Digging out of Debt... 4 months on...

It has been 4 months since I opened up about how we are digging ourselves out of debt. As I was reviewing the last few months, I realised a couple of things. I am going to be open and honest about it all, so don't call me crazy ;)

Since June we have reduced our debt by slaying the Consumer loan on my sewing machine. We paid it off in July and it was an amazing feeling, having it gone. I am in fact awaiting an interest rebate from the company, as their system crashed and couldn't tell me how much interest should have been deducted from the payout figure. The other part of our debt, the school fees has been slowly dissolving. I had originally said that we would have most of it paid out by the end of the year, but circumstances have changed and we really need to pay them out before the end of the year, as our kids are moving schools in the new year. This last factor has also had it's own financial complications, but are short term. It just meant that there was less to pay onto the old debt this month.

Out of the $13,499.76 we had to left to pay of our debts, we have officially paid off $10,329.80 since January. This leaves us with $3170 to pay by the middle of December. We are guaranteed to pay off another $1400.00, leaving us with $1770 to find in our budget before the end of the year. This is of course a miracle happens ( and I firmly believe in them!)

We have had a couple of Murphy's drain most of our Emergency fund in the last month as well, so we are looking to build that back up again. I have been very slack with YNAB, and stopped budgeting on paper (or app) due to what a friend of mine called "Debt payoff Burnout". I felt like I hit a wall with the debt payoff. We are so close to paying it out and just want it gone, so that we can start fresh.

I am giving us a break with YNAB, as much as I LOVE it, until we have cleared the last of the debt. I think that we will have a new lease on life and be able to work towards our other goals, once we have no consumer debt to worry about.

Our first goal in 2016 will be to rebuild the emergency fund, followed by creating a one month income buffer. Once both of those are achieved we can start saving for our family holiday and kitchen renovations( I told you I was goal oriented!). All of this will be done whilst building up our budget categories for the big expenses that come up over the course of the year.

Get organised in 30 days, Day 16

The Importance of Financial Awareness

Last week we looked into getting our bills and paperwork in order so that we can deal with one of the biggest and most overwhelming areas for Australians today... Budgeting

Many of us live on credit cards, store cards and have debt to the eyeballs. My husband and I were no different, just a few short years ago. We were renting, had 2 credit cards a personal loan, contracts that were costing us money, a housing authority Bond debt and were relying on hand me downs for our kids. When we moved into our last rental, we made a decision that would radically change our lives forever. We got Organised. Yes I started decluttering our personal belongings and paperwork, but we made tough decisions to get rid of debt and become financially responsible. We started with our smallest debt in size, but biggest in interest. I have since learned that the method I used is called "snowballing". As we paid off each debt, the money that was left over went onto the next debt on our list of financial clutter. Within 18 months we had got rid of 2 credit cards, reduced our telecommunications bill by $80 per month, paid 80 % of our Bond Debt and found out that were were able to purchase our first home by refinancing our personal loan. Even when we refinanced, we continued to pay it off at the same amount that we had been in the past. Within 36 months we had got organised, changed jobs, become financially aware and bought our own home. How did we do it? We learned to Budget. We were tough on ourselves in the first 6 months and we really shopped around for the best deals on everything before we did anything.

Today, we are over $4000 ahead in our Mortgage (in just over 2 years) and we are also ahead on our personal loan. We are driving 10 year cars that really need replacing, but we know that as long as they are still working we can manage. It is so important to change our mindsets from I got to have the latest and greatest NOW, to I can make do with what I have and work toward the thing that I want.

Having an organised office is so important in this process. You need to be able to put your hands on paperwork and bills, whenever they are needed. For me, paperwork is still my one area that I struggle with. I really need 2 rooms for what I do in my office at present (I sew, blog and run the family accounts), but I will work with what I have until we can make changes.

Time to count the cost

Today is office day, so I challenge you to get your office in order today. Have an area where you can keep all your office supplies handy: stapler, pens pencils, paper, envelopes, files etc. Have large envelopes to contain your tax returns and receipts, so that you can keep them stored for 5 years safely incase you get audited. It is also handy to have them when applying for finance.

