Today is my birthday and that seems like a great time to me to reflect on where we were at financially one year ago!
June 2018 -
We owed $134,871 on the mortgage
We owed $22,440 on the truck
We owe $122,418 on the mortgage
We owe $13,471 on the truck
That is a reduction of $21,422 of debt in one year. While I am decently proud of that number, it actually doesn't feel like enough for one year. We had a few unexpected expenses the last year that cut into our snowball, as well as our vacation we took.
We are hoping to double our debt pay off by this time next year (if not, even better). Part of this is pretty doable as we just wrote our very last check to daycare! We will no longer have a $928/month daycare bill starting July 2019! Our first plan is to roll that payment directly to our truck debt and finish that up ASAP.
I've been slacking on the updates to the blog, but at least we've been making some financial progress!
Mr. PoniesandFIRE has been working long hours and had a few weeks in a row where his paychecks were about 30% above normal. We put those funds on the truck.
Truck Loan - $14,900
Mortgage - $123,471
401k - ALREADY ABOVE OUR 2019 GOAL! WOOO!
Savings - $4,000 (depleted by needing new glasses and brakes on the car)
Next up - get the truck loan under $14k and get our savings back up a bit!
I wanted to give a quick update on our two weeks without DishTV.
We cancelled our service on March 28th and so far, so good. My son and I have continued our Monday night library dates and he picks out a new DVD each time. Sometimes, he picks a movie or sometimes a TV series, but either way, it keeps him occupied for the week.
We also discovered we get a free PBS channel that is kids shows 24/7. He's now really into Nature Cat and the Wild Kratts. He made one comment about wanting to watch Muppet Babies, but hasn't brought it up since.
I find we're playing a little more Uno and other games instead of watching TV and now that it's getting warmer out, we're outside more too.
I'm staying up to date with Grey's Anatomy and This is Us with Hulu, but beyond that, with my husband's new work schedule and trying to stay on top of things at home, I don't have time for much else.
So, conclusion so far we made the right choice! We had no reason to pay $75/month when we're equally happy without it.
Last week, my husband's job put out the job bids again. They do this every quarter, or anytime the boss needs to adjust things. Based on seniority, he is able to choose which job/schedule he wants to be on.
He had been working a Monday through Friday bid job about 45 minutes from our house. He'd been getting around 40 hours per week and was home for dinner or at least bedtime most nights of the week.
Starting this week, he swapped to a different job that is an hour and fifteen minutes away, which is a bummer. It's still a Monday through Friday bid job, which is excellent, as he stays with our son when I am away at horse shows or giving riding lessons for my business. We also like to have weekends off together when I am not busy with my side business.
The hours are longer however, he's had 12 hour days each day this week so far and foresees the work being steady like that for the next few months. That means he leaves the house at 7:15am and doesn't get home until about 10:00pm each night. It also means 60 hour week paychecks, which are going to bring us HUGE progress on our next goal of paying off the truck.
I'm trying to pick up the slack around the house, taking over some of the chores he normally does, as well as handling all the meal planning and lunches, so these extra hours don't cause us to go off track in other categories like groceries. So far so good. I mean, it's been 4 days, but we are on track! :)
For years we have resisted cutting DishTV from our household. We only have 1 TV and a basic package/dvr that was costing us about $76/month. We justified the expense, saying it was so small that it wasn't worth getting rid of.
A few days ago, while reviewing our budget and goals, I thought again to myself, why do we have this? Most of everything we watch is on Netflix or available at our local library. My husband jumped on board and I cancelled DishTV yesterday.
My husband went to Walmart to get a digital receiver for our tv and to my surprise, for a one time $30 purchase, we now have 28 free channels. We can now watch local and national news, throw on some PBS kids shows for my son, or stay up to date on Grey's Anatomy, which is mainly what we used Dish for. For some reason, I didn't really realize we could get that many channels for free or have them come in so clearly.
Why didn't we do this sooner?!?
This one change will save us over $900 in one year. This one change won't pay off our mortgage or get us to FIRE, but it is one step that, stacked on top of a few more changes, will make a huge difference over time.
