My wife and I decided we are going to get out of debt. We have been working on it for quite a while, but we are going to get serious. We already paid off our credit card debt, not that we really had much. Now we are working on the home equity line of credit. Then her car loan, and last my student loan. With the cash flow diverted from servicing this debt, we can pay off our mortgage in a few years.
Now there are a couple of problems in the way. One, the house needs an exterior remodel. New soffits, siding, windows, shingles, etc. I figure this could cost about $15k. And it needs to be done this summer. And another one is our children. Or rather the lack of them. We aint got any, and she wants some. I don't know if we can wait long enough to pay off everything. She will be quitting her job when we have kids. I say don't have 'em if you won't raise 'em. Plus she doesn't make enough justify being a working mom. Another problem is health insurance. We get it now from her job, and my employer doesn't offer it.
So I am considering paying off all our debts except the mortgage, and paying that down as much as we can till baby one arrives. Then maybe refinance the house to a ten year loan or something that I can handle on my income. I doubt the interest rates will be that favorable in a couple years though. It would be so much better not to have any house payment at all.
So one of the things we are going to do is a written budget. I learned about this from Dave Ramsey. We have been planning on this for a few months but we never actually did it. So I made up a excel spreadsheet. Every dollar is supposed to be accounted for.
I know this will be hard. I am going to try to quit buying worthless things like junk food and junk drinks. I don't drink alcohol (much) so I am ahead there. Mountain Dew will be hard to quit. I need to lose 30 pounds anyway. I drive a 10 year old pickup. I will have to keep driving it till it quits. Even though I hate the rusty pile of crap. I am considering ditching our cell phones. They are no longer under contract and we don't use them much. Cut out the fat everywhere we can. If we can do it, we will retire very comfortably barring any catastrophes.
But, it is hard knowing I won't be able to buy any toys. Or buy a new truck. There are quite a few things I want that I know I won't be able buy once we have kids. I guess I will have to grow up some. Thus far in our marriage we have just split up the bills and each kept our money separate. We can't do that any more. I have to face the fact that some day I will have to support a family and that it is no longer just my money anymore. Time to be a man.
Dave Ramsey's book talks about getting "Gazelle intense". You "live like no one else so later you can live like no one else." That is our goal. I am going to have to learn self discipline. Work more overtime. (I should be doing that right now). While the rest of America averages over $8,000 in credit card debt, and is one lost job from being homeless, we want be debt free. We will not be slaves to our payments.
I hope we have the stones to get it done.
3 comments:
I'd pay of the car first. The student loan interest is tax deductable. Then the home equity, same reason.
On your budget you should include two line items: Giraffe and Mrs Giraffe. The purpose is to put aside money in a savings account that you can use how ever you want. You migh only be able to put $50 a month into each. When you want a new toy or whatever you save up for it and pay cash. Mrs Giraffe gets to use hers the same way. Whatever little "extra" one of you wants they are free to buy when they have the cash for it.
We have a line item for auto on our budget. We make payments to ourself and pay for repairs etc out of the fund. When we want a new car we wait till we have the cash and go buy one.
Res Ipsa
I chose the line of credit first, it has the smaller balance. I think it will be easier to stick to if we have some progress we can see quickly. Then the car, it has a larger payment, and rate than the student loan, but the balances are about the same. I was hoping to have all of them paid off by Sept.
I do have that line item. I was going to set aside an 'allowance' for each of us. We would each get the same amount each month to use however we want. Good idea on the savings acct.
Until we get our debt retired, we won't be driving any new cars. I will probably get an inexpensive junker if my pickup goes bad.
Giraffe, if you want some tips on how to spend less on groceries, let me know. I think I might get top prize for that!
Also, if your wife is willing, you can cut down to one vehicle when you have your first baby. Then you get rid of all the insurance/gas costs. Yes, it's a nuisence having to schedule around my husband's schedule. On the other hand, it's a lot less tempting to run out to the store to pick up this or that, and we end up spending a lot less in other areas because if I can't get to the store to get more butter then I can't be tempted to buy a chocolate bar or whatever's on sale.
If you have trouble with the soda pop issue, try buying it at the grocery instead of the pop machine. Much, much cheaper.
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