One last business post

Okay, I’ve talked the debt over with my husband. He and I both feel like getting this mess down on paper changes the way we feel about the debt – instead of being afraid to know and avoiding the issue, we are much more confident in our ability to pay down the debts. “There’s a light at the end of the tunnel” is how Brian described it.

So now it’s time to get a plan on paper. I’m writing it out for my own benefit, but also in the hope that it will help some of my readers (few as they are at the moment, I know that in the future others will look back at this post.)

First we need to look at our bills. Most of these are unchangeable, though we are considering switching from broadband internet to high speed, which would save about $25 a month. However, with as much work as I do on the internet, it would probably end up costing more in productivity, so we need to assess that before we actually do anything. We can’t get rid of our cell phones, since we’ve already gotten rid of our land line. And finally, if we give up our $9/month basic cable, we won’t get one single station without buying an antenna for our roof.

And one thing to note is that summer will be much less expensive than winter – right now we are paying more for electric heat, oil heat and firewood (yes, our house is very complicated. 🙂 ) and we have to pay someone to plow our long driveway, especially since we live in the snow belt of the snow belt. In summer, we’ll open windows for our air conditioning, the clothes are hung up outside, fresh veggies and fruits will be growing so we don’t have to buy them, and the driveway will remain clear – all for free!

What we have to pay monthly (some of these are semi-annual bills, so I’ve cost-averaged them for each month):

Mortgage: $750
Electricity: $120-$200 (these are winter costs. Summer bills are about half this, if not less.)
Cell Phones: $65
Internet/Basic Cable: $55
Firewood: $90 or so for 1/3 cord (this is based on our last experience with poorly seasoned wood. The next $90 batch may burn much longer and hotter, so we don’t have to use as much as fast.)
Trash pickup: $25
North Carolina trash and water services: $10
North Carolina Electricity: $10-$20 (the house is vacant.)
Plowing: $100/month from December to April.

Total (based on the highest amounts): $1215 a month.

Our guaranteed monthly income is $2068, plus any additional income I make from my side jobs or selling things online, and income from the business we own, which usually generates no less than $200. So I can probably guesstimate a monthly income of about $2400, to be on the safe side.

So we have $2400-$1215= $1185 a month to pay for seven categories of budgeted money: food, gas, home repair/improvement, savings, tithe/giving, allowances, and debt. We also generally give ourselves a monthly allowance of $40 a person, although it will be going down to $20 each for a while. It’s not much, but it’s enough for us to each have some cash to use for whatever we want (usually the coffee shop in town!) without having to justify it to anyone else. It really is a measure taken for our sanity!

Based on yesterday’s debt calculations, we will have to come up with $615 a month just to pay the minimums on our cards – at least right this instant. As we pay off or pay down cards, this number will change. This leaves us with ($1185-$615) = $570 for food, home repair/improvement, savings and tithe/giving. Here’s how I’ve sorted it out:

Tithe: $200 (approximately 10%)
Food: $100 (we’ll have to get creative, but this is good for right now since we have a well-stocked pantry.)
Gas: $100 (thank goodness we don’t drive very far or much!)
Allowances: $40
Home repair fund: $50 (this is to cover necessary repairs and improvements, like new blinds for our son’s room.)
Savings: $0 (this will go up in the future, and when we have extra money, part of it will go in here, but there’s no room in the budget for it right now.)
Total: $490
Left over: $80 – this will be put toward paying credit cards as well.

So that’s it – our rudimentary, but suitable, budget. I’m glad we threw away our credit cards when we did, because our budget would have become tighter and tighter. I’m already disappointed that we only have approximately $80 to put towards our debt above and beyond the minimum payments.

So what do we do now?
Obviously if we could eliminate some debt, we’ll have more flexibility with our budget in case of an emergency. Plus there’s always the added benefit of having less debt quickly! 🙂

We need to sell off some of the items we have laying around that we don’t use and planned to sell but never got around to it (we have an antique electric stove in our basement and a sailboat in our garage from the previous owners of our house, among other things.) We’ll put that money toward a credit card to pay it down quickly.

We will snowball our debts, which I will talk about in a future post. We also plan on snowflaking any small amounts of money we get into the debt, which is something I want to explore further in another near-future post. Until then, you can read the article I linked to – the woman who writes that blog is very much in the same situation as us.

We will also continue to try to save money through thrift, stewardship, and thoughtful living. This is why we tithe. It is hard to explain to someone who doesn’t tithe, but we do believe in supporting God’s workers in the world, so we won’t give up our dear child we’re sponsoring or giving money to our church, who uses it to support missionaries who build wells and schools. Time and time again we find we always have enough when we’re dedicated to giving 10% of our income to those who are less fortunate. You may not agree with me, and that’s fine. My point is that what we consider priorities when it comes to our money may be different from the people around us.

There’s so much I have to say! I’m having a hard time not typing it all out here! You’ll just have to keep reading. 🙂

Advertisements

3 Responses

  1. U Go Girl!

  2. I’ve been reading some of your latest posts and have decided to go back and read from the beginning. This is a really nice site!

    I have a question (and maybe you talk about this in a post I haven’t read?). Do you guys invest in a 401K or other retirement account? The reason I ask is that when Joel quit his job, he was no longer eligible for the retirement account that he had. We started thinking about it and decided to use his retirement money to pay down our debt. We, of course, had a tax penalty – and so I’m not sure it was the wisest move ever … but it is really, really, really nice to have the burden of credit card debt off of our shoulders.

  3. Thanks Kate! 🙂 I’m glad you are checking it out – I mean, you hear so much of it on LJ!

    No, we don’t. I think Brian has a retirement account from a previous job, but since the job he has now is the first one in a long time that wasn’t a contract position, we didn’t do anything with it. He’ll be getting a 401K after a year at this position, I think. And the church he’s working at now gives him an HSA and as a benefit, puts the maximum amount towards it each year. If we don’t use it, it accumulates and eventually can be used toward retirement. But that’s it.

    It’s definitely something we need to be thinking about – retirement, I mean.

    I honestly don’t know enough about it to say whether that was a bad move or not on your guy’s part. I’d think you’d collect more debt in credit card interest than you ever would gain on a retirement account, and I think it would be to your benefit to have the debt paid off, as long as you don’t get into debt again, and as long as you continue to save. But you guys are young, too, so you have the extra time to catch up! 🙂

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: