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Lifestyle

5 Tips for Buying a House

cheryl.maddox

My husband and I purchased a home in February of this year, so this topic is pretty fresh on my mind.  The process for us was pretty lengthy because we weren’t in a hurry and that leads me into tip #1.

1. Don’t Rush Into Anything

I realize not everyone has time on their side when making a purchasing decision, but if you do, make sure to take advantage of the time you have.  Time affords you several different things—like getting all 4 of the next tips solidified. 

We have purchased 2 homes since we got married, and the first time we did not take advantage of the time we had on our side.  The second time, we had learned our lesson and took 3 years from the time we started looking to when we actually made our move. 

If you are in a hurry, you are likely to overlook some things and end up being unhappy with your purchase, only to find yourself in the same position within a few short years.

The next 4 tips explain why time is so important and advantageous to making the right purchasing decision.

2. Find the Right Realtor

Building a solid home-buying team is imperative in the home-buying process.  The right realtor is an invaluable resource.  We interviewed several before finding the perfect one for us. 

What makes a realtor the “right realtor?”  My favorite thing about our realtor was how good of a listener she was. We had some very specific things we were looking for in a home, but even I had my doubts about how realistic it was that we could get everything we wanted.  She helped us stay the course to find the perfect home for us.  If you feel like your realtor has their own agenda or is showing you homes that don’t fit what you are looking for, they may not be the right realtor for you.

I am the type of person who does a lot of research, I enjoy it.  I wasn’t even sure we needed a great realtor for buying a home because I was sure I would find the right home on my own.  However, when it came down to it, I did allow myself moments of getting discouraged and would “settle” for looking at homes that did not meet our wish list. 

In the end, although I spent HOURS of time looking at homes online, it was our realtor who found our dream home the day it came on the market.  Her expertise and access to resources I didn’t have is what lead us into a wonderful purchasing decision.

3. Location, Location, Location

You’ve heard it before, but it’s one of the most important things to consider, so I can’t skip it.  There are some “rules” about finding the right location, but in the end, the “right location” is very subjective. 

What is important to you? 

Do you want to be within a certain distance of family members, your job, your church, etc? 

What type of community do you want to live in? 

Do you want to be close to stores, restaurants, and highways or more rural and secluded? 

Does a good school district make a difference to you?

Only you can answer these questions and the “right location” is the one that checks all of the boxes that are meaningful to YOU.  Take some time to consider these questions and how your answers to them MIGHT CHANGE over time.

4. Consider Market and Interest Rate Timing

If you’re not in a hurry and have time on your side, consider the market. 

Is it a buyer’s market? 

Are you going to have to pay top dollar and compete with other potential buyers for the home you want? 

OR

Is there an opportunity to wait until a time when the market cools down and you have the opportunity to find a deal on a house?

Interest rates fluctuate all the time as well.  While interest rates may not make a huge difference if you have a plan to pay your home off quickly (that’s a great goal!), there are some other things that affect interest rates:

Have you saved a healthy down payment?  (at least 20% down to avoid PMI—an extra fee that is of no benefit to you)

Can you shorten the length of the loan? (The shorter the loan term, the lower the interest rate) The shorter the loan term, the higher your monthly payment with more going toward principal. But if your interest rate is higher, your monthly payment is higher as well—and that extra money is going to the bank in interest and not to your asset.

Are your finances in good order?  Whether you are relying on a good credit score or going through manual underwriting to qualify for a mortgage, make sure you have taken the time to get all of your numbers in the best possible position before applying for a mortgage and locking in an interest rate. 

5. Make A List

This will help you and your realtor decide what is in-bounds and out-of-bounds and can help you save a lot of time when touring homes.  Don’t waste you or your realtor’s time looking at homes that don’t meet your criteria. 

If you are married, you and your spouse make separate lists and compare notes.  Your realtor can then help you decide what is realistic and may act as a mediator to help you come to an agreement on what you are looking for. 

Recognize their may be some compromises, so prioritize your list from most important to least important so you know which items are non-negotiable and which you could live without.

Debt

Want to Become Debt Free?

cheryl.maddox

Getting out of debt is a big deal!  Our society has normalized debt so much that it just seems like the “right” or “normal” thing to do in most situations.  This might sound crazy, but I would like to challenge that idea.  Debt is not the right way to pay for things—saving up and paying for things with money you already have is the right way.  Why?  I say why not?  Why is our society telling us we can have things before we have earned them?  Do you ask your boss for a raise BEFORE you do all the things expected for that raise?  No, you prove yourself worthy of the raise.  Why isn’t it the same way with our money?  We get so caught up in instant gratification, we are like children and impulse-buy our way into a deep dark pit of trouble and stress.  Maybe you are there already.  Listen, this is a judgement-free zone.  I know the pain of being over $100,000 in debt.  I also know the freedom of being out of it—and what it took to get there. 

My husband used a method called the debt snowball that worked fabulously for us.  Let me explain what the debt snowball method is.  You make a list of all of your debts from smallest to largest.  The smallest debt for us was a $200 credit card, the largest was $89,000 in student loans.  We listed everything in between.  In the debt snowball, you start with the smallest debt and pay it off as quickly as possible, while paying minimum payments on all the other debts on your list.  Once the smallest debt is paid off, you take what you were paying monthly on the smallest debt and add that to the minimum payment on the next smallest.  You keep doing that until you reach the end—every time you pay off a debt, you move down the list and add that amount to the payment on the next one.  That’s the reason it is called the debt snowball.  It’s a picture reference so you can visualize a snowball rolling down a hill and collecting more snow as it goes.  You are able to pay more on each debt as you move down the list because you have eliminated the one before it.  People ask all the time why you would do that instead of paying off the highest interest rate first—doesn’t that make more mathematical sense?  As my friend Dave Ramsey says, “If you were doing math, you wouldn’t be in debt in the first place.”  Isn’t that true?  Why are we paying interest to the bank on items we could have saved up for if we only had a little more patience?  But really, to answer the question, it is all a psychological thing.  There is so much psychology involved in personal finance, which is part of what makes me love it so much!  When you pay off the small one, you feel you accomplished something great!  And when you pay off the next thing, momentum really kicks in.  Let’s say your debt with the highest interest rate is further down on your list and a larger amount.  You are more apt to give up because it will feel like it is taking sooo long to pay off the first debt!  The key here is not giving up!  Keep moving forward! 

So how do you get intentional about paying off debt?  Here are the top 3 things I found helpful while doing my debt snowball that I highly recommend to others:

  • Cut out all unnecessary expenses (temporarily).  That means no going on vacation, no eating out at restaurants, no recreational activities that cost money, etc.  Now is a great time to sharpen your cooking skills and invite friends over for board game nights!  Some of you guys just gave up before you even started because that sounds impossible for your lifestyle.  Don’t stop reading yet!  At least make it through this post and then you can decide what’s possible! 
  • Find ways to earn extra income to put towards your debts.  The more money you have coming in, the faster you get down your list.  You will have some extra time on your hands without the vacations and recreational/social activities.  No better way to use that time than to make more money!  Sell some stuff in your house you don’t use, rent the spare bedroom in your house out, housesit and/or petsit for others, use your unique talents to help others and charge them for your services!  The sky is the limit here, feel free to get creative!
  • Remind yourself throughout the whole process that THIS IS TEMPORARY!!!  This process is not for the faint of heart.  It requires a commitment.  But the only way to not give up is to see that there is an end to it all.  Committing to this process does not mean that you will never go on vacation again.  It may mean that you don’t leave your town for a year or 2, but that’s it!  You have the whole rest of your life to spend how you want it and without all your income going out towards debt, you will be more free to do whatever it is you want to—by saving up and paying for it. 

Tasting the freedom from the other side is unbelievable!  It’s the main reason why I do what I do.  I want to help as many others have this sense of peace in their lives as possible.  It is so worth the sacrifices!  You will undoubtedly grow weary and tired in the process, but don’t give up!  You’ve got this!  To help stay motivated and on track, subscribe to my blog for more tips on your finances.  

Lifestyle

New Year’s Goals

cheryl.maddox

Goals are so important in our day-to-day life.  If you are not working toward anything, what are you doing?  I am not a fan of the word “resolution” because to me, it indicates the need for perfectionism.  The actual definition is “a firm decision to do or not to do something.”  I am not afraid of commitment, but I AM a recovering perfectionist.  The problem with perfectionism is if you mess up once, you feel like a total failure and quit altogether.  The word “goal” indicates a much more lenient approach.  The definition of goal is “the object of a person’s ambition or effort; an aim or desired result.”  See what I mean?  Much more room for error.  I also like goals because they can evolve and change over time.  You may set a goal for something and decide in the process to change directions.  Resolutions are so….Resolute, Finite, Limited.  I want to live a limitless life! 