The reason Dave Ramsey's plan works for so many people is the fact that it's an actual plan. It's simple, it allows you to focus and plan. For those of you not familiar with his plan, it consists of seven baby steps as follows:
1. Save a $1,000 Emergency Fund
2. Pay off all consumer debt (any debt except your mortgage) from smallest to largest
3. Build your emergency fund to 3-6 months of expenses
4. Put 15% into retirement funds
5. Put something towards kids college (if you have any and want to contribute to their college)
6. Pay off your house
7. Build wealth and give
During the first three steps you focus ONLY on the step you are on and because of the laser focus on one goal at a time, you really get momentum and feel the wins as you save money or pay off debt. It feels good, as if you are suddenly making huge strides in improving your life and finances.
As you move up to baby step 4/5/6 you start to do them all at once, but you still have laser focus, as you set your retirement/college contributions on autopilot and then try and kill the mortgage.
Whether you follow Dave's plan or a different plan, I really think that having A PLAN is key to financial success. You need to know where your money is going and you need to pre-plan where you want future income to go.
I was reminded of how important this was today. We found out we may be receiving a small lump sum of money from an inheritance. For one hot second, we were like "SWEET! We can buy X and Y and Z!" We then came back to our senses and were like, "OK, so that will go towards the truck payoff. We will then be two months ahead on that and can move onto paying off our mortgage that much faster."
Because we already had a plan. We had already agreed that any extra money we have right now goes toward the truck and that after that we will be moving on to our plan to pay off the house in two years.
As excited as I was for a moment to splurge on some stuff we don't really need, here I am a few hours later even more excited to hit our goals that much faster. We're winning, we're staying focused, because we have a plan and it protects us from ourselves when we get distracted.
This month we put a pin in paying any extra on our debts, as we prepare our finances to pay our tax bill next month. We were pleasantly pleased that we owe less in taxes than we thought this year, BUT it is still a decent sized tax bill.
Truck Loan = $16,483
This is on a 2016 Nissan Titan XD that I use for my business (hauling horses to shows). Our interest rate on this loan is 1.99% so we have not been terribly worried about killing this loan. However, at this point, the monthly payment is one of our largest expenses (1. Mortgage, 2. Daycare, 3. Truck) and we are trying to clean this up ASAP.
The goal: Payed off by Labor Day 2019
Mortgage = $124,522
We refinanced our house to a 10 year at 3.25% in November of 2017, so if we do nothing extra, this will be paid in full in October of 2027. We have about $80k in equity at this point.
The goal: Payed off by December 2021
Our son ends daycare in July, so that combined with our truck payment, rolled into paying on the mortgage will help us make some big headway fast on the house. To hit our goal on the house, we need to start putting $3,000 extra against the house every month starting in September, which is obviously a big challenge.
Some days, it is a challenge to stay focused on our personal finances. Even with all the momentum behind us, there are still days when I just want to go to Target and blow $200.
One of the ways that I am able to keep myself focused and fired up for FIRE are podcasts. Here are my five favorite podcasts everyone interested in personal finances should check out -
1. Bigger Pockets Money - Co-hosted by BiggerPockets' Scott Trench and Mindy Jensen, this podcast provides the education you didn't get in school. You'll get tips for getting your financial house in order and actionable advice from guests who have been in your shoes - and found their way out.
I love the perspectives Mindy and Scott bring and the variety of guests. Check it out here - https://www.biggerpockets.com/moneyshow
2. Journey to Launch - Jamila has both an excellent podcast and website. I love her perspective as a mom and business woman. Check out more here - https://www.journeytolaunch.com/
3. Choose FI - Brad and Jonathan again have an excellent podcast and website (https://www.choosefi.com/welcome-to-financial-independence/). I find that they both ask the questions I want to hear the answers from the guests and I feel like I get excited to learn actionable tips right along with them.
4. Mad FIentist - (https://www.madfientist.com/) - While there aren't as many new episodes of his podcast lately, he has 50-something episodes that are ALL worth listening to. So much information with so many great guests.
5. Afford Anything with Paula Pant - (https://affordanything.com/) I love that she answers listener's questions, a little like a Dave Ramsey style show. She has a wider variety of guests that aren't always in the financial independence movement, but bring a well rounded and interesting view to personal finance and life.
