Ok so last time I posted I said I was going to talk about reducing my expenses for the rest of 2018. Since then the need for this has become so very, very real. Why? Because we went to Jamaica and now I want to save the world! haha Seriously, kind of tho. I was so inspired by our trip that I am hell bent on getting back there in 2019 to start making a difference. That is a whooooole different blog post tho (find it here).
So here is what I have done to become debt-free:
Reduced our Amazon Subscribe & Save monthly subscriptions.
Let me preface this by saying we currently have five animals (two dogs, three cats). We get all our toiletries, cleaning supplies, and pet food this way for two reasons. 1) We get a 5%-15% discount monthly, and 2) I love not having to go to the store to buy these things.
At one point (probably up until 2016/2017) our monthly bill was like $1000, not counting my impulsive 1-click spending. After we put Titan down in August 2017 (our 110 lb cane corso) I knew I could reduce some expenses on Amazon and that got us down to about $700/month. Titan was a big dog so everything costs way more than it would for a 30 lb dog or a 10 lb cat plus he was allergic to chicken so food choices were pricier.
Fast forward to June 2018 - I changed pet food brands again, this time to the brand “Crave” (always check dogfoodadvisor.com for brand ratings!!!) and removed some things I knew I had at least 6 months or more in inventory of already (Lysol wipes, Febreeze, etc.). I was able to get the monthly bill down to $400/month! Hooray!
Accepted my fate with Stella (my truck).
My truck is KILLING us. I love her so damn much but I have to accept that the fun is coming to an end.
Admittedly, there are things about having a big ol’ lifted truck that I did not anticipate …running through wheel bearings like toilet paper, $2000 for a new set of mud tires, having to wash the beast myself every (which costs me about $25 at the wash bay) or pay for a detail job because she doesn’t fit into a drive-thru car wash, oil changes cost more, the list goes on.
The things I DID know about that are killing us…11 mpg and 60 miles/day commute and the $550/month payment. Which in my defense, was reasonable without another car payment. Now we have another car payment primarily because we needed a car we could drive with normal gas mileage (so yet again, truck costing us even more money).
This beautiful hunk of metal is a commitment. I think I am almost ready to break off the engagement folks.
I spoke with a Financial Advisor.
Over the last few weeks, the more I looked at our debt the more I began to feel like we would never be able to escape all of the building interest to be able to get out of debt in a decent amount of time. During our trip to Jamaica the question came to …”what does my credit score mean to other countries?”. The truth is, it doesn’t mean anything. It has no value whatsoever, especially in impoverished countries like Jamaica. I was in no way thinking of just leaving behind my debt (I believe in kharma too much to do that) but I thought for a moment “hey if we moved to Jamaica, we could just pay this debt off at our own pace and not worry about how it was effecting our credit score.”
Of course this isn’t ideal but I’ll tell ya…my research showed that there is a good amount of people doing just that. People who are so buried by student loans that they move to another country for some reprieve and eventually feel they can never return to the US because they wouldn’t be able to care for their family while paying 70% of their income to student loans, credit cards, etc.
So I started looking at Chapter 13 bankruptcy. I thought that perhaps getting a settlement amount, court scheduled payment plan, and taking the blow to our credit scores (move to Jamaica for seven years???) might be a feasible option at this point. But I also felt like maybe we just aren’t there yet. We aren’t behind on any car or credit card payments and my credit score is still hanging in there around 630.
So last weekend I was on the Dave Ramsey website reading about the cash envelope system and decided to fill out the “get help now” form to find a financial advisor near me. I am not a Dave Ramsey follower by any means but I know there is some truth to his strategies. Well of course they don’t just send me a list of local help, they share my info with those on the list. right? Actually a really nice guy reached out to me almost immediately and said based on the situation I outlined he could see the urgency and would be willing to chat with me for free for 30 min that same day (Saturday). Of course I did some stalker research first and found that he was not only a Dave Ramsey Financial Peace “graduate” but a Financial Advisor and a key leader at a local Free Masons Lodge. I felt he would be a trustworthy person to get advice from.
I essentially stated that I wasn’t sure if we should file Chapter 13 but we had over $100K in debt and I was looking at needing to quit my job very soon to stay home with my combat disabled husband. Of course there is so much more to the story but that’s the gist.
I maintain all our finances in Intuit’s Mint software and I have crunched the numbers so much I was able to easily tell him an exact break down of our income and monthly outgoing funds. It didn’t take long for him to tell me he’s not even sure we would qualify for Chapter 13. In other words, we are not in such dire straights as to consider that right now). This was very comforting to hear…to hear the tone in his voice that I felt sounded very optimistic about our current situation and ability to change it in a relatively short period of time. I didn’t end up agreeing to any future meetings or to pay for any type of services. He did however offer me a couple pieces of free advice….which leads me to No. 4.
I moved my income (the money we need to learn to live without) to a separate checking account.
This was an idea I had been been toying with and exactly what the Financial Advisor suggested. So I opened a new checking account (we use USAA) and changed my direct deposit to put everything except my truck expenses into this new checking account…our Debt Repayment Account.
He explained the reason I should keep the truck payment, insurance, and gas expenses in my usable spending is because when I quit my job the truck goes too. Guaranteed. I am likely going to take a hit on it (I’m about $5000 upside down on it right now) but I can immediately count on removing the commute costs at 11 mpg, the big monthly payment, and the full-coverage insurance costs.
The money in this new account would be used strictly to pay off credit cards and personal loans.
I took a 6-month forbearance from my student loans.
I’ll be in forbearance starting July 2018. During the forbearance, I’ll put 100% of my usual monthly payment toward credit card debt. The reason I am ok with this plan is because I have faith my plan will work which will enable me to pay off my student loans before 2022…when my 10 year repayment period would have ended. If I pay it off early then I’m ultimately saving more than I’m losing in the interest gained over the next six months.
If we are successful (able to live without needing to touch this money) and able to sell my truck for what I’ve estimated, we will be able to pay off over $40,000 of our debt in six months!