Every new year, I pick a few categories and write a goal for each category.  Categories may include: Health, Financial, Career, Spiritual, Intellectual, Marriage, Family…just to name a few.  The main thing to remember when setting goals is to make them S.M.A.R.T. (Specific, Measurable, Attainable, Relevant, and Time-specific)

Here are some examples of goals using the categories listed above:
1. Health: I will take a walk for 1 hour a day, 3 days a week for the next 12 months (except when I’m on vacation).
2. Financial: I will save $500 per month into a Roth IRA account for the next 12 months.
3. Career: I will start a side business that will bring in $1,000 per month by the end of 2020.
4. Spiritual: I will read 3 chapters of the Bible per day in 2020.
5. Intellectual: I will read 1 non-fiction book per month for the next 12 months.
6. Marriage: I will have one date night with my spouse per month for the next 12 months.
7. Family: I will spend 3 hours playing with my kids without the TV on or my phone in hand every weekend in 2020.

I want to live a limitless life! 

Goals don’t have to be complicated, but make sure they are realistic.  It may be a good idea for you to cut your goal in half.  Another key thing to remember once you start working towards your goal is if you miss it one week or one month, don’t give up!  Give yourself grace and keep going.  Don’t strive for perfection, strive for improvement.  Think about this…you set a health goal and say you are only going to drink one soda per week for the whole year (that’s 52 sodas).  Now let’s pretend you slipped up and couldn’t resist that ice-cold fizzy sweet goodness while checking out at the grocery store, but you already had your soda this week.  So, you had more than one soda that week…don’t slip back into drinking soda every day because you feel like a failure, that’s not good for you.  Remember why you created that goal in the first place?  Maybe you want to lose weight, feel healthier, or simply cut back on caffeine and sugar.  Those are all reasons to pick yourself back up and keep going!  You’ve got this! 

Schedule a call with me to see how you can get your Roth IRA set up so you can start saving for retirement with after-tax dollars and experience tax-free growth!  Who doesn’t love free?  

Personal Finance

Gifting without Grief

cheryl.maddox

I have friends that give incredible gifts for Christmas!  Sometimes it makes me uncomfortable to think how much money they spent on me.  One Christmas, I had a friend who gave me a Coach bag.  That’s great, except I knew she and her husband did not have a large income and I couldn’t help but think that must have really stretched them to be able to do that for me.  Another Christmas, I had a different friend give me an expensive bottle of perfume AND the newest Fitbit watch.  I’m pretty sure she spent more on me than my own husband did (because we were on a tight budget trying to get out of debt) and she was living on government assistance while unemployed.  It just felt wrong!  I have had family members give me gifts in boxes that included their receipt details down to the payment plan because they FINANCED the gifts they gave me. 

I obviously have some very generous people in my life who I am extremely grateful for.  Maybe you are one of those people or have gone to similar measures in your Christmas gifting.  I have heard of so many people who put all their Christmas gifts on credit cards and spent the next few months trying to pay them off.  I whole-heartedly believe that is not how God intended our giving to be.  Christmas is about celebrating THE GIFT God gave to us to pay our debt of sin, it can’t possibly be right for us to put ourselves into debt for this special holiday.

I consider myself generous, but I also consider myself frugal.  How can you be both?  Here are my 5 tips on how to purchase incredible gifts for your friends and family members without blowing your own budget, putting financial strain on yourself, and without the payments following you into the new year. 

  • Plan Ahead

Make a list of all the people you want to purchase gifts for and start brainstorming what kinds of things you would like to buy for them.  Do this AT LEAST 2 months before Christmas.  If you’re a planner like me, you may start this even sooner.  The reason I say at least 2 months is so you have at least a couple of weeks to think about it and remember people to add to your list before you start doing your research in the next tip.

  • Utilize Black Friday and Cyber Monday Deals

By mid-November you should have a list of people to buy for a gift ideas for them.  Black Friday ads are often available a week or two (sometimes more) in advance.  I use bestblackfriday.com and Brad’s Deals for early access to those ads.  This is how you will find the best deals on your gifts.  Most deals are available online, so you don’t even have to brave the crowds if you don’t want to.  Also, many sales are available online earlier in the week as well!  Trust me, the deals are worth the planning ahead! 

  • Put Aside Money Throughout the Year

I use an envelope that I put in a locked safe at home and add to it gradually from January through December.  Add this category as a line item in your monthly budget and pull out cash every month to add to the envelope.  Some months are tighter than others, so I may not be able to add as much to the envelope as other months.  Some months I have birthdays or showers to attend that I will need to use money I would otherwise be adding to the envelope to save for Christmas.  That’s OK!  There is not a perfect formula for this!  The point is to consistently add to the envelope as often as you can to create a habit out of it.  You will be AMAZED by the time the Christmas season comes how much stress is relieved by having this envelope full of cash stashed away.  It actually makes Christmas shopping way more fun!

  • Set a Budget –and Stick to it!

