Our Debt Free Family

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3 Advantages of Being Debt-Free

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advantages of being debt-free

If you have ever lived paycheck to paycheck you know it is no cakewalk. Oftentimes, people are living this way because they don’t have all of their debts paid off or their cost of living is simply too high. Relieving that stress is only one of the many advantages of being debt-free. Here are some more to inspire your journey.

3 Advantages of Being Debt-Free

Anyone who has decided to embark on their own debt freedom journey probably knows most of the benefits of living a debt-free life. However, here are three perks you may have not considered yet…

  1. You get an instant pay raise. When all of your debts are paid, you’ll have more free income to spend, save, invest, and live your life with. Think about it. Every monthly payment you are making now towards an account will now be yours to spend as you wish. For us, that would mean more than $1,000 in extra cash month to month.
  2. You’re able to have more fun. Instead of borrowing money to go on vacation or biting your nails over the cost, you can stash away money more easily for fun things. You may feel like you are pinching pennies to make these things happen but you are able to freely take vacations and go out to have fun without worrying about where the money is being borrowed from.
  3. The potential to gain wealth is greater. Being debt-free will open more doors for you than you could imagine. You can create a plan to generate wealth for yourself and your family. You might even be able to become a millionaire because you’ll have the freed-up money to start saving and investing. If you are able to build up your net worth this way you are more likely to be able to leave behind a legacy for your family.

Debt Freedom Does Have Some Disadvantages

Believe it or not, not everything that comes with debt freedom is beneficial. There are a couple of disadvantages to being debt-free too.

  • It can have a negative impact on your credit score. You would think paying off all of your debts would have a positive impact on your credit score but it can sometimes have the opposite effect. If you work to pay everything off and avoid debt altogether, your score may go down because you have no way of proving you will pay for things on time. This can make it hard to get a mortgage or loan of any type.
  • You may feel out of touch with the rest of the world. Debt freedom also puts many people out of touch with the things going on in the financial world. For instance, if you are focused on paying things off and stashing money away you may miss a big investment opportunity. It can also make you feel withdrawn from family and friends. While everyone is out on Friday night, you may make the conscious decision to stay in and save money.

That being said, the advantages of being debt-free outweigh the cons every time when it comes to improving your finances. So, don’t let these two things stop you from pursuing your debt-free lifestyle.

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Do People Still Cut Credit Cards?

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cut credit cards

I remember growing up and seeing my mom cut a credit card over the trash. That was it – no more credit cards. It seemed to be something I saw regularly in personal finance advice forums and tips sections. “Cut up your credit cards.” But do people still cut credit cards these days?

An Old-Fashioned Idea

Cutting your cards is a fairly old-fashioned idea. As I said, I saw my mom do it about 20 years ago. In fact, they used to cut your card in the store if it was declined at one time (what a concept, eh?). Physically cutting up the credit cards is more symbolic than anything though.

When my mom chopped hers into little pieces over the kitchen trash can, she undoubtedly still held debt on that card. Cutting it up was to get rid of the temptation to use the line of credit. Cutting it up got rid of the ability to dig herself (and the family) further into debt.

Thinking back, I wonder what personal finance guru told mom to do this (or maybe it was my Paw-paw). Either way, it was one of the key things I remember about money in my home growing up. I may get around to eventually sharing some of the others, but this one came up more recently on Reddit.

Do People Still Cut Credit Cards?

So, do people still really cut their cards? Of course, you should cut it up before you throw away an expired or canceled card, but what about an open account?

When I was scrolling on Reddit, I found people are actually still doing this. It came as a surprise to me (just like it does when someone uses cash envelopes still), but I kind of liked it. This is grassroots personal finance to me. It is relatable and, more importantly, it works for some people.

Credit cards for me, personally, were never a huge thing to triumph. The majority of our debt is medical debt, student loans, and car notes. Credit cards never came into the picture much. I hold about a $500 balance on one card. So, whether or not I should cut credit cards never entered my mind, but it could be beneficial for some individuals.

Should You Cut Your Cards?

If you do not trust yourself not to swipe the card, by all means, cut it. However, you should not cancel or close credit accounts if you can help it. That can damage your credit and keep you from doing things like buying a home or starting a business.

