Giving minimilism a try...

I ran across a post on a minimalism blog the other day titled, "7 common problems solved by owning less." It struck such a nerve with me, that I ended up browsing their site for the rest of the evening. I couldn't help but relate with how freeing it must feel to get rid of so much unneeded stuff! Don't get me wrong, I had my doubts and reservations, but they were quickly thrown out once I read just how practical it could be! Read the blog below if you wish:

http://www.becomingminimalist.com/2012/04/16/7-common-problems-solved-by-owning-less/

1) First of all, the thought of getting rid of 80% of my wardrobe freaked me out at first, because I am so frugal that I hate to think that I would be getting rid of something that I may have to go repurchase someday, but once I really thought about it, it seemed like such a great idea! I hate the feeling every morning of being reminded of how much of my clothes still don't fit me almost a year after having my son, but in reality, they hardly even fit before. If I can slim down my closet to only the items that fit me fabulously, or will fit fabulously with minor to moderate work, I think I would be so much happier. And when, or if, I ever slim down enough to get some new threads, I can go buy a few key pieces that I can wear long term and look great!

2) I will be the first to admit that I am not the greatest housekeeper. I get so overwhelmed with all of the "stuff" that is needing to be washed, cleaned, dusted, swept, mopped, scrubbed...you get the picture. And this crap just keeps accumulating and causing me more stress! I look at some of my friends' houses and their stuff looks so nicely arranged and decorated, and I get frustrated with how much clutter I have lying around. One of my main problems is that I am way too emotionally invested in my things. I have a really hard time discarding items that were gifted to me or remind me of someone special. The passing of my mother has sent me over the edge and I have a hard time getting rid of anything now, in fear that I someday will miss that item and how much it meant to me. I have decided that my sanity is not worth salvaging these items and I really need to come up with a way that I can maintain my memories and still function in a clean home. I think I will devote a spot in my home to keep my most prized possessions from my mother and display them proudly. I think I will also keep a small box somewhere that I can keep some other more personal items that I can look through when I need to. Hopefully, that will be the first step to detaching myself emotionally from my things and focusing on more important ways to spend my day! Here are some great ways that I can honor my mom's memory while simplifying my stuff: http://www.becomingminimalist.com/2010/09/29/how-to-simplify-your-stuff-and-honor-your-memories/

3) I think when you see how little you actually NEED, your priorities shift to the most important things in life. I read a quote somewhere that said something to the tune of, "What's easier than wishing that you had things that you do not have, is to not want them in the first place." Maybe my need for stuff, and my dissatisfaction for not having them, would be lessened if I could learn to be happy with less. And the idea of not spending so much time, energy, and money on things I don't need will really motivate me to spend more time, energy, and money on the things that to matter. Here is another post from their blog that talks about easy ways to get started becoming a minimalist: http://www.becomingminimalist.com/2011/12/05/sample-living-with-less/

4) Trying to baby-proof for Hudson and thinking of the lessons I want him learning as he grows up has also made me want to really start trimming down on some of the stuff we have lying around. I don't want him having so many toys that he is overwhelmed and has a hard time occupying his mind without something stimulating to do it for him. I want him to be creative and rely on his own imagination to keep himself busy. I think it is natural for a new mom to want to buy all of the latest gadgets for their new little one, but I have quickly learned that not only is most of it pretty useless, but it is so quickly outgrown! I could have saved a lot of time and money by borrowing items or by just being creative and doing without, and he would have been just fine. Here are 7 ways to prepare for a new baby without shopping: http://www.becomingminimalist.com/2011/11/08/7-ways-to-prepare-for-a-new-baby-without-shopping/
I also want to limit the amount of cupboard locks I put on things and allow him some freedom to explore and discover the house. One item in particular has been on my mind lately, as I have been trying to find a new home for it since he now knows how to open the lower cupboard doors. It is a small hand-held mixer that I use occasionally to mix up scrambled eggs. It is actually quite a cool contraption, but since it has a sharp blade, I cannot leave it in his reach anymore. The more I thought about it though, the more I realized that I really don't need it. It is one of those "time saving" devices that is supposed to make my life easier, and while it does a fabulous job of beating my eggs, and is a bit faster than using the traditional fork. the time I spend afterward to take it all apart, wash it, dry it, and put it away, it really is not that time saving!!! Not to mention all of the stress of having to dig past it to get to something that is further back in the cupboard! I have decided that it will be something that will have to go!

