All My Stuff

Three years ago Mike and I were in a very different picture financially.  We were entrenched in debt (about $45,000 down from $70,000 at that point) and slowly paying it down….very…slowly.  Our income was probably more than double what it will be this year and so was our spending. I’m bringing this up because I realize many of you don’t know this about Mike and I.  You just came on board and we don’t talk about it anymore since it isn’t news.  It was a real pivotal point in our lives.  We took drastic moves in the summer of 2009 to change our path around spending.  It changed us.  It made us happier… and not the kind of happy like we are skipping-down-the-lane-happy but a deep contentment.  It didn’t just happen though.  The transition was bumpy. I was really pissy about it.  Today I thought it would be interesting to revisit that transitional time so I’m reposting something I wrote back in November 2009.  At this point we had cut back on our spending for about 3 months.

After five years of paying on $70,000 of debt we still had $35,000 left. Mike, my husband, had sold me on the idea of paying off the rest as fast as we possible could rather than as slow as the credit card companies would allow us. We began planning how to implement this goal. In the last four years we have not taken on any more debt (good thing) but we have only been making the minimum payments on what we owed (not so good). We were on the right track but we needed to learn to live within our means rather than buying stuff on credit and borrowing from our future selves. Presently we’re pissed at our past selves for putting us in the position we are in now. Covering the minimum payments on our credit cards is a large burden on our monthly budget.

In order to free ourselves from it as quickly as possible we had to take a long hard look at our spending and make some decisions about what we were willing to do without in order to use our money to pay off our debt as soon as possible.

As I looked at every line item in our budget and I asked myself, ‘Is spending this money now worth putting off retirement one more day?’ If we stick to this budget for seven months our consumer debt will be gone! In the back of my devious mind I thought, “I could always go back to my old spending habits after I got through this.” I can do most things short term. It’s the long haul that kicks me in the butt.

For those of you that have never tracked a dime of your spending here is my advice: Start simple, if you get too complicated you’ll have a difficult time sticking to it. It’s about having an idea of how much money is coming in and how much is going out. If you know how you actually spend your money then you have choices. It creates options for you. I like having options. Five years ago I started with a budget that had eight categories that I tracked on an excel spreadsheet. I now have forty-seven categories that I track in Quicken. For the last two years we have also had a ‘mini-budget’ on a white board in our kitchen. It has seven categories that track the discretionary (‘mad’ money) items that we have problems keeping on budget. It’s hung up for the world to see. At parties it’s always a topic of conversation. The board has our monthly budget for each category and how much we actually spent. I update it every week. This has been our most successful tool for keeping our spending in check. Anymore, we tend to earn gold stars with these categories of spending. I compare it to someone trying to lose weight and posting an inspirational saying on their refrigerator to give them pause before opening the door and stuffing their face with a million calories before bed.

In order to achieve our new svelte financial lifestyle we’ve had to cut back on some things I considered essential. I’m finding myself resistant. I’m thinking about everything I can’t buy. I feel like an entitled brat. My brain is just ticking away the same mantra: ‘I want, I want, I want!’ And here is the kicker: this is the best time for us to do this. In the past we have earned less money, a lot less. I find myself going to the library (and not the bookstore) to check out every book I can find on financial advisement. I need reassurance and guidance that this is not the scary blob it appears to be. Michael can do without many things. He’s ready to go live in the woods and eat berries for the next year. I like ‘things’. I like to go to the store and peruse the aisles for hours just looking at stuff.

But do I love stuff all that much? How much do I really love stuff? Do I love it more than retiring earlier in life or ever? Would I rather be spending my time working more to buy stuff or spending a few more hours with my family? In fact, I’m wondering right now, do I really love stuff? I’m starting to hate all the stuff in my house. I’m looking at it and remembering how much it cost and resenting it.
As I thought about how I got to the place I’m at today I realized that the majority of the debt I incurred was the result of businesses I had started that were not financially successful. In the past, I have followed my passions, tripping over myself to get out of the starting gate. I realize now I have done it at the expense of financial stability. Lately I have softened or maybe just calmed down. This softening has allowed me to take a moment to think about the possibilities and consider what is important. I’m now seeing the choices in my life as a gourmet meal to be savored slowly rather than chomping through each one like a starving child. Having more choices with how I spend my money seems a revolutionary thought. – Molly (Nov. 2009)

There’s a few interesting thoughts I had when I recently re-read this post.  My memory of the situation was that I was going along with Mike’s plan but really unhappy about it.  I believe that this was true in moments but I forgot how making fat payments to the credit card company was a huge stress reliever.  The other thing I discovered was that both Mike and I had forgotten that we had been using our white board to track our expenses for years before we cut back.   We were having a really hard time not spending more than we were bringing in with our enlarged incomes!  This was monumental to see because last year we actually under spent on a much reduced income!  This proves my theory that back then it did not matter how much money we made-we were going to overspend.  We’ve switched gears now and even with our income going up and down (and down some more) we consistently spend less than we take in.  

