By Eric on August 7, 2012 24

The Cost of Staying in Debt

What’s the point of getting out of debt? Shouldn’t we just make our minimum payments and continue to live the lifestyle we currently have?

There was definitely temptation and hesitation that crept into our minds before deciding to follow Dave Ramsey’s principles and digging our way out of debt. Hindsight is always 20/20, which is why I think it’s important to reflect on how far we have come financially in the 3+ years since learning how to put together a budget.

cost of staying in debt

It’s easy to tell yourself that you will start working on it later, but like most things in life, if you keep procrastinating or do only what is easy, you will never make any progress. And progress is something that shouldn’t be underestimated. The power of progress is what propelled us to getting out of debt and funding an emergency fund.

Of course, we’re not perfect and are always looking for ways to improve, but committing to staying out of debt is something that we have accomplished and, again, it’s worth reflecting on.

How Much We’ve Saved

Because we paid off our debts (minus our mortgage), we’ve been able to use that extra money in other areas of our budget. And since January 2009 we have increased our monthly disposable income by $501.

What would you do with an extra $500 a month?

Where We Have Saved

  • Cable/Internet: We canceled cable, and added Netflix to our budget. We pay a high price for high-speed internet, but when you watch most things online, it’s worth it. Savings: ($137 – $65) + $8 = $64
  • Jeep payment: This was our biggest monthly payment besides our mortgage, so paying off the Jeep was a BIG win. Savings: $300
  • Student loans: We had six different student loans to debt snowball, and while education is important, we could still be paying on these for another 15 years if we had just made the minimum payments. Savings: $6 + $22 + $8 + $17 + $74 + $8 = $135
  • Gym membership: We recently canceled our gym membership. Although our company reimbursed us up to $60 a month, we were still paying $2/month for something we rarely used. Savings: $62 – $60 = $2

Everyone’s budget is different, and everyone has different circumstances. I am in no way saying that your journey to financial peace would be the same as ours or anyone else’s. But if you are not in tune with how you are spending your money, you are likely missing out on opportunities to take control of your financial future.

Where have you, or where could you, squeeze more out of your budget?

 

Eric

Husband to Kelsey. Father to Rooney. Follower of Jesus. Born and raised in Iowa. I like blogging. Bulleted lists excite me. Thanks for stopping by.

  1. I am the worst budget person EVER. I’m learning….I have the hardest time “denying” myself of stuff. Extremely ridiculous. I really admire you guys. Particularly for the student loan aspect, as I am loading myself up with student loans right now.

  2. I have to comment to tell you how thankful I am to have found your blog! You guys are THE reason I made a budget for myself and my husband. We aren’t really doing the debt snowball in the traditional sense. We filled an emergency fund, paid off our car, and now we’re taking down our mortgage. We hope to make the last payment in March of 2013. Then we will tackle our student loans. But even when we are mortgage-free, we plan to stick to a budget and save a lot of money each month for a future home. Thank you for opening my eyes to the power of budgeting and living/spending intentionally! You have forever changed the way I think about finances.

  3. Shawna Robinson August 7, 2012 at 11:17 am

    Kelsey,
    I wanted to express how greatful I am for your blog, Dave Ramsey, and Justin Bennett (he’s a high school friend of mine). I finished my Dave Ramsey class two weeks ago. I have a fully funded emergency fund, no credit card debt, and slowly working my debt snowball. I should have around $65,000 paid off by 2016! I am a single mother of a beautiful 3 year old (not receiving any form of child support) and working three jobs! I am living like no other so later I can live like no other!!

    • Shawna Robinson August 7, 2012 at 11:22 am

      …and I have a much better relationship with God due to all of the trials I have faced this past year. I finally feel content with my life and I know it was because I turned my heart and head in the right direction.

    • Hi Shawna! I am honestly amazed at your comment. Do you remember commenting on our FPU giveaway last fall? You said you were at rock bottom. I am so glad you took FPU! Your daughter is a lucky little girl!

  4. We cancelled our cable and installed an attic antenna. 90% of what is on TV is total junk and we were paying $150/mo to not watch it. We have been without for about 4 months now and neither my husband or I can say that we miss it. The antenna allows us to still watch network channels so we’re able to watch news and the Olympics! Oh, we did get Netflix, too! :)

    We also paid off student loans 14 years early! We didn’t put much into paying them off early when we first took FPU bc it was such a low payment, but we didn’t want the payment anymore as we just recently welcomed baby #2. So, we dug into savings and wrote Sallie Mae a check. I figured that by paying them off early, we saved ourselves nearly $10,000 buck-a-roos in interest! Holy interest, batman!!

    Love being debt free except the house!

    • We got an antenna, too! Yay for Olympics but boo for not being able to pause and rewind :) We should have mentioned the antenna in this post, but I guess it’s a one-time fee and the point was to outline our monthly savings.

