Debt Free Except For The House!!!!

Well, it's official. We are debt free except for the home mortgage!

We closed on the refinance and everything went well. The out of pocket expenses were less than I had expected ($950) and we won't have a mortgage payment due in May. The first one will be due June 1st. So that is pretty sweet!

And, my husband is expecting a large commission check on May 1st, plus our nice big tax refund should be coming soon. I'm feeling really good!!

So, we were officially in Baby Step 2 for 26 months and we paid off $23,000 during that time.

What's really exciting is that I firmly believe that we have finally figured out how to stop living from paycheck to paycheck. We have finally figured out how to do our budget with an irregular income. It feels so good to know that we are moving in the right direction and things should get better and better.

I have been married for 18 years and during that time we have always struggled with debt. We did not live below our means. Several times we would "pay off" our debts (by adding our debt to a refinance, or when we took out a 401K loan, etc.) but we never changed our ways and eventually got right back into debt. Most years I found that we spent about $10,000 more than we earned - no matter our income.

Things are different now. We forecast our expected income and our expected expenses. We follow a budget. We spend with cash.

Even our mortgage broker complimented us on our finances and said we are doing much better than most people our age that he works with. I know we still have a long way to go, but it did make me feel good. I finally feel like a grown up. I know how to delay gratification. And the more I delay, the more I realize how little I need to feel satisfied. :)

Hello, Hello

So, here's what I have done to earn extra money this week:

Church Nursery: $32
Blog Ads: $200
Jewelry Sales: $127
Babysat Neighbor Child 2 days: $85
Total: $444

I definitely need to start focusing on SAVING money again too though. Best to tackle the finances on the saving and earning sides!

The Cost of Tonight's Dinner

I have been craving going out to eat, but for the benefit of our budget I have been trying hard not to. So, I decided to calculate how much my home cooked dinner cost.

Here goes. We had Chicken Marsala with rice and mixed vegetables for 5 people.

Boneless Chicken: $3.33 (1/3 of a $10 family pack)
Marsala Wine: $1.00 (1/4 of $4 bottle)
Flour: $ .10
Butter: $ .25
Mixed Veggies: $ .75 (3/4 of $ .99 bag)
Rice (store brand Rice A Roni): $ .59
TOTAL: $6.02

So, the total for dinner at home for 5 people was $6.02. If we had gone to our family's favorite local restaurant, the bill for the 5 of us would have been about $46.00!

Grade Your Finances

Check out this cool calculator at CNN Money. Answer some questions and get a grade on your finances. (I got a C+, but this should improve drastically over the next few months.)

Moving On To BS3

Well, we are still plugging along.

We have been approved for our refinance, we're just waiting to get our closing date. Our new mortgage will be a 15 year mortgage for $240,000 at 4.5%. This will cover (pay off) our Home Equity Loan and get us "debt free except for the house". Yay!

We will then move on to Baby Step 3 - save 3 to 6 months of living expenses as our Fully Funded Emergency Fund.

Here is what I come up with as our bare bones monthly living expenses:

Auto Gas: $200.00
Auto Insurance: $120.00
Grocery: $400.00
Home-Cable/Phone/Internet: $150.00
Home-Electric: $180.00
Home-Mortgage: $2,250.00
Home-Oil: $350.00
Home-Trash: $22.00
Personal-Braces: $100.00
TOTAL: $3,772.00

If I round up to $3,800 and plan to save enough to cover 6 months, that would be $22,800.00. I didn't include COBRA insurance payments (and I really don't know how much that would be) but I also didn't count on receiving "unemployment" money (which I also really don't know how much it would be or how long we would receive it for) - so I'm hoping those 2 will cover each other and cancel each other out?? (Anyone know more about these things?)

You might also notice that I left our cable/phone/internet rather high at $150 a month, but I figured we'd need the internet for me to continue my on-line business and for my husband to job hunt, and I figured we would want the cable as our only entertainment. (I fear that if we were to cancel it we might snap and go back into debt.)

Miraculously, we are expecting a large tax refund (even though we changed our withholding last year, guess we need to change again), and a large commission check in May and July - soooooo, we could actually have our FFEF by this July!!! This is amazing to me!!

This would mean that in just a few short months we could actually move on to Baby Steps 4 and 5 - and not a minute too soon as my oldest daughter is 12 and we need to really focus on college savings.

So, I'm feeling pretty optimistic tonight.

How did you all figure how much to save for your Emergency Fund?

Hi

We're back from my sister's wedding in Florida. We had a great time, but there was one major unfortunate incident. I lost $1,000 cash.

Well, not exactly lost. The day of the wedding we had a lot of setting up to do. My husband dropped me off to help my Mom set up for the wedding and I had the cash in my purse. I never thought to give it to my husband at that time. Then I didn't quite know what to do with my purse. We were setting up at the poolside clubhouse of their development. It is a public place so I was afraid to leave my purse around with all that cash while I was busy putting centerpieces on tables, etc. So, I put my wallet full of cash in my front pocket of my pants. I spent the day setting up and then we drove back to our hotel. Well, my wallet must have somehow fallen out of my pocket as I walked into the hotel. A half hour later the front desk called to say someone found my wallet. We retrieved the wallet that was empty of all cash, and just like that we were out $1,000!

This was only a half hour before the wedding started and I couldn't stop sobbing. My husband was mad at me, but not more than I was at myself. I pulled myself together and got through the wedding but couldn't sleep those first few nights. I'm trying to get over it but I still have a knot in my stomach.

I might rethink using cash from now on. Or at least carry around less at any given time. (I usually do withdraw about $1,000 cash at the beginning of each months fro the envelopes for groceries, gas, gifts, clothes, etc.). Maybe just carry around one week's worth at a time.