5) And finally, living with less ties in perfectly with the goals I have for getting out of debt and living a more peaceful life. I am drooling right now at how much fun it will be to have the garage sale of all garage sales this summer and make some cash to put toward our home! I am also getting excited about adjusting my priorities to try to live on even less than we already are. I think I will love the home I am in even more if there isn't so much stuff piled in it to wash and clean and maintain. It will be a good excuse to focus less on going crazy for holidays and parties, and focus more on the real reason that we are celebrating. I am excited to be able to SLEEP on black Friday instead of standing in the Oregon rain to buy a bunch of crap for people that they don't need. I am excited to be able to look in my closets and cupboards and be able to see what I need and what I already have! I am just so excited to see how these changes in my life can really make it more relaxing, rewarding, and stress-free. Are there any ideas that you all have for learning to live on less? I'd love to hear them!

Getting what I deserve...

One of the hardest financial decisions to talk myself out of is when I convince myself that I "deserve" something. I deserve a lot of things...I work hard, I sacrifice a lot, and I am a good person. When I was putting myself through college I would often reward myself with material things after a particularly difficult term. A digital camera, a laptop, a night out with friends, and one time a vacation. I really felt like I "deserved" it after working so hard! Well, a lot of those little presents to myself really added up, and I guess I am now paying for that. Dave Ramsey makes a good point about dealing with this this dilemma: he wants to know if you really "deserve" to struggle with debt, stress about paying bills, and arguing with your spouse, or if you "deserve" to life free of financial burdens and live with peace. I have always loved this thought, but I still struggle with saying no to myself when I feel like I just NEED to pamper myself with something fancy to feel better after a rough day or week. It is so frustrating to me that my peers are able to take vacations, go out to dinner for special events, and buy new cars and furniture when they want. I work just as hard as they do, so why can't I have the same abilities to reward myself.

I had an epiphany the other day. I started thinking back to my baby shower a year ago, and although I loved all of the little washcloths and toys and outfits that I got, I really wished that a few of those people had gotten together to buy me something larger that I really needed like a crib, a stroller, or a play set. That made me start thinking about what I really wanted for my own life. I want a new pair of shoes, I want a new pair of Capri pants, I want a dishwasher, I want to take a vacation, and I want to throw my son a kick-butt first birthday party. But what I want more than any of those things is to buy a house. I really started putting these two ideas together and I started thinking that I can have all of these little things that I want, or I can focus on putting all of my focus on getting the one big thing. My husband and I decided that from now on, before we make ANY purchases, we will ask ourselves: "is this going to get us in a house faster, or slower?" If the answer is slower, than we really need to judge whether it is worth it.

I hope I can stick with this motivation. I am so determined to buy our own home and I hope that my friends and family will be good influences and help me reach my goal!!

Sarah

The TRUTH about student loans!

"...student loans are a good debt...they are an investment in your future...just get through college, and the rest will work itself out..."

These were the only pieces of wisdom I heard about student loans while I was in college. I knew I was taking out loans, and that I would have to pay them back, but for some reason I wasn't worried about HOW I would pay them back! When you are taking them out a little at a time, it is hard to wrap your mind around what the total cost will be at graduation, and little did I know that I would be entering one of the toughest job economies in history! I was living on an altered version of reality that only an 18-year-old fresh out of high school could understand. I was living on the idea that I was only young once, and that I should enjoy the college years so that I could buckle down and get serious someday.  I was living on assumptions. The assumption that I would exit college into an immediate job opportunity. The assumption that I would make more than enough to pay back my loans, buy a house, buy a car, and live the American dream. The assumption that several years into my career I would get married, have kids, and afford to stay home for a while until they were grown. The assumption that student loans were just a part of life, and that it was the only way someone like me could get through college without savings or help from my parents.

