Baby Steps with the Debt Free Community Tag

Today I will be answering questions from the Baby Steps with the Debt Free Community Tag. I saw this tag as a video on Wendy Valencia’s Youtube channel. There are five questions.

1) How did you originally hear about Dave Ramsey and what was your initial thoughts on him?

We first heard about Dave Ramsey from my father in law. He jumps in to new things whole heartedly and tells everyone he knows about them. The church he plays organ for hosted a Financial Peace University Course and he attended and loved it. He paid for us to go to the course the next round. I thought that everything sounded logical and having financial peace sounded great. My husband and I immediately started to implement the steps and saw great things happen to us financially.

2) What is the craziest financial advice someone ever gave you that you had to shrug/laugh off?

That being debt free is impossible. My husband and I have been debt free nearly our whole relationship. There was a hospital visit that occurred when we had no insurance that we also couldn’t afford to pay. It was sent to collections and forgotten about. We paid it off shortly after starting the baby steps. Otherwise we’ve always been of the mind set that if we don’t have the money we don’t buy it. The only thing I can imagine us having a debt for again is when we’re ready to buy a home.

3) What is the hardest place you had to give up shopping or eating at?

We didn’t really have to give anything up when we started the baby steps except that we were more conscious of our eating out. At one point when we had no children and were both working full time we ate out daily. Once we started watching our money and making a budget we clamped down on eating out fairly tightly.

The time that we’ve had to give up shopping the most has been this past nearly seven months my husband has been out of work. There has been zero eating out and zero and extra spending. That means I had to give up book shopping and sticker shopping. Those have been hard.

4) What baby step are you on and how long have you been there?

We are on baby step 1 again as we don’t have $1000 in the bank. As soon as we make it dollar 1001 we’ll be jumping back to baby step 3 again.

5) What is something you want to do when you are on baby step 7?

Baby step 7 is the dream I’ve had since we first learned of Dave Ramsey in 2013. The story he tells of anonymously paying the electric bill for a year for a single mother at church makes me tear up every time I think of it. I can’t wait to do things like that. I want to pay bills for struggling people and do as many random acts of kindness as I can fit in my budget. I can’t wait to start giving money away in ways that make big differences for people.

 

What do you want to do in baby step seven?

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Our Storm Mode Budget

On April 11th I got home from my daughter’s mommy and me music class and our weekly grocery shopping trip to find my husband sitting at his desk. He handed me his cell phone open to a text message. He had been fired from his job of four years, by text message, effective immediately, with no warning.

My mouth hung open for a few seconds before I gave him a hug, promised him everything would be okay somehow, handed over my daughter to give him hugs and kisses and then put the groceries away. I second guessed every purchase. Did we really need that bag of chips I bought or the $2 cookie my daughter had gotten for such good behavior. I can’t believe we spent $10 on lunch out that day.

I wiped my tears and made my way back to the livingroom where my daughter was happily playing and my husband had lost himself in a video game as a means of coping with the panic that was setting in on him. I sat down at my computer, opened up a new spreadsheet, and started plugging in numbers for our storm mode budget.

The first numbers I entered were the current balance of our checking and savings accounts and even my daughters small savings account just in case. The I entered the small amount of cash we had on hand and even counted my daughter’s piggy bank, again, just in case. My husband was making two thirds of our income with my freelance projects bringing in about a third. We weren’t going to be totally without income, but it was drastically cut and very sporadic as freelance tends to be.

Now that I had the total number for the money we had to live off for the foreseeable future I had to start putting in expenses. I started with the next bill due and subtracted that from the total we had. I kept going with bills for a few months out. I added in what income I thought I could bring in and added that in where appropriate, and then took out grocery shopping money in the appropriate places as well. Eliminated immediately from the budget were any spending money for the three of us, future as well as saved, all entertainment or eating out monies, no gift money, etc. I cut everything we could from the budget.

Even though we had only $3000 to our name and we were without steady employment we would be able to stretch that, with some income from my freelance work, for about 3 months. More if I could make more money.

It felt like great news. I could tell my husband, “See we don’t need to panic yet. We have enough money for three or four months. You have some time to find a job.” And then I started to worry. I had a husband with a very bruised ego to help, a 3 year old to care for, and I needed to do more work than ever just to try and stretch our solvency date a little bit further.

I also, now knew exactly how many days I could afford to continue feeding my child. 97 days. I just kept seeing that number in my head and counting it down. I can feed my child for 97, 96, 95 more days. Talk about stressful. When someone close to us asked how were doing I could answer them with just a number.

To make myself feel better I played with our spreadsheet some more. I was looking at what number we needed to pull in each week or month to keep us going longer. I had a plan figured out where we would be able to make it to the end of the year if it takes that long for my husband to find work. I projected the spreadsheet out to the end of 2019 to see what kind of numbers we would need. It’s not as much as we might think, but it’s also not a realistic long term budget.

At this point we’re spending the bare minimum to not go crazy or have to feed my child only ramen noodles for every meal, but we’re still spending more money than we’re making at this point. Hopefully a job will be coming in soon. We can make it work and have a little wiggle room in the budget with something part time.

In the meantime though, our budget consists of my freelance income coming in and any odd jobs my husband can do as well and going out are only rent, electric, internet, car insurance, gas for the car, my husband’s haircuts, and weekly grocery shopping.

My daughter does still get her little treats. A cookie at the grocery store and a toy at the dollar tree each week. We’re doing our best to keep things as normal for her as possible. But when the new semester of her music class begins we’ll have to see if we’re back in a place to spend the money on it. Otherwise, we’re making it work for now. We’re helping each other stick to the crazy tight budget and staying strong as a family.

My hope is that we’ll come out of this chapter of our lives with a better grasp on our money. A better understanding of how far we can actually stretch our dollars and what we can and can’t live without. And a stronger motivation to finish off our 6 month emergency savings fund instead of only partially funded like before.

Life Update

The short version is, my husband lost his job just over 11 weeks ago and things have been in total chaos since.

The longer version begins with my husband losing his job 11 weeks ago. He was fired via text message from a job he had been working for over three years. It was an all around terrible situation that we’re still angry about. But there really wasn’t anything for us to do.

My husband panicked. I went in to get things done mode and figured out our storm mode budget. We would only be paying for rent and the bills that had to be kept up. Grocery money was cut as low as possible and all extras were cut out effective immediately. I matched that up with what we had in the bank and figured out how long we had before we needed to panic. And then I calculated to figure out what we needed to bring in money wise to keep us going for longer.

The job loss was a huge hit to my husband’s ego. He’s been suffering through waves of depression, anxiety, fear, and more since the incident. Because of this he hasn’t truly focused on the job search yet.

My freelance work doesn’t bring in enough funds to sustain us so we’re currently living off of our savings. It’s a terrible feeling to watch our bank account balance slowly shrink as we have more money going out then coming in these days.

Things have settled down a little bit at this point though. My daughter is loving having daddy home with her every day. I’m liking that he’s in charge of dishes and cooking. I’m not loving all the extra stress of not having enough money to be sure I can feed my kid in another few months. I’m not loving our completely uncertain future.

Things are moving in the right direction again though. My husband has started a journey looking for a new job he thinks he will love and we still have enough savings to keep us going for a while longer. We’ll continue to cling together as a family and do our best to keep our heads above water. And hopefully we will all still love each other when this period of chaos comes to a close.