I plan to get fit in the new year – not by doing cardio and crunches, but by saving money and paying off debt! That’s right, I want to shed weight (in the form of debt), by getting financially fit in 2016!
Debt payoff is not new for my husband and I. We have actually accomplished many great things financially in the last couple years.
I got rid of lot’s of stupid consumer debt that I racked up in my early twenties (mostly store credit cards). We worked very hard to get out from under some scary tax debt (both federal and state) that was a result of a very difficult time in my husband’s life before we met.
In 2014 I even made my last ever student loan payment! But we have more to accomplish and I want 2016 to be the year we get totally financially fit! I hope you’ll be inspired to join me!
How I’m getting Financially Fit in 2016
I have big goals. Based on our circumstances, some may call them impossible. But I believe in setting big goals. I could set small, easy goals and achieve them, but then what? How much will my life have improved? I encourage you to dream big with me in hopes of making big changes in our lives!
Goal #1 – Save Up $1,000 For a Baby Emergency Fund ASAP!
The ‘baby’ emergency fund is the first of 7 baby steps to financial freedom in Dave Ramsey’s Total Money Makeover (which I will mention again and again). I have set this goal numerous times in my life – but I have never reached it!
Here’s where I think I’ve made a mistake. I make an emergency fund category in my budget and set aside anywhere from $20-$35 per month. Eventually though, life happens, and that money is moved into a different budget category. So the emergency fund never happens. And when emergencies strike, we reach for a credit card.
The recommended way to set up an emergency fund is to do whatever it takes, and save the $1,000 up as quickly as possible. Extra payments to debt are on hold until the emergency fund is fully funded. If you have to use the emergency funds, you put extra debt payment on hold until you build it back up. So that’s the plan!
I hope to complete this goal by the end of January 2016.
Goal #2 – Save Up $100 To Attend Financial Peace University
There is so much free information available to us online these days. But sometimes you need more. You need that human interaction to take things to the next level. You need people to bounce ideas off of and a group of like minded individuals to help keep you accountable.
Financial Peace University is a nine week financial education course that I would like to take with my husband. FPU is very popular and I have heard many success stories from couples who have gone through it. FPU is a biblically based course, but my husband and I are not Christian. However, I know that with an open mind, we could still greatly benefit from the course. If you have other suggestions for financial courses, I’d love to hear them.
Why spend $100 on a course when we need to pay bills and pay off debt? Because we’ve never done it before. Isn’t the definition of insanity doing the same thing but expecting different results? We have been doing the same things for years, and our situation (though it ebbs and flows) has never gotten better. I think taking a course shows a high level of commitment to each other and to the debt free journey.
I hope to complete this goal by the end of February 2016.
Goal # 3 – Pay Off Our Debt Using a Debt Snowball
The debt snowball method, also credited to financial guru Dave Ramsey, involves listing your debts from smallest to largest. You pay off your smallest debt first, while maintaining minimum payments on all of your other debts. This helps build momentum and excitement in your debt payoff journey, because you will pay off that first debt quickly. When your first small debt is paid off, you take the money from that payment and roll it over to your next debt on the list. Your snowball grows bigger and eventually crushes your biggest debt!
I hope to complete this goal by the end of 2016.
The Numbers (*as of 12/25/15)
Here they are in all their glory. Our debt totals (and lack of savings). It’s scary to share so openly, but I believe in being transparent and honest in hopes that I can inspire others with similar goals.
Consumer Debt (4 credit cards & cell phones) $15,444.24
Medical Debt (hospital, OB and neonatologists) $8,880.29
Car Loan/Lease (one of each) $48,690.48
We also have a mortgage, but I don’t plan on paying that off in 2016! Unless some kind of miracle occurs!
Total Debt $73,015.01
Total Savings $0
Did you believe me earlier when I said BIG goals? $73,015.01 in debt to be paid off. To achieve this goal, we would need to pay approximately $6,084.58 per month for all of 2016, while living paycheck to paycheck. And that’s not accounting for interest! I refuse to get discouraged by these numbers. Instead I am focusing on how good it will feel to shed all the weight and stress of carrying around such debt!
How did we get here? Not sticking to a budget (more on that below), overspending, relying too heavily on credit cards, losing my job (and half of our income) in February 2015, a job change for my husband, adding a family member (and medical debt along with him!), going from no car payments to two car payments, and buying our first house in July 2015.
Your circumstances might be similar to mine, or totally different. No matter how we got here, I believe we can all make better financial choices and achieve our goals.
2015 was a really hard year. Really, really hard. I don’t want to wake up in the morning anymore feeling afraid or worried. I don’t want to lose sleep at night due to stress-induced insomnia.
I want to save my marriage. Extreme financial stress has impacted our relationship in a negative way and it makes my heart hurt.
