Yea! I found you all!
How did I miss this thread when it started? I had been thinking of starting one myself for several weeks and then chickened out. But, here I am, ready to come clean.
Well, we were doing really good until just recently. When DH and I were engaged, we went to a financial planner who had done a training at my work. it was the biggest wake up call. He was an american express consultant who said, you guys are screwed. He gave us some great tips though, which I will share at the end.
So, at that time, we had about $20,000 in cc debt between the 2 of us. Luckily his parents paid for all of his college, but I had loans on deferment. anyway, in about 3 years we cut that in half. We literally cut up our cc after the meeting. we stopped eating out and buying stupid stuff (like $900 kayaks! ah, when you are young....)
So, skip ahead and now we've moved across the country i stay home with dd, and dh is a self employed programmer. He gets big contracts but guess where his last $8000 went to? TAXES! being self employed has killed us cause we needed every penny so we didn't set tax money aside. now we have a dedicated account and we cut a check from every invoice paid- NO EXCEPTIONS!
Well, we were so happy when we moved to Maine (from California) cause we could finally afford to buy a house. We bought a great- while *extreme* fixer upper (as in 30 years of smoking in the house) on a lake. We got an extra $33,000 from the bank to do the repairs. We put everything on a mileage credit card so could cash in miles. smart huh? until we got the latest bill and we are $12,000 over our $33,000 fix up!! aggggrrr! I mean, it was stuff we had to do, and the appraisal will show it, but now we have *2* credit cards with over 10,000 on them. I'm not even counting my student loans, mamas, which are about 16,000. Honestly, i dont count that as real debt. Its a like a mortgage to me.
so, our hope is that when all the work is done, we will have the house reappriased and refinance and pull the equity out and *maybe* even pay off both cards. Then our goal is to start buying some rental property so we can work up to having passive income. but, that's later- another thread on creating positive cash flow! (anyone read Rich Dad Poor Dad?)
well, our consultant said that the thing that ususally gets people in trouble is all the "occasional" expenses- like the things that only happen a couple times a year, or once a year like birthdays and holidays. people are good at budgeting for the month but then- doh! its christmas, or the car breaks down, or whatever, and you pull out the credit card. So, he had us make a list of all that stuff that we could think of and add it up, then divide it by 12. this was the amount of money we should put aside every month into a "cookie jar" account. So, we had our checking account for *only* monthlies, and then the cookie jar account for everything else- including clothes. so, theoretically, if you are religious about putting money in, and paying appropriately out of it, you dont have to do the cc thing. Of course, it takes several months for the account to build up.
He said the above was more important that paying above cc minimums because it will help you from putting more on the cards. We have been inconsistent with it, but are about to get back on track with it.
Next was to have a back up account of at least 3x our monthly income. So, if our expenses are 4000 a month, we need to save 12,000. That was if one of us is out of work or incapacitated in any way, we again dont' need to rely on credit cards. This is major, i mean, how can i justify saving 12,000 before paying off my 12,000 in debt? so, i struggle with this. I definitely see the point, so we have revised it to be a little less, but still having a savings for emergencies. (not that we have done this yet- its all in the "intentions" pile). I'm interested in what others think of this reasoning.
oh, and he said everyone needs fun money. even if its only $15 a month, each person needs to have something for themselves, or people cave. we did do this for awhile, i think it was $25. Dh was good- he always saved his up. I blew mine in the first week! we need to get back on that track.
The other things i have thought of doing is really, for one month, spending *only* on necessities (like the stuff Piglet was talking about) and comparing it to a previous month when I was a little more, uh, "free" with the money and then comparing to see how much extra i was spending- and on what. mostly as a wake up call thing (as if i need another one!)
well, that's my novel, mamas. I am grateful for the thread and the tips given so far! let's keep it going!!!!