Tonight in class (FPU Class) we talked about baby step 4 saving for retirement and tuition. As class began I was thinking, great these are two things we need to know about. Let me back up a second and remind you (and me) what the first three baby steps are: 1) $1000 emergency fund, 2) debt snowball (paying down debt with gazelle intensity) 3) fully funded emergency fund (3-6 months expenses). So first you complete steps 1-3 before beginning step 4. Makes sense.
Dave Ramsey suggests that you invest up to 15% of your salary into retirement, putting up to the max allowed into a Roth IRA. Ok, seems reasonable. This is where I started doing math in my head and my pulse started quickening. Dave talked about the ins and outs and dos and donts with IRA's. I really understood it all. I've been putting money in my IRA since I was 22.
After retirement we began to talk about tuition for the kiddos. Apparently you can put up to $2000 per kid in an ESA. So, two kiddos, $4000. (I think this is where I started breathing heavy). In my workbook you can see the scribblings of my quick math.
IF...big if....we were to invest in our retirement and save for the kids college at the rates suggested, we'd need to be saving/ investing way more then we are currently paying on debt. Feeling the big cloud coming over my head now. Feeling the rock crushing my chest. Can't breath. Want to cry.
The point that Dave drives home each class is that you live like no one else so that later you can LIVE like no one else. So if I do what I am supposed to do, pay down my debt, keep living in the hood where I'm afraid for my family, invest in my retirement fund, save for the kids college, where will we be? In the same f-ing place we are now.
Why should we bust our ass to get this debt paid off so that our quality of life stays the same? Once the debt is paid and we work on the next baby steps, we still won't have extra money to do any kind of living. So Dave, tell me how I'm going to LIVE like no one else. If we turn around and put the money we're paying to debt to retirement and to tuition, there still won't be the things I want for my family. No vacations. No different house in a better school district. No Hubby quitting his second job and spending more time with us.
It's days like this that I want to give up. We are only having two children so we can give them a good life. But we can't even give them a good life. So why do this? Why? We could just keep going on our merry way and pay for things with credit card, go on vacations on credit. ENJOY LIFE.
Writing this now there are tears in my eyes and I feel like I can't breath. We were supposed to be living like no one else so we can LIVE like no one else. I want to be able to provide the world for my children. That's why we are doing this. I want to be able to show them the world, well at least parts of th US. I want to travel outside of the US with my husband some day. But instead we will pay off our debt and begin working on steps 3 & 4 and we will continue living month to month (but saving for the future). What's the point?
Sunday, September 16, 2012
Friday, September 14, 2012
A Snowball's Chance...
I feared this when I started writing this blog, that I wouldn't be good at making it a very regular thing. Sorry it has been a while since I have updated our progress.
Baby steps. This journey is all about baby steps. Baby steps to changing behavior. As if that is an easy thing to do. I have tried many times in my life to make changes to behavior but often end up back where I began. True these behaviors were different then the ones we are changing now, but I fear we will end with the same result. The result of slowly slacking and letting old habits creep in, and bringing their friends with them. I am curious if I will learn lessons from these behaviors that we are changing that I can apply to others, or if I can even compare the two. You may have guessed the behavior I am talking about....eating.
Let's compare them for a moment, eating and living in debt. How are they similar? Eating tasty good foods will add to your waistline. Buying things on credit adds to your debt. Eating good foods and buying things when you want them feels good in the moment, but often ends in some sort of remorse. Both are easy to rack up, pounds and debt, but hard to take off.
A good friend once told me that in life you have to repeat lessons until you learn them. At the time she was talking about my ability or inability to work with someone who is passive aggressive. Today I see how this statement/philosophy fits my struggle with both my weight and our debt. I have recently lost a significant amount of weight, but have been on hiatus for a couple months as we have been working on the beginnig of our debt free journey. In those couple months I have kept some of the behaviors that helped me lose weight, while letting old bad behaviors creep back in. I wonder if I can learn my lesson this time? I wonder if I can finally break the cycle of letting bad choices influence my health, both physical and financial.
We recently started on our debt snowball. Paying off our debt, smallest debt first, increasing each months payment as we eliminate each debt. I wonder if our debt snowball has a snowball's chance in hell to accumulate the funds needed to pay down the debt. I feel good about our journey and our successes so far. We have paid down our first 2 small debts, and after this month we will move on to the next. But sometimes the desire to "have" overrides the desire to pay down debt.
