I’ve already covered how we lowered our monthly bills, and our grocery and frivolous spending. Doing so made us realize there was no reason for us to have no money left at the end of the week. We were doing it to ourselves.
Before we could put our little snowflakes to good use, we had to determine all of the yearly expenses. Our insurance is a monthly payment, so that wasn’t a deal for us…but one of our main budget hiccups was our personal property/real estate taxes. They doomed us every year. While ours may be lower than some, it is still a considerable amount of money to have to come up with at one time, and right around Christmas at that. And speaking of Christmas, sometimes that would set us all askew as well.
My solution to this problem, since they were both “due” around the same time, and Christmas time at that…was a Christmas Club account from our credit union. We set a likeable, reasonable goal for our Christmas spending, and divided it by 12. Then, we took our tax total (wish I could have decided a likeable, reasonable amount on that! ) and we did the same. Added the 2 numbers together and that was what needed to go into our Christmas account monthly. Since my husband gets paid biweekly, we decided to go ahead and set our Christmas Club deposits to be automatically withdrawn, and deposited directly into the Christmas Club Account. This way we do not miss that money.
This has worked out really well for us. Not only do I have all the Christmas money that I need (I’ve also bought random things and stashed them all throughout the year), but I also have my tax money. For the first time ever, I’m actually waiting on them to mail me the bill! It is a great feeling! Also…the best things about the Christmas Club account….I got interest on that money!! I called around to all of our banks, and they offered 1/3 the amount of interest as our credit union. So, if this is something you want to try, I recommend looking into what it takes to be a member of a local credit union. Generally, it is just a small minimum deposit, like $25.
Anyway, so once we had our monthly bills figured out, our grocery, gas and blow money, and our once a year bills out of the way…..
We put the little snowflakes of money to good use.
We made a snowball!
But, before we could start throwing the snowball, we had to figure out who we wanted to throw it at. So, we made yet another list! All this list making may sound redundant, daunting and excessive…but in the long run it isn’t. To us, it was such a wake up call to continually see these figures written out on paper. I’ve kept some of my original lists (I have a file folder for all things budget related) and to look back on the little side notes and the figures is just astounding. I urge you to make these lists even if you feel it isn’t necessarily important.
This list was basically everyone we owed money to. Hospitals, Credit Card Companies, our vehicle loans, everything other than your mortgage. List it all seperately with the total amount owed and the minimum payment amount monthly. If you know the interest rate, write that down as well. Then, we organized our list by the smallest debt to the biggest debt.
We then took our snowball amount, which was now minus the tax/Christmas money, and added it to the minimum payment of our smallest debt.
At the time, in our case it was a local hospital bill. I had already set up a payment arrangement with them in the amount of $30/mo. So, I took my extra money (I’m unsure at this point what that exact amount was, so I’m going to throw a number out there) of $60 and determined that I would pay $90/mo to the hospital. That annoyance was soon out of the way and we moved to the next one. Amazingly enough, that was also a medical bill. The minimum on it was also $30, so I added the $90, from the first snowball, to the $30 minimum. This made the snowball amount to be $120. We continued to roll it, and roll it. ANY, extra money you receive (tax returns, overtime, ebay sales, yard sales, whatever it may be) needs to be thrown directly at the debt. I never let it sit in the account until tomorrow…I transfer the money immediately. I’ve tried just letting it be, thinking I would transfer it tomorrow….well tomorrow never came, and before I knew it, we had spent it.
Our little annoyances were gone in no time. We were seeing massive amounts of progress, which is why I believe we were able to stay on track.
When we first started our journey, our list of annoyances was close to 10. Now granted, 4 of those were medically related. Today, our annoyance list stands at 2! We’ve had such an amazing amount of weight taken off of our shoulders.
One thing that we are currently working on, in addition to our $1000 emergency fund (which by the way, you should establish before you snowball your debt) is an account for occurances we’ve noticed hit us every year. This includes:
- Medical Expenses. We’ve decided to have our “max out of pocket” amount from our health insurance company, in an account. While we have never actually had to pay that much in medical expenses, we might have to. It would be nice to have it all saved up so we wouldn’t have to worry about it. $1500
- Home Repairs. It’s inevitable. We are homeowners and there is always going to be something that needs to be fixed. We’ve set a $500 goal for this.
- Vehicle Repairs/Tires. My husband drives a new truck (that is our biggest annoyance, btw) so that shouldn’t be an issue. But, I drive an older van. She’s been pretty healthy…but again, you never know. You might as well be prepared, because you never know when it will happen…and you don’t want to be thrown off track. Also, we live on a gravel road…so we go through tires like nobody’s business! This amount we’ve set at $1000.
Hopefully we will be able to finish these accounts with our tax return this year. This should help us continue to stay on track and avoid those hiccups that set us all askew. Sometimes those hiccups take forever to recover from, and in the meantime you get all discouraged and it is hard to get back onto the budget. Saving up for those things should avoid it.
This journey has been such a learning expirience for us. We look at things so much differently than before. We’ve changed somethings since we originally started, but our new ways work better for us, for now. I’m sure we will continue to change the way we do things as our situation changes. This is just a list of the things that we have found helpful to us…everyone is different and so is their financial situation. Somethings that work for us, may not work for you.
I would love to hear how some of you manage your money/budget.
**As a disclaimer…I would also like to add, that I could sit here all day and say that “we” did this, and “we” did that. The truth behind the matter is that we prayed continually. I continually asked for strength, for wisdom, for financial savvyness. It was tough at times, but I knew that although I had these things/money in my possession, that everything was truly all His. I prayed that I would be a good steward of the things that He blessed me with. It was Christ who gave us the strength, the willpower, and the resources to get where we are now. And we continually pray that we would stay on track and get out of this debt pit we got ourselves into. I firmly believe that there are better things/causes for our blessings to go to other than some multibillion dollar bank. I would rather further His Kingdom, than continue to be so wrapped up in mine! :)**
–Bonus points if you know where that last line came from!–