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.

Digging ourselves out of debt, one teaspoonful at a time

Do you have that sinking feeling?

12 months ago, we got hit with an unexpected tax bill, the numbers on the page sent me into a cold sweat! We had made an error on our tax 2 years in a row, resulting in over $4000 of tax debt. We were due an annual bonus from my income stream and had forward planned to pay off the kids school fees for the year, so that we could get ahead. However, this not so little visit from Murphy threw us a major curve ball. We were desperate to get out of debt, so that we could have a buffer and maybe even afford to pay for a holiday or new car. We wanted desperately to buy out of a shared equity mortgage, so that we could build our equity ourselves. But our dreams looked like they were sinking. I felt like we were drowning in debt!

The hardest part of this was admitting that we had a debt problem. We faced up to our mistake and made the best decision. We paid the tax debt first. It had an interest rate that was ridiculous and I knew it was wasted money. So talking with the ATO, we came up with a plan. The tax was paid within the time limits given, but we still had the school fees to pay. 

Honesty is the best policy

When we realised that we were drowning, we faced up to the situation. Writing down everything that we owed and what our income was, was the first step to being honest with ourselves.

The next step was one that I chose to do, so that my hubby didn't have the stress. I arranged a meeting with our school principal, to explain the situation. Being honest with creditors early on, makes for less stress. Once we spoke to the school, the pressure was released. We committed to paying what we could until the end of the year, before starting again this year. By doing this, we were able to bring that debt down to just over $3000 by the end of last year.

Our next item to attack was our personal loan. We knew it was eating at our cash flow, with the high interest. We had already committed to paying more on the loan right from the start, but we wanted it gone! By October, we had a plan. We started using YNAB for our budgeting and learned to give every single dollar a job in November.

Once we started using YNAB, we realised where all our cash was REALLY going. We had just heard from our Real Estate friend, who gave us a valuation on our property. We did some calculations and realised that by rolling the personal loan and buying out our property from the Shared Equity scheme, we could afford a full mortgage and climb out of debt.

Moving forward

On December 22nd our mortgage settled and we had enough money left over for a full 1 month buffer plus a small emergency fund. We had money to get Christmas Presents for our kids and best of all we had gone from $30,000+ in personal consumer debt to about $14,000.00.(including the school fees for 2015, as we would be starting the year, behind) We were paying slightly more, but somehow we were better off than before.

We were able to start 2015 with a clear new goal. To clear out the last of the debt. Yes, Murphy has visited a few times over the first half of this year, but his stay has been fairly short. We have less of a buffer than we did have, but we still have our emergency fund and the buffer builds up each month.  By the end of July that $14000+ debt will be down to about half. One debt will be completely gone and the school fees will be on track for an almost full to full payout by the end of the year. 

I haven't written this to brag about our situation. I have done it to encourage and inform you and others, that it can be done. I am always looking for new ways to save money, but make it fun at the same time. If this has helped you, please feel free to share this post with others. My hope is that together we can all climb out of the debt pit.

A Return to Blogging

Lost in Translation

So for the last 17 months I lost my blogging mojo. My health and life were in chaos, not that most people could tell. I have had to make some tough decisions and learn to live with a very changed me. I am not going to go into detail right now about what I have been through, but my focus has shifted slightly.

Decluttering and organisation are still at the heart of what I do, however I have had to simplify our family life for the sake of my health and wellbeing.

Taking control of my life

I now use a handwritten planner rather than relying on technology to tell me what is happening. I started with a large family planner diary, but found it was too overwhelming to carry and use. So I recently splurged and collected a Kikki K planner while it was on sale. I love that I have been able to customise it to suit my life and the way I want to use it. I am not a fanatical planner user, nor am I the fancy shmancey decorate every page kind of gal. I do however love that it look pretty and is functional at the same time.

As a working and studying mum, I need to be organised. I have learned over the first semester of my study, when my most productive time is. So now I use my evenings (when the kids are in bed) to do my study, my pre readings are done while waiting to collect kids from school and all other errands are done during school hours on my days off. 

I now get up 40 minutes earlier than I used to and start my day in prayer and planning my day.

As a family, we got serious about our debt. As of today, we are down to just over $10,000.00 of debt (other than our mortgage). This has shrunk significantly from 12 months ago. This time last year, we had around $30,000.00 in debt.

Where to now?

I have learned over the course of the last couple of years, I NEED focus. So I now set myself a challenge each month. I hope that over the next few months, I can inspire myself and others to focus, simplify and regain control of mental, emotional and spiritual health, as I prepare for a life in Christian Ministry.