Sunday, October 21, 2007

Becoming Debt Free

The purpose of this blog is to document our journey as we build our log home. I'm reluctant to discuss personal views as it pertains to everyday life. Debt is one of these areas, although it does impact the way we will approach the way we build our home. This post will be more of a testimony of sorts. Please don't look at this post as if we're bragging, what we have been able to do is made possible through Gods blessing and we give him the praise. Maybe our story will help others.

Our Testimony: Kim and I are high school sweethearts. We started our adult lives off by graduating high school, getting a job, and getting married at age 19. To say the lest we were going to struggle financially through our early years together. When I graduated from high school, I got a job working for my paw-paw as a construction laborer and about a month later I was working for Yamaha Music inc. for about 7 dollars an hour. Since I was making some "good" money I went out a bought a new Ranger pick up (big mistake). A year later Kim graduated from high school and 6 months later we were married. We bought our first home which was a new single wide trailer (big mistake). Eight months into our marriage Kim was pregnant with our son (a blessing). Six months later Kim lost her job as a receptionist at a dialysis center, the company she worked for was bought out. At almost the same time I was transferring into another department which would give me a better opportunity to move up in hourly pay, but I would not be able to get the overtime I was accustom to which would turned out to be an overall pay cut.That's when our financial struggles began.

Kim, being six months pregnant couldn't find another job and I couldn't leave the one I was at because we needed the insurance. We were paying out more than we were bringing home .We couldn't sell the truck or the trailer because we were way up side down (owing more than they were worth) and Kim's car wasn't worth much and we had to have two cars. Like so many people do in this situation , we started borrowing money from anywhere we could get it credit card, signature loans, and loans from family members. Our mess only got worse from there. I remember saying if I could only double my pay everything would be OK.

Four months after our son was born I was hired at Frito Lay as a loader and was able to work all the over time I wanted. Slowly we caught every thing up. With in a year of making that statement about doubling my pay, I was able to almost do that. We were not struggling to make the payment but that is about all we could do, "just make the payments". Over the next three years as I became a truck driver I increased my pay about $10,000 per year. We were still just making the payments. You see my thinking was if I could only make more money it would take care of the problem, but the more money we made the more we spent. Trading our cars in for nicer ones, going out to eat more, nicer clothes, vacations, and the list goes on. I like so many others believed that having payments was just a part of life. After all "you won't never have nothing if you don't have payments" right!

About five years ago I was riding down the road in the truck and I came across this radio show called the Dave Ramsey Show. This guy made a lot of sense in his approach to how we should handle our money. Unfortunately I was only able to listen to him for 30 min. before I lost the station. Then about three years ago he was starting to be on more and more stations so I was able to listen to him more and more. I was telling Kim about some of the things he was saying, but at first she was kinda reluctant to try his approach to handling money until we bought his book The Total Money Make Over. Then she was fully on board.

His approach is quite simple, "don't buy it unless you can pay for it with cash", but its more than that. If you have a pay as you go mind set then you free up your income from making payments. You can start making interest rather than paying interest. Its a common since approach to how we deal with money. As Dave says "its God's and Grandma's way of dealing with money".

In January 2006 we started our "Get Out of Debt" plan. As of two weeks ago we payed off my truck which brings our total debt reduction to more than $30,000.00 . We still have around $9,000 to go but we should be there around April 2008.
Now because we are not paying out so much of our income in monthly payments I can start working less at Frito Lay and start working more at home. This week I'm going to start working three and half days a week at work so that I can devote more time to my family and working on our home. Instead of working to pay payments and interest, I'll be working to "Build" equity in our home. I'll take that trade!

1 comment:

Mungo said...

Just came across your blog - fascinating to read - look forward to reading more. I built a shed with my dad last summer and detailed it on my blog. I've always (as have many more I'm sure...) had a dream of building my own log cabin. In the meantime I shall observe your blog.