Are you a slave to the Lender?

This photo was of our progress a few months ago.
By the end of this 2017, the word "MORTGAGE"
will be all colored in BLUE.

If you were to really take the time to consider your financial state TODAY, how would you rate yourself on a scale from 1 to 10, of where you want to be?  A 1 would be "not at all where I want to be" and a 10 would be "doing better than I deserve".  Are you an "average" American?

-76% of Americans live paycheck to paycheck
-Average American household wastes 24% of their take home pay on consumer debt
-64% of Americans could NOT cover a $1000 emergency

Student Loans, Car payments, Credit Card debt, Mortgage....  How much does that all add up to each month?  Could you imagine changing that value from "money owed" each  month to "money saved" each month?  Now multiply that by 12, and that's what you have over the span of a year.  Incredible to think that you could have that much money at your disposal to do what you wanted with- to tell your money what to do, rather than have you money tell you where it's going.

Most people have just accepted that they will always have some sort of debt.  But that doesn't have to be you.  You could be WEIRD- and be living a life in complete financial freedom.  You could be someone who could drop $1000 at any given time to be generous and change someone else's life by helping with an emergency or need.  It's time to change the trajectory of your financial life and get free of being slave to the lender.

We are considering hosting a Financial Peace University class.  Check out the link to find out more about the 9 week lesson outline in the  FPU Preview.

If you are interested in joining the class, please let us know!  

It involves 9 weeks of class, 1.5 hours x 1 evening a week.  

MY STORY-

I was introduced to Dave Ramsey by my mom in 2004, right after I graduated from college.  She would talk my ear off about his book, "The Total Money Makeover".  I was like, "yah, yah... ok mom."  So she sent me the book.  I read it.  I was completely inspired.  I started working the Baby Steps.  I got my $1000 Emergency Fund into place and then started chipping away at my $22,000 of student loans.  I trimmed my spending down as much as I could, and was able to pay of my student loans by December of 2005.  In 18 months I was able to pay off $22,000- only working part time hours.  Once out of debt I started savings funds for different anticipated expenses like my next car, home repairs, travel...  Fast forward to today.  One year ago, 2 years into our 30 year mortgage, my husband and I refinanced our mortgage down to a 15 year mortgage and got an incredible interest rate in the process.  That was a smart move, and it only cost a little less than $100 each month.  Now we could have our house paid off in 2030, as opposed to 2043.  Who even thinks that far ahead?  But the reality of this change meant that we could have our house paid off before any of our children went to college.  But the truth of the matter is I am all about being completely debt free as soon as possible.  So we started paying an extra $100 to the mortgage right away, which would be about 1 extra mortgage payment a year.  This would cut our 15 year mortgage down by a few more years.  Cool.  But paying down debt is a bit addicting for me, and I got the Laird on board with putting anything extra we have into our mortgage.  My goal now is to make our final mortgage payment for our 10 year wedding anniversary in August of 2020.  That's less than 3 years from now!  This February, We started out with a "No Spend- Frugal February" budget.  And we've pretty much kept that pace ever since.  

It's time to change your life! Wherever you are at in your journey, movement comes from working through hard things with other people.  You will find encouragement and accountability in the area of finances.  Have a plan for your money, rather than continuing on your current trajectory.   The FPU membership kit costs $93, but there are people selling used versions (and even some new) for less on ebay.  If that stands in the way, commit yourself to setting aside $1 a day for the next 3 months.  It's a small price to pay to get on track for a better financially free future. 

 I am hoping we can start a class in January of 2018.  

"I've Got A Dream"

Rapunzel: [after releasing a branch that hits Hook Hand Thug on the head] PUT HIM DOWN (Flynn Rider)! [Everyone stops and stares at her in disbelief] Okay, I don't know where I am and I need him to take me to see the lanterns because I've been dreaming about them my entire life! FIND YOUR HUMANITY! Haven't any of you ever had a dream?!

Rapunzel has a dream.  To see the lanterns of the Festival of Lights that appear in the sky every year on her birthday.  What a magical experience!  I would love to see something like this in my lifetime too.  I think about this scene often, as Rapunzel belts this song out amidst a bunch of thugs in a tavern, who want to capture Flynn Rider.  She distracts them with questioning what dreams they have ever had.  After inspiring each one to consider their dreams they are then free to go. 

