Wake up!

I was reading my beloved Wall Street Journal today at lunch (leftover scrambled eggs and potato salad, weird but yum) when I saw this heartbreaking poll.

Like I wanted to cry.

Nest- Egg Numbers: how much surveyed workers 55 and older said they have in savings and investments.

Less than $1000        21%

$1,000- $9,999           11%

$10,000-$24,999        11%

$25,000-$49,999         9%

$50,000-$99,999         9%

$100,000-$249,999    14%

$250,000 or more      25%

Guys. This is so sad. We work our whole lives and we look toward retirement as our reward for a lifetime spent caring for and providing for our families. Then to see that 75% of people have less than $250,000? That's just horrible. And while 250K sounds like a lot of money right now, just try living on it for 30 years. It's not going to go far.

This has to stop. Don't think that you're just magically going to be okay when you retire because you're a good person or because you've worked hard. You are those things and more but it doesn't work that way. You have to be smart and you have to be intentional with your money.

Get out of debt.

Stay out of debt.

Have a plan.

And SAVE something! Let interest be your friend, let it work for you for a change. Once you're out of debt start putting just a little bit aside each month. Before you know it, magical compound interest is going to take over and you won't be one of the 21% with less than $1,000 to your name.

Be smart. That's pretty easy, right?

Oh and if you're one of those who is over 55 and aren't where you want to be, don't give up. As long as you're still breathing there's time to change. You are going to have to be extra diligent but I'm certain you can make it.

Who Wants to be a Millionaire?

Okay, yes. The title is a take on the game show from years ago but seriously, have you ever wondered what it takes to become a millionaire, or at least retire a millionaire? A few weeks ago on the Dave Ramsey show there was an entire segment dedicated to exploring the secrets of America's millionaires.

I have always wanted to talk to someone who has "made it". I have wanted to find out what they have done to be successful with money. Dan talked to Dave and explained how he and his wife were able to be successful. He wasn't any different from the other millionaires that were on the show. Here's what I think:

• Dan didn’t average over 100k, most of the time he had a normal income
• He was debt free
• They put money away consistently
• He didn’t inherit money or win the lottery
• They didn’t buy new vehicles
• They lived below their income
• Bought things with cash
• Didn't have student loans

Those that are successful follow the principles found in "The Millionaire Next Door".  They followed solid financial principles that worked for our grandparents and they were consistent. These men and women are also living pretty ordinary lives. You wouldn't pass them on the street and be able to guess their net worth. And you know, that kinda makes me wonder, how many of my friends and neighbors are secretly wealthy? Not because I think that's information we need to share (so don't tell us) but I just wonder if there are more people that are able to live comfortably and give outrageously than we know. That's something to think about.

It takes serious work and dedication to retire with over a million dollar net worth but it's possible. And you don't have to be lucky or somehow special to do it, you just have to focus. Oh and get out of debt, we're still working on that part but we'll get there. I think we can all do it.

Happy Friday! George and Nicole Debt Free Scream

Today's video is amazing! First off is the crazy amount they paid off in only 20 months. $1.2 million. That's a lot of zeros.

Second is, even though they were/ are bringing in a lot of money and are "well to do", they realized they were in trouble and didn't have a handle on their money. It was only when they worked together, budgeted, downsized and sacrificed that they were able to become debt free. 

I love how happy they are during this whole process. You can tell that they are really close as a couple and as a family. Budgeting together and working on a common goal of getting out of debt has changed their feelings toward one another and made them stronger. That is what I want for my family.

Happy Friday!- Cinthya's Debt Free Scream

Every Friday we are going to share stories of ordinary people who have done extraordinary things with their lives and their finances. Most of the videos and stories will come from Dave Ramsey's youtube channel. Every time I watch these they keep me motivated and inspire me to keep going in this journey of life.

This lady is awesome!! When I first saw this it made me teary eyed because of the trials that she went through to get to where she is currently. She is definitely an inspiration to me and helps me to keep the perspective needed to keep going in our financial struggles as well as in life in general.

That is where I want to be in a few years. Watching this woman tell her story helps me have the hope that I need to keep moving forward on this rough journey. I feel that if she can do it with all of the challenges she faced then there is no reason for me to give up.

Wherever you are in your journey through life, whether you've been debt- free forever or you're just getting started, don't give up. Keep moving. When life knocks you down just keep getting back up. That's what matters, as long as you keep moving forward then you're going to be okay.

