Wednesday, October 16, 2013

Achieving Financial Freedom


One of our biggest goals as a family is to live debt free.  We have some big dreams that we are excited about and want to pursue, but it’s hard to accomplish much when you’re living in debt.  It feels like this weight hanging over us and we’re ready to just get rid of it!

We are currently trying to be a bit more aggressive with our budget in order to make this happen.  After living in the less-than-$25,000-per-year income for the first four-and-a-half years of our marriage, it was so nice to have a little flexibility after Billy got the job at Dynamic.  We have had a higher and more reasonable income for almost two years now, and we have been so blessed by that.  We have been able to relax a little more, enjoy some things we weren’t able to do before, and not worry or stress so much over finances.  However, we are also realizing that we will never be able to achieve our big dreams until we are financially free, so it's time to get aggressive about paying off our debt.  Thankfully, our debts only include our mortgage on the house in Lynchburg (which we currently rent out to cover the cost of the monthly mortgage payment), what's left of our student loans, and a couple thousand dollars on our van.  That still sounds like a lot, but we try to keep it in perspective that at least we don't have credit card debt and we have paid off my student loans, so we only owe on Billy's now (which is still a significant amount).  With our higher income, we have crept into some not-so-great habits, like eating out pretty regularly, not being as diligent with the grocery budget, buying little things here and there just out of convenience, etc.  Billy has been working on a more detailed plan of how we want to do this, including a more streamlined and organized monthly budget, a debt pay-off plan, and how we can hold each other accountable with our spending habits.  Our ultimate goal would be to pay off our van and student loan debt in 5 years (so by the time we're 30).  This is based on our current sole income from Billy's job.  If I were to start working again during that time, it would (hopefully) go a lot faster.  

There are a bunch of tools we plan to use to accomplish this goal.  First, we are actually increasing our weekly grocery budget (which seems counterintuitive, but let me explain).  Three years ago, when Billy was laid off from his job and we had our precious newborn Ellie, we got very strict about our grocery budget and set it at $50 per week.  This was supplemented by the WIC program, since Ellie was on special formula due to her severe reflux issues.  We were only feeding the two adults and the dog at this point, since Ellie's needs were covered by WIC.  We haven't adjusted this amount in the past three years.  Now, we are feeding two adults, two children who eat like adults sometimes, and a dog (with no government assistance in case you were curious).  Fifty dollars isn't realistic anymore, but I kept trying to force myself to stick to that for some reason.  I was really skimping on buying things that I saw as unnecessary (things for breakfast and lunch) because I kept trying to stay in that $50 budget.  I know that doesn't make sense, and looking back I don't know why I let it be that way for so long, but it was like a personal failure to not stick to the archaic budget.  I didn't even communicate this to Billy, so he wasn't really aware that I had this internal struggle over the grocery budget.  So, because I had set our budget too low, we were running out of food in the middle of the week and then having to run to the store last minute, which means I ended up spending more money anyway.  We were also resorting to eating out when I didn't feel like making something or when what we already had at home wasn't very appealing.  So, in an effort to reduce our overall monthly food expenses, I am giving myself some grace and just raising the budget to be more realistic for our family (we haven’t decided yet what our weekly amount would be as I need to spend some time researching and thinking through what would be more realistic for us).  This is in an effort to reduce our eating out and impulse purchases, as well as increase the quality of our meals at home.  I really think that by buying more of the foods we enjoy that might be more expensive (like meat and fresh produce) and less of the cheaper but not so great foods we can make eating at home easier and more enjoyable. 

Another way we are trying to rein in our spending is by using mint.com.  Mint is a free budgeting tool that basically logs and categorizes your spending for you, so you can keep track of your monthly budget without a lot of work involved.  You connect your bank account(s) to mint.com and they keep track of every purchase you make on your debit or credit card by logging it into a budget category.  You also have the ability to log cash purchases if applicable.  There is some initial work involved, since you need to set up your basic budget and occasionally tell the program where certain purchases need to go.  For example, any purchase made at Costco is automatically logged in as a grocery purchase, but you might have to manually categorize it if you were buying car maintenance items or something like that.  They also have a free app for the iPhone, which makes keeping up with your budget very easy.  I can literally check my phone while I’m at Kroger to see where we are with our monthly grocery budget before buying something at the store.  I actually made a purchase at Kroger after Billy set up our account and the purchase was already logged and categorized by the time I got home, so it’s quick to update your information.  There are also a lot of fun geeky perks to Mint, such as different charts to provide a visual for understanding your spending, as well as the option to create financial goals that help you see your progress along the way.

Finally, we are planning on just cutting back a bit.  This means being way more intentional about our spending and having to plan ahead a lot more.  There are going to be those nights that I don’t feel like cooking dinner, and we are going to allow ourselves the occasional night out, but we won’t be able to be as free with that as we have been.  Also, we’re making it a personal goal to not spend as much money on date nights (which are very important to us!).  We don’t have those too often (maybe once a month or every other month at this point), so we have plenty of time in between dates to try to earn money in creative ways that can fund our nights out. 

We have a few different methods we’re implementing (some old, some new), which I’ll share about in the next post (because it’s a lot of information to take in!).  We also just want to be more simplistic with our date nights.  Typically, a date night for us is dinner at a super nice restaurant and a movie at the theater.  Definitely not a cheap night.  Instead, we want to do more free things, such as window shopping (which is one of my favorite things to do), walking around downtown, driving on the parkway or through the national forest, etc.  Or, if we still want to see a movie, we can pay for that with gift cards that we earn online for free (which I’ll share later).  Some other options we’ve talked about include eating dinner at home and just going out for dessert and coffee, renting a movie at Redbox to watch at home after the kids go to bed (and if we get a free rental code, all the better!), or just having dinner at some cheaper, new-to-us restaurants instead of our typical fancy places.  The goal isn’t to make our lives miserable, but to learn to have fun in ways that are outside our norm and to save money in the process.  Every bit we save makes us that much closer to being free!

We’re really excited to see where God takes us through this journey.  I plan on sharing some more ideas and posts in the future that are hopefully helpful to you, but also just to help me keep my momentum going.  It’s so easy to get burned out financially, so I want to stay excited and motivated to pursue our goals and blogging is one way I can do that.  Thanks for reading!

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