I have lots of dreams, but the one dream that has taken a center stage this year is the dream to attain complete financial freedom.  Ever since I graduated from college and was given a copy of The Total Money Makeover by Dave Ramsey (from my mom), I have always dreamed of attaining this sort of freedom.  Inspired by what I read, the principles took deep root in my heart and I started living them out.  I was able to pay off $21,000 of school debt within 18 months of graduating college, while only working part time in my field! I was absolutely determined and I reached my goal.  I have been working the Baby Steps ever since then. In addition to paying off the debt, we've purchased every vehicle we've owned with cash.  Our only remaining debt consists of the properties that we own.

These Baby Steps have served me well.  They have given me direction and wisdom of what to focus on in order to gain financial stability.  Thankfully I married someone who was raised with a good financial head on his shoulders, and whose family prepared him well for financial success.  At this point, we are working on Step 6- Paying off Our Home Early.  

This is my Dream!  I dream of not having a monthly mortgage to pay.  Imagine not having a housing expense line in the monthly budget?!  More and more I am imaging what an amazing thing this would be. Sure, there are lots of things I would love to do.  I love to travel.  I love to work on renovation projects at Redwoodshire.  And all those things can still happen, if we are wise about our resources.  

Recently I have been evaluating our budget, which is actually more of a "Spending Tracker" than an actual budget we live by.  We used to be really good at saving money- that was before we purchased our old 1890's farmhouse with 5.5 acres of land.  Things all changed in 2013 when we moved here to Redwoodshire.  We needed to make some renovations to the house to make it more livable.  And once the money started flowing out... it just kept going out.  We have been doing projects and starting hobbies since then and haven't gotten out of the "Spending mode".  With land, we needed a riding mower... and then a wood splitter... and then a snow blower... and the dining room needed to be renovated... and then it was a chicken coop & a beehive..... on and on and on.  We plan to live here for the long run, so spending money on needed things did not seem like such a big deal, as they are more of an investment than an unnecessary expenditure.  

This time last year, I revisited my goal of eventually paying our home off.  I got the Laird to agree to putting a chunk of money available savings into the mortgage, and that felt great.  But it sort of just increased the itch inside of me to keep paying things down.  But then we decided to build a chicken coop and buy a beehive, and the itch faded for a while.  Last summer I noticed that mortgage interest rates were at an unbelievable all time low.  We discussed possibly re-financing the mortgage and decided this was a good move, considering our mortgage was in the mid-4% range.  Not bad, but rates were hovering around 3% at the time.  We ran the numbers for both the 30 and 15 year mortgages, and realized it was only going to cost about $100/month more for us to refinance down to a 15 year mortgage, which then allowed us a slightly lower interest rate.  AMAZING!  So we did it!  Original closing was October 2013, with a 30 year mortgage.  With 3 years paid off of that 30 year loan (27 to go), we refinanced down to a 15 year mortgage.  So with that move, we saved ourselves 17 years of mortgage payments.  Can't beat that!

After reaching some financial goals we had before us, I started looking at the numbers and running them through amortization calculators again.  With what it seemed like we could pay extra per month, I calculated that we could pay the remaining $127k on our mortgage by March of 2023.  That's 6 years from now.  Essentially that means paying off our new 15 year mortgage in a total of about 6 1/2 years.  Seriously!?!  This was all a hypothetical IF we could actually pay as much as I thought extra each month.  I shared my new goal with the Laird, and painted the picture of having our house paid off by 2023, and after a weekend of mulling it over, he seemed sold on the goal.  Once we looked at our budget, it appeared like the reality of this payment would be a lot more difficult that I had initially perceived.  And why wouldn't it?  It's like paying off a huge debt in lighting speed!  It's living like no one else today, so that you can live like no one else tomorrow.  Isn't completely DEBT FREE worth the sacrifices right now?  I believe it is.  So this past month we declared as "Frugal February".  We have really become aware of our spending, and have tried our best not to make unnecessary purchases.  The Laird has been amazing and has chosen to eat lunch at home or pack lunch so far all month.  I have been tempted, but resisted buying for the sake of buying.  We have cut back and have literally cut our expenses down dramatically.  Unlike most months, I look forward to itemizing all the expenses and inputting them into our budget to see how well we did this month.  There are so many fewer transactions, so it will take me a fraction of the time.  Not to mention the inspiration of what we're capable of when we really try to save for a greater purpose.  

