Just in time for those New Year’s resolutions, I wanted to share a financial resolution our family achieved for 2024: our last vehicle is officially paid off 31 months ahead of schedule! It has been a long, arduous journey but we finally achieved it.
We’ve been snowballing our debt payments this year and chunking in the raise I received from work and my husband’s overtime each month. My vehicle was paid off early in March and we took that car payment + our snowball and put it all towards the truck each month. For the next 8 months, we were adding $1,500-2,000 towards the truck payment. In December, I pulled less than $2,000 from savings to make that final payment. It felt SO GOOD! I just peeked at the payment website and it has a “CLOSED” icon on the page now with $0 balance. How exciting!
With that vehicle paid off, we have our mortgage and a vacation investment remaining for outstanding debt. The vacation investment is the smaller debt so that will be the next thing to tackle but I’m hoping to split our snowball between that debt and building our savings. We shall see. I want to look at our first month without the truck payment to evaluate where the income needs to go before we make any big decisions. So many questions swirl in my head like what about trying to build up an extra retirement stream through a Roth IRA or perhaps a 403B? What about putting extra towards our mortgage each month and see how much we can whittle that down? How much in savings is enough to feel comfortable? In the midst of the thoughts about the future, I like to think about the past.
It’s funny how different our finances look now compared to how they started 11 years ago when we hit our breaking point mentally and financially. Back then, I handled the bill paying in our family and J was minimally involved in how our paychecks were spent. We were hemorrhaging money like crazy and living paycheck to paycheck. I hated checking the mail every day because I worried there’d be another bill waiting for us in the mailbox. I felt like I had an ulcer from the stress of floating checks until payday and racking up credit card debt. I can’t even say we had a budget in any sense of the word. It was more like, here’s a stack of bills to pay on the counter and what can wait until the next payday and what has to be paid now. We were not doing well financially and things had to change. You can read my original post about how a broken water heater was the catalyst for change in our house.
And since this is when most people start making their New Year’s resolutions, if one of your resolutions is to improve your financial situation, begin with an honest assessment of your situation. To me, that looks like the following:
Run your credit report and see where your debt lies. Run a credit report on yourself. www.annualcreditreport.com – do it online and you’ll usually get your report immediately after verifying your identity.
Why do this? It will show all debts listed under your SSN that you would be held liable for. You’ll be able to see your debt amounts, length of debt, and other details about each creditor that is owed. There are three agencies – Equifax, Experian, and TransUnion. You can request a report from any or all of them and its free annually.
Print out your bank statements for six months to see where you’re spending. I’m old school and like paper. I sat there with my bank statements and used markers in a LOT of different colors to highlight what I was spending money on; there was one color for all fast food purchases, another color for credit card payments, yet another color for the water bill and our mortgage. I’m also a visual person so seeing just how much fast food color there was on our bank statements was horrifying, especially after I added the amounts up and realized how much eating out was costing us.
Write down your monthly bills for the necessities (sometimes people refer to those items as the four walls – shelter, utilities, food, and transportation) and see how that compares to your income each month. Can you cover the four walls with your income? If so, that is a great start and allows you to see how much you have left to tackle the debt.
Once you see your incomes and spending, you can build the basics of a budget and hopefully see a much brighter fiscal future when 2026 rolls around. It won’t be accomplished overnight (after all, that debt was most likely not created in a single day) but each step forward is a step in the right direction. You’re changing your financial situation as well as your mental approach to money. It isn’t as simple as flipping a switch; it is continuing to make the tough choices at times, continuing to evaluate a purchase and its impact on your debt free journey.
I will say that I struggled with credit card usage for a while, especially in the beginning, and when we decided to make changes, I went drastic and legit pulled all my credit cards from my wallet, stuck them in a Tupperware of water, and froze them so I couldn’t use them anymore. I knew I would be tempted to use them if I had easy access to them. At least encasing them in ice meant it would take me at least a few minutes to get them back out and hopefully I would talk myself out of that shopping itch I wanted to scratch. You can also take the same approach with your credit and freeze that to prevent yourself from opening up any new accounts in your journey to be debt free.
To freeze your credit, visit: https://www.usa.gov/credit-freeze.
Why is this important? It prevents new accounts from being created under your name; it protects you from fraud and maybe from yourself with the temptation. Contact one of the three credit reporting agencies: Equifax, Experian, or TransUnion. It can be done online, by phone or by mail. It will be completed within one business day if request is done by phone or online. To lift the credit freeze in the future, contact one of the three credit reporting agencies to make the request; it can also be done online, by phone, or by mail. If online or by phone, it would be lifted within one hour.
So here is to a new year and a new opportunity to choose financial freedom with step 1: Assess your situation and be honest about it. See where you are at and think about where you want to be. Set financial goals for yourself that could be immediately achievable like “don’t put anything else on the credit cards” or “save $100.” Add in some longer goals that you can work towards in the next few months like “find cheaper car insurance” or “curb my dining out expenses by half.” Baby steps are still steps. Just keep moving forward.
You can do it! I am rooting for you!
Going Green In Texas 