Hello Murphy. We've been expecting you.

This is my husband David, and yes, he's holding a set a training wheels.

Thursday morning, a little before 7am, I got a call that I'd hoped I would never get. David had been in an accident on his motorcycle on his way to work. It was a pretty nasty crash, and he'd been taken to the emergency room. When you think of motorcycle wrecks, you think of the absolute worst. I was so relieved when I got to the ER and found that he only suffered a broken hand, sprain ankle, bruised ribs and some road rash. It could have been so much worse.

In July of 2008, when we started our Total Money Makeover (by Dave Ramsey, of course) we started expecting "Murphy" to make a visit. You know-everything that can go wrong, will go wrong! But it never happened. In fact, our journey to be credit card debt free was almost easy. Since then we've moved on and are working on the emergency fund. But it feels like we just got the wind knocked out of us. Luckily, the bike was paid for and with David being a Marine all his health care is paid for and he won't be losing any income. But we didn't have full coverage on his bike, and insurance isn't going to pay for it. He's going to sell it for parts and try to recover some cash to add to savings for a new bike.

But it made me realize something I might not have other wise-that we have become complacent in our financial journey. We worked so hard to get the credit card paid off, and it felt so good to accomplish that. But it seems like we've really lost focus on building our savings. Just because we don't have any credit card debt does not mean we are out of the woods and can "live like no one else", we are SO not there yet. We've started to become lazy in our goals and loose with the budget. And that's a nasty combination. But I am re-motivated now and ready to build up that emergency fund, but Murphy finally showed up for a visit and I don't like him.

**By the way, David's co-workers brought him those training wheels, flowers and balloons so he doesn't have any more accidents. Isn't that the funniest thing ever!?

February Summary

February was a really great month for us, especially financially speaking. It really is amazing the things you can do and the motivation you find when you aren't paying a "stupid tax" on a credit card. We were blessed with getting a larger tax return then we planned on, and with that we were able to almost pay off the bike loan!
In addition to our regular income, we got back $1,556 from Uncle Sam. That is actually a LOT more then we anticipated. Usually our returns are small, about $500. But with the extra $800 stimulus whatever it was (I seriously do not understand all of that!) we got back a larger amount. And wouldn't you know, it was enough to cover all but about $170 on the Bike Loan! We were thrilled, this was out last debt to pay off before saving to buy a house next year. (More on that in the coming months-SO exciting!)

So all combined, here are the numbers for the month:
$351 toward the Truck (regular payment, but still lowering the balance!)
$1,617 to PAY OFF the Bike Loan
$60 Vehicle Savings and Maintenance

Total: We increased our net worth by $2,028

Staying Motivated

Good news! With the exception of the truck loan, we are DEBT FREE. Bad news? Now that we're not focused on paying off unsecured debt, we have lost some steam. It was easy to be motivated to get rid of that "evil credit card" and the motocycle loan. But now that we're saving to fully fund an emergency account, we're finding it to be harder. Yes, it's thrilling to be putting away money each pay check instead of sending it away, but at the same time, now we feel like we have "wiggle room" to cash flow things and frankly, we've been doing too much wiggling! We (mainly me!) have been justifying buying thats because I was putting so much stuff off when we were focusing on credit card debt. Now that we have cash in hand, I have been spending a lot on things we were putting off for the last few months. And I guess that fine, things have to be replaced, and now we have the cash to do it. But I am so scared that I'll get into the habit of spending and we'll one step forward, two steps back.

Also, I think another reason for my lack on motivation is because of my lack of posts! Now that the credit debt is gone, I feel like I have nothing to post about anymore. I've been thinking about branching out into other topics, and definitely adding a monthly summary so I can see how much we've been able to save. I've made a couple posts about cheap date/entertainment ideas, and I'd like to continue with those. I need to do something to get my focus back into saving and being finacially smart!

Interesting Documentary

My friend shared this link with me, it's a PBS documentary on credit card practices, the Truth in Lending Act, and some insight on the politics behind them. I think everyone should watch this, include your spouse and teenage children.

http://www.pbs.org/wgbh/pages/frontline/creditcards/view/

Big News!

