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Back at Again

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It has been months and months since I last posted anything on this page.  Over the last several days, I have thought about how I have neglected this blog and what I am really trying to accomplish from sharing my thoughts.  Thinking about all of this took me back to the why:

The WHY is at the age of 49, I started my life anew.  I divorced after 29 years and 11 months of marriage.  This was hard, very hard.  However, it was something I needed to do.  I have often said, people under the age of 20 really have no clue what they want with their lives and it is far too young to make a commitment to someone for the rest of your life.  Now I know some of you are going to say I know so and so and they got married when they were in their teens and they are very happy.  For those rare gems, I say congratulations.

I made this very hard decision just a month shy of my 49th birthday.  The day before my 49th birthday, I started my new single life.  Over the next year, the realities of what was occurring set in.  The first is for the first year or so after I left, I paid the expenses for both homes.  I did this not only because I was able, but because I felt an obligation.  During this year, my youngest son got married and there were of course expenses.  Also, during this time I racked up credit card and other stupid debt.

When the divorce was finalized, it was necessary to split what assets were accumulated during this marriage.  Because I did have a better job situation, he ended up with 60% of the assets.  This does not make me unhappy, nor do I bear any grudges.  The reality was though, when I took inventory after all of the dust had settled, I somehow had gotten myself in almost $40,000 debt — without a house payment.  I really was starting from scratch — and I needed to do something about it NOW!!

The good news though is from all of this, I realized I needed to make some changes in my spending and savings habits.  I had to learn how to be disciplined with my money and get back on track. After all, by this time I had turned the BIG 50 and I didn’t have so many working years ahead of me any more to right this ship.  Luckily, someone very dear to me recommended I read Dave Ramsey’s book “Total Money Makeover”.

I knew to pay off this small mountain of debt I needed to make some drastic changes. The first thing I did was take a true inventory of my income and expenses.  I wrote everything down. I also tracked everything I spent for several weeks to truly see where my money was going. I then did the first honest budget I had done in years. Some of my previous posts talk about the zero-based budget. I plan over the next several weeks to do a new series of posts about budgeting and discuss how I was able to pay off this debt and the successes in my life since.

Budgeting – Getting Organized

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Recently, speaking with some of my co-workers about budgeting and getting debt-free, the statement was made to me “we aren’t even ready to start a budget.” My question is if you are in financial straights, how can you not budget??? Believe me it is hard — very hard to get started, but to get on the right financial path it is absolutely necessary.  The very first thing you have to do to be successful is do a reality check with yourself about what you really owe.  Remember — no debt is good debt, no matter what you may have heard.

Three years ago, when I sat down and looked at my world — I was shocked.  I didn’t think I was doing too bad in life. I had just gone through a divorce and had a little more credit card than normal. I also had a surgery a few months before and had some doctor bills. But they were on a payment plan and I was not having any trouble making the payments.  I had a car loan (for a brand new car), but everyone has car loans — right???  When I sat down and put all of the outstanding balances together, along with the monthly payments — I was dumbfounded.  I was $40,000 in debt (with no house debt).  How in the world did it happen.  All my life I felt I was living within my means, making payments on time, had good credit — where did I get astray.

Let me say, it was easy to say it was because of the divorce.  It is because of all the extra expenses I have had recently.  Everyone has debt. I’m doing fine.  But it wasn’t — I was $40,000 in debt and 50 years old.  I decided now – not later, was the time to fix this problem.

The first thing I did was get organized and look at what I really “needed” to spend in a month.  I then split this into two parts.  I get paid two times a month, so at the top of the page I wrote what my income was and then subtracted everything due in the first of the month pay period.  I then took what was left over on paper and added it to my income for the end of the month and subtracted everything I needed to pay the second half of the month.  The first thing I noticed was the amount of money I had left over.  Part of this is likely because I forgot a bill here or there.

The bigger part is because I was not controlling my money and it was dribbling out of my hands without even noticing.  What I did to really help myself get on track is write down everything I spent — no matter how small the amount.  I also switched to cash for my “allowance” which includes eating lunch out, personal care, stuff I just want — those type of things.  Before this exercise I rarely had cash — it was easy to just pull out the debit or credit card.  I also switched to paying cash for groceries. I was very disciplined — if I ran out of cash — I couldn’t spend any more money.

It was amazing to see where all of my cash was going, looking back over the years I was really not very good with money (even when I thought I was great).  By controlling exactly how much I was giving myself to spend, I was really able to get a handle on all of those little drips in my cash.  Even though I am now debt-free, I still manage my cash the same way.

After doing this for a month, I was ready to really budget — and really start the journey to debt-free.

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