If you are interested here is more about Cinthya. Her story is incredible and I'm glad she was willing to share.

Look out below!

We recently finished paying off our last Visa card. We had it for over a decade and finally are done with it and closed the account. At the start of this year we had 10 debts that we were working on and grinding out. I am happy to report as of today we have paid off 6 of those debts! What is more interesting is the amount that we have paid off so far for the year is over $10,000. WHAT!! 10k in 4 months how did you do that you ask? Well I will tell you because we like you and hope that you can gain some inspiration from us and change your debt story.

The method we are using is what is called the debt snowball. Just think in your mind about some nice thick snow lying on the ground and what happens to a small snowball as you roll it in that snow. What happens is the snow you are rolling it in starts to stick to it. Now think in your mind what would happen to the snowball if you had it rolling down a hill how fast it would grow.

That is the same type of thing that happens with your money when you list your debts smallest balance to largest on paper. First attack that smallest debt and throw all the money you can at it and pay the minimums on the rest of the debts until it is paid off. Once that is paid off then you focus on the next debt taking the minimum payment of that small debt you just paid off and adding it to the next largest debt and whatever money you can throw on that one. Then you keep going down the list until they are all paid off. The key to it is focus!


If you are feeling like you are out on a lake in a canoe without paddles when it comes to debt start small and focus on one thing at a time. Don't try and juggle 4 or 5 things at once it doesn't work well. For those who are finance geeks don't worry about interest rates on your debts just put focused intensity on one thing at a time and you will have success. Once you have success knocking out the small debt and achieving a victory it will give you momentum to keep going on to the bigger debts. The debt snowball is powerful and I know it works and it will work for you.

That feeling of getting rid of debt is addicting. We were so excited when we paid off that first debt, it just felt unreal! It just got better, every time we paid off another debt we just kept feeling more and more excited. When you pay off each debt in your debt snowball the feeling just magnifies and you start to feel less weight on your shoulders and it is AWESOME!!

PS- our grand total we have paid off since we have started this debt free journey is over $20,000, which just blows my mind.

It's the little things

I had to write a short discussion post in response to an article in the Wall Street Journal. I feel so grownup with my WSJ subscription, never mind that it's only for this class and after the semester I'll cancel it and if I feel the urge to read it anytime after that I'll get it from the library, but for the next 2 months I'm a grownup!!

Wow, sorry about that, I get distracted sometimes. Like I was saying we were asked to pick 5 things from this article that resonated with our financial beliefs. Here are my takeaways. I also recommend that you read the article (you know, if you're a grownup and have a subscription), it has some good insights into financial behavior.

1. Keep it simple. History has shown that the most successful people are those that very simply diversify their investments. They don’t try to choose the most flashy and popular things, rather they look for things that have a proven track record. I invest my own portfolio in the same way with a simple mix of mutual funds. This is proving to be profitable.
2. Protect yourself from disaster. Soon after my husband and I were married we began purchasing term life insurance. We did not have any children at the time but we knew that if one of us were to go, it would leave the other with responsibilities that needed to be met. Since that time we have always carried insurance, gradually increasing the amount as we had more children and our other needs changed. Knowing that the other spouse would be able to carry on financially is a comforting feeling.
3. Make the most of what you have. A few years ago we were making very good money but somehow we were still late on payments and always scraping to get by. After a job loss and career change we are not quite back to where we were but we are always early to pay our bills, there is money in the bank for emergencies and we are making serious progress toward paying our debts. The difference is we are intentional with our money and we use it wisely. We know what’s important and it’s not stuff. The money that we have is to be used for the benefit of our family, not for momentary thrills.
4. Teach your children about money. Having 5 children means a lot of demands on my time. The list is always longer than the time I have and if I'm not careful I could spend all my time just dealing with the immediate needs. I need to be intentional about the way that we spend our time. I want my children to grow up to be successful, independent adults that I enjoy spending time with. A key to this is to teach them to be wise with their finances. We pay our children comission for work that they do around our home. They then divide this money into 3 categories; give, save and spend. They are learning that money comes from work and that there is great pride to be found in taking care of your own needs. That’s pretty amazing.
5. Share. This category of my financial plan is very personal and tied to my religious beliefs. I believe that God provides all that I have; health, money, peace, love, everything. In return He has asked that I give back a percentage of my increase. I do this because I believe in a loving God that blesses His children and only wants the best for them. I give because it’s a commandment but I receive so much more in return.

What's your favorite financial principle? Share in the comments, I'd love to know what works for you.

