10.10.2008

Cutting Back

The desire to live debt free has been growing in my heart for some time.  It is something that seemed like a dream, not truly an attainable goal. 

At least that is how it seemed until we were introduced to Dave Ramsey and Financial Peace University.  

After our first session, we were definitely motivated to get rid of our student loan debt and be debt free.  Then we left class and started to second guess our decision to work on becoming debt free.  Should we tighten our budget to pay off loans that are at 3% and 4% or just continue to live as we are today?  As days went by and we prayed about the direction we needed to take with our budget, it became clear to us that we need to be good stewards with our finances. By maintaining the student loans, we were not being good stewards. 

In order to free up money in our budget to go towards paying off our student loans, we had to prioritize and make some decisions about our spending and our future goals.  It wasn't easy and there were many discussions (and there continue to be many discussions) about what we are willing to live without.  The signature FPU quote: "If you will live like no one else, later you can LIVE like no one else!"  is something we repeat daily. Multiple times each day.  It will take a change of mindset and a change of spending habits in order to meet our goal of becoming debt free.  Without a daily reminder of where we are headed, it could be easy to fall into old habits.

What are we doing to get on the road to financial freedom?

1. Cut up credit cards.  Two weeks ago, I cut up all our credit cards except one.  For the past six years we have paid our balance on our credit cards each month but having the credit card makes it easy to over spend. Good bye Gap card, good bye Old Navy, and the most painful good bye Target. I almost shed a tear or two over that one.  I have a major credit card but I am wavering about cutting it up as well. Statistics say that you spend 12-18% more by using a credit card than by paying with cash or a debt card (even if you pay the balance each month).  I am struggling a bit with not having a credit card but I will say I am leaning towards cutting this last one up too.

2. Canceled cable.  Right in the middle of football season, no more ESPN! OUCH!  

3. Canceled Netflix.  The convenience of having the movies delivered to home was wonderful but we just weren't using it enough to justify the payment. Now with Red Boxes everywhere, we can get a movie for $1 when we know we have time to watch one.

4. Canceled Vibe.  For about five years, we have been taking this liquid vitamin.  It is a great product but it is a cost which we felt we needed to give up until we are debt free. 

5. Use cash envelopes.  Even though we use the mvelopes online system, I felt that there were areas where we would overspend if we didn't use cash.  We use cash for dining out, entertainment, personal care, and part of our food/household (Target, Winco, Schwan's man). I can already see a decrease in spending in those areas. Spending cash hurts. It is really really painful.  I can see that I think more about purchases and stick to my list.   

6. Meal Planning.  I have done meal planning in some form over the years.  Now, I am sitting down at the beginning of the month, planning meals, and posting the menu in the kitchen.  When I make our menu I make a list of needed items and add them to my grocery list.   By sticking to the list and purchasing only what I truly need and not what I think I need or I might need in the future, we are saving on our grocery bill.  

7. College funding on hold.  While we are trying to get rid of debt, we have put funding our kids' college accounts on hold.  Once the debt is paid off we will begin contributing again and we will be able to contribute at a higher rate because our debt will be gone.

What we didn't give up:

1. TiVo.  If I don't run outside, I run on my elliptical machine. When I am on my elliptical machine I watch TV. There is only so much of the local news a girl can watch. The TiVo allows me to mindlessly watch a few shows while working out.  It also allows Lance and I to watch a show after the kids go to bed in record time -without commercials. We heart TiVo and were willing to give up something in another area in order to keep it.

2.  Schwan's Man.  I know this was an emotional decision. I have had the Schwan's man coming to my house since I was born.  I really don't remember a time without the Schwan's man. I have cut back significantly what I purchase from him but there are some things that are so good and not just the ice cream.

3. Internet.  No explanation needed!

4. Home phone.  We have discussed getting rid of our home phone numerous times.  But with young children in the house, I just don't feel comfortable not having a land line. I also don't like talking on a cell phone, I prefer a regular old phone.  For now, the land line stays.

I am interested to know if any of you have tips on saving money or things you have cut back on in order to save money.  

14 comments:

Stephanie said...

Those are great compromises. That should be a step is learning to compromise with your spouse before starting any program. :)

Pat & Valerie Berg said...

I think you and Lance are off to an amazing start! We need to follow in your lead now and continue to refocus on our FPU teachings(as after a year I think we have gotten to lax). Your list just gives me more ideas of things I could still "consider"! :)

Shawna said...

I am amazed! We live with so little right now, that it has been hard to find what we could cut back on...The internet and phone weren't an option, and I am praying about cable. We got it in May, and it is the 1st time I have ever had cable my entire life. I feel guilty about it, but Josh thinks we should keep it for now (He's the free-spirit). I think my biggest cutbacks have been gas (I rarely go anywhere) and groceries (I only buy what I need...and I have actually ended up with cash left over each time! I probably have the lowest budget for food known to man, and meals do get boring, but we have food and someday we will "live like no one else!" I am so glad to hear your story...I am so excited and motivated by this class! Gazelle Intensity!!

Leah in Iowa said...

Good for you, Kristen! Won't it feel wonderful when that last payment is made? =)

Sarah Markley said...

i love how you layed all of this out!

have to admit, i don't know what a schwans man is!

joy said...

i have been hearing wonderful things about fpu. we're thinking of signing up next session. thanks for sharing. it's nice to see a real person's cuts and keeps. and an online envelope system! that sounds cool. very modern.

Jessica Brown said...

Thanks so much for sharing! Wow - no more ESPN! Yikes! But I think it is great to make those tough decisions to be able to move toward being debt free. Way to go!

Live like no one else so you can live like no one else!

On another Dave Ramsey note, I'm really appreaciating his voice of calm during this troubled economic situation. He does a great job of NOT freaking out on his podcasts. Also, I appreciate his ability to explain things in a way I understand.

Lynn said...

Love this series of posts, Kristen. We have been blessed to never have lived paycheck to paycheck. We are also blessed that Patrick and I both spend money about the same. Neither of us are huge savers or huge spenders. We usually make careful choices for big purchases, but we don't think twice about whether we can go out to dinner. Patrick was not taught how to save or invest, but he quickly rose to the occasion, and now he knows more about our investments and future savings than I do. Thanks for sharing how God has been working in your heart.

Alana said...

We did this recently and honestly we probably need to revisit and dump a few more things. I have the same debate about the landline. I'm not sure why that bothers me so much, but it does!

We didn't give up the cable altogether, but we downgraded big time. It was painful for awhile this summer when there was nothing on, bu now that the fall tv season is underway it is better!

Great post...thanks for sharing!

Janelle said...

Clap. Clap. Clap. That is the sound of me applauding you. We are in the process of cutting back and realizing that it hurts. I commend your perserverance cuz I know that I want to give up.

Cathi Hamen said...

yeah i too commend you!!
love the way you wrote it all out i think it will help to see... like pros and cons!!
good luck..

Maren said...

I love your blog! Found it just serfing some of my fave mom blogs:) I like your money ideas. I wish I didn't believe my cute hub would leave me if we canceled the cable...but I like all of the good suggestions!

Joyful Weddings & Events said...

This was super encouraging for me! We are going through the process of thinking through all of this right now. We just cancelled cable as well. Canceling the landline too. David is not a great budgeter, so it is going to take a lot to get him to work with things like the cash envelopes. Wish us luck!

Dave and Jenni said...

Wow, Kristen, thanks for sharing. I never realized that about the credit cards and spending more. While we also pay our monthly balances, I am definitely going to consider this as, we too, try to reign in the spending right now.