Here is the reality: After a Bachelors at a public university and a Masters from a private university, those tiny little loans every semester added up to over $60,000! Immediately after graduation, I met the man of my dreams and got married. 1 year later, we started our family. And after almost 3 years, I still have not been able to find a teaching job. When my loans came due, I was paying almost $1,000 a month. After consolidation (which took my repayments from 10 years to 25 years) I am now paying almost $400 a month. I will be 50 years old when my loans are finally paid off, and my education will have cost me about $150,000 with interest. That is to be a teacher who makes about $40,000/year starting out. Wow. I obviously didn't major in math because this is not adding up at all! I want to scream at all of those people who told me I was taking out a "good debt" and that I would just "figure it out" after graduation!! 7 years of having fun is now costing me 25 years of stress and financial burden!!

So what can a current/future college student do if they don't have the financial support of their parents?

• First, my biggest mistake was not setting a budget for my college years. I worked as a waitress most of the time, so I had the luxury of living on daily tips and not needing to budget my expenses. I wish somebody would have sat me down before I left home and helped me set up a realistic living budget. I was making a pretty good income as a working college student, and I really could have put that to good use if i would have thought ahead!
• Second, I would have surrounded myself with other college students who were also doing it on their own. It is hard to turn down all of the social invites and the youthful lifestyle when you are out on your own for the first time as an adult. I had so much fun going out to restaurants, movies, clubs, and parties. And when all of my other friends are buying new clothes and expensive meals, I felt like that was the "norm". I wish I would have traded in some of the dinners out with get-togethers at people's apartments, some of the movies out with popcorn and pajama movie nights at home, some of the clubs and parties with game nights and a bottle of wine at a friend's house. There are a bazillion ways to be young and youthful and fun without being out every night!
• Finally, I wish someone reliable and trustworthy would have told me to grow up, be mature, and think about my future. In adolescence, it is normal to live in the moment and not think about the consequences, but there is no excuse for a college student trying to pretend to be an adult to be making such poor and thoughtless decisions. At 19, I realized that with my income as a waitress, I could afford to rent my very own apartment, pay bills on my own, buy new furniture, and live a pretty decent lifestyle. That was all good and true, but in the process of me living the above-average college lifestyle, I was taking out loans to finance my tuition, books, and living expenses. If I would have made some better choices, like living at home or with roommates, sharing bills, staying home more, not shopping so much, I could have been using my good income to finance my education, and not loans. I was kidding myself on how much I actually needed to borrow. But I didn't realize this until too late.

If I had the whole college experience to do over again, I would have definitely used my noggin more and made some sacrifices to pay for it myself. It wasn't as impossible as I thought. For instance, I could have saved at least $300-$400 a month by sharing an apartment with a roommate! $300-$400 a month over the course of 5 years (the last 2 were spent rooming with my sister and now husband) would have saved me $18,000-$24,000!! That would have cut my student loans by over a third! Just saving on room and board...factor in what I could have saved by going out less and shopping less, and I have no doubt in my mind I could have gone to school without any (or at least very few) loans. There is no way that those 7 years of fun was worth all of the stress, agony, and sacrifices I will have to make for the next 25 years!

Please pass this on to a current or future college student...and have them get started NOW!!!

UPDATE! Dave just premiered a gift sat for incoming college freshman with info about navigating the confusing world of college all on your own! I know several graduates who are getting this from me this year!! http://www.daveramsey.com/store/prodgsg.html?ectid=dd1204.3_1

Sarah

"Same as Cash" isn't the same as cash...

I told you all in the beginning that I would blog about some of the mistakes and pitfalls that John and I have made along our journey to financial freedom, and I'd like to tell you about the giant one that is sitting right in front of me!

When John and I moved into our very first apartment together (and long before we discovered Dave Ramsey together) we decided to "reward" ourselves with a brand new Play Station 3 gaming system. John had been wanting one for so long, and who was I to tell him no? So we went down to the local Best Buy and picked one up. Cha-Ching! $300 put on my retail card, but it was 90 days "same-as-cash" so it wasn't really that bad, right? I had used the "same-as-cash" promo several times before and I ALWAYS paid it off before the deadline so I never paid interest. I felt pretty smart about outsmarting the system. Well, a few days later, after John had a chance to play some of his high-tech games on his new super crisp gaming system, he realized that our outdated 32" tube television was just not cutting it. The awesomeness of his new Play Station needed an equally awesome HD TV to play it on! So hi-ho hi-ho back to best buy we go! This time, they gave us 12 months free financing on a brand new 40" flat screen HD TV with all of the bells and whistles! I again was feeling pretty confident that we had just made a very smart move, using my impeccable credit to earn ourselves a year to pay it off with no interest!!!