You may read this post and think “Man I really need to get my finances in better shape but it’s just too hard, not the right time, I don’t know where to start…”  We could see we needed to rethink our spending for years but it just seemed impossible until we decided we were going to do it and once we did it our lives changed dramatically.  You can do it too.

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10 Comments

  1. Sandyl
    Posted April 23, 2012 at 1:28 am | Permalink

    Now that I am house shopping, I am having many inner monologues with myself about spending. I just have this resistance to spending because I worked so hard to be debt free. I think also part of it is because I haven’t found that dream home yet either.,,,most of the time I am like is it really worth going back into debt for this house? Usually the answer is no.

    I know from personal experience that no matter how meager your earnings, there are still ways to cut back. A young girl I know is just starting out and I sent her a foreclosure site and there are properties in her target town that would have a mortgage payment of $334/month. People set their sites too high from the get go and the people who have done the best financially do get starter homes and don’t start with the dream house off the bat.

    I know your post isn’t about home buying, but it’s usually ones biggest expense. I do want more land though. I am jealous of all your outbuildings.

    • Posted April 23, 2012 at 6:22 am | Permalink

      No, this is good Sandy.  When Mike bought this house the year we got married (2003) he could have qualified for a loan twice the cost of this house.  We asked to look at the cheapest house listings and there were only two.  There was a lot of push for us to re consider and get something bigger.  We still can’t really put our finger on exactly why we didn’t but we are so happy that we have our small mortgage.

  2. Noelle
    Posted April 23, 2012 at 9:09 am | Permalink

    Love it! I want more of course…..more of your blog that is! I need to go on a financial diet too and a regular food one too while I’m at it. :-) As I sit here in my office (should be working) I am surrounding with tons and tons of “stuff”. We are past the frenzy of constantly buying for our only child, but now what does one do with the remorse and mounds of stuff! DONATE!!! I look forward to more posts of your successful journey!!!! Oh and Michael, I have been meaning to ask you how you cooked the fantastic asparagus you made for us that night the girls made the nachos. They were perfect. Is there anything the two of you can’t do? :-) Miss ya…..let’s get together soon. xo

    • Posted April 26, 2012 at 6:40 am | Permalink

      Noelle, you are a funny one! I do agree Mike make the best asparagus, just crunchy enough :)

  3. Posted April 25, 2012 at 6:31 am | Permalink

    This is such a good post, Molly, with such a helpful perspective. It’s great to read it again.

  4. Posted April 25, 2012 at 11:03 am | Permalink

    i like this. i’m 70,000$ in debt (myself) due to university student loans and associated credit card debt. that’s ef’n scary. i’m glad to see you guys have had some success. right now it feels insurmountable.

    • Posted April 26, 2012 at 6:40 am | Permalink

      It did for us feel like a huge tower looming over us.  We are not in the position financially to make that heavy of a contribution to our goals but I’m glad we did it while we could.

  5. Jeff @ sustainable life blog
    Posted April 27, 2012 at 1:41 pm | Permalink

    Great points molly – I had the same thoughts about 3 years ago, and it’s been nice not having to say “no” because I couldnt make my payments and actually use the rewards from credit cards, instead of paying for other people’s rewards.  

  6. Bren
    Posted March 26, 2013 at 8:42 am | Permalink

    My husband and I just found this website and love it! I wanted to comment on your financial situation and what we did to solve ours. We found ourselves in $50,000 in debt due to a previous badly managed divorce and inadequate medical insurance. We were making inroads on the debt until we both lost our jobs. We had recently purchased a very inexpensive house in Santa Fe with a mortgage that was half what we were previously paying on rent. I contacted our credit card companies and credit union to see if they would work with us until we got on our feet again and we were shocked when no one would negotiate a short term interest rate decrease. We contacted a bankruptcy lawyer just to see what our options were as we did not want to fall behind on our mortgage. We filed chapter 7 last year, kept the house, kept our vehicles and our debt went to 0. Within a couple months Capitol One and other credit card card companies were sending offers (we have one card now with a zero balance for emergencies). Our credit scores 8 months after bankruptcy are 685 and 700, but going up every month. We keep waiting for some awful to happen like all the financial advice gurus predict after bankruptcy, but the only penalty so far is that we have to wait 3 years after the date of filing to be able to get federal grants or funding through Homewise for a solar array. I really admire your lifestyle and the way you are able to pay down your debt, but for others that are in a completely unmanageable situation, consider bankruptcy.

    • Posted March 27, 2013 at 7:01 am | Permalink

      Thanks Bren! One element of how we got out of debt was luck. At that point we both had well paying jobs. Years before we were not so lucky and were looking at bankruptcy. We were able to avoid it but we did look into it as a possible alternative. Good luck!

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