      Anyway! That is SO great that your student loans are gone! We also pulled from savings to get rid of some of them. It totally makes sense!

  5. Hey Eric & Kelsey,

    Can I link up to this in my “Weekly Roundup” post on Friday (I am writing up the post right now, so you may see a notification of the link, if I make it that far right now!)?

  6. I like the idea of the Financial Peace University, but when I checked out the link the religious overtone really turned me off. It certainly doesn’t appear to welcome non-believers.

    I admire you both for taking control of your finances, though. It’s inspiring. I just can’t get behind a business that is so overtly Christian.

    • Hi Marilyn – I am sorry you were turned off. Yes, it is a Christian company, but from what I remember, it only comes into the class on week 13 (the final lesson). But, I may be wrong on that. There used to be different versions of the class you could buy (for instance, if you weren’t going to take the class at a church), but I can’t seem to find it now.

  7. I agree with Marilyn- as a non Christian, the overtness of FPU turns me off. Do you have any suggestions for good reading that isn’t religious based? I’m all about smart money decision making and budgeting and paying off debt, but would like something less religious. Not saying FPU is bad (I’ve heard from multiple people how much they love it), just not my cup of tea.

    • Dave Ramsey has a book, Total Money Makeover, which I do not remember being heavy on the religious component (or if it was, it was easily skipped over since I don’t remember it). Obviously reading a book takes a bit more internal motivation than actually participating in a class, but it worked for my family!

    • There are tons of money blogs – my favorite one is actually Christian-based, so you may not be interested, but it’s http://christianpf.com. I am hesitant to recommend others that I have read because I don’t believe everything they say, and I think they can lead you astray if you aren’t educated (there are many that recommend credit cards). We vary from Dave Ramsey on a few things, but I still recommend his class for a good kick in the pants. But if you do a search, you will find a ton of money blogs out there.

  8. For those of you looking for alternative resources, check out the National Financial Educators website resources page: http://www.nationalfinancialeducators.com/resources.htm

    I’ve heard Adam Carroll, the CEO, speak twice and he is great (and from Iowa!). This site has a nice list of finacial literacy-related books. I’ve only read a couple, so I can’t speak to the quality of them all – but it is a place to start. He and his business partner have also written a book titled “Winning the Money Game,” which is quick read geared toward young adults, though the lessons can be applied to just about anyone.

  9. I get sick thinking about financing a vehicle again (hopefully we never will)! We freed up nearly $600/mo just in paying off our car loans.
    I would love to get rid of cable as I feel like we have more than enough screen time, but the husband won’t hear of that.
    I also found that meal planning results in less food wasted and less money spent at the store and at restaurants.
    I can’t wait to be mortgage free too, but it’s such a ways off still that I get a bit depressed trying to get pumped about it LOL

    • Amber, do you have any meal planning tips? I’d love to improve in that area!

      • not sure if it is groundbreaking, but we have implemented meal planning as part of our weekly schedule. i always buy groceries on monday after work, so every sunday as we gear up for the week and look at our schedules, we also plan our meals. we choose quick/easy meals for nights when we will be home late or rushed to get somewhere and plan our more elaborate or time-intensive meals for nights when we don’t have much going on. we write these meals down on the corresponding days on our whiteboard calendar in our kitchen. once we choose our meals, we check our pantry, freezer, fridge for what we have on hand and then make a grocery list for what we need. we also keep a running list of “staples” on our whiteboard calendar, so if we are running low we can get the product before we run out. i always double check that list before going to the store. this helps us to limit our grocery trips to once a week – giving us more time to enjoy each other and our food and less time scrambling to figure out what to eat after work. :-)

        • I second everything Katie said. One thing I like to do so that we don’t get bored is check cook books out from the library. We’d try different things and then decide which recipes we’d write down and keep. I also try to consider what produce is in season when selecting meals.
          If you’re interested in completely taking the guesswork out of things, there’s a blog: http://5dinners1hour.com/
          where you can subscribe and get menus and shopping lists and instructions for all the prep work to have 5 dinners ready to go in an hour. I really like the concept but discovered that I like planning myself.

          • agreed! we love cookbooks and experimenting too. we’ve found a lot of great recipes this way, but usually end up tweaking them a few times until we get it exactly how we like it. trying new recipes has also helped us learn about new ingredients and whether we like them. once you get familiar with the ingredients, spices, etc. that please your palate, it is much easier to make up recipes on your own or modify a recipe that may contain an ingredient that isn’t your favorite. it is a trial and error experience though – we’ve also made some really terrible dishes, taken one bite, and said, “ok, never again – and what can we eat tonight instead of this.”

  10. love all of this! we haven’t paid off anything yet (we just have big student loans that will take a while to pay off), but i am so counting the days until we start seeing that extra money in our monthly budget that once went to debt.

Leave a Reply

*
*

Text formatting is available via select .

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>