Fast forward to almost a year later, and by the grace of God nothing catastrophic struck and we were able to make all of our payments on time and our amazing TV was almost paid off! Wouldn't you know it though, in an innocent trip to the electronics store, it happened. I saw the most amazing TV I had ever seen. The picture was so clear I felt like I could reach out and touch Johnny Depp. I HAD TO HAVE THIS TV! So back to best buy we go, and this time we decide to get the new TV and a matching theater system to go with it! We walk out with a $2200 theater set that was again financed at 0%, but this time for 18 months! Wow, they must really like me a lot to trust me with 18 months of financing. They even gave me a Best Buy Platinum Rewards card so I could shop even more and earn cash back! As we mailed in out $200-300 payments every month over the next few months, the awesomeness of the new TV wore off. The picture was still pretty cool, and all of our friends loved coming over to watch Blu-Ray movies on it and play games, but it hardly seemed worth over $200 a month for that luxury. But not until Dave addressed the true downfalls to 0% financing did I really realize that I had been duped.

First of all, most people do not pay of their item within the grace period. Luckily Murphy didn't strike while we were repaying on it, or else we might have fallen behind and not been able to pay it off. And interest does not start being charged once the grace period is over either. If you do not pay it off within the time period, they tack on the interest for the ENTIRE length of the loan! They just tack on whatever interest you would have paid since the beginning! Second, they are not as likely to negotiate on price if you are financing the item. You are often paying full price for something that could have been bought at a steep discount if you had brought cold hard cash to the table instead. For someone like me, that always needs to get a deal, I was surprised I fell for that. And third, I realized that if John and I had saved up $2200 in cash, and I walked into Best Buy with it in hand, I have no doubt in my mind that I would not have bought the TV. That last one was a real eye opener. Without barely a blink, I forked over more money than my car was worth (I paid $2000 for my car) and bought a freaking TV! But since it was on credit, and I thought I was getting such a great deal at 0%, I didn't hesitate. But once I thought about how much money that really was, and how much I could have done with that $2200 instead of buy a TV, I felt like a complete idiot! Not to mention that once we had paid it off, the thing was practically obsolete and worthless...

I was so unbelievably happy to cancel that credit card and let Best Buy know that they can keep their "Platinum Status". I was done letting them insult my intelligence and treat me like a fool! I can't help however, feeling sorry for all of those people who still think 0% financing is a good deal. If after this, you still feel that way, at least take some time to make sure that you can make the payments every month (it will be more than the minimum if you intend to pay it off before the deadline) without any chance of falling behind, and also be completely certain that if you had that entire amount in your had that you would still make that purchase for that price. I can almost guarantee you that you wouldn't!

I hope my huge mistake helped you not make the same one :)

Sarah

Debt snowballing!

I have been so excited to write this post, that I waited until I had enough time in my busy schedule to actually sit down and do a good job! John and I had so much fun debt snowballing, that we almost want to rack up some more and do it again! (Just kidding) First of all, let me tell you a little bit about what a debt snowball is...

When you make a plan to attack your debts and monthly payments, you need to sit down and write out how much you owe on each account, and what the minimum payment is. Some financial advisers recommend attacking the debt with the highest interest first, and that does make some mathematical sense, but a more reasonable and much more successful plan is to attack the debt with the SMALLEST balance first! This new mentality is similar to setting a weight loss goal of cutting out dessert once a week versus planning to run a 5k right off the bat. Start with baby steps!

So when we laid out our debts (and we did not include my student loans in our snowball, just consumer debt) we had the following:

American Eagle retail card: $300/ $30 month
Friedlanders Jewelers: $800/ $170 month
First Financial CC: $1800/ $100 month
Best Buy retail card: $2200/ $200 month
B of A Consolidation: $10,000/ $250 month (YIKES!)