I want my children to grow up in a financially fit family where they are neither spoiled or deprived. I want them to learn from our experiences and not have to money struggles in their adult lives.
I want Christmas 2016 to be a happy, low stress time, very different from Christmas 2015.
I also don’t want to be average. The average American household carries $129,579 in debt!* No thank you! I want to be financially free!
The Action Steps
Make More Money
We need more income monthly, but we also need extra money in order to reach the goals I laid out above.
We are in a very tight spot. This is full disclosure, full honesty time. As a stay at home mom caring for two young boys, I need to bring in about an additional $1,000 – $1,200 monthly.
And making more than that will help us get out of debt faster. That will be no small feat. How will I accomplish this? Lot’s of ways! First, I plan on selling things we don’t need (books, clothes, a couch, a TV, a video game console, baby toys and gear, my ipad, my CALIA bag, a sewing machine, lamps, etc.). I will continue to work on my social media management business, and offering virtual assistant services (check out my Hire Me page for more info).
I will get a part time job, I will babysit, I will do whatever it takes and so will my husband. There’s no other option!
Want to help? If you’re already planning to make a purchase through Amazon.com, consider using my affiliate link. There’s no extra cost to you, but I’ll earn a small commission.
Stick to a Tight Budget
We have technically had a budget for a long time! I started learning about money and budgeting while I was still single, and we have had a budget of some sort every month of our entire marriage.
But having a budget and sticking to a budget are two very different things! My budgets have been more along the lines of “wishful thinking.” When we spend all the money in a particular category, we don’t stop spending.
That’s when the credit cards come out, and we’re officially living beyond our means. This is unsustainable behavior and has to stop! Which means we have to take the next action step …
Have Regular Family Budget Meetings
For us, I think they need to be weekly. I’m marking these on my google calendar and setting up reminders on my phone! It’s not fun to sit down and talk about money with your spouse. Especially when money is tight, and when you don’t agree on exactly how each penny should be spent! But we need to do this. We need to be fully conscious of every cent coming in and going out, and we need to be a team in the fight against debt.
Use A Price Book To Help Reduce Spending
Do you look at the price tag on every single item you buy? I sure don’t. There aren’t a lot of areas in our life where we can reduce spending (no Starbucks or happy hour habit, no vacations, no daycare costs, etc.) but there sure are a lot of things we buy.
I spent a few minutes listing out everything we will need to buy in the household or personal care categories in 2016 – everything from toilet paper and paper towels to diapers, wipes, shampoo, toothpaste and deodorant. I came up with over 90 items my family will need in 2016. Ninety!
Imagine if I educated myself on what the lowest possible price was for each of those items? Instead of just blindly picking an item off of a store shelf, I could potentially save my family tons of money by reducing my spending on these items!
Price books are most often used for grocery items. I just grabbed a small notebook and listed a few items on each page (alphabetically). I’ll carry the notebook every time I shop and will track a “price to beat” for each item. I’m excited by this money saving idea because I’m almost viewing it as a game!
Continue My Financial Education
One of the hardest parts of being frugal, or of paying off a large amount of debt is keeping your momentum going. Debt fatigue is a very real thing!
I not only want to educate myself about debt, credit, frugality, and investing, I also want to maintain a high level of motivation in 2016! To do this I plan on seeking out inspiration via podcasts and financial books. I already own Dave Ramsey’s Total Money Makeover and plan to re-read it fully and with fresh eyes in the new year.
I’ve listed a few other financial books from my amazon wishlist in the resources section below, as well as podcasts I have downloaded.
If you are striving for a financially fit 2016, some of the resources below should help you!
(Stay at home yogi is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com)
Mint.com A free tool that will help you track your spending.
You Need A Budget Excellent budgeting software (not free but a great investment).
Every Dollar Dave Ramsey’s Free budgeting tool.
Money Saving & Earning Apps
Swagbucks (my referral link) Earn giftcards to help stretch your budget!
Apps that help you earn money shopping:
New Year, New Momma! Join the challenge!
This blog post is a part of the inspiring New Year New Momma series on Momma Wants Java.
New Year, New Momma is about achieving your goals and becoming a better you. It’s creating a community of support for those that want to start the new year on the right foot. Join the Instagram challenge and use the hashtag #newyearnewmomma to connect with others on their own journey. Please pay a visit to Momma Wants Java and these other participating bloggers to see more awesome posts! Healing Mama Remedies, Smart Mom Stuff, & Watch This Mom. And be sure to follow along on Instagram too!
I will update regularly on my progress throughout the year. How about you? Do you have financial goals for 2016? Please share them below in the comments so I can cheer you on! 🙂
Let’s all make 2016 our fittest year ever! Happy new year!