In short, if you think cutting your cards will make it easier for you to control your spending and wrangle your debt, do it. There is nothing to ever be lost from seeking debt freedom.

Readers, have you cut credit cards?

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The Things We Do For Family

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things we do for family

In the last personal update on the blog I talked about taking breaks and how important that is. I took a weekend off back in July and it was great. Since then, life has been way more hectic and, guess what? I haven’t had a break since, mostly due to the things we do for family.

What Are The Things We Do For Family?

For everyone, familial relationships can be different. The things we will do for family members and close friends vary widely. Some people are very close with their families and they are a priority in their lives. For others, family doesn’t play as important of a role. My family has always been extremely close and when someone needs something, one of us comes to the aid of others. In some cases, the whole family is needed to put their heads together to resolve a situation.

About a month ago, I traveled to my home state, North Carolina, to help out with my grandmother. My whole family has taken some kind of time off for this matter, even my husband. Now, this weekend, we traveled even more: seven states, 17 hours in the car, and two plane flights. Ah, the things we do for family…

How Far Would You Go?

Everyone has their limits though. Not every family is as close as ours. Not every family gets along like we do and some relationships are just toxic to continue nourishing. When we set out on our journey to come home and help my family this weekend, it was a lot to ask but my husband and I didn’t think twice. We are exhausted, but we helped and did what we could.

Setting limits is important though. In the past, I’ve stretched myself too thin helping family members, especially where money is concerned. There have been times we gave our last $20 to another family member (seriously). Right now, for us, our boundary when it comes to helping out is money. We don’t have it to give currently. However, we are able to give our time and lend a helping hand when we can. Knowing your limits to how much you’re able to assist is important.

Conclusion

When it comes down to it, figuring out how important different relationships are in your life and determine boundaries. You can stretch yourself too thin, but if you define where your lines are and how far you’re willing to go to help you will save yourself a lot of hurt and trouble.

We will be headed back home today after 5 days of running around to help family. We are exhausted and have a lot to do when we return, but it was worth it and it always will be. If we are able, we will always go the extra mile for those we care about.

Readers, what are your feelings when it comes to helping family? Where do you draw the line?

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How Brian Paid Off $30,000 in Student Loan Debt His First Year Out of College

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Paid off $30,000 in student loan debt

Any time someone chooses to seek debt freedom and succeeds in it is amazing to me. Dave Ramsey’s “debt-free scream” is always a heart-warming celebration to see online and speaking to people who have paid off debt always inspires me. Brian Meiggs’ story is yet another inspiration. He took the time to participate in a quick Q&A to share how he paid off $30,000 in student loan debt.

How He Paid Off $30,000 in Student Loan Debt

When it comes down to it, Brian was able to pay off his student loan debt by pure determination. When he graduated, that was his sole focus. He did not want that debt to have a hold over him for 10+ years, as it does with so many other graduates. Here is how Brian Meiggs got started on his journey and led him to debt freedom.

paid off $30,000 in student loan debtQ: Tell me a little about yourself. What inspired you to seek financial freedom?

A: My name is Brian Meiggs and I’m an entrepreneur who spends most of my time building finance-niched websites from the ground up and making them profitable. Some of my recent projects include My Millennial Guide, Saving Junkie, and SavingExpert.

I’ve always been a hustler. In college, I bought used iPhones and flipped them for a profit. I had a few corporate finance jobs after college, but I found myself bored and without a purpose. I knew I didn’t want to work a 9-5 until I retired so I looked for a way out. I started a blog and eventually, it took off, and now I do it full-time. I enjoy every moment of it and the freedom it brings.

Q:  How much debt have you paid off?

A: I graduated from college with around $30,000 in student loan debt. Being a 23-year-old, that is a lot of money. I spent so much time building a rock-solid budget and maximizing my income in order to tackle this debt. I paid off all of my student loans within one year of graduating college. It was so liberating.

Q: How long had it taken to get to where you are financially?

A: It definitely took me a while to start making my desired income. I thought back and reflected, “man, I’m really doing it!” What helped me reach my income goals was looking at other bloggers who were making anywhere from $10,000 to $30,000 per month. I figured if they could do it, why can’t I?