Once you’ve made your list of people and gift ideas and know how much money is in your envelope, you should decide how much you are going to spend on each person.  This is important, because if you don’t plan this part out, you will potentially get yourself in way over your head.  I tend to categorize people (immediate family, extended family, close friends, friends, Pastors, teachers, etc.) and set an amount for each individual in those categories.  For example, immediate family gets $100 each, extended family gets $50 each, close friends get $50 each, etc.  You decide your amounts, I’m just trying to create a picture of what this looks like.  Also, DON’T FORGET those white elephant gifts for Christmas parties.  Most of us can anticipate how many Christmas parties we will attend each year (Office, Church, Small Groups).  Many of those parties you will be expected to bring a gift of a certain monetary value to.  Can you purchase something worth $20 for $10 on Black Friday?  Yes, you can!  So, add those parties to your list too!

  • Talk to Your Friends and Family about Gift Expectations

If you have a really large family of Siblings, Aunts, Uncles, Cousins, Nieces, Nephews and it starts to get overwhelming to think of how many people you have to buy for and how much money you will have to spend, you are likely not the only one in your family feeling that way.  It may be helpful to have a conversation with your family about drawing names so rather than everyone buying a gift for everyone, everyone only buys a gift for 1 or 2 people.  Way less stress for sure!  I know that plan doesn’t work for all families, but if it will work for yours, try it out!  My family uses an app called Elfster to put gift ideas of all different price ranges on their “wish lists” to help ease the frustration of coming up with ideas they will love (maybe that’s one of your spiritual gift, but it most definitely is not mine!)  I like to know what people want so I don’t end up getting them something they don’t even like or will never use.

Christmas is not supposed to be stressful, and if you are stressed, you’re doing it wrong.

Try some of these ideas and see what works for you.  Feel free to tweak the ideas to fit you and your lifestyle as well.  This is what has worked for me for years and I don’t want to withhold potentially helpful information from you.  You’ve got this!  You CAN make Christmas fun and stress-free!

Want more information on living a financially stress-free life?  Subscribe to my blog to receive the latest posts as soon as they are released!

Investing

3 Rules for Investing

cheryl.maddox

Approaching the topic of investments can be very daunting for many people.  I talk to people every day on both ends of the spectrum from knowing nothing to knowing everything and everywhere in between.  I am often surprised at some of the questions I get from people about investing, especially when they have been putting money away in one form or another.  Based on the questions I get in daily conversations with people, I have developed a list of 3 rules for investing.

  1. KISS Principle

I borrowed this one from our good friend Dave Ramsey because it is so good.  Many people think that in order to be successful in their investments, it needs to be complicated.  There is an incorrect belief circulating out there that complicated is more sophisticated.  It’s not.  In fact, usually it’s stupid because you don’t even understand it (see rule #3).  Investing does not have to be complicated.  It can be simple.  This is going to require a little effort on your part to learn the basics of investing, especially if you are on the end of the spectrum that you don’t feel like you know anything and have no experience.  Often people know more than they give themselves credit for, other times people give themselves too much credit and think they know more than they do.  Find that happy middle place where you are confident in what you know and what you don’t.  Dave Ramsey recommends a very simple approach to investing.  He recommends investing money into growth stock mutual funds with a long track record (of greater than 10 years) that have outperformed the index funds over time.  If you are comfortable with real estate (owning rentals and being a landlord), invest in some real estate as well.  He has some very specific do’s and don’ts of owning rentals that I will cover in another post.

2. Diversification Lowers Risk

I just outlined the 2 things Dave Ramsey recommends investing in – growth stock mutual funds and real estate.  He often says “Money is like manure—when left in a pile, it stinks, when spread around, it grows things.”  To diversify simply means to spread around.  It is important to diversify your investments because the more you have invested in one particular thing, the less opportunity you have in other avenues.  Mutual funds themselves are fairly diversified as they contain many different company stocks.  You can further diversify your mutual fund investments by choosing mutual funds from different categories.  Dave Ramsey recommends choosing mutual funds from 4 different categories: aggressive growth, growth, growth and income, and international.  He recommends keeping 25% invested in each of those categories to maintain diversity.  Aggressive growth mutual funds will generally include stocks of smaller companies that are projected to grow.  Growth mutual funds include larger companies that are projected to grow.  Growth and Income mutual funds focus their efforts on companies that are projected to grow, but also pay dividends regularly.  International mutual funds hold positions in companies outside of the US. 

