Sunday, October 31, 2010

Day 17 - Making Time to Write

October 31, 2010

I have even more respect now for writers (bloggers, especially) who can consistently write something to share with the world.  It's been two weeks since my last post!  I find myself wanting to sit down and write about our progress but I can't seem to make the time.  I hate this saying but - life always seems to get in the way.  And coming from a family of writers (excellent ones, I might add) I would expect more from myself - even though somehow I ended up as an accountant.

My mom has decided to do a writing marathon during the month of November and write an entire first draft of a novel.  I think a blogging marathon is in the works for me.

On a financial note, Mike and I made it through our first two weeks of living on my paycheck.  We even went out on the town one night (Groupon in hand, of course).  Mike's entire paycheck went towards our smallest debt.  This might actually work!

More later, I just wanted to check in and get back on track!

Sarah

Sunday, October 17, 2010

Day 1: The Mortgage

October 15, 2010

Day 1 of the $60k project was a big one. Mike and I decided that in order to successfully pay off this very large amount of debt in 365 days, we would need a flea flicker to get an early lead in the game. We scrounged up every last penny we could possibly find - withdrew from checking and savings, emptied the change jars, searched under the couch cushions (seriously) - in order to pay off the smallest debt we owe. The flea flicker worked:
10:30am - Arrive at Bank
10:33AM - Skip Out of Bank
I can't even begin to explain to you how good that felt. I tried to express to the bank teller my feeling of exuberance but she shoo'd me away before I could tell her for the eighth time that I was paying off my mortgage. Some people.

Wait a minute, Sarah - you have a mortgage? Does that mean you just paid off a house? you have all of this debt and a paid for house? I don't get it.

You know how you can set your relationship status to "It's Complicated" on Facebook? I think my mortgage relationship status would be closer to "It's Really F'd Up". About four years ago, I convinced myself that I officially had a lot of money to spend because of my "good" income. So I decided it would be a great idea to help my mom purchase a smaller, more manageable (and affordable) home. (Mom, just stop reading here and skip to the next paragraph - nothing to see here). Since my mom's credit is less than stellar due to her inability to pay bills, I came up with the down payment, got approved for a mortgage and became a homeowner. Once the old house sold, my mom paid off both the old and new house mortgages with the proceeds. So technically I do have a house in my name, but in reality it's my mom's house because she paid for it. Although the ownership seems to revert back to me when taxes and insurance are due. Or when the roof needs to be fixed. By the way, I would highly recommend NEVER doing anything remotely like this. Even if you have good intentions, mixing family and finances is about as tasteful as brushing your teeth and gargling with orange juice.

Once the new house was paid off, I decided to take out another mortgage and pay off all of my credit cards (which turned out to be a good move since shortly after I did this the housing market collapsed and credit card interest rates skyrocketed). So ultimately the house isn't really mine and Mike and I just paid off all of my old credit card debt. The main point is that we scrounged up enough money to pay off $7920.89. A HUGE win for us.
Why is this so important? Our payoff strategy (I'll explain this in more detail later) is to attempt to live on one person's paycheck - living expenses, minimum debt payments, fun money, everything. The other paycheck will be used to pay extra on the debt. Paying off the mortgage immediately freed up an extra $335 to live on since we will no longer have a monthly payment. That's the logical answer. Psychologically, completely paying off a debt is a great sense of accomplishment and also a great motivator.
Now reality sets in - there is no extra money out there for emergencies. There is only one paycheck to live on. Serious cutbacks are ahead of me. I'm not sure I know the definition of frugal. A serious post from a slightly freaked out person. Can we really do this? Are we setting ourselves up for failure? Are we just plain crazy? Send me some positive vibes.
What's Coming: Getting to know us and our financial situation a little better. "Mike's Corner". Laughing (you), crying (me), taking care of business.
Stay tuned,
Sarah

Thursday, October 14, 2010

Day 0: 365 Days and $60,000 To Go

October 14, 2010

We have finally thrown down the gauntlet: pay off $60,000 in debt in one year. For you math heads out there, that's $5,000 a month, $165 a day. I'm pretty certain this means my life is officially over - at least temporarily. Goodbye J Winery club membership. So long Kate Spade Friends and Family sale. Farewell eating out when I feel too lazy to cook. Duke, we're downgrading from Natural Balance to Kibbles 'n Bits - and we're going to have a serious discussion about the cost of bones. 

Why the hell am I doing this again? And who the hell am I anyway? I believe I represent the average American lifestyle - I grew up in a household where debt was a way of life. My dad was in debt most of his life - only two months before he died this year did he finally become debt free. He was 73 and it was one of his proudest moments. My mom has no concept of due dates and check registers. Paying bills makes her break out into a full blown panic attack most months. Coming home from school to find a utility cutoff notice was nothing out of the ordinary for me.

Growing up I was constantly reminded how important an education was and that school loans were my ticket to a better life that was carefree and absent of debt collectors. Consequently, I decided to do whatever it took to get through undergraduate and graduate school - including taking out a bunch of student loans. Now every month I make a payment to Sallie Mae that is the equivalent of a mortgage for a very nice home. On top of that, I thought credit cards were made for living expenses in my early twenties. Not until recently did I realize that there is something very wrong with this picture that I just painted.

I'm now in my early 30's and I actually make a "good living" - at least I thought I did. But when your good living goes right out the door every month to pay for living expenses and debt it doesn't feel so good anymore.

The good news: I paid off $22,000 in the last 18 months.

The bad news: Combined, Mike (you'll hear from him soon) and I have $110,000 to go. Just writing that down makes me feel nauseous.

The goal: Pay off $60,000 in the next year.

The fantasy finish: I'll let Mike speak for himself because I'm fairly certain he has his own ideas, but I envision us standing next to Matt Lauer and Meredith Vieira on The Today Show holding a giant check made out to Sallie Mae (evil of all evils). Jimmy Buffett has just finished his Friday concert series performance (do they still have those in October?) and is handing me two front row seats to his next concert.  And for all of our hard work Al Roker informs us that he told the annual Today Show wedding winners to piss off and we are the much more interesting, better looking replacements!!

So why am I writing about paying off debt for the whole world to see? I must admit I'm not usually the sharing type. My biggest reason: accountability. Even if I only have five readers the entire year, I will feel like I disappointed these five random strangers if I don't achieve my goal. Second reason: I want people to know that living a debt free life is possible. Definitely not easy, but possible. I want to show people it can be done.

What's coming: Day 1 is a big day for us - find out why. Meet Mike. Learn more about our plan of attack (or lack of). Feel inspired. Have fun.

Stay tuned,
Sarah
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