its on my boss's bill. At my job as bookkeeper and office manager, part of my duties are paying the bills. My boss has 4 or 5 credit cards as well, and her bills usually have $1000 - $2000 each month also. The big difference is I write a check for $1000 or $2000 almost every month, for each credit card. When I'm writing those checks, $1000 seems like nothing, like a normal $50 payment for me. I was thinking about it recently, if I was my boss, I could pay off all of this debt in about 4 or 5 months if I wanted to. That makes me feel a little helpless. I have to keep reminding myself that we're in way different stages of life. Someday I'll be on the other end of this debt and my perspective will be different, about spending, money and probably more.

Recap September

So this month was our first on our budget/Debt Diet. It was exciting and interesting. I updated the budget every 2 or 3 days or so and we were able to stay within our means and pay extra on our cards this month. It was not the amount I was hoping for, but it was a lot better than the last 3 years have been.

It's amazing how old habits are hard to kill. Even though we were trying to stay within the perimeters we had set for ourselves, we overstepped what I thought was reasonable. For example, we spent $87 in "dining out" and even though we were eating extremely healthy (baja fresh), that is more than I used to "budget" for and more than we need to spend in a month on outside food.

Another thing I forgot to configure in my budget was "unexpected items" - which is hard to plan for, but I didn't even think about. Our brake pads needed to be replaced, and luckily my husband is awesome and replaced them himself (even though he'd never done it before), saving us half the cost. However, adding that to our other "unexpected costs" and "necessary/unnecessary expenses" and we were off of my projected dream payoff amount for the month.

Overall, it was a great and successful month. On to October!!

How Did We Get Here? And How Do We Get Out?

Why A Blog:

We started this blog for a couple of reasons, 1: we know there are other people out there with similar situations, we want to show that it can be done, be that example to follow; 2: This is a very ambitious undertaking, we have failed before at budgets and obviously we know how to get into debt, this will be a way of keeping us accountable - Keep our minds on it and our end goals. 3: We want to leave something for our children, they'll know what our lives were like when they

were too young to remember and before they were born.

Our Background Story:

Amber: It's funny, as a child my parents battled debt. There were house payments, small loans, no credit cards, but we always lived month to month. It was all I ever knew but as a young person I wanted to avoid that when I grew up. But life throws unexpected things at you and my life was no different.

I married a wonderful man who, because of a car accident and 3 houses with taxes, had a few credit cards with high balances. I got my first credit card in my first year of marriage and began to set a good credit score. I was proud of my 730 score. I was young (still am), happy and feeling free! I started school and paid for tuition on my credit card, I would put a few dinner's on it, they would be easy to pay off. Another school quarter brought more books and more tuition. I was doing great, paying on time and more than the minimum, and my bank doubled my limit! I flew to Utah, bought a few little things for the house. In the space of a year I had reached my limit and one or two late payments (I swear by Automatic Payments now) jumped my interest rate up. I couldn't believe it. I was in debt. And it wasn't just my card. I'm a little ashamed to say it, but we had 5 different credit cards that were mostly maxed out. There were other problems with one of Tony's houses and we wanted to start a family. Life was happening fast and we knew that 5 digits of debt was not part of our "family picture" we wanted. We figured paying 50 or 60 more on each card every other month or so would get us there fairly well. But month after month we were in the same position. I tried keeping track of things in QuickBooks, always feel behind, I tried budgeting, never worked quite right. A year later (3 years into our marriage), I was being lazy on the couch and switched to Oprah. She was having a special on her "Debt Diet", apparently there are many more people in the nation with this problem (no kidding right?). I watched, thought "that's a good idea" and went about my day. A month or two later I got serious. I wanted to start on our second child, but the chaos of our life - which was partly financial - kept both of us from moving forward.

