LWM

Some Encouraging Words:

Okay you still have hair on your head (well most of you anyway) and you haven’t thrown in the towel quite yet. I promised you it would get better and I am going to share today some of the positive experiences I have personally seen while going through this process.

I too created a budget, set up envelopes and gave up many things that I wish I could have kept. I knew that in order to be successful I had to give 100% to this process and for the most part I have met my target. My goal was to be debt free by the end of the first year with exception of my mortgage, car payment and student loan. That goal is so close to being accomplished that I can almost taste it.

I have my small emergency fund at the credit union (first time in over ten years I have been able to save $1,000) and I have used it twice (for small emergencies) and restored it back to the target goal of $1,000. Later that will increase but the goal is $1,000 then move on to debt reduction.

I started funding my envelopes and some of them have a rather large balance at this time, it again is more money then I have EVER saved at any time in my life experiences.

When we started this process our washing machine was out of service and the repair bill was almost $400, the wife and I went to the Laundromat every Saturday morning and did laundry as we did not have money for the repair of a new washing machine (it was not an emergency so those funds were off limits). Eventually there was enough money in the “furniture & appliance replacement” envelope to get a new washer so we did; now we are saving again for what ever might need replacement in the future.

As soon as the small emergency fund was fully funded at the $1,000 lever we took the money that we were setting aside for that item ($100 per month) and reallocated it to our debt, this is important. You cannot take that money and add it to your other envelopes or you journey to being debt free will take a lot longer, follow these steps and increase your envelope budget later.

Tomorrow I am going to share the secret to eliminating your credit card (& other) debt, but today I just wanted to provide our positive report.

We eliminated two credit card debts that we had, one of approximately $5,000 and one in the amount of $8,000. We eliminated a line of credit of $1,000 & a $3,000 solar water heater balance as well.

That was my first year’s goal and we made it… we almost. Part of the process is to eliminate credit card debt and not to charge ANYTHING ever again. I thought we could do it but unfortunately I was not prepared for an emergency (you know the things the small emergency fund is for so that you do not need to go into debt). Living in Arizona one MUST have air conditioning and when a heat pump goes out you cannot wait until you save up enough to repair or replace it, I needed almost $7,000 and I had $1,000 in savings.

The vendor had a program that saved my budget and still allowed me to stay on track. I was able to finance my Air Conditioner on a one year same as cash credit line through one of the larger banks. Since I was one month away from paying off my last credit card I accepted the terms and then immediately began making $600 a month payments on a loan that required $179 per month. The Air Conditioner will be paid of by the end of the year and I will have made my goal in spite of a $7,000 unexpected expense.

Feel free to send me a PM if you have questions or you can add them to the comments section if you feel others can benefit from the discussion.