It wasn’t until my 3rd year of blogging that I felt comfortable with quitting my day job. I was working as a Credit Risk Manager making around $85,000 per year. Once the income from my blog was making me more money per month than my job, I felt comfortable quitting.

I have a funny quitting story, but that’s for another time. Now, I’m making more than six figures per year with all my websites. I simply enjoy the financial independence and not the money itself.

Q: What was the key to your success?

A: My success came from looking at other bloggers who were successful and trying to make my website better. I’m at a tipping point where if I really want to grow, I’m going to have to hire a full-team to help with management. I really enjoy running everything myself but if I want to continue to grow, this needs to happen.

Q: What is the most important part of your finances?

A: The most important part of my finances is continuing to maintain the lifestyle I am currently living. I’m not opposed to splurging on things that I want or saving every penny. I recently purchased my dream exotic car (BMW i8) and I have no regrets about it.

Q: How do you stay debt-free now?

A:  Staying debt-free is done successfully by spending less, finding additional sources of revenue and scaling that up, and having a budget that I actually follow.

Q: What is something you wish you could tell your younger self about money?

A: Money is passive. It comes and goes and while it can make you temporarily happy, creating memories and experiences whether solo or with friends and family, that’s more valuable.

Q: What is your favorite quote?

A: “The root of joy is gratefulness”  – Brother David Stiendl-Rast

Q: Is there anything you would like to leave readers with?

A:  I just wanted to thank you for reading my story and learning a bit about me. I would say the best way to invest is in yourself. Never stop learning or teaching yourself new skills. Every day you should be better than the day before. What do you want in life? Go out and get it. Perseverance is failing 19 times and succeeding the 20th. 

Closing Thoughts

Looking at the success in Brian’s story and how he paid off $30,000 in student loan debt, I thought to myself, “Man, I wish I had done that!” Could you imagine starting out your adult life with absolutely no debt? Hopefully, sharing his story inspires other young people to consider doing the same or taking similar approaches to pay off debt and focus on financial freedom.

Readers, what do you think about Brian’s story? How would paying your student debt off immediately impacted your finances? Was it ever a possibility? 

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We Are Officially Credit Card Debt Free!

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credit card debt free

COVID-19 definitely put a damper on our family’s debt freedom journey (at first). However, my husband has since gotten a new job and we encountered some windfalls that have allowed us to pick up some of the slack and refocus on our debt-free goals. Now, (insert trumpets) we are credit card debt free!

Being Credit Card Debt Free

Prior to this, we had about $2,000 in total credit card debt. We only had about $500 left to pay off though. So, once we got a windfall, we paid off the last account balance of $498.21, and just like that, we are free of credit cards once and for all.

Honestly, it feels pretty weird! I know it will take of lot of dedication to continue being credit card free. Now, we are one step closer to financial freedom and the ability to put that money towards other debts.

What’s Next

And that is exactly what we have planned next!

Because we no longer have credit card debt to pay off, we are going to refocus that money on paying off the tool loans, the car loan, and student loans. To do this, we are going to focus on them in this order…

  • Tool loans – roughly $10,000 owed
  • Car loan – $19,216 owed
  • Student loans – $24,185 owed

Once these things are severely paid down, we will focus on paying off tax debt and getting any other financial needs situated. Now, you’re thinking, how long will this take?

I’m hopeful it will take us between two and three years to be debt-free. The plan is to add some additional funding to our emergency savings over the summer and then attack our debt full-on. Every extra penny we have will go towards paying off each of these accounts (in that order). Any windfalls, such as cash gifts, bonuses, and over time will also go towards debt repayment.

Once we are debt-free, we will be looking to buy a home. Initially, that will be more debt, but because we are going to be financially free, it will be easy to swiftly pay the house off. Being credit card debt free has us both optimistic and thinking about our debt-free future! Readers, how did you feel after paying off all of your credit card debt? 

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5 Things to Avoid to Live Debt-Free

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Live debt-free

Reaching financial freedom is far from easy. Only 29% of Americans consider themselves to be financially healthy. Once you obtain debt freedom, you want to be able to stay there. So, there are several things you’ll want to avoid to live debt-free.

