So now the we have decided to improve our financial situation, it is time to come up with a plan of attack. Here are our long-term goals for our financial situation:
1. Eliminate all non-mortgage debt.
We sat down to work on our budget, and I am shocked about how much we pay towards debt each month, even by just paying the minimum. I am guessing a third of our net income is going towards debts other than our mortgage. That makes me feel a little sick, and that is probably a good thing (feeling sick, not the debt...).
2. Set up college savings accounts for our kids
I would really like to be prepared for when my girls go to college. Fortunately, the are so young that I have plenty of time to do this. However, it doesn't make much sense for me to do this now... Why put money into an account that is currently earning 5% interest when I could pay off a credit card that is costing me 15% interest. I also would like to help my kids by helping them not take out student loans.
3. Contribute more towards our retirement.
We already have some retirement accounts, including a decent pension plan from the state of Florida. I would like to save more, but again, this doesn't make much sense until I have paid off my debt.
4. Pay off my mortgage.
This is a long way away, but it is a nice goal.
Now that my goals are set, it is time for a plan of attack. Like I said, I have read a lot about other peoples' financial stories, and have learned a lot from listening to Dave Ramsey. I am going to go into more detail about how I am paying down my debt on a later post, but I do have some basic strategies in place. My wife and I sat down, and came up with some pretty basic, common-sense short-term goals:
1. Create a budget, and stick to it.
We have just finished our first one, and learned a whole lot about where our money goes (and it's not pretty). Teachers have to be creative when making a budget because of our pay schedules - although I am sure you can say that about a lot of people/jobs. I am going to post this weekend about how we did our budget.
2. Stop using our credit cards.
The only way to do this is to stick to the budget and follow the next goal.
3. Make more money than we spend.
Easier said than done!! When we first made our budget, we actually had more in it then income. Our income will go up in a few weeks, our first check of the school year is a little smaller than the others. So, needless to say, we had to make some tough choices, but we did it.
4. Find ways to increase our income.
This is also not easy. Getting a normal second job can be hard for a teacher to do, because of all of the extra after-hours work we have. So we are looking for ways to pick up some extra income, and we have actually found some! I will post about that later on. At this point, however, any extra income will be devoted to extra payments on our debt.
5. Do all of this, without it affecting our kids.
This may be the most difficult. Our biggest rule we made when trimming our budget was not trimming anything that would affect the girls - we also will not sacrifice the quality time we spend with them. Any efforts to make extra money are usually done after bed time.
I'll spend some time in the next week sharing some of our strategies and ideas... If you have any tips for us, please share in the comments!
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