The Cost of Staying in Debt
What's the point of getting out of debt? Shouldn't we just make our minimum payments and continue to live the lifestyle we currently have? There was definitely temptation and hesitation that crept into our minds before deciding to follow Dave Ramsey's principles and digging our way out of debt. Hindsight is always 20/20, which is why I think it's important to reflect on how far we have come financially in the 3+ years since learning how to put together a budget.
It's easy to tell yourself that you will start working on it later, but like most things in life, if you keep procrastinating or do only what is easy, you will never make any progress. And progress is something that shouldn't be underestimated. The power of progress is what propelled us to getting out of debt and funding an emergency fund.
Of course, we're not perfect and are always looking for ways to improve, but committing to staying out of debt is something that we have accomplished and, again, it's worth reflecting on.
How Much We've Saved
Because we paid off our debts (minus our mortgage), we've been able to use that extra money in other areas of our budget. And since January 2009 we have increased our monthly disposable income by $501.
What would you do with an extra $500 a month?
Where We Have Saved
- Cable/Internet: We canceled cable, and added Netflix to our budget. We pay a high price for high-speed internet, but when you watch most things online, it's worth it. Savings: ($137 - $65) + $8 = $64
- Jeep payment: This was our biggest monthly payment besides our mortgage, so paying off the Jeep was a BIG win. Savings: $300
- Student loans: We had six different student loans to debt snowball, and while education is important, we could still be paying on these for another 15 years if we had just made the minimum payments. Savings: $6 + $22 + $8 + $17 + $74 + $8 = $135
- Gym membership: We recently canceled our gym membership. Although our company reimbursed us up to $60 a month, we were still paying $2/month for something we rarely used. Savings: $62 - $60 = $2
Everyone's budget is different, and everyone has different circumstances. I am in no way saying that your journey to financial peace would be the same as ours or anyone else's. But if you are not in tune with how you are spending your money, you are likely missing out on opportunities to take control of your financial future.
Where have you, or where could you, squeeze more out of your budget?