1. Budgeting is Always Crucial to Your Financial Health

You had to budget to get out of debt. That doesn’t stop just because you no longer have creditors to pay off. In fact, budgeting is even more important once you’ve paid everything off. If you don’t set a budget you run the risk of racking up debt again if an emergency arises.

Remember that your budget needs to be 100% cash. Don’t consider your credit cards or any other form of money spendable.

2. Overspending is a No-No If You Want to Live Debt-Free

That directly ties into overspending. If you start considering the money available on credit lines to be spendable, it is more likely you’ll restart the cycle of debt in your life. You certainly don’t want that after all of your hard work to get where you are.

Instead, plan for bigger purchases and save up for what you want. You should also have a set budget for recurring expenses and other plans. Don’t deviate from that budget.

3. Don’t Stop Saving Your Money

Saving money isn’t just important during your debt freedom journey either. As mentioned in the point above, it is important to save money for large purchases and planned expenses. However, it is also always a good idea to keep money saved.

Having an emergency savings fund will keep you from tapping into credit lines if something comes up. Additionally, saving money can help you secure your financial future and ensure you’ll be able to retire someday.

4. Giving Up on Investing Isn’t an Option

When it comes to saving for retirement, you should also continue to invest while you live debt-free. Even though you may not have as much cash flow or you may be tempted to spend cash, it is a good idea to invest in a diversified portfolio.

Not only will this allow for you to have financial freedom throughout the rest of your life but it can help you expand your current finances. Avoid being afraid of the stock market once you’ve paid off your debts.

5. Neglecting Insurance Will Cost You

Renter’s insurance, homeowners insurance, car insurance, and health insurance. Purchasing coverage is important to protect your finances. In the event of an accident or emergency, these policies can help you avoid racking up debt.

Even though the monthly cost of insurance may seem like a pain, it can help you replace damaged items, restore your health, and protect your belongings. Without it, it is easy to swipe your credit card. Insurance is crucial if you want to live debt-free.

Readers, what else would you add to the list? How do you live debt-free?

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How to Organize a Budget Calendar

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budget calendar

Everyone has a way they like to organize their financial plan. For some, it is easier to log everything into a spreadsheet. Others have started using apps to manage their cash. In our family, we use a budget calendar to stay on top of our finances.

Our Budget Calendar

While writing everything down on a calendar may seem a bit old-fashioned, it can work really well, especially if you do better with writing things down. I personally still keep a physical calendar for everything, so adding our budget into it made complete sense. Here’s what ours looks like…

budget calendar

As you can see above, I have color-coded what money we have going in and what we have going out every week. Our paydays are written in red and all of the money going out is written in blue. This includes all of our bills, groceries, and my hubby’s vape fluid for the month. As you can see, there is also a note to have money budgeted for Valentine’s Day as well as $500 into savings.

Creating Your Own

If you’d like to create your own budget calendar, it is really easy. All you need is a monthly calendar layout (you can even do this on your computer if you prefer). Once you have your bills and earnings written out on the calendar, you can decide how much money you can budget towards entertainment and additional debt payments.

Of course, everyone’s budget calendar is going to be different. If you have a larger family, you’ll spend more on food. People who have more debt may also have more monthly payments to consider on their personal calendars. As you begin to pay things off, you can always change your budget because you’ll be jotting down your expenses and earnings every month as it changes.

Also, it is a good idea to set aside a day every month to review your budget and see what the month ahead will bring for you financially. Be sure to also note any large, one-time expenses that may occur, like paying taxes or renewing your car’s registration.

Readers, do you use a budget calendar? If not, what kind of budgeting method do you use?

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August 2019 Debt Update: Stalled

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debt update

We take a look at our finances pretty regularly, but I have to be honest, we’ve slacked off big time this summer. I am not sure if it is the move, the inconsistency with work, or slipping back into bad spending habits, but we’re definitely not where we’d thought we’d be after a year of paying off debt. Here’s the latest debt update with detailed numbers…

One Year Debt Update

Right now, we are feeling pretty stalled. A lot has happened in the last five months that has hindered our progress a bit.

