Wednesday, March 8, 2017

Our Financial Peace Update

So.... I made this post FOUR years ago! I recommend reading that post first. I was really committed to Dave in 2010 and made some big changes in my life. Jason and I did well for a couple years... then well, um... sometimes it has felt like "Dave Ramsey Who?"

The below sums up why we have more debt, but here's our numbers over the past few years:
Year Jan-13 Jan-14 Jan-15 Jan-16 Jan-17
Debt $45,643 $63,186 $42,246 $34,057 $25,749
The January 2014 debt included two vehicles and two school loans.

While this is going to be a long post, and filled with lots of financial details, it was therapeutic to write it out and see just how far we have come in 4 years. We are not debt free. We did some non-Dave approved things (cough, two car loans, the house..) but overall we have a working budget, use cash for things, and don't worry too much about finances. (I worry every now and then.) 

So to wrap up 2013. It was a huge year. 
  • Jason's car was rear ended on January 2.
  • I lost my job in August.  
  • We had Liam in September.  
  • My (paid off) Highlander was totaled in November. 
  • We purchased a timeshare (but not an evil one).
On January 1 we knew we were pregnant (with Liam) and were discussing how we were going to save to replace Jason's 2-door blazer. The next day he was rear ended. While not totaled, it was useless since we couldn't open the back. He received insurance money from the lady who rear ended him, and then got a decent trade in value. He picked out a Chrysler 300 and we took out a $17k loan on it, mid-February 2013. Note: Jason was approved for a $42k car loan. We knew what would fit in our budget, and that wasn't it. (This is how people get ridiculous car loans they can't actually afford - they think if they are approved for it then they can afford it, when they really can't.) 

We weren't prepared for the job loss, but were prepared for maternity leave, so we knew we'd be ok for a little bit. We had everything we needed for Liam, and weren't too worried. 

On November 2 my Highlander was totaled. That was a rough blow. It had been paid off in January and I was planning to keep it at least another 2-3 years. You can read about that here and here.

A chance presented itself to purchase a timeshare week for where we got married and where I have been vacationing since 1982. After a lot of math, we used inherited funds to purchase this timeshare. And I say "not an evil one" because we paid a lump sum, didn't take out a loan, don't continue to owe, it wasn't a ridiculous price, and we will use it. And the years we can't use it, it'll rent. The week we bought (Week 26) will usually include the 4th of July and it's really hard to get extra units that week. It'll usually include our wedding anniversary too.

Even though we had just purchased a timeshare, we knew a vacation wasn't in our future unless I got a job. And then Grandma announced she was getting married, in Florida, during our timeshare week. *facepalm* Ok Grandma, we'll figure this out.

The most fortunate part? The day of her wedding I received a verbal offer for my job. I had spent spring working on job applications, networking, and interviewing. I managed to get a couple interviews and had one right before leaving for vacation. It's for my current company and this July will be three years.

I went back to work in mid-July. Liam went to daycare. And it was great. I knew I wasn't meant to be a stay at home mom. I enjoyed my time with Liam, and took a few extra trips to the Lake or my parent's house. But looking back, I'd never be able to teach Liam everything he has learned, and I probably would have gone insane trying to manage him 24/7.

We got in a groove of both of us working, Liam at daycare, and having dual incomes. Things were looking up. We paid off Jason's car in December 2014. That was less than 2 years and we felt back on track.

I remember nothing of this year. Looking at journal entries, I worked out a lot, Liam had some sleep issues, and I cooked a lot.

We did start discussing buying a house. We started saving toward a downpayment. We even went to a few open houses to see what was available and what the prices looked like. We went to Florida for vacation. We enjoyed being a family of three but didn't make a huge dent in our debt.

We had spent 2015 discussing our next life changes -- having baby #2 and buying a house. We knew 2016 was the year to try and accomplish both those things. And we did. We also knew that if we didn't get into a house before baby #2 that the second daycare costs would sink us from saving for a down payment.

Liam in front of our house
We met with our realtor in early March and started seriously looking. After viewing a couple homes, we narrowed it down to wanting a ranch. With a dining room. 3-4 bedrooms, cross your fingers for a finished basement. But getting that dining room in a ranch was our priority. Not a lot of ranches came on the market. Especially with our desired ranch. We were pregnant and had a cut off date of giving up on the ranch and reconsidering two story houses. We stalked a "coming soon" for a month and were one of the first to view it the day it went on the market. And we got it! And we love it.

Bathroom Wallpaper
We closed the beginning of June and moved in July 4th weekend. Uncle Pat was incredible and helped us paint everything. Every bedroom was yellow, the family room and dining room was yellow. And according to the cans of paint left in the basement - everything was a different colored yellow!! And the master bath -- the Hand of God/Naked David wallpaper had to go. It was actually scary.

We did not go to Florida. Both due to the cost associated with it and time. I wanted to, but knew it wasn't possible. I needed to save my vacation time for maternity leave. We did take a long weekend to the lake and enjoyed our time with Liam. We tried to maximize being a family of three and making sure to cherish every weekend and time spent with Liam.

Benjamin was born in October. We had saved every penny to be prepared for my maternity leave and medical bills. We had already redone the budget to know what two kids in daycare would look like. Christmas was a little smaller than usual, we had to keep things tight in case a Murphy popped up. And to be honest, my parents and our siblings spoil the boys with presents. We didn't need to buy Liam a lot. And Jason and I don't need a lot, so we kept it simple.

Looking ahead, our goal to pay off debt, honestly, isn't on our radar. We owe $5,230 (SL @ 2.07%), $7,300 (SUV @1.49%), and $11,800 (SL @ 2.38%). I'd like to pay off the smaller SL, but it's not hurting us. The interest is tax deductible. We pay $421 a week to daycare. Even if we wanted a third child (which we don't), we couldn't afford the daycare. Our daycare is more than our mortgage. And only a small portion is tax deductible.

We could cut everything that keeps us sane (cable, annual vacation, eating) and work on paying debt off, but we're not there yet. And maybe it's because we aren't underwater on my car or don't have an insane amount of credit card debt. I don't classify our debt as "good debt" either. The rich rule over the poor, and the borrower is slave to the lender. Proverbs 22:7

Hopefully in 2017 we make another big dent in our debt and keep our heads above water and survive our new life with two boys.

Oh, you read all the way to the end? Good! 
I encourage everyone to look into Dave Ramsey's Financial Peace University. While we currently have paused our debt free journey, the budgeting aspect is helpful. We don't live paycheck to paycheck. We don't fight about money. We have enough stressors in our life, we don't need to add another one if we can control our money and tell it where to go.

You can download and listen to Dave's podcasts for free!! 3 hours a day! I listen at work. You can use his budgeting software to start your budget (I budget using excel spreadsheets.) Start telling your money where to go instead of watching each paycheck disappear and wondering "WTF just happened?"

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