I have never said on here our actually amount of Credit Card debt. We only have a couple cards, our MasterCard through our bank, my Ann Taylor MasterCard from when I worked there, and our Military Star (Military Exchange Credit Card). We only ever used one, our bank MasterCard, but boy did we use it! I was so excited and proud when they raised our limit to $8,500 when I was only 21 years old! I can remember thinking "Wow, they must think really highly of me if they'll 'give' me that much money!" WRONG! What was I thinking? They didn't GIVE me any money, but that's how I saw it. It was mine-it had my name on it and I could use it as I wanted. And no, they didn't think highly of me. They were hoping I wouldn't pay it in full so they could charge me interest. And I totally proved them right.

But today, a year after starting my blog and 6 months into our Total Money Makeover I am ready to confess our credit card balance. On the first page of my Money Binder, in a sheet protector is a printed statement from January 20, 2009. The balance was $6,700 and change. Do I need to wait for you to catch your breath? But wait-that wasn't the highest it's been! At one point it was $8,046. That number STILL makes me sick to think about. But why am I confessing today? BECAUSE YESTERDAY I PAID IT OFF IN FULL. Yes! In less then a year, on one income and at the ripe old age of 24 we are credit card debt free.

We were able to accomplish this by making a couple changes. First, in November of 2008 we committed to stop charging things we couldn't pay for. Now, this doesn't mean we haven't used the card, because we have. For example, my brother is in the Navy, stationed in VA and I always help him book his plane tickets. I use my credit card to purchase them and he writes me a check when he gets here, which I then use to pay the credit card. So the key is that even if you use it, to PAY IT OFF. Secondly, we stopped adding to our savings. At first that thought scared the crap out of me. In the first recession of my adult life, I stopped saving money. Instead, I put that money toward paying off that credit card. When I really say down and thought about it, it made complete sense. I was saving money, that was making me 2% interest, which WASTING money by being charged 9% interest on the credit card balance. I was paying up to $50 a month on a finance charge, while making pennies on my savings account. (I do agree with Dave Ramsey though, and I kept at least $1000 in savings at all time for emergencies. We were also lucky enough that David would take short deployments at work, and while gone, he tried to save as much travel money and per diem as possible to put toward our debt. His sacrifice it what made it possible to pay off that card.

I can't put into words the peace I have now that we are credit card debt free. It's a peace that sinks deep into my heart. It's wonderful to make goals for 2010 that don't include paying off a stupid credit card. We can do so much more with our money when it's not going to a credit card company.

Happy First Anniversary

Yesterday was a year since I wrote my first blog! So much has changed for us financially I can't even begin to imagine where we'd be now if we hadn't made the decision to become debt free. And while we still aren't there, we are MUCH closer. In fact, we'll make our last payment to credit card debt this month and start 2010 with only a truck payment. Here are my top 3 things I've learned this year, and what's worked the best for us:

1. USE CASH: I'd heard of Dave Ramsey but never paid much attention to his plan until this summer. I was still hesitant to use a cash only system. In this day and age it seems "old fashion" and inconvenient to use cash instead of a debit card, but that's just not so. Also, from my experience using a debit card is NOT the same as cash. It's just too easy to swipe the plastic, it's painful to hand over tangible cash.

2. BUDGET: My old budget didn't work because I would plan for what I would like to see happen with my money. When I took total control and told my money where to go, I was able to stick to it. (Example: I used to *hope* that I could spend less then $15o a pay period on groceries. With my new budget, I tell myself I *must* spend less this $150 because that's all the cash I have.) It's amazing what you can so when you have to!

3. BLOGGING: And reading blogs. Sharing ideas is the best way to find a budget that works for you. When I feel myself slipping or wanting to have a pity party I read others blogs and get all the motivation I need. So thanks to all the fellow bloggers!

Here's to another year of blogging and reaching new goals!

No New Debt- FAIL!

Yes. We did it. We took on more debt. I am not happy about it, but I am not upset by it either. I think the difference is that now I have a plan, and we have our budget set up in a way that will allow us to work our plan.