The B Word

You know, the one. The one that you hear people say and you scream and cover your ears. That one.

I'll whisper it to you.

Budget.

I hated doing the budget. First of all, I had to do it by myself and there was never enough money to make everyone happy. I figured that life would just be easier if I just paid everything and then hoped for the best.

You can imagine how that worked out.

I also hated feeling controlled. Doing the budget meant that I wouldn't be able to go to the store and just spend money. It meant that there wasn't any money to just blow. I preferred the spend what you want first, then try to pay the bills, then move money that supposed to stay in the emergency fund to cover things like the mortgage when you're in a crisis. At least I got what I wanted before I had to face reality.

Pretty grown up, I know.

It's scary to see what your finances look like in black and white but here's the crazy thing, it's usually not as bad as you think it is. You know when your kid won't eat dinner because they're like "it's yucky" and you know that if they just tried it they would like it? Doing a budget is the same thing, we always imagine it to be more painful then it is. But I couldn't figure that out, oblivion was a better plan.

So is hoping someone else will take care of things but I'm pretty sure that's not a solid plan.

But fortunately life threw us a few fastballs and it knocked some sense into us. Now I'm a budget nerd. I check our written plan several times a week and right now I could tell you exactly how much money is in which account. Like I said, Nerd.

So what changed? I didn't get a brain transplant and my personality didn't change but I finally realized that all the experts were right. Having a written plan means that you have more money to spend, not less. It takes away the stress and the worry. It makes money fun again.

It took us a few months to really get the hang of things, we (meaning Greg and I working together) made our original plan and then adjusted categories as we went along. At first our grocery budget was pulling a Goldilocks, too high, then too low and now, just right. We tried to be crazy conservative and didn't budget any money to blow and that didn't work, one or both of us would start feeling a little twitchy and the next thing you knew our plan was out of whack again. So we began to budget blow money, that's money that we each get and we don't have to be accountable for, it's just ours to well, blow.

We're Financial Peace University grads and we think that the FPU budgeting forms are the easiest to use but it really doesn't matter what you use as long as you spend every dollar on paper that you make BEFORE you do any real spending. If you have given every dollar a place to go, you'll suddenly realize that you have more than you imagined.

Don't forget, if you have something you'd like us to address we'd love to hear from you. You can comment below or send us an email.

Starting Over Again

And again. And again. And one more time.... Okay, so this could go on forever. But I think you get my point. None of us are perfect, very rarely do we ever do something perfectly the first time and then keep hitting perfection each time.

Like my oldest daughter says "h space a space h space a" (10 year old sarcasm, heaven help us). Most of the time life is a series of high, low, high again, serious crash, repeat and repeat.

We started getting serious about getting out of debt way back in 2008. Nope you didn't read that wrong. We only had 3 kids, we were younger and we had less than half of the debt we're carrying now. So what happened between then and 2015? Why did we add a ton more to our load?

I already told you about grad school. We also made a couple more stupid choices along the way. So here we are again, we are blessed to have 5 kids and sadly, twice as much debt and we're following the same plan that we started on all those years ago.

What's different this time around? Why do we think it's going to work?

Well this time the kids are involved. When we started our oldest wasn't even in kindergarten and now we have 4 in elementary school. Greg and I talk about being in debt and the things that we're doing to get out of it. We've told them about the way that being in debt robs your freedom. Last week I drew a thermometer on construction paper. It's our debt tracker and it has numbers on each side. On the right is the total amount we have to pay back and on the left is the running total of what is done. It's pretty exciting to come into the kitchen and see them gathered around the paper seeing how much we have paid back.

One of the things that has made us so motivated is knowing that we have 5 kids headed on missions and to college in the not distant future. Somehow all of that has to be paid for and we don't want to be unable to help our children because we are still cleaning up our mistakes. That's a huge incentive.

I've shared with you how Greg and I are both committed to this plan but it bears repeating. We are on the same page. Totally. Sadly that hasn't always been true. After our fourth child was born in 2009 I just kinda went off the deep end. I lost touch with everything that mattered for a couple of years. That included our finances. Greg would try to encourage me to get back on track so that we could get rid of our debt but I wouldn't respond. We were making great money back then so technically this debt could be gone by now but because I was just barely surviving I couldn't do it. We lost those few years but now we're back. Everyone is mentally and physically healthy and we can devote our resources to this massive goal.

