Summer Break is Ending

Perhaps the best part of summer is the fact that a variety of projects can be completed and the temporary improvement in weather gives us permission to take a break from the routines established in the fall, winter, and spring. At least that’s the excuse I use living in the Pacific Northwest when summer time hits. Unfortunately, not all routines should be tossed to the back of our (or maybe just mine) minds so quickly. It’s the reasoning that says because it’s summer and “I’ll be playing softball once a week for two hours”, I can quit the workout regime, I mean routine, at the gym. Or it’s the thought that just because the temperature has increased and the grill is fired up more often, I should eat steak dinners every night (grilling at home is economical after all!).

Ah yes, summer break can take its toll on many a budgets and leave us dazed and confused when we returned to reality in September. So do yourself a favor and awaken from the heat induced slumber that has lulled you away from the healthy budget you had in the spring. Get back to work on making your financial plan work and set yourself up for a strong finish to the year financially speaking. Remember, a good financial plan requires routine commitment. This is one area we can’t take a break from regardless of the season!

Alan & Dawn at the 2-Year Mark

It’s been two years, one month since Alan and Dawn decided a change was in order for their financial situation. They were living paycheck to paycheck despite having a nice income and they were tired of it. Tired enough to get motivated to make some tough changes. Tired enough to do what neighbors, friends, and co-workers were unwilling to do despite facing similar difficulties. Alan and Dawn changed their behaviors towards money and the results are amazing.

In May of 2007, Alan and Dawn had $131,000 in consumer debt  including a BMW ($22,200),  mini-van ($12,100), one credit card ($10,500), two student loans ($17,500 & $37,000), a personal loan ($28,000), and a handful of miscellaneous smaller debts ($3,700). In addition to the consumer debt they had $259,000 on a negative amortizing home-loan. Combined, Alan and Dawn had a pile of debt adding up to around $390,000. To tackle this debt they had a take-home pay of $5,200 when they started…..and then they got to work!

They “downsized” their expenses by selling their two vehicles for two much cheaper ones, cut the budget (and the credit card!) in every possible way, and stretched every penny as far as it could possibly go. Doing this dropped $17,000 off their total debt, and saved them thousands of dollars worth of interest. About six months into the process they decided to take the big step of selling their home and renting until they became debt free. Not only did they knock $259,000 worth of debt out, but it reduced their total financial risk and dealt with the terrible loan situation they were in. They ended up with monthly expenses (including minimums payments on debt) around $5,000, leaving about $100.00 each month to throw at the remaining debt.

Two years later Alan and Dawn are doing great. The once $390,000 pile of debt has been reduced down to $69,537 without having received any significant pay increase or bonus. Taking any extra money they could find from garage sales, gifts, or the odd job resulted in taking a nice size hit out of the debt. Only the two student loans (now $16,500 & $33,687) and the personal loan ($19,350) remain to be paid off, and at this rate they will meet their goal of  being debt free in less than 5-years!

What Alan and Dawn have accomplished in such a short amount of time is amazing to say the least, but it’s not impossible. It has taken them hard work and caused them to be intentional to the penny every month for two years. I’ve sat with them when it was tough and tears were rolling, and I’ve witnessed the multiple little victories along their journey. Most people living paycheck to paycheck would like to be free from the stress and limitations that situation creates, but few are actually willing to do what it takes to change the situation. It’s tough! Anything worth anything typically is. But it’s completely worth it if you will commit to it! I know Alan and Dawn are going to make their goal and I’m excited to see how their life flourishes in the future because of the decisions they are making today. Great job guys, keep up the great work! I’m so proud of you!!!