Now the principle of the debt snowball says that you pay the minimums on all debts, and throw every extra penny (after building your emergency fund first) at the smallest debt. Then once that debt is paid off, you start attacking the next debt with its minimum payment, what you used to be paying toward the last one, and all extra money. You keep doing this until you are working on the last debt with what you used to be paying toward all of your debts! Doing it this way solves two main problems with trying to get out of debt: First, since you are attacking the smallest one first, you get almost immediate gratification. We were able to pay off the smallest retail card in our snowball that first month. So we got to pat ourselves on the back for getting out of under one of our cards immediately! Second, once you are getting rid of a payment every time you pay off another card, if anything catastrophic should happen, something that is too big for an emergency find to fix, you now have that much less financial liability to slow you down. You will understand this second benefit more as I explain the process.

Now, like I said, we were able to pay off the first of our credit cards that very first month! We scraped together $300 and just wiped it out. This now allows us to start attacking our next debt with even more strength! Friedlanders now gets their same $170 a month PLUS the $30 we used to pay toward American Eagle for a total of $200/month, PLUS any extra money we can scrape together. It is nice to be able to let go of the stresses of all of your bills and just focus on one at a time. We were still paying on all of them, but it was so freeing and peaceful knowing that they were all going to get paid off if we just stick to this plan.

I really strive on visuals when working toward goals, so I thought to set up our bill payments kind of like they do during fundraisers with those thermometer type posters. I laid out each bill with our total owed at the bottom and the goal of a $0 balance at the top, and colored in what the new balance was each month when I got the new statement. It looked something like this:

After I started doing this, a strange thing happened...I started LOOKING FORWARD to getting our monthly bills! Crazy, I know. The physical reward of getting to color in the arrows every month was enough motivation to keep at it and keep sacrificing and working hard. I really started seeing progress in getting out of debt, which seemed so hopeless just a few weeks before. If you use this idea though, you must only color in the arrows when you get your new bill with the new balance however. I made that a rule for two reasons: First, if you color it in when you make the payment, like when you pay $200 on a $1200 balance and coloring it down to $1000, it wont work out when you factor in interest. You will receive your next bill and it wont say $1000, it will be more like $1045 because of the interest. If you color it in when you get your new statement, then you will be coloring in the correct amount. Second, the physical reward of making a dent in your balance like that when the bills comes changes your mindset like it did for me, and making those payments seems like less of a bummer. I looked forward to getting the new bill so I could go color in the new balance...and the more I got to color the happier I got!

As the months went by, they started filling up and John and I got to see every day when we walked by them how much progress we were making. Once the second bill was paid, we took the $30 from the first one, the $170 from the second one, and we applied it toward the third one and were paying $300/month instead of $100. That made it go so much quicker as well! Then after that one was paid off, we took that $300/month and applied it to the next one and were paying $500/month instead of $200! Meanwhile, our last debt of $10,000 was barely making any progress only getting a mere $250/month, but I knew what was in store for that little brat. Once we had all of the others taken care of, we then applied that $500 toward the biggest one for a whopping $750/month! Plus we were still throwing any extra income or savings every month toward it as well, so it was more like $1000/month. Imagine how quickly that little sucker filled up!!! When we were all finished, our wall looked a little different :)

Man, was that a satisfying event when I got to fill in the last little bit on our final arrow. We had gone from over $15,000 in debt, down to $0 in a little over a year. That may not seem like a lot to some people, but to us, it was amazing. Mainly because I was not seeing an end in sight, and it was putting an emotional toll on the both of us and our marriage. Being financially free allowed us to then take a vacation to Disneyland (since we didn't get a honeymoon after our wedding) using CASH! And it also allowed me to finally feel financially secure enough to think about starting a family. Also during the snowball, we had that car crisis where we needed to come up with some cash fast, and since we were at the stage of working on the last debt, we were able to take a "break" from our snowball that month and only pay the minimum on that one card, and that freed up over $500 in our budget that month! (That is what I was talking about earlier, which is one of the advantages of getting them paid off one at a time)

We did eventually attack some of the smaller student loans as well using the same strategy, but then ended up consolidating the rest when I got pregnant. I figured lower payments now would allow me to stay at home more and we could work hard on them later when I started working full time again!

I hope this how-to post helps you to make a plan on getting out of debt and have fun while doing it! We worked really hard to get out of all that was crushing us, and even though we haven't always been perfect since, we are so much better off because of it!!