All of these can be found on your favorite podcast way. I prefer to listen off my iPhone while driving to work with the purple podcasts app. Subscribe to all these and stay FIREd up and focused on bettering your financial life!
As a kid, I would go once a week to the library in the summer time. I loved to read and it was a good waste of a few hours for my stay at home mom to occupy me. As I got older, she’d drop me off for a few hours while she ran errands or did some grocery shopping.
As a self-proclaimed bookworm, I am embarrassed to admit that I had not been in my current town’s library, except when voting, since moving here in 2011. This is extra embarrassing, as the library is legit five minutes from our house. That horrible crime has was rectified in 2018 and I am now a proud library card carrying member of my community. They even gave me a free tee shirt when I signed up!
PoniesandFIREjr is 5 years old and the two of us now have a weekly date to the library on Monday nights when they stay open late. We’ve gone the past six months and we are loving it! The great things I remember about libraries from my childhood are the same and I have found some exciting new free stuff in ours too!
Here are my six reasons to check out your local library for some FREE entertainment:
1. This is obvious, but BOOKS! I LOVE to read and if I’m being honest, I probably qualify as a book hoarder. The library gives me an unending supply of free books for myself and for bedtime stories for PoniesandFIREjr.
2. My library has hundreds of movies on DVDs available to check out. This week we borrowed Cars 2. Last week was Lady and the Tramp. It will take poniesandFIREjr years to get through them all!
3. On the same vein, DVDs of TV shows and stuff Mr. poniesandFIRE and I would want to watch too! Seriously – everything from Friends, to Breaking Bad to anything in between.
4. My library has puzzles you can check out! I have no idea if this is a normal thing or not, but how cool! I love puzzles, as does my son, but I have zero desire to ever pay money for them or have them permanently take up space in my house. PROBLEM SOLVED!
5. My library hosts free community events for kids. There are afternoon movies, crafts and back in October a super cool presentation from a wildlife rescuer that included a real life SLOTH!
6. Librarians are awesomely nice! Our local librarian lets poniesandFIREjr run the scanner himself to check out his own books and movies and he thinks that is incredibly cool. They also give great suggestions of books we might love. Last, but not least, they sometimes give out free snacks! So many wins!
7. Our library is dog friendly. I suspect this isn't the case everywhere, but how cool is it to be able to bring you dog?
All in all, there are so many things to love about libraries, most of which is that they are in EVERYONE’S budget! In honor of National Library Week, take some time to swing by your local library and check out all the amazing free stuff they have to offer.
Confession time - we do not follow the Dave Ramsey plan strictly. When we first started out, we were pretty strict with the plan, but we NEVER stopped contributing to our 401Ks.
At first, our reason for not stopping was the hassle of the paperwork of stopping, but the more we researched and learned about personal finance, we came to peace with the choice to contribute up to the match amount during our Baby Step 2 journey of paying down our consumer debt. As we paid things off, we eventually upped our contributions and we now contribute 15% each to our plans and I receive a 4% match. My husband receives a 3% match.
If you have a 401k plan offered through your employer, I strongly recommend contributing, even if you start small. What makes a 401k so great? Let me share my thoughts with you.
1. They are portable. Anything you put away goes with you, even if you leave your employer in the future, unlike a pension plan.
2. The contributions go in PRE-TAX, which reduces your taxable income. This reduces what you owe in taxes and reduces how it hits your paycheck.
3. Should you pass away, the funds in your 401k can be passed along to your spouse or children.
4. No taxes are owed on the 401k or it's growth until you start making withdrawals. Likely, when you retire and take withdrawals, your tax rate will be lower than when you are working, so this will be a savings. Whatever stays invested, stays tax free.
5. Many employers offer a match, which is a 100% return on investment when you invest up to the match. Where in life can you get a guaranteed 100% return?!? Really is not something to be missed.
6. Compound interest. By starting early in your career even small contributions can compound into a large amount of money by the time you retire. If this is confusing to you, take a moment to google "Story of Ben and Arthur Dave Ramsey." This is a great showcasing of what can happen over time, even with small figures.
If you have the option to invest in a 401k at your work, start today! Don't let confusion or the hassle of paperwork hold you back, sign up and get started. Even if all you do is put in 3%, start there and raise it another percent each few months.