Struggling Financially? Our Plan For Living On One Income

First, let me warn you that this blog will have a few disclaimers and I’m diving into what I believe is a pretty sensitive topic – finances. This is a topic that I’ve planned on covering for about a year now and it’s a question I get asked regularly through DMs or email. I’ve alluded to some degree of the financial struggles we’ve had years ago and how we’ve been able to correct things through financial literacy and changing the pattern of our financial future. As I said before, this is something that I’ve been wanting to talk about but I kept hesitating because it is such a sensitive and personal topic but I kept having this feeling like God was tapping me on the shoulder and telling me that now’s the time to talk about this. I hate to say this, but at first, I didn’t want to listen, I didn’t want to talk about this yet, but the reality is that if this helps even one person, then it was all worth it! So here it goes. (Click below to view my full Coffee Chat video)

Disclaimers

Now let’s get my disclaimers out of the way. Number one, money is a very sensitive topic. I am a very private person, which you probably find really hard to believe because I get on here and I talk about some really personal stuff sometimes. But this one is very much outside of my comfort zone and there are a few reasons for that. I feel like for many of us, money is a loaded, emotional topic. We feel shame about our debt and shame about our money situations. Then on the flip side, people who are in a good financial situation, feel like they can’t share that either. There’s a lot of emotions wrapped up around money and I want to be sensitive to that.

My second disclaimer starts out with a quote that I’m seeing all over social media and I love it! We are experiencing the same storm but in different boats. Right now we are all going through the Corona Quarantine and the life changes that have come with that. We all have this crazy storm swirling around us but our boats are different and that fact is not lost on me. 

Finally, I am not a finance expert. The same way I’m not a fashion expert. I’m just gonna be totally upfront about that, too. I’m not a stylist. I was not trying to be one. What I can do is share with you what works for me and what is worked in my own personal situation. Take what works for you and leave the rest. So now that all of that is out of the way, I can get into the topic at hand, which is money.

Our Own Doing

What I’m going to talk about is not a result of a worldwide pandemic or a recession or even a job loss. It happened about 12 years ago and it was something that was entirely our doing. I’m going to share with you some of the steps we took and the things we did because you might feel like you’re in a really, really dark place right now and I want you to know that maybe 12 years from now and hopefully sooner than that, you may be able to look back on this time and say, Wow, that was the time where I set the foundation that’s put me where I am today.

Now let’s get in the wayback machine and rewind 12 years ago. We built the house that we live in right now and we had just moved in. Our mortgage payment was more than twice as much as the starter home that we had been living in. Of course, I wanted new furniture and all of the window treatments and the plantation shutters and all the good stuff. We started racking up credit card debt. The move into the new neighborhood made us think we needed nicer cars so we went ahead and added in the luxury car lease. I think that pretty much covers it, but basically we had gotten into a place where we were in over our heads. To top it off, I had my head in the sand over all of this because Craig was doing all of our bill paying at the time. I chose to keep my head there because I didn’t want to know what was going on. I didn’t want anything to do with it. I felt like I had other responsibilities in the house. I didn’t even want to be aware of it. Craig finally came to me said that we were struggling, that we were spending way more than we were making and that we had to borrow from our 401K to make the mortgage payment. Let me tell you that it was a real come to Jesus moment. I’ll never forget it. I was standing in the kitchen and I just started crying. I couldn’t figure out a way out of this situation because we couldn’t generate more income. Our desire to keep up with the Joneses had gotten us into this place. It was a lot of emotional decision making that got us there and I wasn’t sure where to turn.

Asking For Help

After the emotional dust had settled a bit, I made a phone call to one of the smartest people I know, who is now our financial advisor and has been for the past 12 years. He was my old director at Verizon but he had left and started his second career as a financial advisor. I asked him if he could come over to our house and talk with us about our finances. It was a really difficult phone call to make because he was somebody I really admired and respected but I had to swallow my pride and say, Hey, we are in a bad situation and I don’t know how to get out of this. Craig and I were not taught financial literacy growing up, which I’m guessing a lot of people weren’t. My kids have been because of this situation that we’ve been in and that has been something very important to us. 

