One year ago, I first shared with you Courtey’s story. She and her husband were just setting out on getting out of debt and improving their financial situation.
Back then, their house was on the market and they had hopes to use profits toward a down payment on a larger house, pay off some debt, and bank the rest as savings.
Plans changed. They didn’t get much interest in their house and eventually took it off the market.
They got hooked on Dave Ramsey and got gazelle-intense with their finances. They sold things. Made sacrifices. Budgeted like crazy. And kicked a ton of debt out of their lives forever.
Courtney and her husband are not the same people they were one year ago. The changes they have made to their views on money are permanent. I know they are in a much better financial place than they were a year ago, and possibly even a better emotional place.
You see, Courtney was miserable at her job. She found another job and took a pay cut (you’ll read about it more in a minute). Making a move like that with thousands in consumer debt would be tough. Perhaps impossible.
But now that they’ve got some breathing room, she was able to make that change.
Now that they’re down to their last two debts (car loan and student loan) I think it would be good to start building up their savings beyond the starter emergency fund. Beefing it up to a few months worth of expenses could be something they could quickly achieve, and it could give them the cash they’d need to cover any larger emergency that they can’t absorb into their regular budget. Once that is in place, they could keep on with their debt snowball.
Or they could take a balanced approach and put some money toward savings and the rest toward debt.
Her March 2010 numbers, with March 2011 numbers in bold:
- Kohl’s: $395.20 NOW $0
- Discover: $537.16 NOW $0
- Capital One: $725.45 NOW $0
- Menard’s: $2,100 NOW $0
- Visa: $2,530.82 NOW $0
- Signature loan: $2,729.23 NOW $0
- Discover #2: $5,400 NOW $0
- Dodge: $3,295.40 NOW $0
- Toyota: $11,503.06 NOW $5,916
- Sallie Mae: $27,379.43 NOW $24,496
- Total: $56,595 NOW $30,412
Total paid in one year: $26,183 !
(Note: In the first post, I didn’t have Discover card #2 correct, so these numbers don’t quite match the originals)
WOW. That’s eight separate payments that they no longer have to pay! That’s a huge improvement to their cash flow.
Now some comments from Courtney:
So, as of now I have accepted a different job. It is not ideal and it is a huge pay cut in a lot of ways. But, my quality of life was suffering with an overbearing boss who verbally degraded me. I felt miserable even when I was home and my husband and I decided that making some financial changes and not having anxiety about going to work every single day was a sacrifice worth making.
My new position has strange hours (4am-2pm), lower pay and no benefits, but it is working for a transportation company and hopefully it will be a friendly and accepting work environment. On the surface I am only taking a $4,000/year pay cut, but our insurance costs are going from $40/month to $350/month. In addition, I no longer have an automatic 3% of my income contributed to retirement. So, it’s really more like an $8,000+/year pay cut.
It was definitely not a decision that we came to lightly. I thought, asked advice, prayed, and discussed quitting for over a month before finally making my decision. This time last year I would not have been able to feel financially okay with a decision like this. Thankfully, we got wiser and began paying off our debt so I can have some peace of mind! There is still a slim chance that I will get a phone call telling me I’ve gotten a better position (with one of the local schools), but I am not holding my breath.
So, we have not paid anything extra on our debt since January 2011. This is because we were not sure I would have a job at all and wanted to pad our savings a little bit (we still only have the $1,000 baby emergency fund). We will be changing this next month once we see what my paychecks from the new job are like after taxes. At that point we will likely use some of our current ‘extra savings’ and put it towards our debt
Our total outstanding debt is still larger than our total debt paid, but that gap is MUCH smaller than it was a year ago! It is insane to think in one year we paid off more in debt than I made in my yearly salary! We met our goal of beginning 2011 with only the Toyota and Sallie Mae left to pay off. It feels really really good and I know that while the next year our progress may be slowed because of my job change, we will never have $56,595 in debt (except a mortgage) as long as we live!
We have been fairly good about sticking to our budget–some car repairs and this job change have definitely thrown us for a loop. BUT, we’ve not put ANYTHING on a credit card or had to touch our emergency fund yet. Our brother-in-law is moving in with us and he will pay $200/month in rent. Most of that cost will go towards food since he will be eating meals with us (and boy do my husband and his brother know how to pack it away!), but we will probably come out a little bit ahead.
One unexpected thing that has happened to us is that we are more open about our finances–it’s kind of amazing to say that in one year we’ve paid off more than I made! But, our family members and friends have been sharing their financial problems as well. We have suggested they apply the same principals we are, but it seems that they are unwilling and uninterested in doing that. It’s difficult to watch them sinking deeper and deeper all the while claiming the only ‘way out’ is bankruptcy.
We will be creating a new budget soon, but still attacking our debt as best we can on a smaller income. I truly am so blessed and thankful to have a supportive husband and the knowledge that now seems so simple and common sense!
My life is definitely a testament to the phrase “life happens” but, when life happens you can still keep your goals–you just have to change the route a little bit!
Kacie again. Oh, Courtney, I am so proud of you both! You have done an amazing job and it’s clearly paying off for you. I hope that you like your new job and that 2011 treats you well. I bet you’ll have your car paid off sometime this year, with Sallie Mae not too far behind that. Thank you for inspiring me and my readers and I’m looking forward to another update later on!
Please leave some comment love :)