3. Never Invest in Something You Don’t Understand

The worst thing you can do with your money is trust the smooth-talking salesperson in front of you that uses terminology you don’t understand to sell you a product that makes no sense to you, but he promises it will all work out for your benefit.  If it sounds too good to be true, it is.  Never invest in something until you fully understand the way it works, where exactly your money is going, what the fees involved are, if there are penalties involved for pulling your money back out, etc.  There are unfortunately many people who have been hurt financially for making this mistake.  Learn from them and don’t let it happen to you.  Find someone you can trust to look over the product or investment and clear up anything you don’t understand.  This is one of the wonderful advantages of having a great financial advisor in your corner.  Work with someone who will break things down in bite-size pieces for you.  Someone who will not get frustrated with all your questions, even if you ask the same question several times to make sure you understand.  You need someone who will be patient with you and truly wants to help you learn.  Having an advisor who just tells you what to do and tells you to trust him is a red flag.  This is your hard-earned money; it is your job to understand where it’s going and ultimately make the decisions on what you want done with it.  Don’t blindly hand over that responsibility to someone else.  Find someone with “the heart of a teacher.”

Personal Finance

3 Foundational Blocks for your Financial Plan

cheryl.maddox

There are 3 things you want to do before you do anything else when creating a financial plan.  They are simple, and yet daunting at the same time.  It feels like they are so time consuming and will take FOREVER!  In our fast-paced culture, and get it done NOW mentalities, doing 3 things that may take 1-2 hours EACH seems unrealistic.  But seriously, how many hours did you spend on social media this week?  How much time did you spend in front of the TV?  Whatever else your guilty pleasure may be, don’t you think it is worth a small sacrifice to make sure you and your family are going to be taken care of?  It is truly a small price to pay.  You just have to make the choice to do them. 

  1. Get the Right Amount of Term Life Insurance in Place

The first building block to creating your financial plan is to make sure the loved ones in your life will be taken care of after your gone.  None of us like thinking about dying and I am not speaking that over anyone.  The fact is we are all one day closer to the end of our lives today, and the fallen world we live in includes unfortunate and unexpected accidents and illnesses.  If you have family members relying on your income for everyday expenses (e.g spouse, children), you NEED life insurance!  What is life insurance?  Life insurance is an insurance policy that you pay monthly, quarterly, or annual premiums for and when you die, the person you have selected as your beneficiary receives a lump-sum of money.  This is crucial for your family whether you earn an income to keep your family fed or you stay at home with kids, clean the house, and make meals.  If you earn an income, you need to replace your income for your family with your life insurance policy.  If you are a stay-at-home parent, you need to provide funds for your children to be cared for and fed if you were not there to do it anymore. 

How much life insurance should you get?  Dave Ramsey recommends 10 times your annual income in life insurance and I agree.  For example, if you earn $50,000 per year, you should have $500,000 in life insurance coverage.  The reason for this is your beneficiary can take that lump sum of money and invest it in good growth-stock mutual funds.  Let’s say those mutual funds earn an average of 10% interest per year.  Is 10% of $500,000 equal to $50,000?  Yes, it is.  Your income has just been replaced and your family has not had to change their lifestyle or living situation in addition to facing the tragedy of the loss of you.  That is the best way to say “I love you” to your family.  If you are a stay-at-home parent, calculate how much it would cost to hire childcare, a housekeeper, a cook, and/or personal assistant to do all the jobs you do every day and week.  Now multiply that total annual cost by 10 so your family can do the same with that lump-sum—invest it and pay for those expenses with the interest it earns. 

The best life insurance available is TERM life insurance.  Don’t let anyone tell you otherwise.  Don’t even argue with anyone about it, just know it.  I will tell you why.  There are other products out there with the name “life insurance” on them (e.g whole life, universal life, etc.)  The problem with these other life insurance products is they have a secondary part to them outside of the part where they pay your beneficiary money when you pass on.  They often include an additional “savings” feature.  They are often 10 times more expensive than term life insurance policies because of this feature and all the extra fees.  Now you might be asking, what is so bad about having an extra savings account?  Isn’t that the goal?  Yes, you want to save and invest, BUT you want your savings and investments to be just that, and not tied to anything else.  Your investments have the potential to grow at a much greater rate when you are able to control what your money is invested in.  PLUS, what the insurance companies don’t like to tell you (because they make A LOT of money on these products) is that when you die, they give you the face amount, but NOT your savings account.  WHAT?!?!  You’ve been paying extra for this policy so you could have this extra savings feature, but when you die, they keep the savings?  Yep!  See why it is important to keep your investments separate from your insurance?  Because if you paid for a cheaper TERM life insurance policy and took that extra money they would have charged you on the other life insurance with the savings feature and put that money in a savings account or investment instead, when you die, your beneficiary receives the face amount of your policy AND your hard-earned savings.  Now your family is even more taken care of!  The last selling point they will use for these other life insurance policies is that they last you’re your WHOLE life, not just for a period of time.  If you are serious about getting your finances in order, getting out of debt, and investing for your future, there will be a point in time you will be considered self-insured and you won’t NEED a life insurance policy anymore.  Let’s say you get out of debt, get your kids through college and they are successfully living on their own, your home is paid for, and you and your spouse have been diligently saving for retirement for many years.  At that point, you don’t need life insurance anymore because your family will financially be ok if you were gone.  My point is, you don’t need life insurance for your whole life.  You need it for 15-30 years depending on where you are in life when you start.  A term life policy is your answer, and it is incredibly cheap. 

