Woman’s World magazine featured my family’s story of how we got out of $51,000 in debt in less than three years in their March 22 issue, which is pictured above. The vignette about our family (page 12) includes three things we did that changed our financial situation:
Opened an account at a credit union. I was notorious for moving money into savings to set aside for things like car repair and Christmas gifts, just to move it right back out into our checking. To combat my impulsiveness, we opened a new checking account at a different financial institution. We made it difficult for us to access the money, but auto-transferred into it every month. It felt good to start saving for those non-routine expenses. (Side note, this was in addition to the auto-savings we did in an ING account for our 3-6 month emergency fund).
Planned for surprise expenses. If you’re like me, you often flounder in your financial planning because of the unexpected things that pop up in a month. That could be new shoes for your kids, a worn out air conditioner and new brakes. Let’s be honest. Is it really a surprise that your kid’s feet grow? Is it a surprise that your 15-year old air conditioner needs maintenance? Is it a surprise that your brakes eventually wear out? Of course not. These aren’t true surprises. They come as one though, because we pretend they won’t happen and don’t set aside money in advance to pay for them when the time comes. Denying that Christmas won’t come is not going to change the fact that it comes 365 days after the last Christmas. You can count on it. When Marco and I began to set aside a prorated amount of money every single month for these non-routine expenses, we could buffer life without running to the credit card.
I’ll give you a warning. The first time you sit down to include a prorated monthly amount for all of life’s “surprise” expenses into your budget, expect a surprise. You’re bottom line will probably be in the red and much further in the red than you would have believed. Instead of getting depressed about it, realize that not planning for these expenses is a huge part of how you got into and why you stay in debt. Your life costs more than what you make. Move forward by reducing expense (and Pocket Your Dollars will help with that) and/or increasing income.
Gave up one luxury for a month. After realizing that we got into debt and were staying in debt because our life cost too much (it was a “duh” moment that changed our life) we got radical about reducing expense. We looked across every area of our expenditures. We found ways to continue enjoying life while paying less. One area was really hard for us to get under control, though – eating out. As two people without kids we were spending $300, $400, and sometimes $500 per month eating out. The worse part, we could not seem to get it under control no matter what we did. That led us to something radical that nipped our eating out addiction in the bud.
For one month my husband and I gave up eating out (except for work-required functions). We put a firm boundary in place since soft boundaries, like “we’ll only go out to eat once per week” didn’t get the job done. In that one month we learned where our pressure points were, how to overcome them and really rooted out the underlying issues that caused us to excessively eat out. When the month was up we went back to eating out in moderation and have done so ever since. The point is simple. If something is controlling you, then get radical and figure out how to get control of it.
I’d encourage you to pick up a copy of the magazine to read the piece yourself, but it isn’t on newsstands anymore. *insert sheepish smile* It was on the newsstand last week and I didn’t make time to write this post until it was too late. Whoops! You’ll need to get it from the library if you’d like to read it yourself.
Your turn: What is thing change your family has made, whether in attitude or action, that has made a positive impact on your financial situation?