Tackling Student Loans

Howdy!

Some of you may have seen my post on facebook earlier this week which announced that Darren and I had paid off all of our student debt.  We are very excited about reaching this goal, and especially since we completed it a few months earlier than planned.

As most of you know, we haven't had the most stable financial situation since we've been married, so money topics were not ones we enjoyed talking about after we said, "I do."  The more we read, the more we realized that getting our finances in order would not only be smart, but would also provide a sense of peace when paying bills, planning events, and basically any transaction that involved spending money.

Fortunately, we found a church that we had started to like just before it began a Crown Financial Peace Course.  This course taught the basics of budgeting, all Biblically based with the emphasis on the fact that we are stewards of the money God blesses us with.  That course, starting in January, taught us how to take our income and divide it among the things we had to pay (rent), the things we need (groceries), the things we want (dinner out), and the emergencies (flat tire, ER visit).

I bought a binder with tabs (one for each month) and used a few Pinterest posts as inspiration to create our own budget documents.  Every single transaction, whether cash, check, or card, was documented and then divided among each category.  We allowed ourselves to have some room for fun (entertainment budget) and some room for unplanned things (medical budget).  I find writing everything by hand to be extremely helpful because it makes you think twice before splurging on those adorable shoes at Target or ordering pizza for dinner because you don't feel like cooking.

After 3 months of the Crown Financial course, our class began a Dave Ramsey course using his book the Complete Guide to Money.  Dave goes over baby steps to financial success and Darren and I decided to do these, mostly in order, to achieve our goals.  The one thing we did differently was instead of doing baby step 1 of an emergency fund of $1000, we went ahead and skipped to doing the emergency fund that would last us 6 months.  This way, if something happened to my job we would be able to survive reasonably for 6 months.

One of our most important goals was paying off student loans.  Without getting into details, we had five different loans with five different interest rates.  We used Dave's snowball method, which means you focus in on one debt while paying minimum on the others.  In our case, we chose to pay off the loan with the highest interest rate first.  This way, we paid off one loan in its entirety before moving on to "attack" the next loan.  At the end of each month, any extra money that we didn't use was put toward the loan. Every. Last. Penny.  You see, since we had the 6 month emergency fund, we knew our savings account was fine until we reached this goal.

I would say that the best part about this whole process was the peace that it brought when we wanted to splurge a little.  Before, we had no idea how much money we'd already spent eating out that month and felt bad if we thought we had gone out too often.  Now, we knew exactly how much we allowed ourselves to use and when we got to the end of the month and had a little left, we would go out and ENJOY it completely guilt free.  We did the same when buying new clothes, purchasing new guest bath towels,  and splurging on the expensive brand of cookie mix at the store.  It was budgeted for that purpose, so it was okay to use it whichever way we chose to.

One of my other favorite categories that we put together was our "personal" budget.  This can be according to your income, but for us we decided that we each get $25 a month to use as we please.  I could save up and get my hair highlighted, Darren could save every penny for something special, etc.  We also gave each other an additional $50 when it was the other person's birthday month to be used for cake supplies, dinner out, or a gift. It's money that is ours to spend without having to consult the other person, because ALL other purchases are mutual agreements.  I remember someone suggesting this back when we were in marriage prep classes, and I HIGHLY recommend it.

I have Word documents of generic versions of our budget sheets if any of you are interested in starting this process yourselves.  There's nothing quite like knowing exactly where all of your money is going, and feeling like you're completely on top of it. If there is anything I can do to help you reach your goals, let me know! This process has literally changed our lives and how we look at money, and we are so much happier because of it.