The Ups and Downs of January

I'll start with the ups first.

• We paid off a $919 student loan
• Paid $350 regular payment towards our mobile home loan
• Paid $3900 towards our car loan
• Total Debt Payments this month: $5169.00
• Cash flowed my wife's new nursing licence for Mississippi - $133
• Cash flowed my wife and daughter's passport fees - $135 (we are going on a family reunion cruise in June - paid for by my Aunt - so excited!!)
• Cash flowed $62 worth of doctor co-pays that we didn't budget for
• Cash flowed $67 annual membership to AAA for my wife & I (didn't budget for this either)
• Negotiated with internet provider and cut about $15 off the bill every month
• Gave our normal tithe and gifts to charity, plus gave a little extra for Haiti relief
• We have spent less on food this month than historical months

The downs:

• We still blew our food budget. My goal was to see how close we could get to $500 for the month ($300 groceries, $200 eat out). As of the 29th, Mint.com says we have spent $731 so far on food ($377 on groceries and $348 elsewhere). We still have the weekend left in the month, which is our hardest time. We like to eat out together during the weekend. So, in summary - we will be over our food budget by about $250.
• Over budget on CVS (my wife does the CVS extra care buck program where she gets tons for free or little cost)
• Over budget on clothing - My wife needed some new clothes, so we cash flowed her spending about $20 at a local thrift store. She also spend about $100 on baby clothes this month that we weren't planning on doing.
• Lost $25 to a children's book club that we signed up for but forgot to cancel (At least we got the books though)

So those were the ups and downs in a nutshell. Our game plan for February will include the following:

• Shoot for a new food budget target of $600 ($400 for groceries, $200 for everything else). Until we meet this goal there is no sense in making it lower.
• Do a trial run on a cash envelope system for the $200 everything else budget. This breaks down to $25/week per person. If we use the cash envelope then hopefully we can learn to control this category better. The reason I didn't do this before is because I didn't like the idea of going to an ATM very often. I like the convenience of my debit card. However, I think we can afford to just pull the $200 out in one shot, divide it up by week and by person and just see how it goes. Since Mint.com won't be able to record the transactions, we might try to save all receipts and manually enter them to get an idea of where the money is going.
• Work together more to discuss and plan out spending on extras, like clothes. My wife loves baby clothes. She is VERY thrifty at finding good deals on ebay and at consignment stores and such, but we need to decide how often we are going to spend in this category and control it.

Other notes,

• We have $480 balance left on the car - and will pay it off in February!
• My initial tax preparation indicates a return of about $1300, which we will put into savings as a cushion for emergency during our upcoming move in May. This also might be used towards our small vacation fund during our cruise in June. This will be our last vacation for a while. It is a celebration of many things - family reunion, family birthdays, upcoming marriage in the family, and my graduation and new job.
• We are putting our mobile home on the market probably in February. Hopefully it will sell easily!!

I leave you with this quote from my man Charles Spurgeon:

Economy is half the battle of life. It is not so hard to earn money as to spend it well.

Half way through January, how are we doing?

I think I was a bit off in my initial debt thermometer. The current debt is around $145,000. I don't think I was including the mobile home loan and the interest that has accrued on various other loans.

Also, just made a mobile home loan payment of $350 so my total is $1269 to debt so far.

This month, I will be paying $3800 towards the car ($300 normal payment + $1000 leftover from student loan refund + $2500 from savings). This means that the car will be paid off by March, so exciting!!

We are half way through January and after taking our financial "temperature", we are doing fine in most areas but our biggest problem area is still food. I've reduced our food budget to way below what it used to be. We are on the 17th and have already spent $200 of our $200 alloted for "eating out". We still have about $150 left out of $300 for grocery. So, the rest of the month I'm going to be living on PB&J and leftovers and we are going to have to really limit when we eat out. I know we will go over the $200 but I want to keep it to a minimum. My goal next month is to shoot for $180 eat out budget.

Either way we are making progress. Our old lifestyle would have us spending up to $500 on eating out alone every month. I don't know how we did that but when a meal for 2.5 people on average is about $25 after tip then it adds up. Plus, fast food and snacking will kill your budget over time.

Our goal for the total money makeover was to use this spring as a training period to adjust to a new lifestyle and mindset. Come June - it hopefully will be all out gazelle intensity debt payoff time.

E-Mealz

If you're like me and have a love/hate relationship with cooking (I love to eat, just hate to cook/clean up after!), then you will love E-Mealz. I found E-Mealz by googling "meal planning" one day because for me, it had just gotten to the point where meal planning and figuring out what to cook that week was becoming such a burden. I work full-time (nights, at that!) and don't have the time nor the energy to plan an elaborate meal for every day. Of course, we are on a budget, so that means not eating out all the time, either. Enter E-Mealz!

Since joining back in September, it has made my life SO MUCH EASIER. And at $5 a month, you really can't beat it.

