budget — To Someone Somewhere

As of last week, Ryan and I completed our THREE YEAR journey towards debt freedom! We are now proud to say we are completely debt free! No car payments. No credit card debt. No student loans. Nothing. Nada. Zilch.
It all started in the fall of 2012, when we took Dave Ramsey’s “Financial Peace University” class. We were already familiar with his principles, as Ryan’s family are all big Dave Ramsey fans, but it wasn’t until we took the class that it finally clicked.

We started with about $33,000 in debt. About $23,000 of that was between our two cars, and the remaining were various debts, a small credit card debt and two small personal loans. Between our car payments and payments on these other debts, we calculated that we were spending close to $750 a month. I couldn’t believe it. No wonder we were struggling, we were paying out so much money to the bank each month! I imagined what life would look like without any payments and it motivated me to get intense with paying it down.

It felt like a big mountain to climb. We were young, living in Los Angeles (which is not exactly the cheapest place to live), and felt like we were already scraping by. We weren’t sure how we could scrape together the extra money each month to pay down our debts. But the class laid out a plan for us to follow and we did our best to focus on following it. We built up our beginner $1,000 emergency fund, then started on baby step #2 by attacking our smallest debt first. This debt was relatively small so we were able to knock it out quickly, giving us our first “win.” It felt so good to payoff that first debt, giving us the hope we needed that this could actually be possible. So we moved on to the next one, each time focusing on that debt and paying as much as we could until it was gone. I really think this method is so much more effective then going with the largest interest rate first. We needed those “wins” to keep us going, to propel us forward.

The first year we were able to payoff $10,000 and get down to just our two car payments, which felt really good. And then things started to go a little slower. At this point we were moving down to Orange County to be closer to our Church (also Ryan’s work) and our community down here. So we needed to save to cash flow the move (and save for security deposits, first month’s rent, etc). It was also during this time that my dad got really sick and his liver was failing. We knew he wasn’t going to make it. So we used our emergency fund to fly to Florida at the last minute so we could be with him right before he passed away.

After settling into our new place in Orange County, our budget adjusted because our rent was higher. Then, shortly after that we got pregnant with Eveleigh, and needed to cash flow all of our doctors appointments, lab fees, and her birth. Our health insurance at the time wasn’t great, so we had to spend quite a bit of money during my pregnancy. Luckily, we knew this would be the case and had saved extra for it, leaving us able to cash flow it and not have any medical debt.

We continued to trust God and His provision, and He continued to blow us away. He provided us with great odd jobs, and extra miscellaneous income here & there to help us stay afloat and still work our plan. We did use some of this income to cash flow a few things, like me getting new cameras & lenses for my photography business, and a couple vacations here & there (shhh don’t tell Dave! My wanderlust gets the best of me) and trips back to Florida to visit family.
Then we entered into a time of financial strain for our family, as we had a new baby and had just taken in my 15 year old twin brothers. We had to move to a bigger place, which meant our rent increased significantly while our income did not. Our grocery budget during this time was also through the roof. That was a challenging year – but God always provided and we were able to make ends meet. Any unplanned income went straight towards savings & debt, since it wasn’t accounted for in our usual budget anyways. We weren’t always paying down our debt, but our goal during this time was to just not have to take on any additional debt.

We were able to get down to just one last remaining debt. My little Nissan Versa that we had financed right before beginning all of this. With baby #2 on the way, we pushed “pause” on the debt snowball and began saving towards the birth, just as Dave recommends. My brothers went back to live with their mom, and we moved to a new place down by the beach (such a blessing, more on that later). In 2015 God showed me more than any other year that He is faithful, trustworthy, and that “He’s Got Us.” During the Fall we were able to build back up our savings, thanks to extra income and a nice tax refund. We wanted to pay off our car to be debt free, but were waiting because of the pregnancy.

Then, about three weeks ago, we put our second car seat in my car and realized there was literally no space. At all. A few trips to Costco and the grocery store revealed that we would need a bigger car. We didn’t want to go into debt for a car, but weren’t sure how we could get a bigger car without it. We still owed money on our Nissan after all, and up until this point we were upside down on it. But we started looking to see what was out there… We went to Carmax to get our Nissan appraised and look at used car options. I found a car that I loved, and, I’m embarrassed to say, we were dangerously close to financing it. But when we did the math and worked out the numbers, we knew we couldn’t be so stupid. We couldn’t blame ignorance this time. We knew the right thing to do, and just had to be adult enough to do it. So we passed on the car. But fortunately, Carmax will buy your car whether or not you buy a car from them. The appraisal would pay off our loan with a whopping $370 in equity paid to us. We decided to sell the car and take the cash we had saved and buy a used car so we could be completely debt free! We knew this would mean an older car with higher miles, but we knew it was the right step.
We found a used 2006 SUV with only 48,000 miles, and it’s way nicer than what I thought we could find with our budget! God is so good! And now – we are debt free! I’m so excited to do our budget next month with NO CAR PAYMENT!

The best part of this whole journey is that it taught me to be at peace with our finances. Even through the hard times, I chose to put my faith in Him and trust His provision. I used to be so stressed out with money, literally every dollar spent weighed on me. But now, even if there is an unplanned expense or emergency I know that we’ll be ok and we will be provided for. There’s so much beauty in the peace.