These days there are so many things that can sabotage your goal of becoming debt free. Each day I get emails telling me about this deal or that deal. They seem so hard to resist. THEY WILL SAVE US MONEY, the devil on my shoulder says, then the angel replies THEY AREN'T SAVING YOU MONEY WHEN YOU DIDN'T PLAN TO BUY IT IN THE FIRST PLACE. Devil: "But you need it." Angel: "You can live with out it another day" (holy moly I have mutiple personalities!) And don't get me started on Nebraska Furniture Mart. Stupid 30month no interest. That just fuels my desire to buy stuff I/WE don't need. I tell you what though, the day I get an email that says a trip to Ireland is like $350...all bets are off! :) I will not be able to be held liable for my actions on that day.
I know if we are going to be successful in this we will have to learn to build in money for fun, and for life. We were successful in doing that this month. Hubby and I knew we were going to go to the Irish Fest (it's kind of our thing) so we built money in the budget to go and enjoy ourselves. It did mean buying less crap from the shops. We normally each would have gotten something and maybe something for the kids. But we had a great night out. I konw we can't plan for everything and I guess that's where your emergency fund comes in. I can't wait for the day when that is fully funded at 3-6 months of income.
Earlier I compared this to changing the habits of eating. I thought I was going to say that this is easier. Truly they are equally hard. I love food! And I like having what I want when I want it. I know to be successful in both it comes down to discipline and making a plan. The days/weeks when I have a menu planned, I eat better. The months we have had a budget, our money went further and we started paying down debt and stopped incurring debt. Now if I could just start doing my menu when I do my budget, maybe we would start killing 2 birds with one stone. Then if we killed 2 birds we could have dinner for 2....wait I took that a little too far.
So as of right now I give our debt snowball a pretty good chance at getting bigger and covering a lot of ground. We are lucky we have people who have been there, done that, who can remind us why we started. OR we can look at the face of our beautiful children and be reminded why it is so important that we continue our journey.
Let's compare them for a moment, eating and living in debt. How are they similar? Eating tasty good foods will add to your waistline. Buying things on credit adds to your debt. Eating good foods and buying things when you want them feels good in the moment, but often ends in some sort of remorse. Both are easy to rack up, pounds and debt, but hard to take off.
A good friend once told me that in life you have to repeat lessons until you learn them. At the time she was talking about my ability or inability to work with someone who is passive aggressive. Today I see how this statement/philosophy fits my struggle with both my weight and our debt. I have recently lost a significant amount of weight, but have been on hiatus for a couple months as we have been working on the beginnig of our debt free journey. In those couple months I have kept some of the behaviors that helped me lose weight, while letting old bad behaviors creep back in. I wonder if I can learn my lesson this time? I wonder if I can finally break the cycle of letting bad choices influence my health, both physical and financial.
We recently started on our debt snowball. Paying off our debt, smallest debt first, increasing each months payment as we eliminate each debt. I wonder if our debt snowball has a snowball's chance in hell to accumulate the funds needed to pay down the debt. I feel good about our journey and our successes so far. We have paid down our first 2 small debts, and after this month we will move on to the next. But sometimes the desire to "have" overrides the desire to pay down debt.
These days there are so many things that can sabotage your goal of becoming debt free. Each day I get emails telling me about this deal or that deal. They seem so hard to resist. THEY WILL SAVE US MONEY, the devil on my shoulder says, then the angel replies THEY AREN'T SAVING YOU MONEY WHEN YOU DIDN'T PLAN TO BUY IT IN THE FIRST PLACE. Devil: "But you need it." Angel: "You can live with out it another day" (holy moly I have mutiple personalities!) And don't get me started on Nebraska Furniture Mart. Stupid 30month no interest. That just fuels my desire to buy stuff I/WE don't need. I tell you what though, the day I get an email that says a trip to Ireland is like $350...all bets are off! :) I will not be able to be held liable for my actions on that day.
I know if we are going to be successful in this we will have to learn to build in money for fun, and for life. We were successful in doing that this month. Hubby and I knew we were going to go to the Irish Fest (it's kind of our thing) so we built money in the budget to go and enjoy ourselves. It did mean buying less crap from the shops. We normally each would have gotten something and maybe something for the kids. But we had a great night out. I konw we can't plan for everything and I guess that's where your emergency fund comes in. I can't wait for the day when that is fully funded at 3-6 months of income.
Earlier I compared this to changing the habits of eating. I thought I was going to say that this is easier. Truly they are equally hard. I love food! And I like having what I want when I want it. I know to be successful in both it comes down to discipline and making a plan. The days/weeks when I have a menu planned, I eat better. The months we have had a budget, our money went further and we started paying down debt and stopped incurring debt. Now if I could just start doing my menu when I do my budget, maybe we would start killing 2 birds with one stone. Then if we killed 2 birds we could have dinner for 2....wait I took that a little too far.
So as of right now I give our debt snowball a pretty good chance at getting bigger and covering a lot of ground. We are lucky we have people who have been there, done that, who can remind us why we started. OR we can look at the face of our beautiful children and be reminded why it is so important that we continue our journey.
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