So Henry came over, sat down and looked over everything. First, we needed to get rid of the car lease as soon as possible. The next step would be to pay down the credit card debt. Then he told us about a course he was teaching at his church called Financial Peace University which is a program by Dave Ramsey. He briefly told us what it was about and to say that this program turned our financial lives around is an understatement. Time for another disclaimer, I am not affiliated with Dave Ramsey nor am I being compensated in any way, it’s just something I truly believe in and it was something that changed our financial future forever. I will never look at things the same way again and one of the most important things we learned was to live below our means.

The Baby Steps

Some of you may have heard of Dave Ramsey and his 7 Baby Steps for Financial Freedom and some of you may be wondering who the heck he is. Other’s may have already gone through his steps and are living a life of financial freedom. I truly believe in his method for getting out of debt because you use what you have and take a good, hard, critical look at your finances. Below are his baby steps.

Baby Step #1

Save $1000 for your starter emergency fund.

But before we even jumped into the baby steps, we had to create a list of all our debt, all our bills and all our income. Saving up $1000 when we were struggling to pay our bills was hard. I was able to squeeze out maybe $50 a week and that was hard, but we finally made it and proceeded to Baby Step #2.

Baby Step #2

Pay off all debt (except the house) using the debt snowball.

While the steps are a great guide to get where you want to be, they are not easy. It took sacrifice. We went from basically not really caring about what we spent to looking at every single penny that we spent. We were able to consolidate all our credit card debt onto one card and pay it down in chunks. We cut our expenses and had a monthly budget. We created our now infamous $15 Fridays. I would take $15 out of the budget per week and that was our entertainment expense. We would rent a movie from Red Box and get $5 pizzas from Little Caesars and some crazy bread. It was something we looked forward to and that our kids look back on with fond memories

Within two years, we were able to pay off sixty thousand dollars worth of debt, not including our mortgage. We were able to fully fund our emergency fund and we were able to start going on vacations again and learned to live below our means. We were able to now move on to Baby Step #3.

Baby Step #3

Save 3–6 months of expenses in a fully funded emergency fund.

Now it’s time to add more to the emergency fund however the emergency fund we’re building now is for situations like what we’re currently in. This will help sustain you if you lose your income, you’ll still be able to cover all your bills for the next 3-6 months depending on how much you figure to save. Now you’ll take the money you were throwing at paying off your debts and that money is now going to go into funding your emergency fund. I’d be lying if I said that after doing steps one and two that step three was easy because it wasn’t. For us to have a six-month emergency fund we needed to save around thirty thousand dollars. This step also required sacrifice and took us roughly another two years to accomplish.

Baby Step #4

Invest 15% of your household income in retirement.

On to baby, step number four, we’re moving into some higher-level stuff now. Invest 15% of your household income in retirement. It’s time to get serious about retirement no matter what your age. Take 15% of your gross household income and start investing it into your retirement. Start with your company’s 401K if they offer one and sometimes you can receive the full employer match. This is important. If you’re not taking advantage of this, please do so.

If this is something you’re not doing, it’s never too late. You can always invest in your retirement. You can start today! There are so many resources out there for you and don’t beat yourself up if this isn’t something you’ve done, just take the steps and do it now.

Baby Step #5

Save for your children’s college fund.

By the time you get to this step, it’s been assumed that you’ve paid off your debts except for your house and you started saving for retirement. Now it’s time to save for our kids’ college expenses. This is another tip Henry gave to me. I was panicking twelve years ago because we didn’t have any money saved for our kids. He said Your kids can always borrow for college but you cannot borrow for retirement. You have to save for your own retirement. Put yourself first. Then you fund your kids’ college funds. Wow! That really struck me so that’s what we did. We had been saving but we haven’t paid for their college fully. I wanted them to have a little bit of student loan debt coming out of college to make them a little bit hungrier for finding the job and starting their careers. I wanted them to be more invested in their education. Again, just my philosophy, but just my two cents on that.