We had a car that was having a few mechanical problems, and since I don't work or go to school I had pretty much stopped driving it. It's been paid off since early 2007, but we were still paying $100 a month on insurance for it, and not driving it. We decided to sell it, but hadn't actually gone as far as to put it up for sale yet. Then, a neighbor was at our house and David mentioned we were probably selling it, that I didn't really need or want it anymore, and our eventual plan was to purchase a motorcycle for him to drive back and forth to work and leave me with the truck. The neighbor said he'd be interested in the car for his teenage son. And wouldn't you know, he had a bike that David liked that he was willing to trade for it. The value of the car was much lower then the value of the Bike, so we traded our car and $1,500 for the Bike (which is worth a little over $3,400). We had enough cash on hand to pay for the bike, but didn't want to dip into the Emergency Fund. We had been planning on buying a bike with Davids bonus later in the year, maybe early 2010. So, after much thought we decided to take out a small personal loan, pay for the bike, and pay it off as soon as possible. The payment is $65 a month, but we'll save $20 in insurance and $60-80 in gas, so we'll put all of that toward the payment each month. As soon as the credit card if paid off (December) we'll be using the snowball to pay off the bike. However, if the bonus comes in before, the bike and card will both be paid off immediately. It also means that the $4,000 of the bonus we had earmarked for a bike can now be saved for the Fully-Funded Emergency Fund.

I know taking on more debt may not have been the best option, but we do take some comfort in the fact that we do have a very workable plan. And we are grateful that we've spent the last year working hard, so that we are able to work this into our plan.

Why?

WHY do we want to be debt free?

Today, we are 80% credit card debt free. We are so close we can taste it, and it taste GOOD. So we've been tossing around ideas of how to tackle our next goal, and what exactly that goal might be. But this post isn't about that. It's about WHY. Why be debt free? I'm sure almost everyone would answer the same way-to be able to buy what we want, to fix what breaks, to be secure, to no longer be a slave to the lender. I agree, those are my reasons too.

But aside from the normal everyday answers, I believe each person has their own why. My main reason for wanting to be debt free is to prove something. We got married young, I was 18 he was 19. I had just graduated high school the month before and he'd only been in the Marines for a year. My parents were very supportive, but they were probably the only ones. Sure, everyone gave us well wishes, but they also would ask "Are you sure this is what you want?" or my personal favorite..."but you're both babies! Are you ready for this?" I could scream for every time I heard that. And then of course, when we visit back home old friends will ask "So, are you guys still married?" Umm..YEAH. Why wouldn't we be?

Now I do realize these are sad, but valid questions given the culture we live it. But I feel like it was almost expected of us to fail. But we refuse to fit the mold the young couple, struggling to make it. We want to be the exception, and for people to not question us, but use us as examples of how it CAN and DOES work. And, for us, part of that is being debt free at a young age. What will that mean for us? Being debt free at 24 will mean I don't stress over money and I will never lose sleep at night over a credit card bill. I will not live paycheck to paycheck, I will have an emergency account that gives us peace, I can afford my pet, and to keep him healthy and happy. We can travel, with cash and thank ourselves for a wonderful time, not Visa! We can drive new (to us) cars that we enjoy, we can fix what breaks, when it breaks. It will mean that David can deploy to war, and not worry about me while he's gone. We can buy a house and make it our home. We WILL retire millionaires, neither of us having ever gone to college, and we will NOT BE SLAVE TO THE LENDER.

So, what will being debt free be like for you, and WHY is it important?

One Credit Card Down...

Only one more and a truck loan left until "WE'RE DEBT FREE".

I paid it off this morning. It was a small balance, but annoying none the less. Our goal is to be debt free, except the truck by March 2010, and then start saving like our lives depend on it to buy a house (and thus take on MORE debt) by the beginning of 2011 when we move. It had the highest interest rate at 19%, and it was a dreaded store card. I know those are the worst to have, but I was an employee of the company at the time and we were forced to get one. I actually never used it, until David needed all new clothes for a business trip. I used it that one day, spend $265 and never used it again. Now, 2 months later it's paid off. It has a credit limit of over $5k, so I'll keep it open so it adds to my credit score. I know Dave Ramsey says it doesn't matter what your FICO is, and I completely agree. However we are in our early-mid twenties and will be buying a home in the next 2 years, so I don't want to hurt the score either. We only have one card that we really used and it has an interest rate of 9%. We haven't used it since December 2008!!!! And we'll have it paid off (hopefully) in March 2010.