Am I certain that this time around is going to be different? Well, no. I occasionally worry but I'm not focused on the fear of failure. Instead we keep working and praying and talking about what we are doing. We're planning a celebration trip for when this debt is gone. The kids have decided where they want to go (Nashville, Disney World and a cruise, oh my) and Greg has printed out pictures of a cruise ship and a Disney World map for us to drool over. Every morning after family prayer we practice our debt free scream (WE'RE DEBT FREE!!!) and we just keep following our plan. I don't know what's coming next but I do know that we paid off one of our little debts just yesterday and man, that feels good.

Houston, We Have a Problem

Greg is writing today. It's good to hear his perspective. So Greg, take it away!

Do you remember Apollo 13? NASA had a huge problem bringing three astronauts home after a freak accident to their spacecraft. It appeared to be insurmountable and impossible. 

With underemployment starting at the beginning of 2014 WE HAD A SERIOUS PROBLEM! What were we going to do to fix this huge problem? There was underemployment, student loans coming out of deferment and the other debt we already had. Talk about a big weight that seems to be crushing you all at once.

The group on the ground at Houston and on the spacecraft, Apollo 13 worked together to solve their problem and get the astronauts back home. They had plans and procedures that helped them to resolve their issue which resulted in the best outcome possible. We also needed a plan to get out of the mess we were in, especially one that made sense to our family. 

It is really difficult to come up with something quickly that makes sense and gives you direction. I am not the smartest person in the world so we needed some help coming up with our plan. Luckily we had taken a class through Dave Ramsey several years ago called Financial Peace University. This class taught us the principles we used to keep our heads (barely) above water. The things we learned in that class became our plan. 

So what is this plan and who is this Dave Ramsey guy? If you want more information on Dave go here but I'll give you the five line version: he went bankrupt at age 28 and since then he has been on a crusade to help others be more financially solid. The plan he teaches contains 7 steps. These are not the gigantic "I am trying to walk in my dads steps". These are baby steps, think wobbly new baby. Here they are in order: 


Baby Step 1- $1,000 to start an Emergency Fund 

An emergency fund is for those unexpected events in life that you can't plan for: the loss of a job, an unexpected pregnancy, a faulty car transmission, the list goes on and on. It’s not a matter of if these events will happen it's more like when. This should be completed very quickly. 

Baby Step 2-  Pay off all debt using the Debt Snowball 

List your debts, except the house, in order smallest to largest. The smallest balance should be your starting point, pay minimum payments for the rest. Don't worry about interest rates unless two debts have similar payoffs. You're going for quick wins here. But if 2 debts are similar, then list the higher interest rate debt first. Once the smallest is payed off, take all of the money you were paying on that one and add it to the payment of the next one on the list. Then repeat until all the debts are taken care of. 

Baby Step 3 A fully funded emergency fund

Once you complete the first two baby steps, you will have built serious momentum. But don't start throwing all your “extra” money into investments or going back to spending everything quite yet. It’s time to build your full emergency fund. This should be 3 to 6 months of expenses. Make sure you have this so that when unemployment or another emergency happens you will be prepared. 

Baby Step 4 Invest 15% of household income into Roth IRAs and pre-tax retirement 
When you reach this step, you'll have no payments—except the house—and a fully funded emergency fund (can you imagine that)! Now it’s time to get serious about building wealth for your retirement. Don't think you can count on Social Security because if there's one thing the government is known for it's improper money management!  

Baby Step 5 College funding for children 

If you or your kids are looking at college you need to start saving. Helping your children graduate from college debt- free would be an incredible way to start their adult lives. 

Baby Step 6 Pay off home early 

Now it’s time to begin throwing all of your extra money toward the mortgage. You are getting closer to realizing the dream of a life with no house payments. 

Baby Step 7 Build wealth and give! 

It’s time to build wealth and give like never before. Leave an inheritance for future generations, and bless others now with your excess. That's a pretty great way to live!

Download Baby Steps 

Those are the steps to our plan. We have a written budget that we religiously follow and right now we are on Baby Step 2. I am the first to tell you that it is not easy to complete (just read our other posts). But just like that wobbly baby learning how to walk, it gets easier with time and practice. 

The geniuses at NASA had a plan for getting Apollo 13 back home. They followed the steps, they got creative when necessary and above all they never gave up. Kristen and I have a plan for getting out of debt. We're following the steps and working towards our goal. There are lots of long days and a long payback period ahead of us but we are optimistic. It was much worse when we didn't have a plan and just expected to be in debt forever. Now we know there's hope.