2. Do a Monthly Budget

Start now and don’t ever stop!  This is something you will do FOREVER!  Make it your new habit.  Trust me, it’s not as bad as it sounds.  In the beginning it took me nearly an hour to set up the budget for each month.  There was a lot of trial and error.  For me, it came down to having the right tools in place.  I first tried doing it with a pencil and paper using different templates, then I created an excel spreadsheet, next I tried using several different online budgeting tools.  The one I landed on and continue to find the easiest and quickest to use is EveryDollar.  There is a website as well as an app you can download to your phone.  They have a free version where you manually enter your transactions or a paid version (annual subscription) that links to your bank account and automatically loads all of your debit transactions for you to categorize.  I’ve used both.  Obviously, the manual one is slightly more time consuming and the paid-for version is faster, but that’s the only difference.  Everything else functions EXACTLY the same! 

Setting up your budget for the first time is the most difficult one, but again, depending on the tool you use, it could make it easier.  To start, you need basic categories and subcategories for your “budget items.”  Examples of categories could be housing, transportation, food, etc.  Examples of subcategories for housing could be rent/mortgage, electricity, water, lawn, security, repairs, etc.  When I set up my very first budget, I didn’t want to be guessing, so I printed off my bank statement from the previous month and did a retrospective budget, putting every transaction into categories andsub-categories.  I gotta tell you, it BLEW MY MIND to see where all of my money was going.  Full disclosure, I had spent over $2,000 between Wal-mart and Target and had NO IDEA what I had bought!  That’s why it is so important to be intentional.  Dave Ramsey says “A budget is telling your money where to go, instead of wondering where it went.”  Let’s just say after that eye-opener, my “grocery” category went on a diet.  The most amazing and liberating thing about the whole process was that I could free up so much cash that I was missing out on before and use that extra money to pay off debt and save!  It actually felt like I got a raise!  I wasn’t sure how it was possible to pay off over $100,000 debt within 2 years until I saw these numbers (more on my personal debt-free journey in another post). 

Just like learning any new skill, it takes time and practice to get the hang of it.  Have patience and give yourself grace, but commit to becoming good at it!  It will change your life for the better!

3. Create a Will

I’ll be honest, I put off creating a will for far too long (like, years!)  And I had every excuse in the book not to do it (I’m going to have more kids, our financial situation may change soon, we might move soon, how much is this going to cost?, I don’t have time!)  I know you make excuses for not doing very important things too, so don’t judge me.  When it comes down to it, I don’t want the government to decide what to do with my child and my money, so I sucked it up and did it. 

The best way to do a will is to just sit down and knock it out.  I used US Legal Forms to purchase the correct will for my state and family situation.  What I loved about their forms is it gave me a step-by-step process in how to fill them out.  These are very legalese forms that when looking at it by itself, requires a lawyer to interpret.  US Legal Forms provided a guide with my form that told me exactly what to write in for each space.  Once complete, you have to take to a notary and have a couple of witnesses sign it as well.  That’s it!  Step 1: fill it out.  Step 2: sign it in front of a notary and witnesses.  Why do we put this off for years?   I think it is dreading the unknown process.  But hopefully I just made that easy enough for you that you can put it on your to-do list this weekend and knock it out.  You will feel so much better that you did and your family will thank you for it!

Debt

How to Become Debt Free

cheryl.maddox

A wise person once told me there is power in stories.  Here’s mine.