How it works:

Sign up for a meal plan. There are lots to choose from (i.e. Low fat, Vegetarian, Family or Couple, Weight Watchers, etc), plus you get to choose the store you shop at and the meal plans for that store are based on the sales that week (which saves you even MORE money!) Cool, huh? :)

Every week you log into E-Mealz.com and print off your meal plan along with the grocery list. We subscribe to the Family Low Fat, Any Store plan and I usually pick my 3-4 favorite meals (they give you 7 to choose from! make all 7 that week if you want!) and cross off what I dont need from the grocery list from the meals Im not making, and then just go shopping! It has really reduced our grocery bill and improved my sanity. I am an avid coupon clipper, so that helps even more with saving costs.

I hope you'll give E-mealz a try and love it just as much as I do! :)

- Hilary

Scrooge Lives! | Christianity Today | A Magazine of Evangelical Conviction

Scrooge Lives! | Christianity Today | A Magazine of Evangelical Conviction

"A man's pocketbook, Martin Luther said, is the last piece of him to be converted."

Read this startling article about giving in the church today. It is sad, shameful, and disappointing. 5% of Christians cover 60% of the giving! 25% of Christians give nothing!

Read this quote from the article:

American Christians' lack of generosity might not be as shocking if it didn't contrast so starkly with their astounding wealth. Passing the Plate's researchers say committed American Christians—those who say their faith is very important to them and those who attend church at least twice a month—earn more than $2.5 trillion dollars every year. On their own, these Christians could be admitted to the G7, the group of the world's seven largest economies. Smith and his coauthors estimate that if these Christians gave away 10 percent of their after-tax earnings, they would add another $46 billion to ministry around the world.

$46 billion! Imagine! That could change the world - every year!

"But store up for yourselves treasures in heaven..."

Come on Christians, are we building up God's kingdom or our own? Get your priorities straight. Get out of debt. Repent of greed, selfishness, worldliness, secularism, and living for yourself.

Give!

My family commits to serve the Lord - including with the money that he has entrusted us to be stewards of.

Our Biggest Challenge: Food Budget

One of our goals this spring is to learn to be frugal when it comes to food.

My wife Hilary is great at this. She uses E-Mealz online meal planning to plan out meals based on sales at the grocery store. She follows blogs that help her to maximize her savings with coupons and help her to get free things at CVS using "extra care bucks". At some point she will write some posts about how she does that and how you can too! She saves a lot of money.

We have a LOT of changes to make in our food budget though. The first change is to actually STICK to our budget. We eat out a lot (mostly for lunches, snacking, and when we are together on the weekends).

Here are the startling "approximate" numbers for what we've spend on food (eat out and grocery). This also includes toiletries, minor shopping at Target/Walmart, and CVS.

July 09 - $1140
August 09 - $1280
Sept 09 - $1290
Oct 09 - $1000
Nov 09 - $765 (from Mint.com)
Dec 09 - $860 (from Mint.com)
Jan 10 - $290 (so far on Mint.com)

Dave Ramsey recommends that food/dining be about 5%-15% of your income. Our budget for January food and dining is $500. As you can see we are halfway through our budget, but we are not even half way through the month! We have a lot of learning and tough choices to make in this category. It has been said that people can loose weight while on the Total Money Makeover. I wouldn't mind that!

Hopefully we will meet our food budget this month. If we do, then February will be lowered to $450. We will work to get this as low as we can.

THIS my friends is how you pay off debt with Gazelle Intensity. Beans and rice as Dave Ramsey says. Rice and gravy if you get bored.

Investment help from Mint.com

Mint.com : My New Best Friend

I found Mint.com this weekend and let me just say, WOW! I have been searching for a way to track my finances that is more efficient and powerful than a spreadsheet (I've used my own spreadsheet to track every dime for the last few years and it takes forever).

Mint.com is a FREE-yes FREE online budgeting and finance tracking software. You enter your accounts (Checking, Saving, Loans, Investments, etc) and set your budget and it automatically links in and updates everything for you. You can look at charts and graphs and see how and where all your money has gone for the past month(s). It will save me so much time and will give me more information at my finger tips to make better decisions about how I spend my money. It even sends me email alerts when I've gone over my budget in a category.

After 3 days on the site I highly recommend Mint.com. It is a one stop shop for all your finances and you don't have to pay a dime or download any software!

I anticipate this tool being a big help in tracking, monitoring, and saving money while paying down our debt!

Borrowing from Peter to pay Paul

We have paid our first loan! It is small but it is progress and is encouraging. The method though was probably unorthodox. My friends at The Total Money Makeover will probably not approve.

This school year I applied for $10,500 in student loans ($5250 for fall and $5250 for spring). I didn't need to take as many classes as I expected this last semester so I didn't use all the loan. When this happens the school writes you a refund check. I got a little over $2200 back. I use about $300 to pay for my books and used $919 to pay the first loan on my list off. I will be using the remaining $1000 to put towards my car loan which is next on the list.