As you know, last September, I detailed my debt and broke it down. When tallied, it came to $67,999 in total debt for our family. I’m happy to report that almost a year later, we have made some progress. Last year, the numbers looked like this…

  • My Car Amount Owed: $23,051
  • Drew’s Car Amount Owed: $1,092
  • Credit Card Total For Both: $1,748
  • Student Loans (Mine): $23,852
  • Matco/Snap On: $9,534
  • Amount in Collections: $8,722

Here are the updated dollar amounts for August 2019…

  • My Car Amount Owed: $21,333
  • Drew’s Car Amount Owed: $0
  • Credit Card Total For Both: $483
  • Student Loans (Mine): $24,002
  • Matco/Snap On: $7,543
  • Amount in Collections: $679

That brings the total amount we owe down to $54,040. That is nearly $14,000 paid off in a year (not too bad). Compared to this time last year, that is definitely an improvement. Some of our biggest “wins” have been paying off Drew’s car, paying down credit card debt, and taking care of items in collections.

You’ll notice my student loan amount owed has actually gone up a bit. I asked for forbearance on the loans for a few months this year as we transitioned from North Carolina to Georgia. I will be back on track to repaying those in a short amount of time.

The move impacted our ability to attack our debt the way we’ve been wanting to, there’s no doubt about that. With deposits, the costs of moving trucks, and getting used to a new city, we fell behind on our goals a bit.

Getting Back on Track

Both of us are working on budgeting and finding a way to get back on track with our debt freedom goals. First, we’ve had to tap into our emergency fund, which needs to be padded once again. This will be taken care of this month.

Next, we are planning to find a way to cut costs and make more money. As mentioned in previous posts, I’ve been finding ways to make money on the side by selling things and grabbing a freelance gig here and there. Drew has also been looking for additional side work as he feels his way through establishing his own business.

Finally, we HAVE to sit down and work out a budget. We’ve gotten way off track with our current spending and need to refocus. Stay tuned for an update on our new budget later this month!

Readers, where do you stand with your debt freedom progress? I’d love to hear about it in the comments below!

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Learning to Live on One Salary

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live on one salary

In my last update, we celebrated having paid off $20,000 or so in debt within one year. However, there have been a lot of changes with our cashflow in the house that has hindered the speed of that continuing. Mostly, we are down to one (main) salary.

My husband is breaking off on his own a bit and has been considering starting his own business. Because of this, cash flow on his end hasn’t been consistent. We’ve lived on one salary multiple times in the past, but every time it is different. Here’s how we’ve learned to live on one salary (and benefits of doing so).

Learning to Live on One Salary

Living on one income isn’t as hard as it sounds. First, you have to come up with a budget that only requires a single budget. For us, it is my income because it is more stable. Your family may want to choose the larger (or smaller) income, depending on your financial goals.

If you are over budget when you tally up your expenses, see where you can cut costs. Do you really need Hulu, Amazon, and Netflix? Or, if you’re looking for a bigger decrease, consider downsizing to a smaller home to better fit your new one-income budget. Others may find it beneficial to move to a more pedestrian-friendly area to cut down to one (or no) car payment or walk more places. If you’re comfortable doing so, you may even consider taking in a roommate or renter.

Consider giving up your indulgent behaviors like going out to eat, junk food, and other items as well. You certainly don’t need to eat out every Friday and spend tons of money on junk foods. This will help cut down the cost of food in your budget as well.

Why You Should Live on One Income

You’re probably thinking, why would anyone willing to live on a single income? It can be difficult and, at times, hinders you from being able to do everything you want to. It can also help you achieve some of your financial goals and feel more secure with your finances as a result.

  1. It makes saving money easier. Simply save your spouse’s income instead of spending it. If you can live on one income, why not bank the rest? You can create a strong emergency fund.
  2. You can use the cash for debt repayment. If you want to focus more on your debt payoff plan, living on one salary can make that more doable as well. Learn to live on one spouse’s income, then use the second to pay off what you owe.
  3. Financial security increases when you have a surplus of cash flow. You have more money than you need, why wouldn’t you feel more secure? You have the ability to invest in your future, pay off debt, and increase savings. It can truly pave the way for financial freedom.

