debt free
Debt Free

Become Debt Free | Dealing with Unexpected Expenses

Let’s get debt free!

So here is how this story starts. You decide you are going to set a goal to become debt free. That goal, as you know, will be a ton of work and a lot of extra hours on your part. You start your journey and things start off smoothly. Payments start little by little, month by month. Things are going great and then boom! You find out you need all new tires on your car. The dentist tells you that your husband needs his wisdom teeth taken out. Or you might even have kids and you know how much that costs!

The unexpected expense.

It always comes doesn’t it? Even if you aren’t paying off debt, but you are just trying to get to a place where you don’t have to live pay check to pay check, it still comes. How do you handle it? Do you pay it off right away or pay it off later? Is it smarter to continue payments toward your debt when now you have the possibility of another payment with maybe higher interest rates looking you in the face? Zach and I know this scenario all too well. It took us 2 years to pay off $50,000 of debt, but if we had not had the unexpected things come up, it could have been so much faster.debt free

Our journey.

So here’s the deal, I am going to be up front with you about costs and income at the time we were becoming debt free because I honestly don’t think this post would help you unless you were able to compare budgets. When Zach and I started our journey to becoming debt free we were living in Southern California. It was perfect! It felt like heaven on earth. I will go back anytime I have the chance. However, for anyone who knows Cali, it is expensive. Everything is expensive. The rent, tax rates, clothes, food, you name it. Surprisingly our car insurance was about $20 cheaper and our utilities of course were way cheap. The weather is perfect so there is no need for air conditioner or heater.

Our budget.

We were working for a higher education company, so we weren’t making a ton of money either. Here is a breakdown of what our budget looked like per month.

Monthly Expenses:

  • $95 Geico (Renters and Car Insurance)
  • $8 Netflix
  • $10 Hulu
  • $1700 rent (685 square ft)
  • $40 wifi
  • $50 Zach’s phone
  • $50 April’s phone
  • $40 Electric
  • $25 natural gas
  • $40 water/sewage
  • $600 tithe
  • $300 grocery
  • $200 gas
  • $200 entertainment
  • Total – $3,358.00

Monthly Income: (after taxes)

  • Total – $5,200.00

After Expenses: 

  • $1842.00
  • $300.00 monthly cushion
  • $1000.00 debt
  • $542 savings

The bare minimum: 

As you can see, Zach and I cut our expenses down down down when we were working toward becoming debt free. We sold one of our cars, so that is why gas and insurance was so low. Anything extra and unnecessary we cut out except Netflix and Hulu. We cut off our gym membership and used the free gym at our apartment complex. Walking became our new normal and we ate at home as much as we could. We got the cheapest phone and wifi plan as possible. Our apartment complex even had free wifi that we used for awhile. You name it, we cut it.

Always save!

Now I get it. Some of you are going to have a much tighter budget than what we did, so savings might not even be in your vocabulary at this point. But, if you can, save! I don’t care if it is $10 or $1000.00. Do not put all of your left over money after expenses towards your debt. It doesn’t make sense. You have to invest in yourself. You have to make sure that you are going to be able to take care of yourself and your family. Some months we saved more, and some months we put more towards our debt, but we ALWAYS put something in savings.debt free

and here it comes…..

So I didn’t put it on our budget list, but I could have made another bullet under expenses titled “unexpected.” It sometimes felt like we were not able to make any leeway towards our debt because we were always paying for a random thing that came up that month. Where to begin. One month we found out we needed 4 brand new tires. One month we found out that Zach had $1500 of credit card debt that he didn’t know about. I bumped a really nice car in our work parking lot, left a tiny scratch, and still ended up paying close to $400.00. The biggest heart breaker of all happened when we thought we were only $4,000 away from being debt free. We got a letter in the mail from Zach’s school saying he owed the school $8,000. My heart was crushed. I saw the end in sight and it was like it was taken away from me. It seemed every time we made progress something else just got in the way.

How we coped.

Most of the time, I was pretty devastated when these extra things came up. I almost felt entitled to not have these things happen. It was like, I’m trying to do a good thing here and I just keep getting pushed further back. Zach handles money and financial stress way better than me, so it didn’t seem to phase him too much. The number one thing that helped us when these expenses came was our savings account. When you take Dave Ramsey’s Financial Peace University, he tells you that you need to build up a $1000 emergency fund. Let me tell you this is gold! Make sure you have this! Then if you ever have to spend the money, you just build it back up and then start paying off your debt again. Not only did we work on the $1000 emergency fund, but we continued to put money into savings each month. This started to create a large savings account for us.

Savings? What?

You might be thinking, why build the savings? Just pay off your debt and then build the savings. My friend let me tell you that building our savings account was the best thing. Whenever that $1500 of credit card debt came up, we paid it off right away with our savings. When I hit the car, we paid it off with our savings. And, when the $8000 surprise came our way, we had built up enough savings to pay it all off! This kept us on our debt free track. We never had to stop putting money toward debt. Instead of taking two months to build back up our emergency fund, we had enough with savings to just continue making our debt payments. We never missed a month! Consistency is key. Consistency also helps keep your interest rates on your loans down. This was our golden ticket in handling those oh so annoying surprise expenses.

You are worth it.

The other reason you save is because you are worth it. You are going to hit a time in your debt free journey where you need a break. You will need a vacation. With a savings account you will have the money to go! Becoming debt free is exactly what it says “freeing.” There is nothing quite like it. I imagine it’s what it is like when people finally loose all that weight they wanted (I’m still working on that one.) Or when someone finally saves up enough money to start their own business. It is the best feeling ever. If you can discipline yourself to cut your budget and save, you can do it too! If I can become debt free, so can you! For more information on our debt free journey check out my posts on Pay Off Debt Fast | Make Money on your Hobbies and Two Years Now Debt Free | How You Can Do It Too On A Low Income.

 

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