When you have your office together and you know where to find everything, it is important to decide  how you are going to manage you budget. I have found a couple of free ways and a couple that will cost a small amount. Please keep in mind that I am doing this as a service and that I am not a paid financial advisor. I am also not being paid by any company for the links.

You can go old fashion pen to paper or computerised. I have tried both, and as I am a visual person I find the computer style works best for me.

Ok Freebies

Paper  monthly budget by Organizher 

Microsoft Money Sunset. I love this program. I have used Money for many years and was unhappy to see them remove it from the range. They came to the party with this last version as a freebie.

Paid Versions

Quickbooks Personal. At $99.00 it seems a little steep, but the program is stable and easy to use.

In the Apple Mac app store there is Home Budget. it is the closest I have found to Money, since changing over to a Mac.

The Organised Housewife also has an Excel based Budget. I suggest that if you use a Mac, not to get this program, as it is difficult to use in Mac based Excel programs.

At the end of the day, check them all out, they all have their own merits. I have used them all. 

Remember when budgeting to put some into savings. Even if it is just $5.00 per pay period. It will get you into a regular routine. I also recommend when budgeting, that you get out all the bills for the last 12 months and add them all up and divide by the number of pay periods in a year. Then add 10% to the figure. This will help you ensure that you can pay bills on time and even help cover the unexpected Shocker. Spreading the payments out over pay periods makes for less bill stress and a greater sense of knowing what you can play with.

Remember also to give yourself a little to have fun with. My Hubby and I get $20 each a week. Just enough to treat ourselves to lunch or that piece of fabric I have been eying off LOL.

Ok enough rambling! Go into your office and conquer your financial clutter!! 

Have fun and God Bless

Rivkah

Get organised in 30 days, Day 9

What's worse than the dreaded Lurgy?

The answer... the pile of filing that never seems to get done, the computer full of emails to be deleted and the tax stuff that you just don't know what to do with. 

Actually the real answer is writing a Budget. However, this can't be done if you don't know where all the money is going, because you haven't filed anything or just don't even know how to get a good system started and it all just seems a little too daunting! If this sounds familiar, then please set a time with yourself at least twice a week for the next month to work on this area. Most of us stress over money more than any other area in our lives. 

SO... Let's set ourselves a Thursday 1hr routine for our home office. We are going to break it up into 4 15 minute lots, so that we can start to claim back the treasure that is our peace and financial awareness.

Office routine

1. sort through the pile of mail and paperwork from the last week. Please set up an "in box" for ALL incoming paperwork. that way you will know where to find it when you look for it in step 1. Throw out all junk and unnecessary paper, in this time. Put all bills in a folder that you can get to readily and place anything that needs to be filed neatly on your desk ready for step 2. (As the weeks go on you will be able to sort through much of the older paper work, as you will get into a good routine. Over the course of 3 months, I threw out an entire 90L container of old paperwork. Remember to start with the latest paperwork, so that you can make sure bills that are due get paid and not missed, hence not costing you extra fees.)
2. DO YOUR FILING! only for 15 minutes. You will be surprised what you can achieve! I DARE YOU!!
3. Schedule your bill payments for current bills and place any Tax claimable receipts into a folder for the current tax year.
4. Clear your emails. This will include removing yourself from mailing lists that you no longer wish to receive. They are as bad or worse than junk mail in your letter box, because we just scan over them.

When we have started getting our paperwork in order, then we can start to look at our Budget. Next week we will look at what our options are and see the pros and cons of each of them.

If you are still not sure about filing, I suggest a really good course through Kikki-k. I have done this workshop and found much of it to be very helpful. They encourage you to buy their products, but I have been able to find affordable alternatives in many cases. For $40.00 and 2 hours of your life, it might just save you from drowning in the sea of paperwork. 

Please note I have not been paid by Kikki-k. I am sharing my own personal experiences.

Have some fun and reward yourself at the end of the hour with your favourite beverage or even a refreshing walk. 

Take care and God Bless

Rivkah