05 April 2013

Financial Friday: Elizabeth's Debt-Free


Several years ago I found myself knee deep in a pile of unexpected car accident bills: car insurance, health insurance, hospital stay, emergency room visit, x-rays, and ambulance ride.

While trying to pay off this mounting pile of bills, I had my regular bills: car tire credit card, car payments, two student loans from a private university, a computer loan, phone bill, and a credit card on a church employee’s salary. Sound familiar?

Just thinking about those days brings back a headache and night sweats.

There is a certain amount of underlying stress that comes with being a “slave to the lender”.  See, when you’re paying off loans, cars, and credit cards your money isn’t really yours. The second you earn it, the second you pay your “master” aka the credit card company or the loan company.  You aren’t really FREE to do whatever you want with your money.

Paying off debt, managing / reducing bills by living simply, and changing your attitude towards money grants a FREEDOM to do as you please (within reason) with your money.

Soon you won’t have night sweats, late fees, or balances rolling over.  Or worse yet, fear of the debt collector.

This is real. It’s very real. For some reason our generation thinks we’re entitled to a certain status level without really earning it....or without waiting to pay for it in cash. GUILTY!

For many years I bought expensive brands of clothes and fancy electronics just to keep up with the Jones’s.  But for what?  A little extra attention? Was I that desperate that I would sell my well being for things?

I traded my financial freedom and peace of mind for panic attacks, false pretenses, and lying about my financial situation to a LOT of people, including myself.

The pile of car accident bills that I could not pay because I was out of credit and out of cash was the wakeup call I needed.

Fortunately, around that time my parents were taking a financial planning course and passed along some of the materials.  My then fiance, now husband and I devoured them.  We learned how to pay off debt, how to save up emergency funds (for things like car accidents!), plan for big purchases (like a baby! and a house!) and prepare for retirement.

We made a lot of sacrifices like cutting out cable and selling some rarely used big ticket items to get the ball rolling, but once we had a plan in place for our money, the rest was easy.

We paid off 2 cars, 2 student loans, all the medical bills, and a stack of credit cards in 3 years on entry level salaries.  A few bonuses, raises and a baby later, we paid cash for trips to Puerto Rico and Ireland, traded in a car with cash, and bought a house with almost 20% down.

I hope that my story has helped you examine your debt (yes, even those car payments!) versus your goals.  Make a plan. Write down your dreams!  




Are you in debt and looking for a place to start?
1. Start by listing your expenses imperative for survival: food, water, shelter, heat, electric, etc.
2. Then list your debts: car loans, credit cards, student loans, etc
3. Next list your kinda necessary expenses: work clothes, internet, basic phone plan
4. Finally list out your pleasure expenses: phone data plans, cable, eating out, movies, fancy coffee, etc

Give yourself a reasonable allowance for #1, list #2 smallest to largest in total debt making sure to pay the minimum on each, #3 give yourself a very small amount for #3 and cut out #4 to the bare, bare bones.

Get creative: babysit, tutor, deliver pizzas, sell your stuff!

Once you have a little extra money squeezed out from #4 and/or your extra income, apply the extra to your smallest debt. Once that debt is paid off, take all that money and apply it to the next smallest, and so on. This creates a snowball and before your know it your debt is POOF gone!

If you have never been in debt or have dug your way out, I applaud you.  It’s a lot of hard work. Way to go!

I challenge you to take the next step. Have you set aside an emergency fund? Do you have a plan for retirement (and no inheritance doesn’t count!)?  Are you saving for a car replacement? New roof or water heater?

I sincerely wish you all the best. If you have questions or would like more information email me: elizabeth (dot) buergler @ gmail (dot) com

If you’re interested in more, check out the full version of the story


Elizabeth blogs at www.thebuerglers.com about family life, faith, and occationally finance.

4 comments:

  1. We, too, have a lot of debt. Not enough that we're going without anything, or having night sweats, but it is a little stressful. I am great at always paying my bills first, but when there's extra money I can never seem to do the responsible thing with it. I really need to work on that aspect of it.

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  2. love this! dave ramesy is so inspirational isn't he. my daddy took us to see him once. :D i should SERIOUSLY start the snowball effect stat! another one of his quotes i love is, "act your wage" :D

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  3. love dave ramsey! my husband and i are doing it with my student loan debt and then tackling our house! we love the idea of being debt free!

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  4. Being debt free can be a motivation which helps you save, something you might not have done otherwise. Cutting down the unnecessary expenses, and resisting impulsions for shopping, dining out can help you, if you really want to save. One other thing that can make life easy is that not repeating your mistakes. Once you end up the wrong way and get out of the mess after a lot of sacrifice, make sure you don't wind up that path again. Debt snowball or debt avalanche - whichever way you chose, you just need to have the determination and patience to stick to it.
    --
    Stacy Barbee
    Financial Writer
    Oak View Law Group

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xo, amy