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.