One year ago, Dexter and I made the decision to buckle down about getting out of debt. We pored over Dave Ramsey’s Total Money Makeover book, and my aunt and uncle gave us a subscription to Financial Peace University. Then we put what we learned into action. We cancelled our credit cards, switched to using a cash envelope system for most of our purchases, and we revised and tracked our budget month after month. We were encouraged as we tracked our debt repayment and had big months like April and July. We were discouraged the months we were lax about our spending or didn’t have much extra income.
It’s been a month since our last Total Money Makeover Update. In those 31 days, we paid off 0.9% of our debt. We also brought our baby emergency fund back up to $1,000 (because we realized after-the-fact last month that the money wasn’t all there to fill it up). We also took care of a few yearly expenses. We stayed pretty close to budget in most areas and succeeded in using the cash system *most* of the month.
Let’s take a look at the year in review, seeing what percent of our debt was repaid each month in the last year.
- March – 1.4%
- April – 6.5%
- May – 2.0%
- June – 1.0%
- July -4.1%
- August – 1.5%
- September – 0.4%
- October – 0.9%
- November – 1.5%
- December – 0.8%
- January – 1.8%
- February – 0.9%
This brings us to a total of 22.3% of our debt GONE! We have 77.7% to go. Let’s break it down some more.
- Highest Month – April (thanks to the tax-credit we received for buying our home!)
- Lowest Month – September (my third consecutive month without a real paycheck)
- Average Per Month – 1.9%
- Projected finish date at the beginning: March 2014
- Projected finish date at 1.9% paid per month: June 2014
- Projected 50% date at 1.9% paid per month: May 2012
I so badly wanted to sell off everything we own to get down to 75% this month. I thought that being a quarter of the way through our debt in a quarter of the time we wanted to take to pay it off sounded really good. It’s disappointing to realize that we’re a few months behind schedule. However, I’m so thankful for how far we’ve come. Our debt is scheduled by the banks to be paid off in 20-30 years. Four years and some extra months is so much more encouraging than 30!
I’m also refusing to be discouraged because of some things we’ll be changing in the next year.
- Last year, we saved $200/month to replace our car whenever that becomes necessary. Because we think we have enough saved to replace our car’s transmission if that were to go out or to buy an old car to tide us over till we’re out of debt, we’ve decided to stop saving for a car. From now on, we’ll have an extra $200 a month to put toward our debt!
- Starting this summer, we’ll be having the housemate who lived with us last year move back in. Although last summer he lived here for the cost of groceries and a little for utilities, since he’ll be staying here long-term, we’ll actually be making a little profit from rent. We researched how much he’d be paying for accommodations nearby and are charging him a lower price. We’re hoping to save him money and speed up our debt repayment a little, too!
Most importantly, we’re refusing to be discouraged because we’re trusting God to work out our financial situation as he sees fit. If he wants us to be done in March 2014, that’s when we’ll be done. If he wants us to be done in June 2014 (or later), we’ll trust that his plan is good. If he wants us to be done earlier, I definitely won’t fight him either!
We’d like to say thanks to all of you who have encouraged us over the past year. Your positive comments, especially in the slowest months, meant a lot to us. Although we’ve heard stories about people being mocked and even berated about their decision to live frugally and become debt free, we’ve been blessed to have family and friends who think it’s cool that we’re making these financial decisions.
Let’s get year 2 of this Total Money Makeover started!