The Long Road to Freedom

My husband and I want to…no, we need to get out of debt.

Being debt-free has been a dream of ours for years, but it has always been so difficult to see the light at the end of the long tunnel of creditors. The goal seemed unattainable, and as a result, we continued to pay minimum payments while overspending at the grocery store.

Now don't get me wrong, we've been pretty frugal with our money as a whole—well, at least since we accrued all our debt anyway. We don't go out to eat and we don't have cable or satellite TV, but our regular expenses have always been just about equal to our expenses—the typical "paycheck-to-paycheck" syndrome.

Maintaining a strict budget in the past has also been made difficult by my variable income from piano lessons. I never know from month to month what my income from piano lessons is going to be; and then over the summer, so many of my students take the summer off that my income plummets, resulting in our expenses in the summer exceeding that of our income.

And, you know what? Having more expenses than income gets pretty annoying pretty quickly!

Several months ago I read through Dave Ramsey's book and tried to implement his system, but I found it difficult to do at the time. But after being inspired by my friend Toni and her journey to become debt-free, I took another hard look at our finances to try to see if I could make Dave's budget system work.

And I think I can do it.

Jeff gets paid every Monday, which makes his income easy to figure; but my piano income, in addition to being variable each month, often trickles in throughout the month, with some students paying for the month well after the 10th of the month, which is the official due date. So when I looked at my budget again this time, I tried to see if there was a way to take those variables into account. And this is what I came up with.

First, all our regular expenses (mortgage, car payment, gas, utilities, phone, insurance, minimum payments on our debts, etc.) will be paid out of Jeff's check. His check will be deposited in our bank account, and then our bills will be paid from our account, especially since most of the bills are paid either automatically or online. And since only regular bills will be paid from Jeff's income, we will not use our ATM/Debit card for anything. We do have a gas card that we use for gas (we get a nice rebate on it), but I'll be paying on that card from our checking account as it is used so it will be paid off every month.

Second, my piano income will be kept as cash in physical envelopes and designated for:

1. food/household, $450
2. medical out-of-pocket expenses, $75
3. auto expenses (oil changes, registration and inspections), $25
4. clothing, $30
5. homeschool supplies, $50
6. entertainment/gifts, $25, and finally…
7. extra debt payments.

Then, as my piano income comes in throughout the month, I'll cash the checks and fill the envelopes in a trickle-down manner. In other words, my food/household envelope will get filled first ($450 for May), and then when that is fully funded, the next envelope on the list gets funded, and so on. The extra debt payment envelope is funded when all the other envelopes are fully funded for the month.

If there are some months in the summer when I can't fully fund one of my envelopes, it won't be a great tragedy since most of those categories are intermittent expenses that can be controlled to a certain extent. If we're short, we'll just refrain from buying books, gifts, or spending money on entertainment for that month, but all our regular monthly bills will have been paid.

This has been a great time to start up our budget since we just got our stimulus check from Uncle Sam. That money, along with the money from the sale of my piano, we've used to establish our initial emergency fund and to start paying off a couple small balances.

But there's one last thing.

For the sake of accountability, and as motivation for us, I'm going to post the balance of the first debt that we're going to be working to pay off ($4,270.75) on my sidebar; then I'll adjust the amount each month to show our progress toward paying it off. And lest you think that this $4,000 is our only debt, let me assure that we, unfortunately, have many more debts than that. This particular debt just happens to be the one with the lowest balance and thus has been marked as the first debt to die a quick—and hopefully painless—death.

This road to becoming debt free is a long one for us, and it will likely not be accomplished under four years' time. But as the proverb says: "A journey of a thousand miles begins with a single step."

Image by Justin Shearer