Not to mention, if you live on one salary, you will always be ready if something happens to one of your jobs. You’ll have some savings, and you will be able to continue your current lifestyle until your spouse finds a new job (or starts earning more).

Our Debt Freedom Progress

live on one salary

So, while we are adjusting to living on a single income again, our debt freedom progress has been slow. However, today we paid the final $175 payment to completely pay off a credit card. That will free up an additional $175 for us each month to redirect towards other debts and savings.

In the next few months, we will be paying off other accounts and see our debt freedom progress continue. I will be in a wedding in October, which will be a small cost (around $200 total). We have prepared for that cost though. Both of us are planning to spend the holidays at home as well, to cut down on travel costs.

Readers, have you lived on one income? Tell me about your experience in the comments!

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’13 Reasons Why’ Being Debt Free is Awesome (and I Can’t Wait for It)

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Being debt free is awesome

Debt freedom. Those two words literally make me grin ear-to-ear, and who wouldn’t? Can you imagine what your life will be like once you’re no longer being crushed under credit card bills and car notes? Here are 13 reasons why being debt free is awesome (and I can’t wait to get there).

13 Reasons Why Being Debt Free is Awesome

Although I haven’t gotten there (yet), I’ve heard plenty of people talk about how great it feels to have the heavy burden of debt lifted off your shoulders. Here are a few reasons why it feels so awesome…

1. You are free to truly live.

When you aren’t bogged down with your finances you are free to enjoy other things in life. Maybe the stress of your debt made it impossible to go on vacation or practice good self-care. Without debt, you’ll have the ability to do what you want to do when you want to do it.

2. You feel accomplished.

Most people who have accomplished the feat of debt freedom say there’s nothing else like it in the world. Once you’ve paid off your last account, the sense of accomplishment is astounding. It is enough to boost your self-esteem and help you gain confidence where your money is concerned.

3. Being debt free strengthens your marriage and relationships.

This is especially true if you worked on being debt free with someone. For instance, my husband and I are working together on our debt-free goal. At the end of this journey, we will come out stronger (and avoid debt like the plague).

4. You’ll have more money.

When you’re not paying on your credit cards or other debts every month you’ll have more cash flow. At first, it is important to take this extra cash and fully fund your emergency savings (3-6 months of expenses). After that, you can spend freely, invest, and build wealth.

5. Debt free folks have more fun.

It is true! You’ll be able to take that vacation you’ve been postponing without worrying about being able to pay the bills. Not to mention, you won’t have to check your bank account before you go out with friends. You can have peace of mind where your finances are concerned.

6. The feeling of financial security increases.

Being debt free is awesome because it makes you feel more secure in almost every aspect of your life. Financial security increases, security within relationships, and feelings about yourself all become more positive.

7. You can make changes you’ve been wanting.

Many people who become debt free find themselves changing jobs or moving once they’ve reached their financial goal. If you’ve been putting off going after your dream job or moving to the beach, becoming debt free can help you make those changes.

8. Now you have the opportunity to build wealth.

Now that your debt isn’t weighing you down you have the opportunity to begin saving, investing, and building wealth.

9. Maybe you can retire early!

While you’re building wealth, you’ll also be building your retirement fund. Most people who become debt free early on find they are able to retire early.

10. There are fewer risks and more peace of mind.

When you’re holding on to a lot of debt there is always something worrying you. With less liability hanging over your head you’ll have peace of mind.

11. Your stress levels will drop significantly.

Because of the peace of mind you’ll receive from being debt free, your stress levels will drop. You won’t be biting your nails over the next credit card bill or whether or not your car is going to be repossessed.

12. Being debt free is awesome for your mental health.

All of this has a profound impact on your overall mental health as well. Many people find they are no longer depressed, have more energy, and feel happier. (Remember, debt is not a death sentence.)

13. You’ll be able to live your best life being debt free.

When all is said and done, paying off your debt will free you up to live the best life you possibly can. You will have the freedom to do whatever it is you want to do (within reason, obviously). Take the trip you’ve always wanted, send your kids to college, retire early, and live the way you want to.

For those that are already debt free, what is your favorite part about it? 

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