If you missed the start of this series, check this post out first.
In our quest to live debt-free (this is a long-term goal, there’s nothing quick about it), we had to sit down and list out our debt. Which was eye-opening since I felt like we didn’t have much. Well, what we have is just a few loans, but in large amounts. I have selective memory that was serving me well until recently.
So here’s how the Graham family is applying the principles we talked about on Monday:
-I have about $15,000 in student loan debt. Some undergrad, but mostly it’s from my master’s degree. That will be paid off by December 2013.
-We own two homes: the house Chris bought and lived in before we were married and the house we live in now, that we bought after being married for about a year. We rent Chris’ old house out and that covers the mortgage. We don’t make any money off of it, they’re basically just paying our mortgage every month. Once the student loans are paid off, we will concentrate on paying that mortgage off in seven years (or less). Did you know that paying your mortgage and the next month’s principal cuts your mortgage in half? I didn’t, but I’ve asked around and apparently that’s pretty common knowledge. Oops. The rental house has a little over $74,000 left on it. Once the student loans are paid off, that will free up an additional $250 a month to put toward that mortgage. We’ll also chip in the rest of the money so that we’re always paying next month’s principle with the current payment. According to our plan, this won’t start until January 2014.
-We have a Kohls card with about $400 on it. This one is my fault. And it has been taken away from me for the good of the family.
-I don’t like the idea of automatic payments coming out of my checking account because I’m afraid I’ll mess something up and overdraw it. So we have our gym membership, some random monthly Thirty-One business supplies, and our Hulu/Netflix fees put on our Visa. It’s in the budget to pay the whole balance off every month, but this summer, I didn’t do that. So now there’s $900 on that credit card. I’m in the process of having all the monthly charges moved to automatic withdraw from our checking account. I’ll have to be more aware of what that account looks like, but we’re spending money we have as opposed to money that we will owe later. We need to be totally paycheck-reliant and not charge anything to a credit card.
-Both Chris and I will create and maintain our family’s budget. We’ve been on a budget since getting married over six years ago. And I’ve always been in charge of our finances: I pay the bills, I budget the money, I make sure we have a savings account, I make large financial decisions. I do all of this alone. I’m not going to lie, I like it that way. Chris doesn’t care, I do and so I do it. But that’s not how it’s supposed to be. Chris is accountable for our finances just like I am. And sometimes I don’t make the wisest choices with our money and no one holds me accountable. This is something that is being worked through right now.
-Changing our tithing. I can say, through no power of our own, that we have tithed regularly since we got married. There has been four times we have not and I remember them vividly. But according to that book, we haven’t been tithing correctly. We tithe monthly to our church but only half actually gets to our church. We made the decision years ago to send half our tithe to some missionary friends. We wanted to support them in their ministry and used part of our tithe to do so. But through this book, I realized what we were doing wasn’t what God intented. Our tithe, all of it, must go to God. If we want to support missionaries, donate to a good cause, or help a family who is struggling, we can’t take our tithe to do that. Which we have been doing. Also, there has been multiple times where a family member was struggling and instead of writing our tithe check to the church, we just sent that money to someone. And that’s the difference between tithes and offerings. Those should be extra, those should be offerings, but my tithe is for God only. This is where the debt thing comes in also–if we were debt free, we could easily support, donate, or share our extra with others. But if all our money is tied up because we owe others, we don’t have the ability to minister to others with our resources. I kind of felt foolish after learning about this one.
-Being an example to our daughters. This will be addressed in part three which will post on Wednesday. We had some pretty strong convictions in this area and that deserves its own post. But making sure our daughters are learning about money from a biblical standpoint is very important to us. Right now they’re only one and three, but there are things we’re doing now because it’s never too early to start.
-We do not have any automobile debt. We drive older cars so that we can afford to have Chris stay home with the girls. This is a constant struggle for me because I have some pride issues with driving an older vehicle. I’m working through those, but I do get caught up in the idea of having a nice car often. This book reinforced our decision to drive older, paid-for cars, but I’m just going to say I’m still not happy about it.
-Our family budget is also for an upcoming post. Where all our money goes because it feels like it all goes out and none of it ever stays with us.
So what do you think? Is this plan to be debt-free crazy? Do you have debt? I would feel a lot better about myself if you could go ahead and tell me all about your finances in the comments section…thanks.
As always, it’s nice to hear someone’s honest, transparent, struggles and know that we’re not alone.
I think that it’s against the culture to be biblically focused on your finances and I commend you for it. We took a Crown Financial class 6 years ago and it changed our lives. At that time I continued working the evening shift at the hospital to pay off our vehicles. I hated being a slave to our debt. We have been debt free minus the house since 2008. It’s so freeing knowing that you owe (almost) no one. We have considered getting a new to us vehicle since J drives SO much for work, but are saving cash to do so. I can’t stand the thought of working more and missing time with my kids because of a (stupid) car. Good job Grahams!
I read this blog this morning and have to say, I was moved. I love your transparent feelings and thoughts. Keep them coming, such and encouraging thing to read this morning!
It’s an awesome plan to be debt free! Like I said, I ordered the book, it’s on it’s way. We currently have a mortgage on our house, 1 paid free & clear car (hubs), a few thou remaining on my car, and a rolling debt on our 1 credit card. We use it for big purchases so we can get air-miles to go see family, but it’s paid off monthly. In my single days I was in big debt, and debt cab be a scary thing!
Oh man, we have a LOT of it. BUT my husband is a farmer, so I am just used to it. We just bought more land and that has a hefty price tag, but we will also be able to get income from it when he retires. SO, it will be tough for now but its ok. We don’t have any credit card debt or student loans. Just the house, my car, and our farm expenses.
This words are absolutely true.
My husband joined the military at the age of 33 so we could break the cycle of “keeping up with the Jones’ ” and we were tired of being house poor. We too owned two homes and were renting both when we moved to Kentucky for the Army. While hubby was deployed to Afgh., I put all of the money we were not paying in car payments (because we went down to one car), insurance, gas, and food – all of it onto debt…and we paid off $17,000. When he came home, we were able to sell the larger of our two homes. The smaller one actually brings in more than the mortgage so we’ll be keeping that for now, but I appreciate your suggestion of paying the following month’s principle amount. I didn’t know that! Thank you!
I’ve actually thought about my husband joining the military so we could move and I could stay home with my babies…he wasn’t as keen on the idea as I was. But paying off $17,000 in debt is AWESOME! Good work! Since I’ve written this post, we’ve paid off a lot more debt, just chugging along slowly but surely. Maybe I should update how things are going, this series seems to have interested a lot of people recently. Brandi, thanks for sharing your story, I get jazzed up by hearing how other people handle their finances. 🙂