It all started at age 21, when I got married to my long-distance boyfriend and moved to Florida to start a life with him.  But, let me back up a little bit to give you some background.  I grew up with a dad who worked with finances in businesses and a mom who was a high school math teacher.  I was told as a child that I had no excuse to make poor grades in math because I had 2 excellent tutors at home.  If I was struggling, they wanted me to ask for help.  My parents had credit cards they used to make purchases and earned points and airline miles.  They paid them off every month and didn’t carry any other debt besides a mortgage.  My parents always paid cash for used cars when it was time for an upgrade.  I was blessed to have grandparents and parents who saved money for me to go to college.  What they saved plus my scholarships covered all of my college costs, so I didn’t have any student loans.  My dad always warned me against getting a credit card in college as he didn’t want me to start poor money habits when I didn’t have an income to speak of.  I followed his wise advice.  After college, I felt like I was finally an adult and should start making adult decisions.  To me, that meant getting a dog and purchasing a newer vehicle that would comfortably transport said dog. I didn’t think a rowdy golden retriever in the back seat of my Ford Taurus was safe, it was time for an SUV.  I didn’t have any money saved to purchase a nice SUV and my Taurus wasn’t worth much.  My dad agreed to co-sign a loan for me to be able to purchase the SUV so I could begin building credit, which he felt I would need as an adult.  I got a $10,000 loan for the SUV and paid extra every month so I could pay it off as quickly as possible.

Now, back to my new marriage.  I married a wonderful man who is 7 years older than me and a little more life experience.  He did not have the assistance of parents or grandparents with college costs and he grew up in a family where car debt was normal.  All of that to say, when we got married, I had $5,000 left on my SUV loan.  He had $90,000 in student loan debt and a $30,000 car loan.  On top of that, I insisted on purchasing a home right away, because after all, that is what you do as a married adult, right?  With my new husband’s incredible credit score, he was able to secure a nice $200,000 loan for a house.  Did I mention I moved across the country after I married him?  I didn’t have a job yet in my new city.  I was fresh out of my Master’s degree and searching frantically for a job…because we were drowning.  Everything was stressful.  Every paycheck went straight out the door to pay all of our bills just so we could keep our heads above water.  Luckily, neither of us were in the habit of or had the mindset to get credit cards to lift some of the pressure.  I know that is some people’s go-to, but I am grateful we didn’t go down that road.  After all, if debt was the problem, how would more debt help?  That’s how I see it anyway. 

I got a job within 2 months of being married (2 LONG months!)  This job required me to drive 50 miles each way to work, so I had a lot of time on the road to think.  I remembered my grandparents had a book in their library (yes, they had a library) called “The Total Money Makeover” by Dave Ramsey.  I looked him up and found out he had a radio show.  I started listening during my commutes and learned a lot.  I heard inspirational stories from people who had gotten out of loads of debt and I wanted to be just like them.  I shared what I learned with my husband and he was completely on board.  The only problem was, we had NO IDEA what we were doing or how to start.  I kept listening for more direction.  Dave talks about the debt snowball method where you list your debts smallest to largest and pay minimum payments on all debts except the smallest one and pay as much as you can on the smallest debt to get it knocked out first.  I’ll be honest, that first year listening to Dave on the radio is a blur.  I don’t remember what exactly we did to pay off $13,000 in debt, but that’s what we paid off in the first 12 months.  We had $117,000 to go.  At this rate, it was going to take FOREVER! 

As a sidenote, I don’t remember what we did to actually scrape together that money, but I do remember the stress and the sacrifices that were made.  As a newly married couple in a great big house that both of our furniture combined did not fill up, we had to practice some serious delay in gratification.  I remember crying because our toilet paper wasn’t soft enough.  We had a Christmas tree from the Dollar General and an old collection of ornaments from my childhood.  Let me tell you, it was lackluster.  I couldn’t wait to get a nice big Christmas tree with matching ornaments and Christmas decorations for the whole house, but those first few Christmases, were not very cheery as far as décor goes in our home.  I felt especially bad because Christmas was my husband’s favorite holiday and he wanted to go all out for Christmas, but had the patience to wait for it.  (He grew up in Germany where apparently that’s where they have REAL Christmas.  I don’t know from experience, but that’s what he tells me.  Florida Christmas with it’s 75 degree weather, is a far cry from what Christmas is SUPPOSED to be and when all you can do is decorate like crazy to make the inside of your home feel like Christmas, except you can’t do that because it costs money and you are trying to pay off a mountain of debt, well you get my point, it was lousy). 