Baby Step #6

Pay off your home early.

Now on to baby step six. Your mortgage is the only thing between you and complete freedom from debt. Can you imagine your life with a house payment? Any extra money you could put toward your mortgage could save you tens or even hundreds of thousands in interest. Craig and I are in a place right now because after we paid off all the debt and we were able to contribute to the 529s and able to fund a retirement, we started to pay more on the principle of our mortgage. Our house is 12 years old now and we’re in a position where we’re really close to being able to pay our mortgage off soon. With all of this, I would have to say the sacrifice was completely worth it.

Baby Step #7

Build wealth and give.

Baby step 7 is where we ultimately all want to be, build wealth and give. It says in the book, Do you know what people with no debt can do? Anything they want! I love that! The last step is the most fun, you can live and give like no one else. Keep building wealth and become insanely generous. Leave an inheritance for your kids and their kids. Now that’s what we call leaving a legacy. And also ultimately, what a great position to be in.

Finding Peace

I just can’t say enough about Financial Peace University, because ultimately it truly has given me peace in this situation that we’re in right now knowing we can weather the storm. I’m not lying awake at night worrying about how are we going to pay our bills or worrying about being in debt because we did these baby steps twelve years ago. We made the sacrifices. Again, the situation that we created, we created on our own and I’m not trying to shame on myself in any way or shame anybody else. It was about not being financially literate. It was about making emotional money decisions and we’re all guilty of that. I view it now as being one of the darkest spots though, kind of like a rock bottom moment for us. But it was also that rock bottom that has gotten us to where we are today and has brought about this peace. I know, if I had to go back and do it all over again, I absolutely would, and if we had to do it again, then we absolutely would, too.

So if you’re still following this story, you’re probably getting to the point where you’re wondering about the title of this blog/coffee chat. I won’t get too much into the business side of things, but GYPO has taken a hit during this pandemic. As the year goes, I have different aspects of the GYPO income to allocate to different things in the business. I have the funds to take care of the company and my team but I run it as an LLC and therefore I’m on the payroll just like my team and receive a paycheck. After reviewing the budget I realized I have 10 more weeks of being able to pay myself. But that’s okay! Because of everything we’ve been through, because of hitting rock bottom and pulling ourselves out of it with the Baby Steps put in place by Dave Ramsey, we are living below our means, debt-free and we’re able to weather this storm. We will be able to live off of one paycheck. (If really want to look behind the GYPO business curtain, be sure the watch the Coffee Chat video above.)

I want you to know that there is hope and that this might be your opportunity to take a look at your finances and take a look at your budget. The scariest thing is just sitting down and looking at those numbers on that spreadsheet but you got to know where you’re at to know where you’re going. Take the time to sit down and look at your finances, sit down with your significant other, and say, okay this is where I’m/we’re at and this is where I/we want to be. Maybe we need a budget or maybe we need to start this baby step or that baby step or whatever. This is an opportunity to do that. It’s never too late. Don’t look at the past. Don’t put all that shame on yourself. Just move forward. This can be a clean slate that you start with.

Your Turn!

I want to hear from you. Have you done Financial Peace University? Have you done the baby steps? I know that this is a topic that people maybe are uncomfortable sharing publicly, but you’re welcome to share in whatever medium you prefer, DM or email me at info@getyourprettyon.com. I would love to hear from you and definitely comment below if you have a tip, a trick, some advice, some emotional support or just some moral support for everybody out there. I would love to hear from you. I want to thank you for allowing me to unpack this topic with you and for giving me grace in the process. I know it can be a really tricky situation. I know that there’s a lot of fear and frustration out there right now for all of us, so thank you guys. Again, I’m no expert on this, but this has absolutely worked for Craig and me for our financial lives and our situation. I appreciate you guys so much and I hope you have an awesome week!

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