So we're 23 days into February.  With only 5 days left of this short month, I asked myself how life has changed with spending less.  Has my quality of life diminished because I haven't made random shopping trips for things that we "need", but may not really need?  Has it been intolerable that I haven't stopped to McDonald's for a Mocha Frappe (my weakness, and source to make it through the sometimes long days of being a stay-at-home-mom)?  Has it been hard not eating out?  The answer is NO!  Life has felt so much simpler.  Less stuff.  More contentment.  Connection to gratitude for what we have.  Clarity of mind to know that WE WILL reach financial freedom in the near future.  Gratitude that we have the ability to pay extra on this huge debt.  Gratitude for the vision of something greater.  It's SO WORTH it.  

I got the "mortgage payoff chart" that I started last year back out and was able to color in one line of the picture.  We still have so far to go, but I now know that we're focused and we're going to be coloring in more lines of that chart every couple of months now, rather than one line each year.  On March 1st we will make our 2nd extra payment toward the "principle only".  Yay!  Let's hope that we can figure out a way to keep motivated toward making the little sacrifices that will be necessary for us to be able to continue making the largest extra payments that we are able.  That March of 2023 date needs to be our bottom line.... I would love to see that date move up closer and closer.  That may be a little overboard, but one can dream, right?!

DO YOU HAVE A DREAM?  Let yourself DREAM BIG about things that seem unreachable- because you just may be able to reach them.

Matters of Money

After college my mother shared with me about Dave Ramsey and his principles the "Seven Baby Steps".  She was very enthusiastic about the baby steps and really worked to influence me to read his book, "The Total Money Makeover".  I did, and from that point on I was sold on a more directed path to financial freedom.

Having just graduated from college, and working part time in my field, I was making more money than I had ever known before.  I hurried to consolidate my loans, which meant that I missed on the 6 month period of deferred interest.  Then I made it my goal to pay my loans off as fast as I could.  I saved up my $1000 Emergency Fund, and started putting every bit of extra income towards my loan payments.  With just over $20,000 of school loans, I was completely payed off within 18 months!  Part of this time I was only working part time!  It became somewhat of a game to me to pay extra on the principle each month and watch the total go down.

Me & "Marley" , the 1969 VW Beetle in 2005

Honestly I enjoyed paying off my school loans.  Once I was paid off, I actually missed having a goal to pay down.  At that point, I had disposable income that wasn't accounted for.  I would save, but as soon as I reached about $5000 I would find something silly to spend money on.  One time I bought a beautiful 1969 Volkswagon Beetle from Northern California, off of ebay!  Keep in mind, I was living in Western New York when I made this purchase.  I had to pay a good chunk of money to have the car shipped across the country.  I affectionately called it Marley, because I really loved listening to Bob Marley at the time.  At the time, I had become a new home owner.  So I now had a mortgage to work to pay off.  I printed up the amortization table and every time I made an extra payment towards the principle, I would cross off future monthly payments.  If you've ever owned a house and looked at the breakdown of your mortgage payment, you know that in the beginning only a very small portion actually goes to paying down your loan.  I realized that if I only could simply match the amount payed towards principle for that month, then I would decrease the life of my loan by a whole month!  If I did that every month for a whole year, I could more or less decrease my 30 year loan by a whole year!  And as more of the loan is paid down, the impact is even greater.

I LOVE Dave Ramsey's 7 Baby Steps!  And they have worked for me.  For more information, check out Dave Ramsey's 7 Baby Steps.

With some financial freedom goals for our family brewing in my mind,  I found some great debt freedom charts . Most people accept the fact that they will probably always live in a state of debt.  This is an absolute lie.  There is light at the end of the tunnel, but as Dave Ramsey says:

Can you imagine living mortgage free?  That would be amazing financial freedom in my mind.  It's time to set some BIG GOALS for the near future.  With charts like this one hanging on the wall or refrigerator, our goals are visible every day.  Saying "No" to eating out, or using that really good coupon to buy something that we may not "need", means gaining something we really do need- Financial Freedom.                        Check out these DEBT FREEDOM CHARTS.