Tuesday, July 2, 2013

Staying On Budget

I wanted to talk a little about our financial adventures since buying our new house. I have hinted at our 'tight' budget in other posts I have written. This is to elaborate a little on that.

When we sold our old house we made a small profit on it and put it into savings along with a little we had saved up. We intended on using a large part of it for the down payment on our new house.

But what we did instead was use ALL of it. The lure of a lower monthly payment and less to be mortgaged was too much. This is something that is built into my DNA. I get it from my dad. I HATE debt. I really don't like being in debt. It stresses me out. So, at the time, putting a larger amount for the down payment sounded like a great idea. That was mistake number one.

This, combined with the fact we bought a van that was more than we could handle back in 2010. We were originally looking for a van under $10,000. But we were dazzled by the bells and whistles of a newer van. So we bought one that was only two years old at that time. Mistake number two. (Technically it would be mistake number one since it happened first)

We could get by with such a large payment when we were in our old house. Our house payment was smaller and we had a cushion of savings to fall back onto if things were too tight.

Not true in our new house. With a higher house payment (not by much), a big car payment and no room for error, we were drowning. And then add in some credit card debt that we had accumulated while making improvements to the house and I was one stressed out lady. I know, I know. The credit card spending was foolish. But it was made with the knowledge that the renters (that we inherited when we closed on our house) would be paying us for the two and a half months extra that we let them stay in our house. We still haven't seen that money. Lesson learned.

So, all in all it was a rough beginning to what should have been an exciting time in our lives. I'm still not sure how we made it through the end of winter and beginning of spring. I actually think I did go through a slight depression at one time. But God provided for our every need when we didn't know how we were going to make it through. It was actually pretty amazing to see. It is probably why we went through it. I tend to be a little self-reliant at times. How can I fix this? What can I do to get through this. It was challenging but also eye-opening.

What I did to cope- LISTS.
I am the accountant in our household. I do all the bills and keep track of the finances. I have a notebook that I write down all the bills for the month and any other checks that I have to write. My old way of doing the bills is a lot different than I do them now.

I used to do all the bills for the month at one time. I made sure the total amount for our bills was in our checking account. And then I took out cash for gas, groceries and everything else. This didn't always happen perfectly. Sometimes I wouldn't get to the bank to get the cash out until halfway through the month. Not a good idea. You always spend less when using cash.

The lists I made helped me not to feel so stressed. I wrote out lists of all our debts from least amount to greatest so I knew what to tackle first. Then I made a financial plan for the next four months. I wrote out what each check was going to be used for according to what week of the month it was and what bills were due. I learned the latest dates I could pay a bill before being penalized with a fee. I'm a rule follower so this was hard for me. I used to make sure everything was paid before it's due date. But sometimes this wasn't possible.

Now, when payday comes, I look back at my list so I know what the money is being used for. I take out our money to live on and pay whatever is due. We cut back on some things. We still have cable but it is very basic. We hardly ever go out to eat. (We just did for my birthday for the first time in a long time). We have been traveling a lot for baseball and I try to pack a cooler for one meal. If we eat fast food we order from the dollar menu with no extras. We carry water bottles with us everywhere and fill up when we can. We live on $130/week for gas and groceries. This is a real stretch. But I take it on as a challenge. I shop at Aldi's now and that really helps. We don't buy a lot of junk food. Mostly fruit and vegetables with a few snacks. We do a lot meatless meals.

Some weeks we have extra. Scott gets a lot of overtime in the summer since it is their busy season. I count on his checks being a certain amount each week. I plan a lower than typical number on purpose. And then any extra above that I use to pay down debt even more. Sometimes I squirrel it away for an emergency or for when things are too tight.

All this has paid off. (literally) We sent our last payment for our van last week.  Paid off two years early! It was a very happy day. I may up our budget by $20 but otherwise we will start on our next debt to pay it down even quicker.

I'm breathing a little easier. Eventually we hope to open a savings account again and make weekly deposits. Until then I am going to utilize the overtime money to get things paid off. But try, also, to use a little for fun things this summer.

Do you have a budget? Who is the accountant in your family? Do you have any success stories of overcoming debt?

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