Every good debt snowball needs a good stick of dynamite to set it off. The faster you can get it rolling, the faster it will grow. In July we got wind that a stick of dynamite was coming our way.. we just didn't know exactly when. Dean is an electrical engineer and works for a good company. We have been blessed many times over in recent years that as round after round of layoffs were announced, Dean was always spared. But less hands on deck means more work for everyone else, so Dean and his fellow team have had to work extra hard on their different projects. The company has been good though, and has rewarded the hard work with an annual profit-sharing bonus last year and this year. Now I wish I was talking about a lot of money here, but it comes out somewhere in the 3 - 4 K range. Last year we paid off a credit card and took a short vacation. And then we promptly racked up charges on the credit card over the past year because we hadn't changed our ways. Oh well - at least we have nice vacation memories - nothing to sniff at. But nothing to show for it either. We had no idea if he was going to get another one this year, but as luck would have it - yes! Then we 'met' Dave Ramsey. We have seen the light so to speak, and have been humbled.
For the past month, we have lived on a very hairy edge. We have had to use every financial life line we had to get by. We cashed in stock options. ($300 - big deal.... but it paid for groceries and gas), we cashed out a small investment fund... ($125), we had to spend our birthday money to keep the balance in the checking account to keep from going negative (when things get better, we both promised ourselves that we would spend that birthday money on something fun, as it was intended). As we used each life line, I could hear a ricochet in my head as if a taut wire was cut and the ends were flying apart with a loud crack. We were NOT going to use our credit cards. Because we couldn't. They were each within $100 of their limits. The past six months have not been kind. So many 'things' have come up, each with a pressing need, and our spending far out-paced any time in the past. Our day of reconciliation had come - and yes we were humbled. A couple of days here and there I fed the kids and only nibbled myself. We cleaned out the cupboards. We rationed milk, eggs, flour, sugar and the gas in the car. It was raw, hard and intense. And I never felt so alive!
I won't say that I ENJOY this experience, but it certainly brings a clarity to your life that was previously unknown to either of us. I mentioned to Dean how frightened I was when we cut our last life line last week (the stock option) and he said that he felt like it was a freeing experience. It was a testament to our faith. God was guiding this experience, and asking us to trust that if we let go, that we would at last be truly free to take this problem by the horns and really deal with it. Okay - just a moment here, because Dean never talks like this. Only one other time that I can think of, when Dean mentioned divine intervention as the way we were brought together in the first place. I'm sure that Dean's family thinks that I have drummed religion out of Dean's life. I haven't. I didn't drum it out of mine either. It just sort of 'happened' - for both of us. When you feel dead inside, the spark of faith starts to sputter. We both have strayed from feeling 'moved' by much of anything, until now. The process is working, we always manage to find a dollar or two in the time of need, and we have to have faith that it will continue. And for that, I give thanks and feel truly humbled.
The day that the stock option money was supposed to be transferred to our account (last Friday), we had already experience a slight reprieve from the day before, when I sold about three things from Craig's List. We had $45 dollars and we felt rich! lol... Then Dean checked the bank balance that morning, to see if it was there yet, because the city bill HAD to be paid ASAP. You can't deal with the rest of your troubles when you don't have power or water. Low and behold... there was the bonus. The heavens opened up and 380,000 pennies came raining down. What a gift! And we were not about to waste it. On with the program!
Baby Step #1
The first step to Financial Peace (besides STOP using the credit cards) is to put away an emergency fund. The typical amount is one thousand dollars. This way, if a true emergency crops up, you don't run to your credit cards to cover it. Done.
Baby Step #2
Pay off your debt using the Debt snowball method. We paid off every item that we were behind on. Luckily, we were only behind a month on about four things, so it didn't take too much. Then, we took aim at the first debt on our list. Checking account overdraft. This little cretin is such a pain. We pay it off, and it just comes back. Again and again. We are going to see if we can just get this option removed from our account altogether so it doesn't happen again. Or at least decrease the amount that is available. Next, we took aim at the next debt on the list. One of Dean's credit cards. We threw one thousand at it. The next regularly scheduled payment is due at the end of September. Here is where the debt snowball method comes in. The overdraft loan payment was $30 each month. Now we don't have to make that $30 dollar payment anymore, but we keep it in the budget anyway, and apply it in addition to the next credit card's minimum payment of $88. So we now pay $30 + $88 towards that card. When that card is paid off - hopefully by early spring, we will put $30 + $88 + minimum towards the next card. The the snowball just continues to grow and grow. In the meantime, any extra money that comes our way, or that is not spoken for in the budget will be thrown at the current debt target.
For one glorious afternoon and evening (last Friday) I felt like a huge weight had been lifted. We even went out to eat. And then felt immediately guilty the next day when we paid every thing we could and realized that our food budget for the rest of the week was going to be strained. I spent 3 hours just shopping King Soopers for produce and Walmart for everything else. I only had $150 in our grocery cash envelope, and there I was going up and down the aisles, with a calculator, trying to make it all fit. I put eleven items back. I still came out $11 over, and had to take it from the gas cash envelope. That means we are back to gas rationing. Sucks. But I like being back on the hairy edge. It keeps you honest!
It is the best feeling to finally get our snowball rolling.
It feels dy-no-mite!!
(okay, that was cheesey...)