Tony: I remember when I was on my high horse about credit cards. I had a credit card since I was 18 and was so responsible. I even got good enough credit to buy a house for my parents and two for rentals. Then one dumb decision was followed by an even dumber decision. Taxes, insurance, medical bills, and silly man toys. And then my dad lost his job, which I didn't have any savings to help out with, all I had was credit cards. Things continued downhill, financially, after I got married. It reached rock bottom after our first son was born. Medical bills were in collection and we were even forgetting to pay little bills. I didn't even want to open the mail. We would say repeatedly, "we'll pay it down, it'll get better" but it wasn't getting better. We didn't have a real plan. Only words, barely dreams, and no results.

Now What:

I went back to this debt diet (you can find it here http://www.oprah.com/packages/oprahs-debt-diet.html) and started. I wrote a spread sheet with everything I needed to do, all our monthly expenses and how long it would take if I just paid minimum payments. Over 4 years and paying over $8000 in interest. There had to be a better way. The fact was, we needed to pay more every month and spend less on other things. So I got my calculator out, used a spreadsheet and began experimenting with numbers. I found a magic number: $1000. If I paid $1000 a month, we would be able to get by and the debt would be paid off in 1 year and 10 months! End was in sight, I could see the silver lining. Now to implement this. The next 2 years are going to be thin-living and a lot of planning.

To see how I got to this point you can go over the Debt Diet at the website above, I took a lot of our "plan" from that, some from advice from friends and some just common sense.

It was helpful that Amber was excited about this. I remember when she tried to share the plan she learned about, but I was so down, I didn't think we could do it. When Amber got the discipline to actually start writing things out, I too started seeing the vision.

The Plan:

Step 1: Write down everything. I used a Google Doc Spreadsheet and typed out all our expenses in a month. I wrote down all our credit cards, the balances, interest rates and typical finance charges. I wrote what we could expect for income in a month as well.

Step 2: Cut the Fat. Any unnecessary expenses were shut down, for example I was allocating and spending about 50 a month for "dining out". It seems a little ridiculous to be up into your elbows in debt and still eating out once or twice a week.

Step 3: Math! Add or Subtract until you have what I call a "flex" number (called the "Latte Factor" by Oprah). Example: Income - Regular Monthly Expense - Variable Monthly Expenses (groceries, gas) = Flex Money. This Number is what you have to put towards your debt.

Step 3.5: At the end of each month, what ever is left of this Flex Money is put towards one credit card - the same one until it is paid off. To determine which one it is use the DOLP - in the Debt Diet.

Step 4: Make It Easier. I set aside one bank account for all our bills to be drawn from and set up automatic payments for everything that I could and Bill Pay for everything else. At the Beginning of each month I transfer the amount needed for those expenses and let the Banks do the rest.

Step 5: Keep Track. I have another spreadsheet that shows what bills have gone through so far, what I've spent in gas, groceries and unexpected expenses and how much is left.

Step 6: Be Strict! This is the hardest step. Already in this first month we've been tempted with lunch buffets (we gave in once) and Computer supplies, household trinkets and especially fast food (this is where being on a diet comes in handy - 2 birds with 1 stone). Keep in front of you the wonderful picture of your 1st month without a credit card bill, or the other little victories like paying off one after the other of credit cards.

I always thought that we didn't have any wiggle room. However, what was important to me was just to be consistent and actually know where every dollar is going. I was tired of saying "what happened to our money?" every month. If we have to spend all of our money, I'd just like to know what it was on.

Lastly:

Most importantly, make sure (if you're in a relationship with someone) that you are all on the same page. If you don't have support or the same goals its going to be very difficult to be successful.

Keep moving forward and don't give up hope! I know there are people in far worse positions, but if you're quick with math you'll notice that I mentioned 1 year and 10 months at $1000 a month, that's about $22,000... in debt. What could we have done with that amount? Much better things, I'm sure, than what was originally spent on. No matter what stage you're in: no debt, some debt, a lot, or a ton, you can save yourself a lot of trouble by organizing yourself and your finances.