Until next time,
Sarah



Being content

I found a quote online today (and I hate that I couldn't find it's original author) but it said, "Someone else is happy with less than you have." That made me think about some of those things that I curse at and wish were better or newer... I hate our old run-down house with its peeling paint, worn floors, drafty windows, and occasional 6-8 legged visitors; but it is a house with heat, clean running water, electricity, and its in a safe neighborhood. I hate that my compact car can't fit a jogging stroller, it is getting pretty complicated to get Hudson in and out of, the windows need tinting so the sun wont beat in Hudson's eyes, and I desperately want keyless entry so that I am not struggling to get a door unlocked while holding a baby, diaper bag, purse, and groceries in the rain! But it is a nice car, the newest car I have ever owned, and it runs great, looks nice, and is very safe. I hate that I have a lack of stylish and form flattering clothes, but they are in decent shape, they serve the purpose of keeping me warm and dry, I have a place to wash them and keep them nice, and they help me represent my fun and colorful personality.

These things that I have are much more than many people in this world could ever ask for. The more I think about it, the more I just want those bigger and better things to make myself feel better and impress other people. If everyone lived in a house like mine, drove a car like mine, and dressed like me, would I be happy with what I had? Of course I would! So why, just because other people have more than I do, is my stuff suddenly not good enough? It's the proverbial cookie theory: A little girl is happily eating away at her cookie, thinking she is the luckiest little girl ever to have such a delicious treat, until another little girl comes along with TWO cookies...and then she is suddenly unhappy. I need to remember that it doesn't matter what is out there that I don't have. I need to look around me and be happy with what I do have. I need to find excitement and contentment in things that I can control and obtain. I need to set goals for myself that are realistic, and reward myself by doing things that wont sabotage my efforts. I need to be a big girl and take responsibility for my own actions and not wish and hope that some magical event will take place that will solve all of my problems. Yes, I took out way too many student loans, and that sucks. I wish I hadn't done that, but there is nothing I can do about it now except to just accept that this is my reality and take care of it. I am very lucky in the fact that I can afford to pay on them every month. I just heard that 1 out of every 5 people with student debt is in default. I can't imagine what it must be like to not have the money to pay your bills. Sulking and complaining about having to pay them every month does not make them go away any faster. But at least I had the ability to go to college, right? I love my education and I am very proud of myself for being the first one in my family to earn a college degree, let alone two of them!

I also need to focus on all of the blessings in my life that cannot be bought with money, because the richest people in the world are the people who have the most things that money can't buy. Here are a few things that I am so grateful for:

1. My husband is the greatest husband, father, provider, and friend a girl could ever dream of. He cooks, cleans, takes pride in being a dad, works hard, makes me laugh, and treats me like a princess. I appreciate him more than I could ever express.

2. My son was born absolutely healthy in every way. He wakes up with a smile on his face every morning and amazes me with what he learns each day. He throws me curve balls every once in a while, but it shows me how much strength and patience I have.

3. I have the most amazing family. I can count on them for everything. Each one of them has stepped up to the plate for me and sacrificed numerous times to make sure that I am doing okay. It's unfortunate that sometimes it takes a tragedy to make you realize how lucky you are to be surrounded by the people around you, but I am glad that they were there.

4. I am grateful for my job flexibility right now while I try to figure out exactly what I want to do long-term. I chose a career that I love, that is rewarding, and that forces me to learn each day and become a better person. Although it is not financially beneficial at the moment, it provides enough for me to be able to stick with it and wait out the economic storm.

5. I am just grateful to be able to wake up every morning. I have said before in my other blog, that sometimes when things are not going their best, and I dread having to get up to another day of dealing with a difficult situation, I try to remember the alternative. Not getting up. There are very few things that can happen to a person that will not get better with time, And even though things may be hard right now, they will get better. Every time something difficult is thrown my way, something great and positive usually comes a bit later. These tough times also remind me that money and "stuff" are so freaking unimportant!

I want nice things, I want financial freedom, and I want prosperity. But at what cost? Am I willing to sacrifice my marriage? Nope. Time with my child? Nope. My emotional well-being and sanity? Nope! I am going to keep plugging away and giving it my all, but I am also going to enjoy each day for the blessings it brings me and just enjoy the ride. Being gazelle intense is great, but if you are running so fast that you miss all of the scenery along the way, it's not worth it :)

Till next time,
Sarah