Sunday, February 9, 2014

Debt Free in 14 months?

It has been an interesting 48 hours... I should back up a little more.

In January, I sent and email to Jess Mecham, the owner of You Need a Budget (YNAB). In his podcasts, he has spoken about having a passion for small business to use YNAB. So I inquired about more information from him about this to support my husband's small business (technical writing and editing - Borealis Communication Solutions). He forwarded the email to Mark Butler, their financial coach and blogger, to reach out to us to hear more about Steve's business. We met via Google Hangout and chatted about business finances.

I then said to Mark that it was too bad that he was not taking anymore clients for coaching, he said he was and said he had a few minutes now... WOW!!! We sent our YNAB budget in screenshots to Mark. He was trying to be kind about what he saw but I told to just tell us like it is. Basically, he said to us we are in a financial crisis in that we have more going out than coming in. I had a hard time wrapping my head around that as I thought we were managing just fine. Mark made some hard suggestions that Steve and I needed to talk about if we were serious about getting out of debt and into financial freedom.

1. We should stop contributing to the girl's TFSA's and cash them in to pay off our debt. That one hit our egos HARD! I have been so proud of the fact that we have not used any of the money that the Canadian government sends us for our children. We have been saving it since the day Hannah was born - 5 years - and built up $13K into them for their further education. What Mark pointed out is that the money in the TFSAs would pay off our MasterCard and get a chunk out of our personal loan.

2. We need to look at trading in our van for something we can pay cash for. This one we are still investigating. We paid a lot of money to get our van with every bell and whistile available. We are making a $630 a month car payment for this. We looked on the dealer website and saw a van that can meet our needs IF we can make it happen. If not, we will deal.

3. We need to look at getting out of our townhouse and find something that will not cost us an extra $260/month in condo fees. We have looked into that and we do not believe it is a possiblity. We have applied for school for Hannah in the area and with the housing market where it is, we will not be able to get the money out of the house that we need, as we would need to get our down payment out of the sale ofhte home.

4. He strongly suggested we look into taking Dave Ramsey's Financial Peace University (FPU). This is a course, as I have researched it, about handling money God's way. Thankfully, we have an amazing couple in our lives, Michael and Tania Spears of Spears Bookkeeping & Financial Consulting Inc, who have a passion for helping people like us get out of debt. They have also been through FPU and we hope will be our accountability partners and mentors through this process.

Another thing Mark suggested is that we create a "fake budget" in YNAB to see the possibility of what could be. We did that Friday night and it helped me to see that we are in fact putting out more money than we have coming in. I went one step further and created a spreadsheet in Google Drive to see what making these changes would do. What they would do is make us DEBT FREE, except our mortgage, in 14 months! That is overwhelming, exciting and terrifying to me.

I will blog as we move through this process. God and I have had to work through my ego issues and fears. I know we still have more to get through and with His help, we will get there.

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