So that’s our journey. And I want to leave you with these tips that helped us along the way. We’re certainly not perfect and we’re not financial gurus, and some months we were better than others, but here’s what helped us along the way.

1. Live Generously
It kind of seems counterproductive to both live on a budget to payoff debt and yet live generously. But here’s the thing – when you live with an open hand, when you live with a spirit of abundance instead of a spirit of scarcity, you’re more able to receive the provision God has for you. For most of my life I lived with a spirit of scarcity. After my parents divorced they both struggled financially, and money was always an issue for us. When I was older this lead to me clinging on to everything I had, grasping at it – afraid to let it go. In the first few years of our marriage “giving” was always a struggle for me, but my heart slowly softened, and it seemed that the more openhandedly we lived, the more we were provided for. We practice generosity by giving to our church home, as well as other charities & ministries that we feel called to give. If you’re not a believer or don’t have a church home, practice generosity in other ways. It can be a favorite charity, or maybe even tipping generously, or helping someone in need. But giving is important for your heart and will really bless you.

2. Make a Written Budget
A written budget is key. Dave Ramsey recommends a written monthly budget… I’ve found that writing out our budget and bills each time we get paid helps us even more. Our set income comes on the 1st & 15th of the month. So I sit down with a pen and paper on the 1st & 15th and write out what bills are due, our grocery and gas allotment/etc, and how much “rollover” I may need to keep in the account to save towards rent (our biggest expense). Write it all down! As Dave says “on paper, on purpose.”

Ryan and I then do a brief “budget committee meeting” and discuss & agree on the budget and then move forward with our plan. Open communication is key here. If you are married, you and your spouse need to be on the same page & work together! It is typical for one of you to be more of a saver & the other one the spender. Openly communicate your needs, your goals, and your plan. Make compromises where needed and do your best to give grace to one another.

During this time of writing the budget, take into consideration what you have going on that month. For example, if you’ll have family & friends in town you will probably spend more, so adjust accordingly. If you plan to have people over for dinner, you may need to adjust your grocery budget. If you have a birthday, a wedding, or shower to attend and need to buy a gift – again, adjust your budget and plan ahead.

When most people think of a budget they get frightened because they think it’ll be too limiting. I actually have found so much freedom in the budget. It’s really just “telling” your money where to go. If I budgeted for clothes that month, I can now go shopping without feeling guilty. When I go to the grocery store, I don’t have to stress about it because it’s planned for.
Another side note, there are plenty of apps & fancy programs to make a budget. Dave Ramsey actually just came out with a new one called “Every Dollar” which is great! I’ve used these in the past, but since I like to make a budget every two weeks instead of every month, I’ve decided to just use the good old-fashioned pen & paper method. It works for us. Find what works for you!

3. Use a Cash/Envelope System
After I make the budget, I take out cash from the ATM for certain areas and I stick them in a labeled envelope. So, every two weeks I go to the ATM and take out cash for groceries, spending money, clothing/etc for that two weeks. I literally carry around my wallet with my Dave Ramsey envelopes and I use the cash. It’s easier to stick to your budget when you have the cash in hand and can visually see how much or how little is left. The hardest area for me, that I most easily overspend in, is grocery shopping. Using cash helps me stick to the budget (though I’m certainly not perfect). I also really recommend taking out cash for your “spending money.” This is our budget for eating out/movies/entertainment/date nights/miscellaneous. Eating out is an expensive and slippery slope, so we give ourselves a budget for it and (mostly) use cash. When you are paying off debt this budget should be kept as minimal as possible.
Clothing is another area I take cash out for. We don’t always have room in the budget for a clothing allowance, but when we do we try to stick it in there. I love to shop and buy new clothes just as much as the rest of them, but if you want to get out of debt faster I’d recommend sticking to necessities and trying to keep this area in check.

4. Find odd jobs/miscellaneous income
This was honestly the key to us getting out of debt. Our normal set income gets eaten up so quickly just paying bills and covering our expenses. After everything is paid and groceries are bought, it leaves little money to put towards debt. So, we both take on odd jobs and look for other ways to earn income. Since that income isn’t necessarily planned for in our usual budget, we put all of it towards our savings/debt snowball. We learned how to live on one income early on in our marriage, so whenever I work (whether it was with acting gigs in LA, or my photography, or Cahootsie) we use the majority of that income to pay down debt as well. Ryan has also found great opportunities to earn side income… through his music, contract work, officiating weddings, teaching guitar & vocal lessons/etc. There are so many opportunities out there! You just have to find them! The key is to find something you already love & are passionate about, so it doesn’t even feel like work to you!
Still not sure how to earn extra income? Maybe it’s as simple as babysitting on the side or hubby delivering pizza on the weekends!

5. Pray
“Do not be anxious about anything, but in every situation, by prayer and petition, with thanksgiving, present your requests to God.” Philippians 4:6.
Throughout this journey I have prayed for God’s provision and asked him to generously provide for us so that we would be able to pay off debt and save. He has more than answered this prayer, and every opportunity & extra dollar that came our way was His provision for us. And of course He provides! He’s a good, good Father. And when we are good stewards of what He gives us, and follow His biblical teaching regarding finances, it is His delight to answer this prayer.

I hope this encourages you as you start your journey, and if you have any questions I am happy to help in any way!

In love,

Monika