So, even though I'm borrowing from Peter to pay Paul in this case, I'm not too worried. Debt is debt right? In the end, I have started my snowball and have been encouraged. This is the last time this will ever happen because I will NEVER HAVE A LOAN AGAIN!

So, I get to add $919 to my debt thermometer so it won't say $0 anymore. Yay!

The Baby Steps

You may be wondering what the baby steps are. There are seven.

It is best if I refer you directly to them: The 7 Baby Steps

The 1st is to establish a $1000 Emergency fund and get current on all bills. Check!

The 2nd is to pay off all debt other than your house. This involves paying the minimum on every loan but putting every bit extra towards the lowest balance until it is paid off. As you pay off each loan, you use a snowball technique to use the money and add it to the next loan and so on.

This step is supposed to take us 3-4 years according to the Gazelle Budget Software from My Total Money Makeover.

The 3rd step is to save a 3-6 months living expenses in the emergency fund.

You can read the other steps for yourself at the link above.

My Debt and Plan for this Spring

This is our current debt in order of smallest balance to largest:

1. Sallie Mae Student Loan: $919
2. Car Loan: $4357.94
3. Mobile Home Loan: $8292.74
4. Sallie Mae Stafford Loans @ 6.88%: $8305.00
5. Sallie Mae Stafford Loans @ 1.88%: $8500.00
6. Federal Perkins Loans @ 5%: $9000.00
7. Sallie Mae Consolidated Loans @ 2.87%: $21,438.95
8. Citibank Private Loans @ 3.5%: $73,414.96

Total Debt: $134,228.59

I may be off a little on the federal loans due to interest but I'll update that as I get better numbers. This debt will be the target for the debt thermometer at the bottom right of my blog.

Here is another breakdown for the student loans. Like I said, I've been in school for 8 years. Here is how much each year has cost me:

1. 2002-2003: $9,125
2. 2003-2004: $13,625
3. 2004-2005: $26,850
4. 2005-2006: $26,970
5. 2006-2007: $23,022
6. 2007-2008: $6,788
7. 2008-2009: $4,410
8. 2009-2010: $10,500

Our goal this spring is to knock the first 4 loans off the list. This is our plan:

1. For spring semester of 2010 I am getting a loan of $5500. But I'm not taking as many courses as I expected so I'll be getting a refund of just over $2200. I will use this to pay for my textbooks (~$400) and then pay off the first SL of $919 this month. This will leave about $1000.
2. We have just over $4000 in our savings right now but Dave Ramsey recommends in "Baby Step 1" to have an emergency fund of $1000 and then move on to step 2 (Pay off debt). We are more comfortable with $1500 savings so I will use the $1000 + $2500 from savings to pay on the car loan. This will leave about $900 on the car which we will pay off then by the end of March!!
3. Finally, we will be moving in May and will be selling the mobile home. We will pay off that loan and hopefully be left with around $7000.
4. Using the $7000 plus tax return money and anything else we can scramble up from fruggle living we hope to pay off the 4th loan for $8305.

So, by the end of May 2010, we should have already paid almost $22,000 of our debt!! Not bad for our first 6 months. That will be great motivation and inspiration to really tackle my larger loans (5-8) at a balance of $112K.

We will be renting in our new location because Dave Ramsey advices not to incur any new debt if possible. He also recommends not buying a home until you can do it with 20% down and 15 year mortgage. We will rent until we have that and hopefully avoid lots of property taxes, home insurance, and home maintenance fees in the meantime.

Keep us in your prayers as we work to be diligent and faithful with our finances!

Godbless,

Thomas

How it all began

I began college at Auburn University in Alabama during the fall of 2002. I was going to get a degree in Aerospace Engineering. Yes. I was going to be a rocket scientist. In fact, I was going to even be an astronaut and be the first man on Mars. Well, plans changed. Three and a half years later my grades were slipping, motivation was gone, and hopes and dreams had changed. I'm from Ohio so by this point I had accrued three and a half years of student loan debt. Keep in mind out of state tuition is four times more expensive than in state at Auburn. I met my future wife during my 4th year of school and during my 4th summer I changed my major. It was late in the game but I switched into Industrial Engineering. Things got better...much better. I got married in my 5th year and my grades began to improve. I qualified for in state tuition and a few government grants. I enjoyed my classes and even landed an internship and co-op rotation. Now I'm about to finish my 8th year. I will have a great education and I already have a job lined up, but unfortunately my last 8 years have all been financed. My loans were used for tuition, fees, books, lodging, food, transportation, clothes, bills, etc. Everything! I have over six figures in student loan debt (both private and federal). My wife and I want to get rid of it ASAP, and we are going to be following Dave Ramsey's Total Money Makeover along with enormous faith in God in order to do it. I graduate this May, 2010 but we are starting the Total Money Makeover now, January 1. There is much more to come, along with more on how I got into this mess and how we plan to get out. I hope you'll follow along.