My Humble Christmas Tree

After working hard for those 12 months, listening to the radio show, I started to feel like we were missing something.  These people on Dave’s show were paying off just as much debt as we had with the same amount of income as us in only 2-3 years.  We were not even close to hitting that timeline at our pace.  What did they have that we didn’t have?  I noticed the majority of them say they attended a Financial Peace University class and that kick-started their journey for them.   The class was going to cost money to take, money we didn’t have to spare.  But it had the potential to offer us information we didn’t have and could save us that plus more in interest payments over time.  That’s how I proposed to my husband that we take the class.  I will remind you that he was 100% on board with getting out of debt, but that did not mean he started listening to the radio show and gaining daily inspiration and education on how to do it.  He actually started to get quite annoyed with me coming home and talking about it all the time.  He must have thought “this chick has gone off the deep end and literally can’t stop talking about this.”  I’m sure there was some shame mixed in there as well.   He shared multiple times that he felt guilty for bringing so much debt into the marriage.  I tried my best to reassure him that it didn’t matter where it originated.  We are one and it is “our” debt now.  We were going to tackle it together.  But again, my constant conversation and consumption with it must have felt like nagging to him. 

I’m lucky my husband loves me enough to want to make me happy, even if it means feeding my addiction to Dave Ramsey.  He agreed to take the course with me.  He wasn’t excited about it and made that very clear.  He would attend to make me happy, but he didn’t have to like it.  The class met once a week for 9 weeks.  We met others from all different situations and backgrounds.  We watched inspirational videos and gained so much knowledge.  The best part is, we got all the information at the same time so we stayed on the same page.  The first few classes focused on budgeting – the foundation to a good financial plan.  We sat down and printed off our bank transactions from the month before.  We added up a total of over $2,000 that we spent between Wal-Mart and Target.  I mean, that’s where we bought our groceries but what in the world else did we buy?  We didn’t know then and I still don’t know.  And we were supposedly living so tightly that I was using rough toilet paper and had a dollar store Christmas tree.  That was our wake up call.  We had to get our spending under control.  My husband decided we should only spend $100 on groceries.  I’m ashamed to say I might have laughed.  That seemed unrealistic.  We had to come into agreement on every budgeting category on our paper budget form for the class.  It was a process, and not a fun one, but we wouldn’t be where we are now if we hadn’t started there. 

The craziest stuff happened once we were on a budget and learning all the other great information from the class.  Doors started opening for us in unexpected ways.  I found a job closer to home with an 18% pay raise.  My husband found a job doing something he loved with a 25% pay raise.  A lady in our neighborhood asked if we would be interested in hosting international students studying in the US for $840 every 4 weeks.  We had 2 extra bedrooms, so we signed up for 2 of them for double the payout!  I had the idea to board dogs in our home (we have 3 already, what’s a few more?)  My husband wasn’t as excited about that idea but I promised we would stop as soon as we got out of debt (I kept that promise).  He knew it would help speed up the process so he agreed.  That brought in another $1000-$2500 per month, depending on if any holidays fell in that month.  The international students, dog boarding, our new jobs, and our new budget helped us adjust our debt payments significantly and before we knew it, we were paying $5,000 per month towards our debt.  We had no life.  We didn’t go out to eat at restaurants.  We didn’t go on vacation.  We worked all the time!  We both picked up second jobs and barely saw each other, but we were determined!  

28 months after we took Financial Peace University, I gave birth to our beautiful first-born daughter.  We stopped boarding dogs and hosting students several months before she was born, but we had enough money in the bank to pay off the final student loan.  We were following what Dave Ramsey says by putting the debt snowball attack on hold while pregnant due to the unknown expenses that can come up.  Thankfully, our daughter was born healthy and we both came home with no complications.  As soon as we got the hospital bill, we paid it off and made our final student loan payment.  Words cannot describe the joy and relief that came with hitting that “submit” button online for that final payment.  We were free.  That gave me the freedom to stay home with my daughter for her first year in this world.  Money was no longer a stressful thing.  We got a beautiful Christmas tree and ornaments, but we didn’t splurge on them.  We didn’t splurge on anything.  Our habits changed, our mindset shifted, we had new priorities.  I’m in love with the new people we have become and am grateful for the journey we took together.

You can do it too!  When you are in the beginning, middle, and end of it, it sucks.  It’s not fun!  There is nothing fun about making monthly $5,000 payments to student loans.  It’s tough to say “no” when your friends invite you out to eat and you don’t feel like cooking.  It’s difficult to tell your parents you can’t visit them while they live abroad and everyone else in the family is visiting them overseas.    Those are real sacrifices, but I wouldn’t change a thing.  You have to tell yourself during this process “this is temporary, this is not forever, one day soon I will be able to go out and be with friends.”  You have to constantly talk to yourself and remind yourself of WHY you are doing this.  My why was I didn’t want to be stressed about money anymore, ever again.  My husband’s why was he wants to be able to retire one day and knew he couldn’t adequately save for retirement when all of our money was going out in debt payments every month.  We have both accomplished our why – I’m not stressed and he is stashing away money every month for retirement. Win Win!